Trade war heading to irreconcilable divorce.

 MULTIPOLAR ECONOMIC SYSTEM WELL UNDERWAY

A REAL NEW WORLD ECONOMIC ORDER

Everyday we see more evidence that the estrangement between the west and the rest of the world is heading for the creation of a separate and independent economic system.

Last week we saw the roll out of a separate settlement system based on banks in China, Brazil and Russia. This will allow international settlements between BRICS countries in their own currencies and seperate from the Western dominated SWIFT system. This rapid development, which was estimated to take years to accomplish, will undoubtedly be soon expanded to include much of the eastern and southern world.

At the same time we see sanctions and trade practices leading to retaliation and a withdrawal from any idea of free trade in the future. While both may very well operate separately and still trade with each other, it will eliminate any use of trade and finance from being used to intimidate and damage others in the future.

While some of these trends were already underway, the Russian/Ukraine conflict quickened the trend. When the idea of punishing Russia by sanctions and refusal to buy energy from Russia was used as a political weapon, other markets refused to adhere to the sanctions, while damaging Russia, they may be catastrophic for western Europe.  Russian oil and gas sales have continued to be made, just to others.

When Germany withheld the sale of autos to Russia, they were replaced by Chinese and Russian made autos. When the U.S. decided to restrict sales of silicon chips to China, they now make their own chips, and undersell the U.S. manufactures in price and in equal quality. These retaliations will inevitably damage western companies in the long game.

When the German government issued polices to German companies to restrict sales to China, China cancelled a $250 billion purchase of Autos.

China has cancelled huge contracts for the purchase of U.S. grain and moved those purchases to friendly Brazil and Argentina.

Recently China has also cancelled a huge purchase of U.S. autos while the U.S. companies are all on strike.

Most of the companies that pulled out of Russia, McDonalds, Mastercard etc have been replaced by Indian, Chinese or Russian companies which purchased these enterprises at fire sale prices, they will never return.

One of the sanctions on Russia was the freezing and confiscation of assets in western banks upward of $300 billion dollars. Russia has now placed an internal policy that any companies still in Russia can not be sold for more than 50% of the value and it will have a 10% tax. 

There are moves to force China to sell real-estate and other assets in the U.S. this may be very costly to the U.S. auto, aircraft and others with plants in China.

While many have the idea that this will bring jobs and business back to the U.S., it is impossible, without a restructuring of the regulations and focus on green industry. Not to mention the shortage of skilled willing workers.

China has now rolled out its new airliners to directly compete with Boeing and Airbus, it is likely they will dominate the sales in the rest of the world. At the same time they dominate the battery market for electric vehicles, and now produce 60% of the world EVS. They will have a distinct advantage for auto sales in the rest of the world.

Both China and Japan, the greatest holders of U.S. treasury debt have quickened their liquidation of this debt and this will raise interest rates and create problems in financing the exploding U.S. debt, estimated to now increase by $2 trillion dollars this year alone.

While the narrative will be that these countries are conspiring to damage the United States, the reality is that they no longer view trade and investment in the United states in the same way. They fear that at any time their investments can be sanctioned or confiscated. The reality is there is a strong desire from much of the world to move to a seperate system where they are not imperiled with intimidation and retaliation. It appears that is now too late to change the policies that prompted this situation.