Comment by spwa4
10 days ago
The US as a large-scale import nation and so does not need the rest of the world (except perhaps Europe, and only small parts) to keep its markets open to the US.
Even in the European case, Europe would lose much more than the US would if they closed their markets. Plus, a lot of Europe is either very close to breaking point and unwilling to change (Italy), or rapidly worsening into a crash, and unwilling to change (France).
It's Europe that is dependent on a large trade surplus with the rest of the world, financed by dollar loans to 3rd world countries. Now China is taking away their trade surplus, even directly (meaning Europe has a massive trade deficit to China), and indirectly (replacing demand for European goods, famously cars, everywhere). This is causing large-scale job losses in Europe as well as total disaster for government finances across the block, finances that were unhealthy to begin with.
Now Europe and China are unwilling to lend to the rest of the world (because initially that would make very rich Europeans/the CCP a little bit poorer, by raising inflation quite a bit, thereby raising interest rates, which will move government finances from disaster to catastrophe), so if these money flows are to keep going, either the US MUST export to China, which is not happening, or EU and/or China must loan several times their own GDP to the third world, or the EU and/or China must massively increase their dollar holdings (which will, of course, inflate the Euro and Renminbi something awful whichever way it goes). But either WILL happen, because a crash will do that too. Which is what people mean when they say the worldwide system is on a crash course.
I don't think whether a country is an importer or an exporter matters at this point. This is likely going to develop into a matter of national security. Nations cannot allow most of their domestic industries to be destroyed.
If the US doesn't reverse course soon, I think we'll start seeing large-scale closure of international markets to US companies very soon. Even with US retaliation, there is no other option.
Zero chance of that happening. Europe has already largely deindustrialized and it never closed itself to China. Europe also tried to stop buying Russian oil and failed due to transshipment through India.
It's really sad seeing how little so many of us Europeans understand the situation. America and China hold all the cards, Europe holds none. It makes very little that is both unique and strategic. Decades of left wing economic policies are coming home to roost and there's no way to turn the ship around now.
> Europe has already largely deindustrialized
Yawn. If you look at actual production in industry data we're at the peak or close to.
A lot of this yapping is (outside of just boring political droning) due to conflating relative stagnation with "deindustrialization" lol and looking purely at individual countries like Germany, not realizing the most of the recent growth is east and south of it.
Please tell us more about how “left wing economic policies” have destroyed Europe.
Germany, the 3th biggest GDP country is deindustrializing right now.
that def will hurt.
But we still have a lot of capital left, so plenty of ways to adress the elephant in the room. Its just very weird that the current CDU doesn't has any real good ideas.
USA has a certain amount of hands especially IT but otherwise? China runs circles around Europe and USA for everything else.
Btw. CDU was in power for 16 years and is more right wing than center. If you say left wing in sense of not protecting our own markets, i think this was accepted globally.
USA also can't make things anymore.
If no-one comes up with the general notion of a min of like 60% home made, none of it matters because rebuilding this will take a lot of time and money.
And even with a chip factory in USA, they still import most and automate as much as possible.
This might reduce the pressure on USA Loans but will not help the USA people themselves. They will just continue seeing a bigger and bigger split between poor and rich.
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Europe generates ~20% of revenue for US big tech which is a large part of its stock market. With how precariously coupled US growth is to these companies, it absolutely needs that market.
But can the Europe survive without the US big tech. Imagine the worst case US bans any sort of export from big tech to Europe, all startups and even every tech reliant company in EU would collapse without AWS, Azure or Google cloud. Also imagine ban on exports from Apple and Google, from tomorrow onwards both iPhones and Android phones stops working because software services are banned in EU.
It’s so easy to argue on putting tariff on US tech, but we forget how much Europeans depend on it and it would be like shooting one’s own foot.
One could argue that over the time EU can build their own infrastructure and alternative, but who is going to invest for it? The governments? With tax payers money? And who is going to build it? EU is one of the fastest aging continent in the world and what can they offer to attract young talent?
that would actually spark a new golden age.
aws et all are just extracting rent. we all know this.
telcos have some ownership of the android firmware they distribute, and could easily spin up and fund alternatives like replicant or even go full partnership with Chinese versions.
simply moving email providers from Microsoft would make threeletter agencies work much more difficult, and it's a 2min dns change.
any way you look at it, the impact would be positive. i don't think your example is the example you think it is. like trump, you're ignoring agency to every other player in the systems and ignoring some obvious consequences.
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I think this is a bit too deterministic. Even if Europe is in a weak position economically, "the US does not need the rest of the world" seems overstated
I would even argue that the USA is imploding without China.
The normal USA citicen can't afford a car anymore. Either they make it a lot cheaper over there or they have to continue pressue the USA Citicents to accept that they are not allowed to buy cheap China products.
It will be quitei nteresting to see if we will see a global rebalancing of manufactoring and co around the globe for USA, Europe and China or a overall change in system from pure capitalism to something else.
Or the big players start to reinvest into countries again to have customers who can actually afford it again.
This is not how economists think. They see the US, go "Coal mining, check. Iron mining, check, so you can make steel inside US. More than enough people, check. Oil, check. As well as 1000 other things, and mostly, the checks are there", and conclude the US could produce cheap cars. So if it makes sense or it becomes urgent enough, it will happen. Nothing is really preventing the US from doing everything itself, and doing that will improve the balance of trade (while making Americans much poorer).
In other words, the problem of "The normal USA citizen can't afford a car anymore" can be understood in a different way. That can be fixed, by paying people less (yes, less, really, think about it)
The US can drop it's imports and do essentially everything itself.
Right now people can't afford a car because the US is so equal, meaning they can't compete with labor in India or ... But you could "fix" that, by creating more inequality in the US (do what we effectively do now, worldwide, but within the US. Forbid people immigrating from California to New York. Move all banks to New York, build factories in California. Pay people in California 20% what they make in New York for the same job), and production will move back to the US.
And if that offends you, please understand that's exactly what we're doing now. Just replace California and New York with India or China and New York with, well New York, or Washington, and that's exactly the system we have. That's the system the EU is trying to create in the EU.
Doesn't work that way for exports (EU, or China, or to a lesser extent, India). The EU is an export block that's rich getting out competed by export blocks that are poor ... Now THAT is a difficult problem to solve. Not that EU politicians are even trying.
The US is not doing better because US politicians are better than EU ones. They just have a much easier problem to solve. And, of course, both US and EU politicians are failing, but the consequences are much bigger in the EU.
For example, the EU is in fact making it harder to immigrate WITHIN the block, despite "free movement", and is creating massive differences in pay for the same work, which is apparently what socialism stands for:
Typical after-tax pay for supermarket cashier:
Netherlands: 2550 euro (after tax), for 36 hours of work ~ 15 euro/hour
Greece: 1050 euro (after tax), for 40 hours of work ~ 6 euro/hour
Oh and that's not where it ends. You get way more social protection and medical in the Netherlands ... for paying less in tax. The EU is purposefully creating inequality to solve the problem of rich Dutch people not getting richer fast enough. It's only within the same country that there is less inequality in the EU. And, of course, the EU has been making it worse, not better, for about 18 years now. They're not about to stop. The US hasn't even decently started doing this yet.
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Ah yes, the classic “Europe is in decline” narrative favored by Americans. You’d think after more than a decade of that nonsense, people would start to ignore it or at least question its assumptions. Nominal GDP and venture capital funding are not the only things that matter in an economy.
Europe has no tech industry. It's largely floating on the same economy it had 50 years ago. The situation is beyond dire.
Hey! We Norwegians have on average more ownership in US tech companies than Americans!
Everything is going according to plan. When we have majority, we'll move the companies to Norway, but don't tell anyone, this is supposed to be a secret. /s
European economy would implode without trading with US. The biggest economy in Europe, Germany; exports cars, pharmaceuticals and other high end machinery to US and the whole middle class in Germany relies on the jobs from those exports oriented companies
To be fair, it would be a bigger issue for the US. No country is more economically dependant on the rest of the world than the US. The US is living on the USD, and if others stop using it the US would have to do extreme cuts on everything.
That’s true, but every time a country or a group of country tried to do that US has stopped it either strategically or with military force so far.
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Cars are largely not exported to the US from Germany, but built in US factories. German car companies have factories all over the world.
You talk about Europe then only give Germany examples ..? Is that a German only problem ?
Germany is the biggest economy in the Europe and the one that’s holding Euro stable ( France and Italy would soon be only serving their debt). If German economy goes down, then you can say goodbye to Euro
America has to be careful not to push Europe into the direction of China though. And with how Trump acts that might happen sooner than they would like. Bullying like how Trump prefers to do only works until some point. Europe mostly seems to bet on America changing its tune again once Trump is gone but we have to wait and see if the rot in America hasnt set in too deep already.
Even if America pushes EU to be like China, they cannot be China. China is one country ruled by one law and in a unified vision. On the other hand EU is a band of 27 countries with different laws, different problems and different priorities. They couldn’t even agree on a response for Ukraine-Russian war and present a unified front and do you think they would present a unified front against Americans?
I think he meant : to be pushed towards China as a partner while moving away from the US.
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[citation needed]
What the Clown currently does is to push Europe massivly into exactly this.
I can't find it right now but I read news just a few month ago that the EU is working on making it easier to invest into EU similiar to how the Petrodollar currently works.
But if the deindustrialization of germany/EU continues as it currently does and US implodes and China has also issues, we will see how the new world order will look like.
China is for sure more resiliant though. The living standards were never as high as what we as germans are used to and they dont demonstrate.
In the USA people have guns and civil issues and a hard divide between city and country sides.
But as Europe/Germany we should be able to increase our bonds right? Investing into solar/energy transformation; Doesn't matter short term how this will end.
And if AI continues as it does with robotics, we might even see in 50-100 years a complete change in system?
USA Bonds are exploding so they might have overplayed their hand already.