Trade War - A Clockwork Mechanism

To understand the trade war, know China is in a major economic decline now. Their stock market is down 25%. Banks need bailing out by government due to a collapsing economy and printing more money will only make things worse. Everything in China is over leveraged with many billions, if not trillions, of borrowed money!  The Chinese economy is in high risk without a net.

The Trump trade war forced the Chinese government to subsidize the banks. China lent tens of billions of  Yuan to countries like Pakistan to build port and railroad infrastructure, but economic shifts left them with no way to repay loans with no business.  Apparently the bankers and government analysts were unable to analyze correctly on were the take.  Guess which? 

This is disaster for China and the borrowers.  Trump’s timing on China is exactly right.  They are in a weak position.  Their threat to sell the $1.4 trillion of US Treasuries they are holding is actually good news for us as there is no market for them at the moment.  They could sell for a Dime on the Dollar!  If buy 90% of the $1.4 trillion of our debt vanishes and we would be ahead $1.26 trillion!

Mr. Trump is the only person in government thinking clearly and the "Swamp Establishment" hates him for it.  The EU is willing to cooperate with Donald Trump and revise the World Trade Organization to push China on IP and other trade violations;  Score another one for Mr. Trump!

Mr. Obama told us days of greater than 1% growth were over, and he was right for socialist nations; all fail.  He was seconded by Larry Summers, the ex-President of Harvard fired for having said females were not interested in science and engineering.  Such is "Political Correctness," another leftist problem.  Meanwhile Mr. Trump is also solving the NAFTA disaster sold to us many years ago as a great boon, but only for a gaggle of US Senator, swamp alligators with burgeoning offshore number accounts.

Mr. Trump also had very good intelligence from Secretary of State Mike Pompeao who knows China has to buy 400 million tons of Soy beans from us or they cannot feed their people and nothing wrecks a government quicker than hunger.

Meanwhile the network polls are saying there will be a "Blue Wave" in November: The Democrats will surely take the House and maybe the Senate!  There are 33 Senators on the ballot this year and 23 are Democrats while only ten are Republicans.  Ten of the Democrats are in states Mr. Trump took with up to 40% margin and Democrats all are losing in the polls!  We see no way the Democrats take the Senate and Mr. Trump will gain two to ten new Senators.

Nonetheless, Maxine Waters will be Chair of the House Finance Committee if the Democrats win control, and Nancy Pelosi will be Speaker.  Both have "impeach!" on the brain and will bring impeachment bill after bill up to the point everyone will be irritated and move to Mr. Trump.  The best way the Democrats can insure Mr. Trump a second term is to win this mid-term election!

Meanwhile back in the swamp:  Mr. Mueller is bottom feeding for "Russia, Russia, Russia," and finding nothing on Mr. Trump. To understand Russia examine the Russia-EU gas pipeline issue:  Gas and oil sales are 52% of Russia’s GDP which is smaller than of NY State, $1.5 trillion and the GDP per person is $8,748 in 2017 where it is $43,750 in the United States and growing where it is declining in Russia!  Nonetheless, they spend 20% of their GDP on weapons and military as they lost 80% of their male population in World War II and have not gotten over it.  This is the reason they are so sensitive about foreigners adopting Russian babies.

We have two $400 million Liquified Natural Gas, LNG, loading facilities in Boston Harbor that are mothballed due to Obama era environmental regulations designed to keep us out of the international Liquified Natural Gas market and let Russia have it!  Mr. Trump will rescind these regulations.  They could supply all the natural gas the EU needs and shut Russia down.  It is only Angela Merkle's Socialist mind and perhaps a bit of cash to a swamp rat that kept us from supplying the EU with gas.  She is in trouble politically so this will be the next East/West crisis.

Angela Merkel wants to build a new German pipeline into Russia for gas to enhance her position and power but she also thought letting in over one million Muslims was a good idea until the German people rebelled, and the rest of the EU voted with those opposed as the Muslims are raping German women, committing felonies and creating mayhem.

The pipeline is much the same as Obama paying Iran $150 billion at the moment their economy was tanking, confirming he really is a Muslim, but no one in media dared say so!  Free speech in America is really a myth! 

Russia cannot afford to wage a real war in Europe now that Trump has forced NATO to finally pay what they should for readiness.  It is now happening due to Mr. Trump.  Who says Russia wanted Trump?  They knew what he would do.

Russia's taking over the Crimea was a masterfully done legal war of a new kind:  Putin got many Russians to move to Crimea, become citizens and align with a party, like our Democrats, that would register them to vote for their interest.  Russia also made a serious effort at getting into the Crimean election system so they could change votes.  They sponsored a plebiscite for Crimea to join Russia.  The measure won by 96% which told all it was a fraud as no election ever does that.

Russia will not be happy until they have access to warm water ports in the Baltic Sea.  They can only get them through Latvia, Estonia or Lithuania so expect to see a Crimean style election operation in all of those nations.

If Obama were in power Putin would try to take over Baltic states and have no resistance because NATO under Obama was dysfunctional.  This is why Putin wanted Hillary Clinton:  After the Uranium One deal he knew he could buy her. Russia already has 8% of the world's uranium reserve.  His getting one-fifth of ours was an act of war!  Another war of a new kind!

Mr. Trump is bringing the EU nations up to speed in a way Mr. Obama would never consider. Trump is right for making this a major issue.  In 2018, NATO and the US are upping spending on defense and Russia cannot keep up. Russia is forced to reduce spending because oil prices did not rise as Putin wanted.

Obama cut US defense spending while Russia and China increased and saw opportunities in his reticence.  It was massive US defense spending by Reagan vs Russia, that won the Cold War as Russia cannot keep up.  If we want to win in the classical way we have to outspend competitors, but there is another way Ronald Reagan developed.

The "Star Wars" weapons system was a Reagan deception invented to hurt the Soviets while he believed it would never work.  Our project was very small and underfunded, but given lots of publicity.  The Soviets fell for it, went "full bore" and broke themselves at the same time while we put only enough money into our project to attract curious journalists.  We think Mr. Trump is playing the same game with "Space Force," which would be a brilliant move with a stupid idea.  Set up big project with lots of artwork and no material.

In the Middle East, Iran’s GDP is $439 billion, poor by any measure: now it is tanking! Obama gave them $150 billion, 34% of their GDP!  None dared call it treason, but it was.  Iran cannot compete with the US and Israel.  Israel is much smaller in population, but has a GDP of $320 billion.  With the sanctions Trump is imposing, Iran is in real economic trouble, and cannot afford a war with us, Sunni Muslims and Israel.

The Obama nuke deal intrigued Iran to go on an expansion into Syria, Iraq, Yemen  and Lebanon.  Now Israel and the US are pushing back with the help of  Sunni Muslims.  Restoring sanctions severely cripples Iran and they will likely try to attack shipping in the straits and the Red Sea.  It will end very badly for them now that the Sunnis, Israel and the US are in league.  Sadr is pushing back on Iran trying to control Iraq, and the Iranian people are protesting frequently and ready to revolt.

The entire Mideast situation will change by year end when sanctions return.  Iran runs out of money for expansion.  Merkel and the EU will try to get around the US sanctions to trade with Iran.  The EU has not been paying for their own defense and they want more of Iran's oil and money, but the US economy is expanding and our economic lever is growing.

If oil prices stay where they are, or decline, Russia will hurt and if our third quarter GDP is over 3% the Europeans and Russia will take notice as Trump buries Putin in military spending.  Putin will have to concede and look weak as he may try to build a "Space Force" response.  It took Reagan three years to work the "Star Wars" gimmick knowing all the time it was BS. 

If the result is no pipeline, Russia is in more trouble.  Farm products in the EU will still be a big problem.  Macron cannot give in on this and stay in office.  From here on it is all about China, and how Xi can give in and not lose face.

A very strong US economy and big defense spending will overwhelm Russia and Iran. A strong economy, allowing big defense spending, matters a lot in terms of geopolitics. The price of oil is strategic, not economic alone and the world is a clockwork mechanism.

Adrian Vance
 

Based on the "Ross Rant" of July 19, 2018 submitted by James Rust, Ph.D., edited and expanded by Adrian Vance