Tan Kin Lian's Blog: A trade war in the horizon?

Tuesday, October 04, 2011

A trade war in the horizon?

Will there be a trade war? Here is an event that may lead to this disastrous outcome. Some analysts think that the US government and China will work out a solution to avoid a trade war. But in a conflict, nothing can be taken for granted. Things can go wrong.

9 comments:

War monger.... said...: Throughout mankind, wars have been started and battled over territories and belongings.Sometimes over the silliest of things too.

It is in our blood. Not everyone is passive and violent free.We are animals. We beleive that we are higher order above the rest of animals. But still animals nonetheless.

War is good. the case for war is compelling:

Reduce population
Increase innovation
Increase focus on raw materials
Increase bonding
Increase discipline
Reduce waste

Anyway, the current situation is not peacefull either.. in fact its chaotic! so what is the difference?
War is so much more purposefull, with very definite outcomes.. it lends much more confidence then what is happening now.; October 04, 2011 10:44 AM
yujuan said...: As we see it, trade wars between US and China would benefit Singapore, as more manufacturers would relocate factories to Singapore and SEA.
So for people with money on standby, prepare to invest in industrial reits listed on SGX, watch the STI, already predicted it would drop to 2500 level, if this is broken, next support will be 2,300 and the next 2,000.
More factories mean more lower class PRC would be let in by the Govt, and there would be a larger gap of lower classes growing in Singapore. Therefore retail properties, even HDB shophouses near MRT stations, would be great investment opportunites, esp with the curb of vehicle populations as revealed by Transport Minister.
Trade wars would benefit Singapore.; October 04, 2011 12:17 PM
Tan Kin Lian said...: We have to be careful about a trade war between two countries. It will spread to other countries. This is how the great depression of the 1930s occurred. The recovery was made possible by World War 2. The problem is that a future war will be more disastrous and should be prevented.; October 04, 2011 12:51 PM
Tan Kin Lian said...: We have to be careful about a trade war between two countries. It will spread to other countries. This is how the great depression of the 1930s occurred. The recovery was made possible by World War 2. The problem is that a future war will be more disastrous and should be prevented.; October 04, 2011 12:51 PM
Tan Kin Lian said...: Here is the response from China. It is quite dangerous to the global economy:
http://www.cnbc.com//id/44766724

If there is a conflict, imagine what will happen if China decides to stop funding the US twin deficits or to sell the existing holdings of the US Govt bonds. It can lead to a collapse of the global system.; October 04, 2011 12:55 PM
War Monger... said...: There are times when starting with a clean slate is far more effective.

In the process, death is inevitable.

You & I would of course not want to die! But lets allow where the knife falls..the alternative is not pretty either: slow painful death with escalating unrests, poverty, unhappiness.. trying to stop it is kicking the can down the road..

We can visit Ms Ivy Singh-Lim and help water and weed her vegetables; October 04, 2011 1:30 PM
Koh Lip Wee said...: I personally think that a full blown trade war remains remote.
These China-bashing accusations from U.S are largely due to its internal political pressure and dismal economic performance.

We are likely to see discrete but carefully calibrated trade sanctions, retaliation import tariffs or even domestic trade subsidy etc in months to come (i.e. a more civilized version of economic protectionism?).

As the greatest debtor of U.S., China is in a catch-22 situation.
Any sharp depreciation of greenback will bear detrimental effect to China's forex reserves balance and international investment portfolio (which is largely transacted with greenback).
China should speed up her capital markets reform and consequent internalisation of yuan.
I am fairly confident that we are likely to see a successful 'capitalistic-communist' China in next 5-10 years.

Still as world sole superpower, U.S. can directly intervene international forex markets via its unilateral economic policies below:
a) QE3? or even buying up more domestic bonds to further ease their monetary policy
b) collaborate with Euro block do pursue a 'Plaza Accord 2' on China (they did it on Japan in 1985) --> this is my personal guess

In order to pursue a more stable world economy with multi-polar balance of powers, we need to see a stronger BRIC economies.

Until we have a stronger and more resolve political leadership who are willing to take a long term view and painful correction to the present global fiscal weakness, any monetary policy intervention is just simply buying time with no real and sustainable economic improvement. This also explains why economic boom-bust cycles are more compressed these days!!!!!!!

In fact, global fiscal position have been deteriorating as early as dot-com bubble era but no policy maker dare to admit.
From Greenspan to Bernanke, these monetarist economists have skirted real economic issues by simply printing fiat money and control interest rate.
No bold action was done on fiscal economic domains (i.e. saving, consumption and investment / employment etc).

Till we get there, the world is now surviving with a "declining superman (U.S.)", an "aging old lady (Euro)", as well as an "inward looking frog (Japan)".
It is an ugly pageant contest with no winner : (

Lip Wee; October 04, 2011 11:26 PM
yujuan said...: Dun allow the mainstream papers to make you believe that the US wants to use China as a bogeyman for next year's Presidential election.
In actual fact it's China herself who wants to make US as the bogeyman.
It's politics at play. China dunno how to handle the big economic bubble
created, it's political suicide if the CP of China tries to burst it, she's relying on Obama to do the dirty job, then China's leaders could taiji the blame on America. Obama is aware of China's malicious intention, but has already started to hit China slowly, by increasing margin requirement
on commodities' futures, starting with copper and progressing to others.
As for Singapore, our Govt is sitting on the fence, they dun wan a trade war either, but if happens,
the catastrophic event would also prick Singapore's bubble also, and this would give them the opportunity also to taiji themselves from blame, by pointing fingers at world events beyond the Govt's control. Thus China and Singapore are actually bed fellows.
But GIC and Temasek would lose tons of our money abroad.
Best to burst the bubble sooner than later, it would give our Govt enough time to pick up from the ashes to meet the challenge of the GE 2016.
The scenario is very frightening, but entirely beyond our control of little insignificant people like us. Could only be bystanders. Just
reduce personal debts as protection. Ammaggedon for the world in 2012?
Almighty God bless us.; October 05, 2011 12:58 AM
The truth,nothing but.. said...: Aiyah! just becos ST index, NASDAQ and euro index drop everybody shiver.

Why?.. not enough money? if you have enough money, why you worry? If you park all your money in shares, then you are ID 101T.

So many book, gurus, and even professsional financial planners ( not half past six insurance ppl ok?)
all tell you to have mix portfolio.

You must have at least 5 years of fat to last. Did'nt know that?
How long did WW2 last?

How long did depression last?
All countries affected?? I bet you, you do not know that SOME countries were not affected by the depression at all.

Not all countries were affected by WW2 either!

So, please do not spread half truths... like PAP; October 05, 2011 4:18 PM