This blog has reported economics on the developing world trade war. We have reported on long histories of the trade war spiral as leading to the final patterns of historic charting where super bubbles, rise up to all time velocities, inside a world trade war cycle. The super bubble collapse effects all nations disproportionately. I remain grateful to be in the USA no matter what….thank GOD.
The pattern is to takes years of rising escalating trade war spiraling up where a trigger event creates Cascade, Super Crash and economics rebalance by world war from a long global depression economically. As this never fails as to pattern – under present box top regulations for global markets.
Without a G 100 RE-THINK of GLOBAL REGULATIONS IN THE MODERN DIGITAL AGE WE CAN NOT DEFEAT HISTORIC PATTERN. Only when is unknown.
So today you read that China “may” ( unlikely with XI and Trump’s relationship which is also growing rapidly ) stop buying US Treasury debt assets. This is jaw boning.
The news rattled markets.
Because US Producers are banning and taking to court Aluminum now being price dumped unfairly, via Vietnam, into world markets. The USA seeks to ban those economic assets without fair market reciprocity.
It is a complex issue and going through the history hear will leave my readers in economic shop talk that will not serve your ultimate knowing – what is really going on out there.
The USA is threatening to block billions in trade assets flowing into the USA.
China reacted by jaw boning we wills top buying US treasuries.
If Trump responded as such spiral became real which it won’t. Why? This could unfold.
- The USA places tarriffs on China goods. And other blocks.
- China drops a trillion over night in 2018 trade.
- Factory orders in China nose dive.
- Other nations benefit as the USA fire power moves to those nations for fair trade.
- China escalates USA trade into CHINA Blocks.
This could happen falls under China would have massive potential for a SUPER CRASH IN NATION, massive debt defaulting, and a couple decades of zero growth – political riots and unrest for 100’s of millions our of work – more than the USA total population – and potentials to change the government and rip communism to shreds. That is very real.
The risk on – is too great for China.
The world order works within a system of cooperation. This cooperation permits:
- China to develop trading out more goods then it allows to be purchased by its own rising economic machine with its prime trading partner keeping it rising – the USA buying power.
- China agrees to reciprocity to take a % of its profits in a trade imbalance – accumulating unsustainable piles of dollars it needs to deploy buying USA assets – starting with Treasuries the safe bet on asset classes.
- The rebalancing Trump is trying to put forth as a NEW ORDER would occur under plan over decades and be good for everyone.
Any breach of this direction is high risk.
So the USA taking action – producers of Aluminum saying we can’t compete with state subsidy pricing we can’t and are not allowed to do under our laws – is a trade war and is unfair to market prices.
They seek in courts to block Vietnam importing of China going around the laws using their buddy communist nation.
Now both nations are caught in the economic bear trap.
President Trump wants such dumping to stop now.
China is fighting serious problems to avoid a SUPER CRASH at ANY cost. China borrows 300% more than it makes to keep its economy growing and stable. This debt is not sustainable and will SUPER CRASH the nation which the IMF and World Bank have warned of. China says they need more time and are working on solutions and they are.
Trade WAR between the USA has immediate effects to China on its forward debt and borrowing. Jaw Boning right now is a political error. One is using Nukes against an aluminum pistol.
Today China used a NUKE to get Trumps undivided attention on their aluminum pistol.
Do you see it?
Do you see why I advise to always follow the MONEY when reading the news.
The Beltway is yawning on this jaw boning confident it is not real at all.
I think it is not real at all but we have to see. A miscalculation in trade wars can be serious and spiral it up at velocities not seen today. We have to get out of TRADE WARS. Period.
Meanwhile the FED is working on NEW POLICY a change like the FED has not had since 1929. Long over due. The Fed is working through these issues this week:
- IF a recession hits us – they have no tools to stimulate remaining.
- To accomodate a likely future correction to the longest boom ever recorded this August and the highest boom ever recorded – the Fed needs to take action NOW.
- The action is to secure a policy that allows lower rates for longer time periods. Or the market will become unstable from the FED ITSELF.
- The market correcting needs more TIME.
- Time is the asset both China and the USA require.
Stability is the outcome everyone desires.
SO – can NEW POLICY save the day.
WE think yes.
But the policy needs to inspire market confidence and that is a big job and an immediate 2018 agency.
The outcome here will effect all of us.
Now that – Not Steve Bannon leaving my buddy Andrew Brietbarats news outlet is the BIG NEWS today.
That – IS – what is really going on …out there today folks.
Berny Dohrmann – I’m all over it just for you in 2018