The move to punish the UK picks up steam even though such actions will damage the EU far more than the UK. Belgium is the latest country bound and determined to punish the UK. The truth is Brexit is very bad for the EU, and punishing the UK will make matters worse, possibly even starting a global trade war.
Ahead of the vote on Brexit, IMF head Christine Lagarde warned of a prolonged period of uncertainty. After the vote, Largarde said Brexit provided the EU a better opportunity for reform. Today Largarde is certain of disastrous consequences if another large county turns protectionist. In doing so, she pointed her finger at Donald Trump.
The history of mankind is a struggle between the individual trying to retain freedoms and tyrannical governments trying to take it away from him. The EU was created to increase freedoms: the freedom of the movement of goods, capital, and people. As expected, it has devolved into an entity that does just the opposite...
Right now it is all about the immediate fate of the UK, and as Bloomberg explains the "jolted markets" and overnight plunge in global risk assets, "growing anxiety over the prospect of the U.K. exiting the European Union dominated financial markets, sending global stocks down for a third day and the British pound to an eight-week low while boosting demand for havens such as the yen and gold."
A huge global trade war is on the horizon, regardless of whether Hillary or Trump wins the election, as the Obama administration's own protectionists are on the cusp of a “Pyrrhic victory” over China. In 2011, the US put huge tariffs on Chinese-made tires (to the detriment of consumers and the auto industry). China responded with anti-dumping tariffs on GM.
In his latest letter to investors, OakTree Capital's Howard Marks goes political (slamming Trump's tariffs and Bernie's minimum wage machinations), shedding some blinding light on the economic reality of America, the dismal failure (and increasing impotence) of central bankers, and the ongoing "tryanny of the majority" warning that if everyone wants to tax-the-rich, soon there will be no rich to tax. As he concludes, short-term fixes simply cannot create wealth out of thin air (see Venezuela), as Churchill once said "for a nation to try to tax [or stimulate or devalue] itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."
Overnight the Commerce Department escalated its trade war with China when it implemented the latest clampdown on a glut of steel imports, when it announced that corrosion-resistant steel from China will face final U.S. anti-dumping and anti-subsidy duties of up to 450%. China's Commerce Ministry said it was extremely dissatisfied at what it called the "irrational" move by the United States, which it said would harm cooperation between the two countries. "China will take all necessary steps to strive for fair treatment and to protect the companies' rights," it said, without elaborating.
China is livid: as a result of record Chinese steel dumping, the US unleashed what is nothing short of a nuclear bomb in its rapidly escalating trade war with China, by imposing duties of 522% on cold-rolled steel used in automobiles and other manufacturing. In doing so it has effectively rendered Chinese exports to the US unsustainable and will force even more excess Chinese production to remain landlocked within China's borders, making the domestic glut that much worse.