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Syria, North Korea, Economy: chain of events is escalating Quickly

Posted on 21 April 2017 by @patlalrique

 
 
tsx toronto economy economic collapse
 
 
The news have been really busy in the last few weeks and a detailled recap would be useful. Trump has made several moves and declarations that quite changed the world’s geo-political portrait. Many things can be said.
 
Syria
 
The situation of Syria, where the government is in a deadlock in a proxy war against foreign sponsored jihadi groups, has quickly changed when Trump ordered the the bombing of the Khan Sheikhoun military base just out of Homs.
 
Since the U.S. contacted the Russians (and de facto the Syrians) to warn them beforehand they would bomb a specific target in Syria, the situation has not really worsened, unless it is taken in conjonction with all the war threats floating around these days.
 
The Syrians were also aware through Russia they would be hit by a strike and had plenty of time to move their plane out of harm’s way. The military base wasn’t of real strategic importance, except to allow plane to operate in the region, which according to reports they were able to do little time after the U.S. Tomahawk strike.
 
Sure, just few days ago, Trump administration was still saying that the departure of Bachar al-Assad wasn’t a priority and should be decided by the Syrians, so it is quite a u-turn in term of communication. But Trump hasn’t been elected to conduct the same policy than Obama, so for now we can expect the President to take decisions that will make his stance on Syria different from the one promoted by the establishment.
 
Still, Trump’s surprise navy strike on Syria created lots of tensions internationally and sent a big wave of uncertainty on what was a situation where the Assad Government were slowy but surely winning the war and reinstateing stability in the country while the United States were slowly disengaging. Now with the U.S. double stance (listen to Nickki Hailey versus Rex Tillerson), it’s hard to guest what will happen in Syria.
 
North Korea
 
North Korea is in the eye of the Trump administration. It’s open defiance on the world scene and it’s government obscur schemes made them part of Trump’s policy on China.
 
For a long time the U.S. hasn’t directly adressed the situation of the Korean Peninsula to avoid interfering with business with china and have limited their actions against North Korea to economic sanctions.
 
These sanctions are very nefarious for the economy of this isolated country. Thus, the North Korean Regime is putting more pressure on other nations on the international scene by openly threatening to bomb America’s most important cities.
 
Since that Trump made it really clear he was targeting North Korea’s missile program, the regime announced they would accelarate the schedule of missile tests, taking the same hard stance than in the past.
 
I don’t know what Trump’s plan is, but I wouldn’t expect North Korea to do anything differently than they always did. That’s what make them diffficult to deal with in the first place and why Obama wasn’t interested to meddle with it. We need to ask ourselves who are the North Koreans?
 
Obviously North Korea is part of a bigger plan. Trump is putting lots of pressure on world’s politics by going on the edge of war. Even if war is not the main goal of the operation, we have just seen the world leaning toward it a whole lot more. I hope it’s worth it. I guest you don’t risk nuclear war for nothing.
 
The Economy
 
economic base jump economy
 
 
Globally, the economy is not in a really good shape. Western economies, that is Europe and North America, are showing very visible signs of weakness and could meet a difficult 2017 year in a culmination of 16 years or 4 presidential mandates of easy fiscal policies for the financial system.
 
The Fed is currently tightening but it will surely be too little too late, or to slow, anyway. The U.S. central Bank has no choice to proceed carefully and slowly with the hardening of economic policies to prevent the creation of a disrupting event that would blow the house of cards away.
 
The Fed knows it has created an highly unusual economic set-up and doesn’t want to trigger an event that could send the economy into turmoil, although that option seems to become now inevitable. The is now more a question of when, although the Globalists could find a new way to make it last even more years.
 
(Edit: I’ve heard interesting theories that the Fed wants to crash the economy and then blame Trump, and that the President knows it needs to crash and is trying to do a soft ‘landing’)
 
The 2008 economic crisis was never properly adressed and fixed, Obama didn’t want to be considered the bad economy President, then he became the debt President. He allowed the music to keep playing and the big banks to keep doing exactly what they were doing prior-crisis. More complex financial products and other type of derivatives are being traded and filled with government easy-money than before.
 
For the last 16 years the Fed’s accomodating policy and the 0-1% interrest rate have make really hard the funding of pensions and retirement funds. Low rates mean no return on borrowing, and it become then harder for funds to have interesting returns for their invested money at low-risk, pushing them to buy more risky products to get portfolio performance.
 
To put it that way the structural problems that created the last economic crisis events, most recently the 2008 US housing crisis and the 2001 dot-com bubble, are still here and will again trigger major economic events that will impact our way of life, the western standards of living.
Since pretty much every countries on earth has a central bank that looks closely at the U.S. Federal Reserve behavior, policies and handling of the economy to take their own decisions and also end up emulating most of it’s loose policies, everyone on earth is ought to start worrying.
 
Globally
 
 
asia economy debt problem
 
 
Asia, althought it is still probably the best place globally to find real economic growth, as opposed a to our western nations, is also in the sovereign debt train. A train which has become global.
 

As Bloomberg reports, Asian economy carry quite a lot of debts and the tightening of interest rates by the Fed will increase the cost for servicing their debts.
 
 

”The debt binge is spread across companies, banks, governments and households and is inflating bubbles in everything from the price of steel rebar in Shanghai to property prices in Sydney. As the Federal Reserve raises borrowing costs, that means debt is again a concern”

 
Korean Officials are worried about the rates of Korea’s household debts of 1,344.3 trillion won ($1.2 US trillion), most of it in mortgages and ready to default with rates that are programmed to rise in the coming year and the Fed aiming at a 3% rate in 2019.

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