Bombs Away !!!

We are still in isolation throughout the globe but the fight is still on. We all know we cannot eradicate Covid-19 and we are going to live with it for the time being. The subject is complex for so many reasons and the focus in the USA is the economy.

The markets show signs of hope or do they? I am not sure what to make of how corona will evolve as the fingers of blame are starting to get more pointed. Financial markets will bounce up and bounce down as news and media drive sentiments. There will be a cycle of downward pressure as the fight surmounts and the news makes us realize the consequences.

A friend suggested a tariff on Chinese goods, a consideration to consider but what happens when Trump and Xi start to really mud wrestle. This is going to be the spellbinding act of two political titans, one who has a country of magnitude, manufacturing most what we use in our daily lives, and the other a debt-ridden economy with a leader who sees only his tan.

Trump no doubt has in his mind to punish the Chinese and using the World Health Organisation is one way. I understand what Trump is trying to do and I agree the WHO has not managed this pandemic very well. But it is too late to scream and shout about it, or is it? Trump screams out each day, “Twitter-dee-Twitter-day and everyone watches what he has to say.”

The fights between China and America started when the US started a while ago when Trump started to unilaterally impose duties and started a trade war. I understand the importance of becoming independent of China’s global forces, but a little too little a little too late. Yes we can blame Obama, he was a weak leader, but on the other hand, we went from famine to feast.

Some would argue a trade war is not wise right now, or calling each other names isn’t helping them focus on fighting corona. That is true and Trump’s legacy will be tied to the throws of what is coming, a “new war era” and it doesn’t need battleships. The spying carried out is immense as we are all interconnected by social media – the governments love it.

The little rocket man isn’t sleeping, is he? No, he is not, as North Korea is doing it’s part and the Chinese support North Korea’s missiles programs. This is just one of the considerations looming after March 28, 2020, when North Korea launched two missiles and maybe soon to come is Pukkuksong-1 missile capable of striking the United States. The missile is a Submarine-launched ballistic missile and is working to develop rocket ammo.

And little Rocket Man is said to be sick, so his double plays his role as China gains more respect from the ruling family. No China means no North Korea, it is that simple. And Trump’s bombastic trip was historic and lead to absolutely nothing because China has the final say.

Let’s not lose sight of the warheads as leaders are still swimming in corona issues – the warships aren’t all stranded due to corona. The loudmouth American politicians make it seem more obvious the Navy is troubled – “Loose lips sink ships”.

I am not underestimating the US capabilities and they have plenty of firepower. If you wonder why the US supports Israel, they are their very source of aimed technology and have always been from Henry Kissinger’s days.

Now hold on and lets wind the clock back to see where we can end up as history repeats itself. During the 1930s a time of the great depression, Japan sought to solve its economic and demographic woes by forcing its way into China, starting in 1931 with an invasion of Manchuria. In light of atrocities undertaken by Japan in 1937, the Japanese army brutally murdered hundreds of thousands of people in the Chinese city of Nanking.

The United States began passing economic sanctions against Japan, including trade embargoes on aircraft exports, oil and scrap metal, among other key goods and gave economic support to Guomindang forces.

In September 1940, the Axis powers are formed as Germany, Italy, and Japan become allies with the signing of the Tripartite Pact in Berlin. The Pact provided for mutual assistance should any of the signatories suffer attack by any nation not already involved in the war. The capacity to end the war with Japan was in his hands of the Americans and they unleashed the most terrible weapon ever known named a “little boy”

Now let’s not wind forward too quickly and see a scenario which could play out right now: China and North Korea with a Russian Alliance start to get their hopes up. Pressures mount on trade wars and the shift of blame for corona with angry tones and sanctions riling the Chinese. The Russians are fighting for oil stability as is America and this is one of the battles to come. Many believe oil will drop and I see it going up – just a guess.

The shift away from China is inevitable for the USA and Europe and Russia and China continue to see themselves as communist allies, the two last standing with something to say, and North Korea in the background.

American scholar Joseph Nye argues:

With the collapse of the Soviet Union, that de facto US-China alliance ended, and a China–Russia rapprochement began. In 1992, the two countries declared that they were pursuing a “constructive partnership”; in 1996, they progressed toward a “strategic partnership”; and in 2001, they signed a treaty of “friendship and cooperation.”

China incurred the highest trade deficits with the following countries:

  1. Taiwan: -US$117 billion
  2. Australia: -$71 billion
  3. South Korea: -$62 billion
  4. Brazil: -$43 billion
  5. Saudi Arabia: -$30 billion
  6. Japan: -$28 billion
  7. Germany: -$25 billion
  8. Switzerland: -$22 billion
  9. Angola: -$21 billion
  10. Malaysia: -$19 billion

Among China’s trading partners that cause the greatest negative trade balances, Chinese deficits with Australia (up 24.3%), Malaysia (up 9.6%) and Saudi Arabia (up 7%) grew at the fastest pace from 2018 to 2019.

These cashflow deficiencies clearly indicate China’s competitive disadvantages with the above countries, but also represent key opportunities for China to develop country-specific strategies to strengthen its overall position in international trade.

The United States has a trade of $418 billion which is 16.8% of China’s total exports. I can see the US shying away from China but not Europe and the United Kingdom I doubt it as China has strategic investment there.

Trade is all about alliances and at the core is oil as it still plays a major role so don’t take your eye off oil. It represents a good opportunity, especially with tensions mounting. Trump another 4-years means more tension and volatility in the international community. A schoolyard junkie always gets his way until he breaks a leg.