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The Upcoming Trade War Between The U.S. And China Will Be The Biggest In The History Of The Planet March 20, 2017

Globe At Night - Public DomainThe United States and China are the two largest economies in the world by far, and the upcoming trade war that is about to erupt will be cataclysmic for both sides.  The Trump administration and the Chinese government are both gearing up for a prolonged trade war, and this is going to have very severe implications for the entire global economy.  During the campaign, Donald Trump repeatedly stated that we “can’t continue to allow China to rape our country”, and he was quite correct about that.  Over the past ten years, the U.S. has run a trade deficit of over $2 trillion with China, and as a result of imbalanced trade we have lost tens of thousands of manufacturing businesses, millions of good paying jobs, and hundreds of billions of dollars of tax revenue.

So clearly something needs to be done to balance our trade with China and other countries.  But the situation must also be handled delicately, because trade disruptions could bring substantial short-term economic pain.

Prior to winning the election, Trump threatened to unilaterally impose a 45 percent tariff on Chinese exports.  Unfortunately, China is not just going to sit there and take whatever Trump throws at them.  Every single time the U.S. has imposed tariffs on Chinese goods in the past, China has responded by slapping tariffs on U.S. goods.

And this time around, the Chinese are already preparing a very harsh response even though Trump has not officially made his move yet…

The policy advisers believe the Trump administration is most likely to impose higher tariffs on targeted sectors where China has a big surplus with the United States, such as steel and furniture, or on state-owned firms.

China could respond with actions such as finding alternative suppliers of agriculture products or machinery and manufactured goods, while cutting its exports of consumer staples such as mobile phones or laptops, they said.

Other options include imposing tax or other restrictions on big U.S. firms operating in China, or limiting their access to China’s fast-growing services sector, they added.

When this coming trade war erupts, economic activity will be reduced significantly.  And considering the fact that U.S. economic growth is projected to be about one percent in the first quarter of 2017, that could be more than enough to push us into a deep recession.

Some of the biggest U.S. exports to China include airplanes, autos and agricultural products, and the Chinese are ready to attack on all of those fronts.  The following comes from CNN

Here’s what Global Times, a newspaper backed by the Communist Party, had to say about how Beijing would respond to tariffs of 45%:

“A batch of Boeing orders will be replaced by Airbus,” the paper said Monday. “U.S. auto and iPhone sales in China will suffer a setback, and U.S. soybean and maize imports will be halted.”

But once again, something must be done for the long-term good of our country.  We have been allowing the Chinese to flood our shores with super cheap goods, but meanwhile they have already been hitting our products with ridiculously high tariffs.  Here is just one example

U.S.-made cars exported to China face tariffs of at least 25 percent, including American-made Cadillacs. The American-made Jeep Grand Cherokee costs $27,490 at U.S. dealerships and cost at least $85,000 in China.

What we have with China today is very far from “free trade”, and if they want to trade with us they need to do so on a level playing field.

But China will never allow that to happen.  As Donald Trump has correctly stated, they have been “raping” us for years, and they are going to fight very hard to keep anything from upsetting the status quo.

Trump has got to do something for the long-term good of the U.S. economy, but he has also got to try to find a way to avoid a major trade war, because a major trade war would be exceedingly painful for both countries.

Most Americans don’t realize this, but more iPhones are actually sold in China than in the United States.  And it is being projected that Boeing will sell nearly 7,000 airplanes to China over the next decade…

By the end of 2015, Chinese consumers bought 131 million iPhones. The total sales to U.S. customers during the same period stood at only 110 million. And iPhones are only a small part of U.S. exports. Boeing, which employs 150,000 workers in the U.S., estimates that China will buy some 6,810 airplanes over the next 20 years, and that market alone will be worth more than $1 trillion.

So what happens if all or part of that economic activity goes away?

According to one study, in the short-term millions of U.S. jobs could potentially be at risk if a major trade war happens…

“Millions of American jobs that appear unconnected to international trade—disproportionately lower-skilled and lower-wage jobs—would be at risk,” according to the PIIE study.

And of course a major trade war would hit American consumers very hard as well.

Just think about it.  When you go into a Wal-Mart or a dollar store, are more of the products made in the United States or in China?

A trade war would hit all of us in the wallet as the cost of living goes up.  And considering the fact that about two-thirds of the country is essentially living paycheck to paycheck, that would not be a good thing.

So yes, our trading relationship with China definitely needs to be rebalanced, but Trump needs to find a way to make this transition as minimally disruptive as possible.

A major trade war is just one of the “black swans” that could push us into the kind of economic nightmare scenario that I have been warning about for a very long time.  And sometimes a trade war can serve as a prelude to a real war.  The South China Sea has become a major sticking point between the U.S. and China, and the Chinese are getting ready to cross one of the “red lines” that Barack Obama established while he was still in office…

Beijing has plans to start construction on the disputed Scarborough Shoal this year.

China has reclaimed land in both the Spratly and Paracel Islands and constructed military outposts, but it has been hesitant to start construction on the Scarborough Shoal. Xiao Jie, the mayor of Sansha — an administrative base for China’s South China Sea activities masquerading as a city — said this week that China intends to construct environmental monitoring stations on a number of territories in the South China Sea, including the Scarborough Shoal.

So how will Trump respond when construction on Scarborough Shoal actually begins?

It will be very interesting to watch how that plays out.

The relationship between the United States and China was starting to deteriorate badly even before Donald Trump was elected, and it is very easy to see how it could totally break down in the months ahead.

And considering how interconnected the global economy is today, the United States and China could easily end up dragging down everyone else along with them.

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The Global Famine Begins: UN Announces That The Worst Food Crisis Since World War II Is Happening Right Now March 19, 2017

Horse Famine - Public DomainWe always knew that this would start happening.  Earlier this month, I wrote about the severe economic problems that are plaguing South America, but up to this point I have neglected to discuss the horrific famines that are breaking out all over Africa.  Right now there is a desperate need for food in South Sudan, Somalia, northeast Nigeria, Eritrea and Kenya.  And Yemen, even though it is not technically part of Africa, is being affected by many of the same factors that are crippling nations all over eastern Africa.  The United Nations says that more than 20 million people could die from starvation and disease if nothing is done.  When I write about economic collapse, this is the kind of thing that I am talking about, and we are starting to see alarming conditions spread across the globe.  Many believe that we could never possibly face this kind of food crisis in the western world, but unfortunately wishful thinking will only get you so far.

The United Nations was formed in 1945, and the UN has just announced that what we are facing this year is “the largest humanitarian crisis since the creation of the UN”.  The following comes from a CNN article entitled “20 million at risk of starvation in world’s largest crisis since 1945, UN says“…

“We stand at a critical point in history. Already at the beginning of the year we are facing the largest humanitarian crisis since the creation of the UN,” UN humanitarian chief Stephen O’Brien said Friday.

Now, more than 20 million people across four countries face starvation and famine. Without collective and coordinated global efforts, people will simply starve to death. Many more will suffer and die from disease.”

It would be hard to overstate the level of human suffering that we are witnessing in many parts of Africa at this moment.  In Somalia, the UN estimates that more than 6 million people are in desperate need of food aid

As Somalia inches closer to a calamitous famine, the prospect of utter devastation and colossal loss of human life is once again becoming an imminent reality. The humanitarian situation in Somalia is deteriorating by the day with up to 6.2 million people in need of urgent aid. People across Somalia have been forced to walk hundreds of miles in search of food, water and shelter- with women and children disproportionately affected. Over 300,000 children under the age of five are severely malnourished, with over 200,000 more children at risk of acute malnutrition.

In South Sudan, close to half the population is in dire need of assistance, and things have gotten so bad there that people will literally eat grass if they can find it

Across South Sudan more than one million children are believed to be acutely malnourished and UNICEF have said that if urgent aid does not reach them, many of them will die. “There is no food, we eat anything we can find,” one South Sudanese mother told ITV. “We will find grass, we will eat it. That’s just the way it us for us now.”

Over in Yemen, there are about seven million people in need of food help, and authorities are warning that if nothing is done “millions of children” could starve to death

“The numbers affected are absolutely extraordinary,” said Mark Kaye, Save the Children’s Yemen spokesperson.

“We keep on talking about a country that’s on the brink of famine, but for me these numbers highlight that we’re at the point of no return. If things are not done now we are going to be looking back on this and millions of children will have starved to death, and we’ll all have been aware of this for some time. That will shame us as an international community for years to come.

Eritrea was not specifically included in the recent UN alert, but it should have been.  Much of the country has been hit by a crippling drought, and approximately half of all children in Eritrea are stunted

But we cannot understand why Eritrea is not included in the appeal. Unicef has confirmed what we know from our friends and families inside the country. In a report in January, the agency said that the El Niño drought has hit half of all Eritrea’s regions. Acute malnutrition is widespread. As Unicef put it: “Malnutrition rates already exceeded emergency levels, with 22,700 children under five projected to suffer from severe acute malnutrition in 2017 … Half of all children in Eritrea are stunted, and as a result, these children are even more vulnerable to malnutrition and disease outbreaks.

We have been warned that there would be famines in diverse places in these times.  But here in the western world we tend to be lulled into a false sense of security by our comfortable lives, not realizing that the massively inflated standard of living that we have been enjoying has been fueled by the largest mountain of debt in the history of the planet.

In Kenya, a national emergency has been declared due to drought and famine.  For those of you that are parents, what would you do if your children were crying out for food but you didn’t have anything to give them?  The following story from Kenya is beyond heartbreaking…

Emmanuel Ayapar is three years old and can no longer walk. The flesh on his legs, which dangle from his mother’s hip as she carries him around, is wasting away.

He seems listless and sad, tongue flicking repeatedly in and out of his mouth.

‘We do not have enough food,’ said Veronica, his 28-year-old mother. ‘We eat only once a day.’

The little boy is suffering from severe malnutrition and is at risk of starving to death. He weighs just 15lb – half the typical weight for a boy of his age.

I don’t even know what to say after that.

In the western world we can be so incredibly self-absorbed that we don’t even realize that children are literally starving to death on the other side of the planet.

Hopefully those of us that live in “wealthy” western countries will step up to the plate and aid those in need, and hopefully this crisis will also help us to understand that we need to prepare for the day when things get difficult in our own nations too.

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