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De Omnibus Dubitandum - Lux Veritas

Wednesday, February 1, 2017

What Trump Means for Brexit, China, and the EU

The threat of a US-UK trade pact is very bad news for the EU, but Trump's more mercantilist side spells trouble for the US and much of the world.
 01/29/2017

The easy pattern of prolonged trade negotiations has been rudely interrupted by President Trump. Even before he had become president, his anticipated presence in the White House changed global attitudes and expectations. In Europe, EU officials are wrong-footed, while British trade officials cannot believe their luck.

EU officials were prepared to punish the UK knowing they could prevaricate for ever, because the EU should never, in its view, be challenged by a member state. The UK has been a disruptive member, and other members must be discouraged from following Britain’s exit at a time when there are increasing signs of rebellion by Europe’s "deplorables." Britain, having shocked its own establishment by voting for Brexit, faced the prospect of protracted negotiations with the EU that could, in the words of one British official who has since resigned, take a decade or more.......Read more

My Take - It's common knowledge the Smoot Hawley Tariff bill was what really started the ball rolling downhill to the Great Depression, and then FDR put a jet pack on that slide with his NRA and expansion of government, which he called the New Deal, which wasn't new or a deal.  It was a rehash of all the socialist policies Woodrow Wilson imposed on the nation during WWI, and didn't end until Harding became President. Having said that - there's a big difference between that era and the end of this era, and the era I'm talking about is the Bretton Woods era where Americans opened our markets to the much of the rest of the world, creating trade imbalances that have gone on since the end of WWII. 

Will a tariff now cause the same problems?  Yes and no. 

Unlike the 1920's the rest of the world desperately "needs" to be in the U.S. market, or go belly up.  We don't "need" to be in anyone else's market.  We don't "need" anything anyone else has, including oil.  Will prices go up.  Yes, but so to will manufacturing jobs (we're going to see manufacturing plants returning to America) and income, all of which will balance out over time.  There will be an uncomfortable bump, but that's going to be temporary. 

The rest of the world is heading to financial collapse and we're going to see them become a whole lot more concerned about their neighbors aspirations rather than ours, including military aspirations and the need to acquire energy.   In principle, I'm a free market guy, but the rest of the world isn't playing - by what I and a lot of other people consider - the rules.  An American tariff may be one of the most important and transformative worldwide economic acts in this century, and to America's benefit. 

Let's try an get this once and for all.  There's only one economy the world absolutely needs to be dynamic, successful and effective for any kind of worldwide economic stablity - The American Economy!  If that's profound, the rest of the world has a chance, but they're going to have to make serious changes away from central planning.  And one more thing - no matter what the insane leftists in our society say - we don't owe the rest of  world anything.  We really do need to get that!   

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