Tag Archives: WSJ

DOMESTIC TURMOIL

It’s getting personal!

Our grandchildren have a weakness for Cadbury’s chocolate fingers.   Not wanting them to develop any addictions, they have only been an occasional treat.

A few months ago, I bought them for less than $3.   When I looked for them again a few days ago, they had gone up to $6.75.

The only reason I can think of to explain that jump is an increased tariff on imported chocolate (they are produced in the United Kingdom).   The dispute is between the US and the EU, of which the UK remains a member for another seven months. Hopefully, after Brexit the price will come down.

Yesterday, I checked at WalMart, where I got them for less than $3 earlier this year.   They are no longer selling them.   They have also stopped selling Tim Tams from Australia.

Armageddon must be close – that’s all I can say!

Request: if anybody lives in the Cincinnati area, could they please check availability and price next time they visit Jungle Jim’s?

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207 DAYS LEFT UNTIL BREXIT

Talking of Brexit (and food), you would think the British didn’t eat before they joined the European Union.

Those opposed to leaving the 27-nation EU are attempting to scare the general population, saying that there will be food shortages and their prescriptions may no longer be available.

For the record, the United Kingdom was the world’s most successful trading nation in Victorian times.   They continued as a major trader right up until they entered the EU in 1973.

Prior to that ill-informed decision, major trading partners included the Commonwealth (former British territories), the United States and EFTA (European countries that were not a part of the EU).   Food was a lot cheaper than it is now.   The UK, Australia, Canada, New Zealand and South Africa had a preferential trading agreement, which ensured cheap food for the mother country and gave preference for British exports.   Withdrawing from this agreement was one of the biggest mistakes Britain ever made.

The UK cannot sign any new trading agreements until after leaving the EU. When they do, expect food prices to drop.     It is, of course, possible that the cost of French cheeses and German wines may rise, but, believe it or not, you can live without them! (My grandchildren, deprived of Cadbury’s fingers, are surviving!)

From the WSJ yesterday:

WSJ Brexit Beyond

Britain Ramps Up Preparations for No-Deal Brexit:    The U.K. government on Thursday published advice for British businesses on how to prepare for an abrupt and messy break with the European Union, a move aimed at underscoring to Brussels that it is serious about walking away from talks if it doesn’t get a satisfactory deal.

Of note:   The Wall Street Journal has a regular “Brexit and Beyond” column.  They have now added a sub-title:  “Europe in Flux.”

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POLITICAL TURMOIL AFFLICTS ANGLO COUNTRIES

Thanks to Brexit, there’s a great deal of political instability in the UK right now.   Theresa May seems unlikely to be able to deliver a “deal” with the EU, while satisfying those who want to leave.   Attempting to do so is really a contradiction!

According to one paper earlier this week, over 100 Conservative MPs are ready to rebel over this.   That could mean a coup against Mrs. May, replacing her with somebody more to their liking.   Boris Johnson is still the favorite.   Mr. Johnson is more conservative than Mrs. May and does not want to compromise with the EU.

Don’t assume this won’t happen.   I woke up this morning to find a similar “coup” took place in Australia on Friday (the day is already over in the Antipodes).    Malcolm Turnbull, leader of the governing Liberal Party (the Conservative Party of Australia) has been ousted and replaced with Scott Morrison.   The latter is more conservative than the former.

Canada is also going through some political turmoil, as Maxime Bernier is quitting the Conservative Party and forming his own party dedicated to “more freedom, less government.”   In recent weeks, he has launched Twitter attacks against PM Justin Trudeau’s “extreme multiculturalism” and immigration policy, according to the BBC’s website this morning.

Mr. Trudeau, the country’s prime minister, is a Liberal who has welcomed thousands of Muslim refugees from the Middle East.   The Conservatives remain in opposition, with an election expected late next year.

The UK, Canada and Australia all share a common heritage and remain members of the Commonwealth.   With a very different political system, the United States is also going through a great deal of internal turmoil after two of President Trump’s former political associates were found to be breaking the law.   The implication is that the president did likewise.   Calls for his impeachment are growing. I don’t think this will happen as the Republicans control both houses in Congress and President Trump has a very loyal support base.

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GERMANY’S CONTINUED RISE TO WORLD PROMINENCE

“The Lord says:   I am furious!  And I will use the King of Assyria as a club.”  (Isa. 10:5; Contemporary English Version).

From Time magazine:

Europe should scale up military spending in order to act as a counterpoint to an unpredictable and unreliable United States, the German foreign minister said in an op-ed Wednesday, an unusually forthright criticism of U.S. foreign policy by a senior political figure in Europe.

In the German newspaper Handelsblatt entitled “A New World Order,” Heiko Maas said that Europe and the U.S. have been drifting apart for years.   Instead of waiting for Trump’s presidency to end, he argued, Europe should take an “equal share of responsibility” globally.

Yet Maas joined in agreement with Trump in demanding NATO members increase their defense spending.   “It is in our own interest to strengthen the European part of the North Atlantic Alliance,” he wrote.   However, he continued, this was “not because Donald Trump is always setting new percentage targets, but because we can no longer rely on Washington to the same extent.”   (Germany’s Foreign Minister: when the US ‘crosses the line,” Europe must act,” by Billy Perrigo.)

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From Deutsche Welle:

Germany on track for world’s largest trade surplus for third consecutive year.    Deutsche Welle * 21 Aug 2018

The country’s $299 billion surplus is poised to attract criticism, however, both at home and internationally.

Germany is expected to set a €264 billion ($299 billion) trade surplus this year, far more than its closest export rivals Japan and the Netherlands, according to research published Monday by Munich-based economic research institute Ifo.

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GERMANY BLAMES TRUMP TARIFFS FOR DESTROYING ECONOMY — MINISTER IN FURIOUS RANT                                (headline in Daily Express; article by Paul Withers, 8/20)

“The US President has triggered a bitter trade war with the likes of Europe, China and Canada by imposing huge import tariffs on a number of goods, including steel and aluminum.

Trade war

He has accused them of unfair trade practices and insists the tariffs are aimed at protecting American jobs.

“Speaking to German newspaper Bild am Sonntag, Economy Minister Peter Altmaier took aim at the US President, claiming consumers were taking the brunt of his import tariffs because they are driving up prices.

He said:   “This trade war is slowing down and destroying economic growth – and it creates new uncertainties.”

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A NUCLEAR GERMANY?

German bomb debate goes nuclear

The security community has become unnerved in the face of Donald Trump’s threats, and some are thinking the unthinkable.

“It’s crucial for Germany and Europe that we have a strategic debate”   — Ulrike Franke, analyst with the European Council on Foreign Relations

BERLIN — Imagine a nuclear-armed Germany (first line of article – (Matthew Karnitschnig, 8/6, Politico)

Headline in the Singapore Straits Times:  “Can Germany and Japan replace the United States?”

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Just remember – you read it here first! :)

Daily-Reckoning

Following my post on Weimar and the downfall of money – this was received this morning.  It’s from a daily financial newsletter called The Daily Reckoning, dated November 18th, forwarded by my brother Michael in England.

Last week, Janet Yellen told the senate what everyone wanted to hear – the Fed will support the economy… which means, the Fed will support asset prices. With this option in their pockets, investors bid up the Dow to nearly 16,000 by the end of the week.

What to make of it?

We’re down at a conference sponsored by the Bonner Family Office. And we’re thinking. Thinking is the last resort. You only do it when you’re desperate. When your opinions, predictions and guesses don’t seem to be working out, you’re forced to consider alternatives.

While we have no doubt that current Fed policies will prove disastrous, we have nothing but doubts about what form the disaster will take. John Williams, who recalculates basic indicators – CPI, unemployment, GDP – based on what he believes are more honest data. What he discovers is that the CPI is higher, unemployment is higher, and the GDP is lower than the feds tell us.

He believes that there is only one outcome possible – hyperinflation. A year ago, he expected it in 2019. Now, he’s moved up the schedule. Expect hyperinflation to begin next year, he says – in 2014.

Why? Because the Fed is more aggressive than expected… and because the rest of the world is losing confidence in the dollar and its guardians. The overseas portion of the US money supply is huge – with dollars in every central banker’s vault as well as in the private accounts and hidey-holes of millions of people all over the globe. When these people lose faith, which he expects next year, the trickle of these dollars returning to the US will increase. Prices will begin to rise… slowly at first, then suddenly, in a flood.

Will John Williams be proven right? We’ll have to wait to find out!

Bill Bonner
The Daily Reckoning 

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Further . . . from the WSJ today

OECD Warns of U.S. Threat to Global Recovery

The uncertain future of U.S. fiscal and central bank policies poses a growing risk to the global economic recovery, the Organization for Economic Co-operation and Development said Tuesday.

In its twice-yearly Economic Outlook report, the Paris-based research body said the U.S. debt ceiling should be abolished, and replaced by “a credible long-term budgetary consolidation plan with solid political support.”

The report marks a significant shift in the OECD’s focus of concern, which in recent years has been centered on the euro zone’s attempts to tackle its fiscal and banking crises.