i saw an opinion the new BRICS ( intertrade) currency would weighted on members AND 40% gold ( i assume each nations gold holdings )I agree with you divs, I think this has a long way to play out.
IMO the U.S will want to strip China of its developing nation status and make them fully float their currency and that is probably only the first steps.
China won't be keen on doing either IMO.
is the U.S being a bully? Yes,
Will China become the bully within a few years, unless they are reigned in? Yes
Yes at the moment the U.S takes 16% of China's exports, the next best is Japan which takes about 5%, Korea 4%and Vietnam 4%.i saw an opinion the new BRICS ( intertrade) currency would weighted on members AND 40% gold ( i assume each nations gold holdings )
but the devil is on the details China already does direct currency AND goods swaps with selected nations ( including last i heard .. Japan )
if China strongly prefers BRICS members in trading , the Chinese FX rate will be irrelevant outside BRICS they most likely say 'whatever ' because the BRICS partners can supply almost every commodity ( thanks to South African member status .
from my high school years i discovered bullies hate getting hurt , and IF they are hurt in full view of their 'friends' ( coat-tail clingons ) that is even worse
China is quite capable of punching the US in the nose ( but i used to take out the kneecaps and let the concrete/floor take care off the nose )
China will be careful because India is catching fast and it would be better to share with India rather than fight an ultimately losing battle ( it might take 30 or 40 years but India will be bigger and better situated for world trade and very hard to blockade India )
yes unless Australia starts blockading India has good access to most of the under-developed and emerging nations by sea and/or landIndia's fundamentals are vastly superior to china's - direct/unfettered access to the indian ocean, mineral wealth, a young population...
The indian ocean rim is going to be the place to watch for the next several decades IMO.
Us westerners kind of forget it's there most of the time on account of the standard map we use and its orientation but after the pacific and then the atlantic there's a huge patch of water the rest of the world just kind of forgets exists.
It would be nice to see Sri Lanka succeed. The reason they have a trade deficit with the USA is that they can't afford to buy anything.yes unless Australia starts blockading India has good access to most of the under-developed and emerging nations by sea and/or land
and if India can get it done both Bangladesh and Sri Lanka are valuable neighbors in their own way , Sri Lanka could easily become a larger version of Singapore with a little help ( maybe even Singapore + Macau )
Whole rim IMO. All the way from perth to broome to indonesia, burma, bangladesh and then the whole way around the other side into the persian gulf and the whole east african coastline. All of it.yes unless Australia starts blockading India has good access to most of the under-developed and emerging nations by sea and/or land
and if India can get it done both Bangladesh and Sri Lanka are valuable neighbors in their own way , Sri Lanka could easily become a larger version of Singapore with a little help ( maybe even Singapore + Macau )
You still living in the 70's listening to skyhooks or sumting?Yes at the moment the U.S takes 16% of China's exports, the next best is Japan which takes about 5%, Korea 4%and Vietnam 4%.
So the U.S is by far China's biggest customer, so it will be interesting, the U.S imports about $580m worth of Chinese gear, China imports about $180m worth of U.S gear.
India has a golden opportunity there and , they should take it ( help Sri Lanka ) before China or Vietnam wise up and make a new friend ( Indonesia has plenty of ocean access )It would be nice to see Sri Lanka succeed. The reason they have a trade deficit with the USA is that they can't afford to buy anything.
Yes sorry my mistake, billions not millions.You still living in the 70's listening to skyhooks or sumting?
Billions not millions.
"you started it "Well we're pretty much heading into game theory territory now as China has come out saying that they would match US tarrifs like-for-like "until the end".
IMO it's a safer bet that Trump won't yield...
and / or this:::gg
- Don't do reciprocal tariffs as they harm trade and do more harh to those who put them on.
- Form free trade associations with neighbours or common interest countries e.g Australia, Canada, UK and NZ.. or South American countries. or Japan, South Korea, Vietnam as examples.
- Increase demand in each country by increasing fiscal initiatives. Increase spending.
- Just wait for Americans to start screaming.
I'm not sure there is any such thing.well respected economists
@Garpal Gumnut Drought is affecting the farming areas big time. US farmers crying poor.I was watching a podcast today. Two well respected economists discussing what nations should and should not do do in response to Trump. Wolfgang Munchau & Anatole Kaletsky on Unherd, the takeaways were.
gg
- Don't do reciprocal tariffs as they harm trade and do more harh to those who put them on.
- Form free trade associations with neighbours or common interest countries e.g Australia, Canada, UK and NZ.. or South American countries. or Japan, South Korea, Vietnam as examples.
- Increase demand in each country by increasing fiscal initiatives. Increase spending.
- Just wait for Americans to start screaming.
Taking it back to fundamentals.Which goes to the point- how does restoring American manufacturing actually help the worker?
$350 billion.Trump warned the EU it must spend $350 billion on US energy to qualify for tariff relief.
@farmerge , very seriously TDS is a thing@Garpal Gumnut Drought is affecting the farming areas big time. US farmers crying poor.
Thousands laid off by The Muskrat, Only time and it should hit the fan big time.
I wonder if the next gun crazed who takes a ping at The Trumpet will be a better shot than the last one!!!!
Long windedTaking it back to fundamentals.
Let's consider a town. Any random town that's big enough to be on the map but far enough from anywhere else that it's not somewhere people commute to and from daily. For simplicity let's say it has a population of 10,000 people.
Now it's a given this town will, assuming people live reasonably normal lives, be buying a lot of things not produced there. Because no chance a town of 10k people, or even a city of 10 million, is fully self-sufficient. It's going to buy from others that's a given.
Also a given is the existence of a service economy with locals serving locals. Shops, trades, basic services such as hairdressing, vehicle servicing and so on.
Now there's just one problem with this. If that's all the town has, if there's nothing else, then economically it's akin to a spa with the drain plug removed. The water's going around and around, it's bubbling away, but the water level is slowly but surely getting lower as water goes down the drain and nothing replaces it. In economic terms that's the local service economy sending money around and around meanwhile it slowly but surely leaves the town to pay for all those goods and services not produced locally. Continue that and a point comes where money gets tight and, if it continues further, ultimately the whole thing seizes up.
There's only one fix for that - the town needs an external income. It needs to sell something to someone who doesn't live in the town, and do so on a big enough scale to maintain the overall wealth of those living there. It doesn't need everyone to personally be involved with that, but it needs someone to be doing it who then spends their money within the local service economy and circulates it to others. Meanwhile the constant flow down the drain carries on.
Now go to any actual town and you'll find just that scenario, the town has an external income. Maybe it's the farming that surrounds it, or it's mining, or it's a timber town with a sawmill and so on, or it has some big piece of infrastructure that brings money in from external customers for example a shipping port, or it's manufacturing, or it's tourism, or it's a town that attracts wealthy retirees who bring money with them, or it's a hub for defence or some other government program. Whatever but point is there'll be something that brings money in from outside.
Now we have plenty of examples in Australia of what happens if that isn't the case, if whatever promoted the town's establishment ceases to exist. Eg the mine shuts, the factory closes, etc. What happens at first, on day one, is those directly working at the mine etc make plans to leave. Come back a few years later though and unless something new came along, eg the town reinvented itself as a tourist destination, then the whole town's outright stuffed. That's what happens with a constant outflow of money and nothing coming back in, ultimately the service economy seizes up and now everyone's poor.
Because the truth is that whilst the hairdresser might've thought they worked for the salon owner, or maybe they thought of it as working for the customers, in truth it always was the big company that was feeding them. They might never have set foot inside the mine or mill and they certainly weren't on the company payroll but they now have the painful realisation that in truth it was the mill that fed them. Now that the mill lies in ruins, so does the whole town that depended on it.
Now this applies on a bigger scale. Using an Australian example if we go back to 1975 then the population of Adelaide was was about 13% greater than that of Perth. Today Perth is 56% larger than Adelaide. What happened? Well it's really quite simple - WA's state economy over that time has grown far more in terms of externally sourced income than has SA's and that's flowed through to the capital city. Or in more practical terms, WA massively scaled up mining, which sees a flood of money coming into the state, and that's benefited the capital city. Even though most of the mines are nowhere near Perth itself, the city gains via money spent within the state, taxation, city businesses providing services to the regions, that some workers are FIFO from Perth, and so on. Ultimately the money's benefiting the city.
As a personal anecdote, I've known quite a few who moved to WA not because they had family there or even a job lined up, but simply because they knew they'd find work in an overall booming economy and sure enough they did. None of them ever worked in mining, but ultimately it's what's feeding them.
And this works at a national level. Bring money in from outside by whatever means and ultimately that's of benefit compared to not doing it. It's impossible to say to someone that they personally will get a job out of it, but as a whole society will have more economic wealth with the new industry than without it. Should anyone doubt this, I suggest a visit to the Middle East oil countries, you'll soon realise they're not broke.
Those who advocate manufacturing aren't suggesting that we'll see half the population directly employed in factories. The rationale is far simpler - anything produced in a factory, not matter what it is, is ultimately either replacing an import or it's a product for export. Either way it's bringing money from outside into the country, state and town in which it's located. Some benefits will go to workers, some will go to contractors and suppliers, there'll be at least some tax paid, there'll be the flow-on benefit to others when those workers, contractors etc spend their money in the service economy, etc.
With the key point that all that money came from outside, it's water being put back into the spa bath to offset what's exiting down the drain. It's like the farms, mines, tourists and so on, it's external money coming in or, if it replaces imports, it's reducing the outflow so the same net effect.
Separate to all that are two other aspects:
First is simply there are people who want to work with technical things and suffice to say you can't get far as an automation engineer, industrial electrician or anything of that nature if there's no industry to work in. So there's that personal aspect as with all employment, that if we're to have a diverse society then we need opportunities in diverse fields. Otherwise, if all we've got is relatively straightforward service industry things, well here comes the brain drain of technical people. It's rather hard to develop and retain technical and scientific competency without an industrial base to support and retain those people. Educational institutions and government can only go so far but if you want a good base of people, and you want actual innovation and development, well you need industry behind that, there needs to be something for them to actually do.
Second is manufacturing is inherently tied to broad societal capabilities. If you've got a lot of industrial equipment and you've got a lot of people who know what they're doing with it, then you've got the ability to do a lot of things. When the wheels fall off society in some way, when there's a crisis be it war, natural disaster, pandemic, infrastructure failure or whatever well all of a sudden it becomes rather handy that you've got equipment and people who can turn around and make things.
All that said, Trump is in my view making one huge mistake in the whole thing. The notion that you're going to manufacture does not mean you're going to be self-sufficient, it just means you're going to have more production of things but that won't be everything. You still need trade, because firstly you'll need to import some of the materials, components and so on and secondly the idea would generally be that you're going to export some of the product. That being so, alienating other Western countries, and jacking up the cost of inputs to US manufacturing, isn't at all the right approach in my view.
If I were Trump then I'd have tried to get the rest of the West to come along for the ride voluntarily, or at least have an understanding of what I'm trying to do and why, rather than getting them offside. It's not the EU, Japan or Australia the US needs to put tariffs on, they're not using cheap labour and low standards to compete against US businesses. Trying to convince the EU to get their act together economically and strategically yes, that's necessary, but there's no need to slap tariffs on a place with high wages, high taxes and not a lot of industry anyway. Nor is it rational to be threatening to annex Canada, that's just not helping anyone.
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