Rick Ackerman writes….
Unfortunately, two predictable things will now happen. China will face a credit crisis and the dollar will likely strengthen. Dangerous times for all of us. it’s not hard to imagine all the new risks that come with turning off the trade taps (if that is the real agenda). We can’t know for certain of course, but Trump is certainly playing from a position of strength. He picked a fight he is going to win. The charts already say the U.S. trade deficit will start falling, so it’s baked in the cake. An added strategic benefit is that Belt & Road [China’s strategy of building infrastructure to facilitate trade growth with Europe, Asia, Latin America, Africa and the Middle East] will be set back a decade or more. We will see if the Chinese are clever enough to see what just happened and start playing ball, or if pride will be their downfall (I think pride will win out). The problem I see is that China can ill afford to monetize all the debt that has been created. We may be about to enter a critical period of Asian corporate bankruptcies.
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