By MN Gordon
Interesting Times Arrive
“Things sure are getting exciting again, ain’t they?” The remark was made by a colleague on Tuesday morning, as we stepped off the elevator to grab a cup of coffee.
Ancient Chinese curse alert… [PT]
“One moment markets are gorging on financial slop like fat pigs in mud. The next they’re collectively vomiting on themselves. I’ll tell you one thing. President Trump’s trade war with China won’t end well. I mean, come on. China’s outplayed the U.S. at this game for over a quarter century. They have the upper hand.
“Besides, what’s the point? If we no longer buy stuff from China, then how will China buy Uncle Sam’s debt? And the timing for all this couldn’t be worse. Deficits are spiraling out of control. We’re talking $1 trillion or more a year for the next decade. I don’t see any way out of this quagmire, do you?
“Printing money to buy government debt is no solution at all. And a trade war will just hasten America’s insolvency. What is it that Trump thinks he’ll accomplish, anyway?
“I’ve also heard that China’s tickled the debt poodle way more than we have. So they may be worse off at absorbing an economic shock than us. But I wouldn’t bet my life on it.
“Obviously, like I said, this won’t end well. Yet there’s no turning back now. The trade war genie’s already out of the bottle. That’s easy enough to see. And maybe President Trump is right, and a trade war with China is warranted.
A joint hanging venture… [PT]
“But in the end, something big – like a massive fighting war or worldwide depression – will need to happen before this genie can be put safely back inside the bottle. How do I know this?
“I know this because this is how these peacocks on the walk contests always play out. The invisible line has been crossed. Trump and Xi Jinping have both gone all in. There’s no backing up. There’s no walking away. They’ll keep chest bumping each other until something serious happens. Then it will really be game on.”
It cries out for funding… the federal debtberg in all its glory. [PT]
Integration and Disintegration
Certainly, our colleague brings up some good points. Is a trade war upon us? If so, where will it lead? Here we take a deep breath, and a sip of coffee, and endeavor to offer some perspective.
Expansions and contractions in global trade have rotated back and forth over long secular trends for thousands of years. The Silk Road, for example, was established by the Han Dynasty of China in 130 BC. This trade route provided continuous conduit for the exchange of goods, culture, and knowledge, between east and west for nearly 1,600 years.
Trade along the Silk Road came to an abrupt end when the Byzantine Empire fell to the Turks in 1453 AD. For whatever reason, maybe a madman was President, geopolitical trends turned inward towards isolation. The Ottoman Empire closed the …read more
Source:: Acting Man
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