Now, a Trade War — Is a Shooting War Next?

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A popular thesis since the 1930s is that a natural progression exists from currency wars to trade wars to shooting wars. Both history and analysis support this thesis.

Currency wars do not exist all the time; they arise under certain conditions and persist until there is either systemic reform or systemic collapse. The conditions that give rise to currency wars are too much debt and too little growth.

In those circumstances, countries try to steal growth from trading partners by cheapening their currencies to promote exports and create export-related jobs. Continue reading

Oil World Turns Upside Down as U.S. Sells Oil in Middle East

  • Cargo said to be condensate meant for Abu Dhabi’s splitters
  • U.S. exported about 700,000 barrels to U.A.E.: Census Bureau

The United Arab Emirates, a model Persian Gulf petro-state where endless billions from crude exports feed a giant sovereign wealth fund, isn’t the most obvious customer for Texan oil. Continue reading

John Kerry Warns “Dollar Will Cease To Be Reserve Currency Of The World” If Iran Deal Rejected

 

Scaremongery… or maybe the whole point, as Obama’s former chief economist noted, is to lose reserve status. Take That China!!

As Jared Bernstein previously explained…

There are few truisms about the world economy, but for decades, one has been the role of the United States dollar as the world’s reserve currency. It’s a core principle of American economic policy. After all, who wouldn’t want their currency to be the one that foreign banks and governments want to hold in reserve?

But new research reveals that what was once a privilege is now a burden, undermining job growth, pumping up budget and trade deficits and inflating financial bubbles. To get the American economy on track, the government needs to drop its commitment to maintaining the dollar’s reserve-currency status. Continue reading

China, South Korea sign free trade pact

China and South Korea on Monday have signed a free trade agreement that would remove the majority of tariffs between Asia’s largest and fourth-largest economies, whose trade is already worth more than $200 billion.

The pact — largely agreed in November and signed by the two nations’ trade ministers on Monday — aims to gradually remove tariffs on more than 90 percent of traded goods within 20 years. Continue reading

“All the Eurozone Is Capable of Is ‘Stealing’ Growth from Others”

There were other signs of traction. The Eurozone trade surplus with the rest of the world has been setting new records, powered by strong exports, particularly from Germany. This trend kicked off before the euro started tanking a year ago.So on Monday, ECB President Mario Draghi took the opportunity to slap himself and his colleagues on the back for their heroic and bold action, as these things are called, and offered an upbeat assessment of the Eurozone economy. He proclaimed “that growth is gaining momentum.” And he totally nailed it with three out of the four reasons he gave for that growth:

This is due to in particular the fall in oil prices, the gradual firming of external demand, easy financing conditions driven by our accommodative monetary policy, and the depreciation of the euro. Continue reading

The “Catastrophic Shutdown Of America’s Supply Chain” Begins: Stunning Photos Of West Coast Port Congestion

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One week ago, when previewing what may be the first lockout of the West Coast Ports since 2002, we cited the Retail Industry Leaders Association who, realizing that failure to reach an agreement between the dockworker union and their bosses, the Pacific Maritime Association representing port management would lead to devastating consequences for the US retail industry, had several very damning soundbites:

  • “a work slowdown during contract negotiations over the past seven months has already created logistic nightmares for American exporters, manufacturers and retailers dependent on an efficient supply chain. A complete shutdown would be catastrophic, with hundreds of thousands of jobs at risk if America’s supply chain grinds to a halt. Continue reading

“Catastrophic Shutdown Of America’s Supply Chain Looms” As West Coast Port Worker Talks Break Down

For those who have been following the recent ISM reports, one of the recurring concerns of respondents in both the manufacturing and service sector has been the congestion at West Coast Ports – which handled 43.5% of containerized cargo in the U.S and where transiting cargo accounted for 12.5% of US GDP – as a result of reduced work output by the local unions who have been more focused in recent weeks on ongoing wage hike negotiations.

And according to the latest update from the 29 west coast ports that serve as the entry point of the bulk of Asia/Pac trade into and out of the US, things are about to get far worse for America’s manufacturing base, because as RILA reported earlier, talks between the Pacific Maritime Association (PMA) representing port management, and the International Longshore and Warehouse Union (ILWU) officially broke down on Wednesday, and without an agreement, experts have suggested that nearly 30 west coast ports could be shut down within a week. Continue reading

Vietnam, Customs Union may sign free trade agreement in early 2015

HANOI, December 15. /TASS/. The Customs Union (Russia, Belarus and Kazakhstan) and Vietnam have finalised discussions on draft agreement on free trade; they may sign the document in early 2015, Russia’s trade representation told TASS on Monday following the 8th round of consultations between the parties. Continue reading

The new ‘silk road’, a rail link from China’s factories to heart of Europe

FRANKFURT: One of the world’s longest railways — a “modern-day silk road” — covers some 11,000 kilometres (24,000 miles) en route from the Chinese megacity of Chongqing to Duisburg, a key commercial hub in western Germany.

On Saturday, as part of his landmark visit to Germany, Chinese President Xi Jinping visited the last stop on the “Yuxinou” rail line, an industrial feat that promises to revolutionise transport between Europe and Asia.

Duisburg is a steel-making town of around half a million on the confluence of the Rhine and Ruhr rivers that boasts the world’s biggest inland port and is one of Germany’s most important transport and commercial hubs.

Despite the vast distances between them, it takes just 16 days for trains to travel to Duisburg from Chongqing, a sprawling metropolitan symbol of rising China with a population of more than 30 million. Continue reading

China’s New Silk Road Must Pass Through Middle East

JERUSALEM — Three hundred kilometers by high-speed rail between the cities of Eilat and Ashdod, connecting the Red Sea coast to the Mediterranean: They call it the “Red-Med” Project.

Financed by Beijing and launched from Jerusalem, China has revealed its strategy for “West Asia” — the term that the China Shipping Container Lines company uses to delineate the area of operations between Hormuz, Suez and Haifa.

The use of the term West Asia rather than Middle East is no accident — this gives precedence to the size of the economic link with China rather than the ever troublesome geopolitics of the region. Continue reading

Resource-hungry Chinese lead railroad drive in Africa

MOMBASA, Kenya, Dec. 4 (UPI) — The Chinese, investing heavily in Africa to secure its oil and other raw materials for their expanding economy, are spearheading a new era of railroad building to unlock the continent’s interior.This is an echo of the long-gone colonial empires when a century ago British and French engineers first opened up Africa to plunder its riches.

The railroad frenzy is being accompanied by a massive push to build several major ports along the coast of East Africa to accelerate exports across the Indian Ocean, mostly to China, India and Japan, as well as lay down a network of oil and gas pipelines to these ports. Continue reading

Russia attempts to draw Tajikistan and Kyrgyzstan back into its orbit

According to the World Bank, Tajikistan is more dependent on remittances than any other country in the world. Last year migrant workers sent home the equivalent of 47% of Tajikistan’s GDP. Perhaps half of working-age males are abroad, most in Russia. Kyrgyzstan is third in the World Bank’s rankings, behind Liberia. One-fifth of its workforce are migrant workers.

The economic dependence of these two countries gives their former imperial master great influence. Whenever it is unable to wangle a favourable deal for a military base abroad, or it wants to play up nationalism at home, Russia threatens to introduce visas for Central Asians. And though Russia needs cheap labour, Tajikistan and Kyrgyzstan need jobs much more. Continue reading

Asian countries decide to create trade pact for A-Pac

NEW DELHI: Business leaders of Asian nations today decided to promote new free trade agreements and strengthen the existing pacts to use them as building blocks for creating a Free Trade Area of the Asia Pacific (FTAAP).

According to a joint statement issued after the 4th Asian Business Summit, economic partnership agreements and FTAs will bind Asian economies together and promote greater regional cooperation for expanded trade in goods, services and greater cross-border investment flows, besides dismantling of non- tariff barriers. Continue reading

Russia breaks into top 5 world economies, displacing Germany

Russia has overtaken Germany as the fifth largest economy in terms of purchasing power parity, according to the latest World Bank ranking that measures 214 economies based on their 2012 GDP performance.

Russia’s oil and export driven economy is ranked fifth amongst the top ten economies in the world with $3.4 trillion in GDP. In 2011, Germany surpassed Russia in GDP with $3.227 trillion compared to Russia’s $3.203 trillion. In 2005, Russia was in eighth place.

Rank Country Purchasing Power Parity
1 United States $15.6 trillion
2 China $12.4 trillion
3 India $4.8 trillion
4 Japan $4.5 trillion
5 Russia $3.4 trillion
6 Germany $3.3 trillion
7 Brazil $2.4 trillion
8 France $2.4 trillion
9 United Kingdom $2.3 trillion
10 Mexico $2.0 trillion

The report was published last week in an annual ranking of GDP. The World Bank also updated their ranking of countries in terms of gross national product (GNP) per capita, grouping Russia in the ‘high income’ nation block, with individual yearly income of $12,616 or more. Continue reading

The Submarine Race in the Malaccan Strait

Along with the Strait of Hormuz in the Persian Gulf near Iran and Oman, the Strait of Malacca is the world’s most important shipping chokepoint.

Linking the Indian Ocean to the South China Sea and Pacific Ocean, the Malacca Strait is by far the shortest maritime route connecting Persian Gulf energy producers to their largest consumers in countries like China, Japan, and South Korea. Continue reading