In two examples that gather little following since their economies are small, Turkey and Venezuela are front and center as collapsing due to the strengthening dollar. Contagion can be contained in these small fires, but they are dominoes falling with deeper consequences behind the scenes.
Turkey
has seen its Lira fall in purchasing power. It has lost one-third of its value with the US dollar. It made the news because President Trump extended his tariffs on them in steel and aluminum. Some say this is temporary due to a political concern of an American held in prison by Turkey. The real problem is for European banks like Spain's BBVA and Germany whose banks have extensive loans to Turkey. Since the Lira now buys less in relationship to the Euro, those loans become tenuous. Turkey borrowed with a higher lira to euro ratio. Now, they must repay at a much higher lira ratio to the euro. Sebastian sees bigger problems than a pastor held in captive. Turkey by-passed a US missile company for a Russian one. They also made positive reactions to the new China Silk Road. In addition, they have not helped Europe with the Middle East migration to Europe. Erdogan tried to play one side over the other and reap the middle benefits except it has come back to bite him in the ass.
Venezuela
is a mess. Citizens are fleeing the nation. Some of their neighbors that speak Spanish like Ecuador and Peru are closing their borders to these exiting masses. This notation should be included in Trump's Wall. You would think that many South American countries that have similar language and history would have no objections to these people. They do!
Anyway, Maduro takes from one side of the nation and gives to the other side. People protested all year long. No longer. They are just leaving since Maduro devalued the currency by 95%. Can you imagine?! Prices are rising through the roof. The IMF stated that inflation will hit one million percent this year. Ouch is not strong enough to describe this. Their crazy stock exchange dropped to 1,000 earlier this year. Guess where it is now?... No! Not even close. It is worth more than all the exchanges in South America combined. Last week it hit 454,000 before a recent pullback. The nation has a huge oil deposit, but killed foreign investment in the industry with socialism. Their oil production has declined for the last four years maybe more. Records are cloudy and lawsuits are rampant. This will be a problem for all South America which connects to Central America which connects to North America.
It isn't just small nations that are feeling the squeeze in currency manifestations. The UK is getting close to leaving the EU. People and institutions are nervous. The prime minister tried to push aside these worries with a speech to which the message is, "Keep Calm Carry On." How can you keep calm when your company and or your job demands on air transport from the EU and the EU said no more? Basic contracts will be broken or cannot be renewed. The English pound and the EU euro will be revalued, and terms need to be redone. Big problem that needs to be settled by December. I guess insiders feel that the talks will be extended, indefinitely. Someone is due for a rude awakening.
Meanwhile, other emerging nations are seeking help from the World Bank or the IMF with their current loans. These countries borrowed trillions in loans in US dollars. They must be repaid in US dollars, but since their currency is worth less than when they originally borrowed the money, they are feeling a double whammy. One, repaying the loan and secondly, it cost more to repay the loan than it was first projected to cost. Double ouch!!
Thinking That I Like
In Japan recent flooding from severe weather caused extensive harm to agricultural farms and tree growing fruit. The prime minister gave funds to those affected from a section in the Japanese budget that puts money away for a rainy day. This is how government should function.
Tit for Tat
It is not just tariffs that find nations retaliating over foreign policy. Saudi Arabia cut ties to two G-7 members over incidents in their nation. Canada and Germany will no longer be on terms with the Arab nation. It may sound like small potatoes, but potatoes fill the meal.
How About These Walls?
A German sea captain is being held on trial for crimes against sea regulations. This is what is being said, but this is just another wall against immigration. Trump is not the only one as stated in a previous piece. The boat recued immigrants at sea. While docking, it was flying a German flag. The boat however was registered in Holland. Violation! A good man must suffer from politics.
In Italy a similar story. Italy is withholding its membership dues to the EU because they are not receiving enough aid in the migration of immigrants. I guess no one translated the English speech, Keep Calm Carry On?
Yes, Donald, this does happen
In Australia the political party that installed prime minister Turnbull, kicked him out of office and put someone more to their wants in Morrison. In politics down under it is not who you go to bed with, but who you turn your back too like et tu, Brute?
NAFTA'S NEW NAME..
won't be revealed until Canada gets its chance to accept the new deal between the US and Mexico. Canada's trade minister will be in Washington on Tuesday. Word out says an agreement should be concluded by Friday on accepting or declining. Keep in mind that 75% of Canada's exports go to the US.
One provision in the pact says auto workers be paid $16 per hour. All this does is give Mexican and Canadian auto workers a raise. They will rename NAFTA to cloud their deception as anger lurks below the surface in America with NAFTA. Anyone old enough in the US knows that NAFTA caused us to lose 12 million, high paying, manufacturing jobs for service sector minimum wage. The best deal was to end all deals! Place tariffs on all imports which helps reduce our national deficit and force manufacturers back into the US. The only good aspect pf this new pack is it does not undo the tariffs on steel and aluminum. Enough said!
Panda Art?
In a sign that we are in a spending bubble where we spend $, as we get $. No one puts aside for a rainy day. We have this tidbit. You give Yang Yang a treat, hand the panda a painted brush and hold a blank canvass before the cage and it will strike it. Give the panda another treat and you get another stroke to the picture. Now, you can own your own "original" for around $570.
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