Eric Peters: In The Global Trade War, America Has "All The Cards"

In addition to Eric Peters earlier take on why the "long season of central bankers has ended", here is some additional free-form stream of consciousness from the One River CIO on the current state of the global trade war, and what may happen next.

A Game of Cards

“From now on, we expect trading relationships to be fair and to be reciprocal,” announced President Trump, smiling, a slight blush. In his hand, a Royal Flush, his life history a gambler’s bluff.

“These tariffs are an affront to the longstanding security partnership between Canada and the US and to the thousands of Canadians who fought and died alongside their American brothers,” said young Justin Trudeau, announcing reciprocal tariffs, three Queens in his hand.  And Trump reflected on his early property developments, bluffing his way into the big game. “That was hard. This is not,” whispered The Donald.

“Mexico’s position regarding cooperation with the US on trade, migration or security will not vary because of offensive rhetoric or unilateral and unjustified measures of this kind,” said Foreign Minister Videgaray, a pair of Jacks.

“The US now leaves us with no choice but to proceed with a WTO dispute settlement case and the imposition of additional duties on a number of imports,” said EU Commission President Juncker, a Full House. But of course, the Europeans are hopeless at poker; 28 people cannot play a single hand, each attempt sparks endless argument.

“No leader on earth could play their way out of a hand with four bankruptcies. Stormy. Hollywood Access. The Paris Accord. North Korea. Or Iran’s nuclear deal,” thought Trump, enjoying the high roller table immensely.

“When it comes to the problems in Chinese-US trade and business both sides should take a sincere attitude in the spirit of equality and mutual respect to use dialogue and consultations to seek a mutually beneficial win-win solution,” said China’s foreign minister, in his hand a Full House, strong but a loser.

You see, America has the world’s biggest trade deficit, debt, central bank, economy, reserve currency, global payment system (SWIFT), military. “I got all the cards. I win, they all lose.”

* * *

Boring Crap:

He browsed the White House website, bored. And found a May 29th factsheet titled: President Trump is Confronting China’s Unfair Trade Policies. He read these headlines: (1) YEARS OF UNFAIR TRADE PRACTICES: China has consistently taken advantage of the American economy with practices that undermine fair and reciprocal trade. (2) UNDERMINING AMERICAN INNOVATION AND JOBS: China has aggressively sought to obtain technology from American companies and undermine American innovation and creativity.

The headlines continued. (3) STANDING UP TO CHINA’S UNFAIR TRADE PRACTICES: President Trump has taken long overdue action to finally address the source of the problem, China’s unfair trade practices that hurt America’s workers and our innovative industries. (4) PROTECTING AMERICAN INNOVATION AND CREATIVITY: President Trump has worked to defend America’s intellectual property and proprietary technology from theft and other threats.

White House factsheets are so boring compared to tweets. But he took a few minutes to read the details. Things like: China’s industrial policies, such as its “Made in China 2025” plan, harm companies in the US and around the world. The cost of China’s intellectual property theft costs US innovators billions of dollars a year, and China accounts for 87 percent of counterfeit goods seized coming into the US. China’s aggressive technology policies put 44 million American technology jobs at risk. And by the end, he was no longer bored.

* * *

SWIFT:

“Total has 60 days to negotiate with the US administration while the French government can also use these 60 days to negotiate with the US so that Total can stay in Iran,” said Iran’s oil minister Zanganeh. “If the US does not agree with Total staying in Iran, China will replace this company or China’s state-owned CNPC will take over the project,” continued Zanganeh. You see, Total signed the first major post-sanctions oil exploration deal with Iran. But the renewal of US sanctions means that America will devastate Total if they carry on.

“Considering the latest developments, I guess it’s too early to say what our plans about Iran will be. For the moment, basically, we have everything on hold,” announced Lukoil, Russia’s 2nd largest oil company.

America’s April 9th sanctions on Russia’s aluminum giant Rusal had halved that company’s market cap in one day. And with the US now eyeing the isolation of Iran via cutting its banks off from the global SWIFT payment system, the Russians are steering clear. But what will the US do to Chinese companies/banks if they defy our policies?

 

* * *

Generals:

“Despite China's claims to the contrary, the placement of anti-ship missiles, surface-to-air missiles and electronic jammers across the South China Sea is tied directly to military use for the purposes of intimidation and coercion," said Defense Secretary, General “Mad Dog” Mattis, our greatest military strategist, quietly running America’s entire foreign policy.

China’s Gen He Lei responded, “Any irresponsible comments from other countries cannot be accepted. As long as it is on your own territory you can deploy the army and you can deploy weapons.”

There are consequences that will continue to come home to roost if China does not act more transparently and cooperatively in the region,” continued Defense Secretary Mattis. And then pivoting to Beijing’s strategic Belt and Road initiative, Mad Dog warned of “much larger consequences in the future when nations lose the rapport of their neighbors, when they believe that piling mountainous debts on their neighbors and somehow removing the freedom of political action is the way to engage with them.”

Comments

greven40 Sun, 06/03/2018 - 20:14 Permalink

" “These tariffs are an affront to the longstanding security partnership between Canada and the US and to the thousands of Canadians who fought and died alongside their American brothers,” said young Justin Trudeau..."

Ha.  At least he's admitting Canada fights for money and kick backs.

edotabin Zero Point Sun, 06/03/2018 - 22:45 Permalink

Oh they will. Just wait.  If it turns out that China and Russia take a softer stance, we will be flooded with articles about India buying the new Russian "anti-cyclo-hamba-phobo-tronic" missile that can erase shit stains in a supersonic fashion from 18,000 miles away. India will be the new poster boy of the multi-polar world.  

It's whatever fits the narrative.

 

In reply to by Zero Point

brianshell NidStyles Sun, 06/03/2018 - 21:00 Permalink

How did it all start?

The socialists cried that the capitalists were to blame for everything. So they cranked up the taxes to show them a lesson. Corporations wanted to survive so they went offshore where they were welcomed.

The people who voted for the socialists wanted something for nothing.

Collectively, we the voters are to blame. We have seen the enemy and it is us.

Beware the seven deadly sins. They are as relevant today as ever.

In reply to by NidStyles

edotabin Lordflin Mon, 06/04/2018 - 01:45 Permalink

lol. China rules the world and then they throw in a $30 Trillion banking debt article every now and again. It's turning into a shit show.

I'm not a fan of the way things work. There are flaws. Many flaws are serious. I'd just rather see something constructive be done about it instead of trying to jam narratives down peoples' throats.

In reply to by Lordflin

Escrava Isaura brianshell Sun, 06/03/2018 - 21:08 Permalink

Socialists? Deadly Sins?

Are you sure that you know what you're talking about?

About a week back Trump was working in saving ZTE, which is a Chinese electronic company from collapse just two days after Beijing state bank invested half billion dollars into a Trump development project in Indonesia. And a week before that Ivanka Trump's fashion business won approval for trademarks in China.

 

In reply to by brianshell

Winston Churchill SWRichmond Sun, 06/03/2018 - 21:45 Permalink

Not when the bank is hedged with 40000+tonnes of gold,with another 40000+tonnes in Russia as backup.

I don't think you or the writer have the first clue as to who holds what cards, or even what the game is.

China and Russia will be fine when the dust settles from the pile of rubble that was the USA.

They've been planning this for decades, not months.You really think this scenario hasn't been gamed to death ?

In reply to by SWRichmond

Winston Churchill SWRichmond Sun, 06/03/2018 - 21:55 Permalink

Not when the bank is hedged with 40000+tonnes of gold,with another 40000+tonnes in Russia as backup.

I don't think you or the writer have the first clue as to who holds what cards, or even what the game is.

China and Russia will be fine when the dust settles from the pile of rubble that was the USA.

They've been planning this for decades, not months.You really think this scenario hasn't been gamed to death ?

In reply to by SWRichmond

francis scott … vato poco Sun, 06/03/2018 - 21:31 Permalink

              why have all the deals that came before

              Trump, deals where we came in last?

 

We arranged it that way.  We agreed to come in last to get the business.  To keep those countries trading with us forever.  They knew they were coming in first and they continued to let us make those kinds of deals.  We built bases there. And stationed soldiers in those countries, who spent their paychecks there and then those countries agreed to spend 2% of their GDP on weapons, when we made most of the good stuff (or so we told them). 

 

We didn't care if we came in last because we could borrow forever and

WHEN OBAMA TOOK OFFICE, WE THOUGHT WE WOULD PRINT FOREVER. 

 

 

"Of all sad words of tongue or pen, the saddest are these, 'It might have been."

                                                                   John Greenleaf Whittier 

In reply to by vato poco

Zero Point vato poco Sun, 06/03/2018 - 21:38 Permalink

Politics in the US (and indeed most of the western world) is a millionaire factory. The income from politics itself is relatively modest, so we're left to wonder where all this wealth comes from. Given the historically large wealth inequality now seen around the world, I don't think we need Sherlock Holmes to crack this mystery.

In reply to by vato poco

rtb61 vato poco Mon, 06/04/2018 - 02:46 Permalink

It is simple really. Compared to any single country US winning in some competitive stakes whilst it collapses in on itself, basically consuming itself alive to compete against everyone else.

So whilst it wins against any single country it most definitely losses against combinations and as the US is basically attacking every other country in the world either economically, diplomatically or via straight up war, the rest of the world is uniting and united the US is shite compared to the rest of the world. The only metric the US wins versus the rest of the world combined would be, number of people murdered by law enforcers, the most prisoners, the largest debt, the most military bases.

Sanctions are coming and they will hurt and it wont be the US applying them, it will be the US suffering under them.

America has no cards, just bundles and bundles of receipts for IOUs it has handed out, want the easiest, most reliable and accurate measure of a country, look no further than it's infrastructure for a taste of reality currently D+ or was it D- average. That's the power of the USA and it looks pretty bad and pretty weak.

In reply to by vato poco

Jung vato poco Mon, 06/04/2018 - 03:33 Permalink

Maybe because the US has lived on free dollars by making it the only currency used for significant trade: that kind of "free" money is also not equitable.

So, other countries get out of the card game and create their own "Swift" system and opt for de-dollarization. Why should one have to submit to a Mafia system of the US extorting (by so-called "sanctions") money and profit for their endless selfish "interests".

Time for real sanctions of the US for their infinite series of crimes. 

Difficult to swallow for Americans that they are not always the Mafia bosses, that's all.

In reply to by vato poco

Scipio Africanuz vato poco Mon, 06/04/2018 - 05:25 Permalink

Don't be deceived, USA has piss poor cards! It's not the cards that matter, it's the PLAYER! When this game is over, either Trump will be acknowledged as the greatest American president, or the worst, depending on how he plays his hand.

George Washington is acknowledged as the primary founding father of the American Republic, because it was his victory on the battlefield, that allowed the other founding fathers to go to work on designing the Republic.

Abraham Lincoln is acknowledged generally as the secondary father, who held the Union together, because of his victory on the battlefield.

Trump, if he can deploy his "natural" intelligence, just might earn the cognomen of the tertiary father of the American Republic, if he can dismantle the treasure-draining imperium, and restore the USA to Republican values. To find out what that means, go read the constitution, and the reason given for the type of government adopted. Something about life, liberty, and the pursuit of happiness.

The game has begun, the battlefield is different, it's the battlefield of ideas but if it goes kinetic, we're done as a species. So again, whatever you do, avoid the GUNS of AUGUST!

Let the game continue, let us see, those with balls of titanium, hearts of steel, and those without balls, and timorous hearts!

To the winners, go the spoils! We'll see now, whether mankind can cooperate to achieve mutual objectives...

In reply to by vato poco

peddling-fiction Winston Churchill Sun, 06/03/2018 - 22:19 Permalink

When mentioning Ecuador, I mean the real grip that the U.S. has on Latin America.

This grip goes far beyond the Americas, if you understand the extent of the SWIFT banking system, as just one small example of an effective way to impose its might.

If you have any doubts about who controls what, ask Venezuela how they are doing, and how their allies are helping them robustly.

How is your painting progressing, Winston?

In reply to by Winston Churchill

TrustbutVerify greven40 Sun, 06/03/2018 - 22:03 Permalink

In regard to Canadians fighting next to its American brothers...The opposite is also true...The US fought alongside its Canadian brothers.  Why isn't the "affront" considered in the inverse? 

We're close neighbors.  Agreed  But its the issue at hand that matters.  Does the issue have merit?

Larger than this issue is the fact that third world slave labor around the world has swallowed up so much manufacturing around the world differences between first world countries like the US and Canada have to be addressed, causing tension.  Though decades of drunken sailor spending and the feel good/don't address the real problems policy of implementing incremental a socialistic creep has kept us from seeing the truth of the third world slave labor challenge.  

So, ultimately, in large measure the global suction of third world slave labor manufacturing, leads to fewer and poorer paying first world jobs, which leads to feel great about how you saved a few bucks on foreign made products, which over time are so often made to wear out sooner, but now quality first world manufacturers are increasingly harder to find, with even first world "quality" name "brands" goods countries of origin being third world manufacturers, with lower requirements for critical thinking of various employment, which leads to lower education levels and daily challenges to keeps one sharp, which spiils over to others around you, increasing, disillusion and drug use, and a disconnection to what real work is, which leads to excellent opportunities for politicians to offer various forms of "help" - in return for votes to keep the dependence going, which again disconnects the population from self-motivation, self-respect, which builds and maintains families, neighborhoods, communities, cities, states...and the country.  

 

 

In reply to by greven40