World Trade

End of Empire

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By Alasdair Macleod – Re-Blogged From http://www.Gold-Eagle.com

In last week’s Insight article, America’s Financial War Strategy, I described how the Chinese government viewed the geopolitical scene. It is clear from earlier remarks by the Peoples Liberation Army’s senior strategist, Major-General Qiao Liang, that the view in Beijing is that America perpetuates her empire through the financial benefits to America from America’s actions against other nations, friend or foe. These actions can be either military or financial, or even both. This week, similar views were expressed in Moscow by Sergey Glazyev, a senior advisor to President Putin.

There are many questions that arise from last week’s analysis that I chose not to address, in the interest of focusing on the main theme. It concentrated on geopolitics and economics as the Chinese see them, financial and currency issues mentioned in passing. This article addresses perhaps the most important subsidiary issue, and that is how China visualizes the future, in terms of monetary policy.

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Why Free Trade Is Officially Dead

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By Alasdair Macleod – Re-Blogged From http://www.Gold-Eagle.com

G20 Finance ministers meeting in Baden Baden last weekend agreed, on America’s insistence, to drop the long-standing commitment to free trade from the final communiqué. It is hard to know to what extent America’s position is driven by her autarkic view on world trade, or to what extent it is an acknowledgement of the fruitlessness of paying lip-service to an ideal which is never delivered. Doubtless, it’s a bit of both.

It is certainly true that finance ministers in the advanced nations have always shown a protectionist attitude towards international trade, protectionism that has intensified through attacks on American international corporations, which to a large extent can choose where to pay their taxes. The thrust of research by international NGOs, particularly the Paris-based OECD, has been to decry tax competition; however, even though it has bullied tax-havens to supply tax-related information to revenue-hungry states, it has failed to stop multinationals, armed with teams of tax lawyers, from complying with their statist demands.

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A Trade Deficit Is Never A Problem

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[Fiat Money(paper money) can allow Trade Deficits to continue indefinitely, while under a Gold Standard, the imbalance is corrected automatically. In either case, Trade is good, while restrictions are bad. – Bob]

By Steve Saville – Re-Blogged From http://www.Silver-Phoenix500.com

It’s not just Donald Trump. Many political leaders around the world operate under the misconception that a trade deficit is a problem to be reckoned with. This misconception has been the root of countless bad policies over the centuries.

Trade, by definition, is not an adversarial situation resulting in a winner and a loser. Rather, both parties believe that they are benefiting, otherwise the trade would not take place. Most of the time, both parties do benefit. In general, one side wants a particular product more than a certain quantity of money and the other side wants the quantity of money more than the product. When the exchange takes place, both sides get the thing to which they assign the higher value at the time.

All the hand-wringing about international trade deficits is based on the ridiculous notion that the side receiving the money is the winner and the side receiving the product is the loser, but how could this be? If the side receiving the product was losing-out then it wouldn’t enter into the trade. Furthermore, given that today’s money is created out of nothing, if a trade were to be viewed as a win-lose situation then surely it’s the side receiving the product that should be viewed as the winner.

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China Sets The Stage To Replace The US As Global Trade Leader

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By Frank Holmes – Re-Blogged From http://www.Gold-Eagle.com

Saturday marked the Lunar New Year, the most important date in the Chinese calendar. It’s also the start of the longest holiday at two weeks, during which the largest mass migration of humans occurs every year as families reunite and go on vacations, both domestic and overseas.

2017 is the year of the 10th Chinese zodiac, the fire rooster, one of whose lucky colors is gold. Year-to-date, gold—the metal, not the color—is up 3.5 percent, which is below the 5.7 percent it had gained so far around this time last year. Unfortunately, gold prices won’t find support from Chinese traders this week, as markets will be closed in observance of the new year. If you remember, the yellow metal had one of its worst one-day slumps of 2016 back in October during China’s Golden Week, when markets were similarly closed.

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A Little Perspective On The Post-Election Gold Market

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By Michael Kosares – Re-Blogged From http://www.Gold-Eagle.com

Most of gold’s downside is geared not to the financial decisions of millions of investors around the globe, as the mainstream media would have you believe, but rather to linear computer algorithms geared to the dollar index.  The trading part of the software has been told to automatically place trades at certain correlated price levels and that is why we get these waterfall drops.  The rocket launch trajectories to the upside come when the trading function is told to buy and cover the previous shorts.

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Globalization Faces Challenges

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By John Browne – Re-Blogged From http://www.Silver-Phoenix500.com

For much of the second half of the 20th Century, and even into the new millennium, “Globalization” was the dominant theme used to describe the drift of the world economy. It was widely considered both natural and inevitable that the world economy would continue to integrate and that national boundaries would become less constraining to commerce and culture. And with the exception of the eternal “anti-globalization” protesters, who robotically appeared at large gatherings of world leaders, the benefits of globalization were widely lauded by politicians, corporate leaders and rank and file citizens alike. But a casual glance at the world headlines of 2016 suggests that the belief in globalization has crested, and is now in retreat. What are the consequences of this change?

International trade has existed for millennia. But few modern historians would characterize the trade caravans that crossed the Himalayas and the Sahara as sources of international conflict. Rather, they are widely seen as a useful means to bring goods that were plentiful from one region to other regions where they were scarce. Along the way, routes like the Silk Road in Asia created a great number of positive secondary benefits in culture and politics. But relatively modern developments such as ocean-going sailing ships, modern navigation, and steam and diesel power, have greatly increased the size and scope of trade. Globalism was also boosted rapidly by technological advances in communications, including intercontinental jet travel, fax machines, satellite telephones, the Internet, real time money transfers and massive investment flows to international and emerging markets.

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MUST SEE! (For Americans Too) Brexit – The Movie

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By Bob Shapiro

The UK referendum vote on whether they stay in or leave the EU is this Thursday, the 23rd. This movie lays out the issues from a leave point of view.

Virtually every point is just as relevant to the US. Is continued socialism going to make us richer, even though past socialism has made us poorer? Is more regulation the answer to the problem that previous regulation has caused? Is the rule of law, and our ability to throw out the abusers in the halls of power, more important than the priviledges of an elite which thinks we’re too stupid to run our own lives?

Markets’ Ups and Downs

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cropped-bob-shapiro.jpg   By Bob Shapiro

Stock markets in the US, and those around the world, go up – and they go down. There are various names for the size and speed of the downdraft which inevitably follows an up move. Pullback, correction, crash, and bear market are some of the terms used.

But, why do markets go up and down? “In the long term, markets are a weighing machine. In the short run, markets are a voting machine.” I’ve read that quote numerous times, attributed to several different people.

The gist of it is that, a company’s earnings and growth over the long haul are what will cause one company’s stock to double (or more!) while another’s goes down the toilet. But, since growth and earnings are measured in quarters, years, and longer, in the short run, it is how investors feel  about those fundamentals – market participants’ sentiment – which causes the wiggles along the way. Sometimes those wiggles can be major temporary moves, but they still are just wiggles based on sentiment.

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US Economic Headwind

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cropped-bob-shapiro.jpg   By Bob Shapiro

Economic numbers released today show the US Economy contracting. But some of these numbers understate the damage.

One of the most important statistic is Unemployment. Government figures show that Initial Claims for Unemployment, and Continuing Claims, both were up – to 320,000 and 2,421,000 respectively. While single week changes certainly can’t demonstrate a trend, there has been a significant increase from just a couple of months ago.

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China Just Crossed A Landmark Threshold

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By Frank Holmes – Re-Blogged From http://www.silver-phoenix500.com

Back in July 2013, the think tank Heritage Foundation predicted that China’s outbound investment “could very well exceed $80 billion [by the end of the year] and is on course to breach $100 billion by about 2016.”

With all due respect to the Heritage Foundation, China just beat the forecast by a couple of years, exceeding the $100 billion mark at the end of 2014. For the first time, in fact, China invested more capital outside its own borders than it did inside. As legendary Major League Baseball player and coach Yogi Berra once quipped: “It’s tough to make predictions, especially about the future.”

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