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Old 06-24-2018, 05:14 PM
Danny B Danny B is offline
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,496
Trade wars, playing chicken,,,chicken in Hormuz,,, multilateral world

Blankfein: Trump's Trade Threats Are A Savvy "Negotiating Strategy"
Nope, this is like beating the snot out of your wife. You can't undo it.
This unfolding trade war shows just how ignorant American negotiators are. Many things are produced in one place and, assembled in another. Raw materials could be sourced anywhere. Capital some place else. The Chinese put a tariff on pork. The largest American pork producer is owned by the Chinese.

U.S. corporations moved manufacturing to China to take advantage of low-cost labor. These US Corporations then retain the enhanced profit margins from the low cost manufacturing in offshore tax havens to evade US Corporate taxes.
Many also don't understand that the bulk of the "Trade deficit" with China comprises the import into the US of US brands such as Apple and many others. There is a lack of understanding that even such imports of US brands are still IMPORTS!!
China is not the problem but US Corporations. And they will NOT onshore manufacturing if a full trade war breaks out with China but simply shift manufacturing to Thailand, Vietnam, Indonesia etc.

"the US currently imposes a 2.5% tariff on imported passenger cars"
"EU imposes a 10% tariff on all imported U.S. cars"
"Not long after Trump's tweet, the European Union vowed it was prepared to retaliate immediately should the tariffs be imposed, saying it would continue tit-for-tat escalation in its trade dispute with the U.S. "
"Earlier in the week, the EU imposed retaliatory tariffs on €2.8 billion ($3.3 billion) of American products "
"Europe is convinced that Trump would have no choice but to reverse direction once there is sufficient outcry from either politicians, business or if the market itself were to crash:"
There is little appreciation for the fact that; when the markets crash, they won't get up again.
"That suggests that some of the tariffs may indeed have to take effect (they can always be rescinded afterwords). All that means is that there's a greater risk for escalation in the trade dispute and a more severe market selloff."
The markets can not survive a big selloff.
The article goes to great length to show that the effects of a full-blown trade war would be minimal.

Game of Chicken: US vs China on Tariffs
So, just how much is this trade war worth at the moment?
Jerome Powell is Playing “Chicken” With $10 Trillion in $USD Shorts
"Jerome Powell has emphasized that he is more concerned with the real economy than the financial markets.
Put another way, the Powell Fed, unlike the Bernanke or Yellen Feds before it, is willing to sacrifice stocks in the name of normalizing monetary policy provided the economy can withstand it.
As a result of this, the Powell Fed intends to continue with its rate hikes as well as the increase in QT (we go to $50 billion per month in July),"
Here is a graph of what QT has done to Brazil.

"there is a significant risk that the markets might actually enter a free fall. Powell is playing a dangerous game. "
It seems to me that Powell is depending on capital inflows to prop up American markets.
Evidently, he has turned a blind eye to corporate debt.
Evidently, he has turned a blind eye to the EMs defaulting to American banks.
Evidently, he has turned a blind eye to the looming collapse of the EU banking system.
Evidently, he has turned a blind eye to the fact that China will soon have to devalue. A minimum negative 10% to u.S. markets.

"Iran could effectively shut down the Strait of Hormuz, the narrow channel connecting the Persian Gulf to global markets. It is the only sea route from the Persian Gulf to the open ocean.

Tankers moving oil from Iraq, Iran, Saudi Arabia, Qatar, Kuwait, and the United Arab Emirates all have to pass through the strait. That translates into roughly 35% of the world’s oil traded by sea.

Nearly $2 billion worth of oil passes through the Strait of Hormuz every day. It’s the most critical oil choke point in the world.

In the event of an all-out war, Iran would quickly shut down the Strait of Hormuz. It’s been blatantly clear about this.

Credible studies have shown that—in a best-case scenario for the US Navy—Iran could seal off the Strait with sea mines and asymmetrical warfare techniques for at least a month before the US could reopen it. The Pentagon itself has admitted as much."
Not in a month,,, not in a year. The Suez was closed for 7? years.

"In one week President Trump confirmed that his first concern is the United States, that he has what may be a workable vision for its place in the world, and he loathes globalism and the globalists."
"It’s hard to say if Trump’s dislike of Angela Merkel is business—she’s one of the world’s most visible and vociferous proponent of globalism, or personal—it’s always her way or the highway."
"That Trump is willing to blow off Europe suggests that he may be blowing off empire. "
"As global competition moves from military to economic, Trump is also going to make sure he tilts, as much as possible, the rules of that competition back towards the US. There are the existing trade arrangements with Europe, Canada, and Mexico that he’s willing to blow up, presumably to obtain better arrangements."

"he may get some breathing room to address the intractable second and third realities: the trajectory of US spending and debt, and the fundamentally corrupt government. On the debt, all the breathing room in the world isn’t going to save him. "
most of America’s rulers and its captive media are speaking out against a peace initiative, not on the merits of the initiative itself, but because Donald Trump was one of its initiators.
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