The US is ready for an economic war against the EU - Politics Forum.org | PoFo

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#14771258
Dark times are looming….

Foreign Policy wrote:It’s just over a week after Donald Trump’s inauguration, and his administration has already indicated that it is preparing for global economic war. The currency war the White House has in mind is clearly aimed not just against China — which has long been suspected of “cheating” in order to win the globalization game — but also Germany: On Tuesday, Peter Navarro, the head of the new National Trade Council, claimed that Germany is using its currency to “exploit” both its neighbors and the United States. The White House evidently thinks of the European Union, and the monetary union that established the euro currency, as essentially a mechanism to protect German interests and extend German power — as an instrument of Germany, as Trump himself put it.

This fear of Germany is both an outlandish expression of paranoia and an idea with a long pedigree among some establishment economists and policymakers. Nobody doubts that the White House has tools at its disposal to strong-arm Germany into changing its economic policy, including its commitment to the euro, which currently binds the European Union together. Indeed, the Trump administration already seems to be doing just that.

The first version of such criticism directed at Germany came in the late 1970s and was focused on the European Monetary System (EMS), which preceded the existence of the euro. The EMS was a fixed (but adjustable) exchange rate system that reproduced most of the features of the global Bretton Woods system established in 1944 and was designed by Europeans as an immediate reaction to the mismanagement of the U.S. dollar under President Jimmy Carter. Dollar weakness sent floods of capital — short-term money — into Germany, pushing up the Deutsche mark against the French franc and vastly complicating trade relations within the European customs union.

But there was always a suspicion that Germany was trying to get long-term trade advantages from linking the currencies. In the early 1980s, the former British Labour Party politician Denis Healey convinced himself that the EMS was a German racket after then-German Finance Minister Manfred Lahnstein told him that Germany expected to get a competitive edge by limiting the scope for other currencies to depreciate; since Germany had lower rates of wage inflation than France and much lower rates than the Mediterranean countries, a locked currency would guarantee increased export surpluses, at the price of misery elsewhere. The suggestion was that the EMS, and then later the euro, would allow Germany’s grasp for European economic primacy to succeed at the end of the 20th century and in the new millennium where a similar German military plan had failed one century earlier.

The odd thing about this theory is that it has been far more current in Britain and the United States than in continental Europe. If the power grab is what the Germans were aiming at, wouldn’t other countries be able to get some whiff of the nefarious plot? And more importantly, if this were really a strategy, it would be a pretty short-sighted one (not really that much better than the disastrous Schlieffen Plan of 1914 to defeat both France and Russia at the same time). Plunging one’s neighbors into national bankruptcy is not a good way of building any kind of stable prosperity.Plunging one’s neighbors into national bankruptcy is not a good way of building any kind of stable prosperity.

From the German point of view, the goal of having a single currency is not just to make ordinary transactions easier but to remove the suspicion of trade advantages when nonfixed currencies move against each other. For instance in 1992-1993, when Spain and Italy left the EMS, French farmers immediately began to demand protection against cheaper wine from the south.

Previous U.S. administrations — including Barack Obama’s — have long worried about the size of German current account surpluses: the investment surplus by Germans abroad that corresponded to the amount that they were underconsuming in goods and services. But they read them differently — not so much as evidence of trade manipulation but of a wrong approach to economic policy that placed a brake on the world economy as a whole. Washington did attempt to counteract this. At the 2010 G-20 summit in Seoul, there was a brief, but ill-fated, attempt by the United States to encourage a limit on the size of current account surpluses to 4 percent of GDP. Germany’s surplus is about to overtake China’s in absolute size and as a share of GDP is now much larger. The IMF estimates Germany’s 2017 surplus as 8.1 percent of GDP while putting China’s at only 1.6.

Navarro’s criticism of the “undervalued euro” is that the currency union is a permanent way of keeping what is really the Deutsche mark lower than it should be. As an alternative, it is plausible to look at Switzerland, whose export-driven economy has similarities to Germany’s and which also runs a big current account surplus. Since the financial crisis, the Swiss franc appreciated significantly against both the dollar and the euro. For some time, the Swiss National Bank tried to hold the franc down, with a peg of 120 against the euro, but it unpegged in January 2015 (though it still intervenes to stop over-rapid rises in the currency). But its current account surplus is still enormous — bigger in share of GDP than Germany’s with 8.95 percent forecast for 2017.

In short, Switzerland’s current account balance reflects deep imbalances between high savings and low domestic investment — and not simply trade manipulation. And it is not easily adjusted even by a currency appreciation of the size that Switzerland undertook, which brought acute pain to some major sectors of its economy, including tourism and now also watches.

The dynamite in the German case lies in the domestic politics. In order to stop the franc from rising, the Swiss central bank intervened to acquire foreign assets, mostly euro-area government bonds — rather like China buys U.S. Treasury bills. And Germany also has the equivalent in the eurozone: The German central bank is building up large claims against southern Europe in the European payments system TARGET2. At the end of 2016, they amounted to 754 billion euros, higher than the peak during the euro crisis of 751 billion euros in August 2012. The goal in this case is not to keep the German exchange rate down (that can’t be done since this is a currency union) but to stop the euro from breaking up.

Germany’s TARGET2 balances are not an intended policy by Berlin, but the consequence of money leaking out of southern Europe after the ECB’s attempt to stimulate growth there by asset purchases (quantitative easing). And that quantitative easing arose out of pressure from southern Europe – but also from the United States – to do something to rescue the euro. So the German claims arise because of the inherent logic of the system rather than because the German government or central bank is trying to manipulate anything.

Navarro and Trump’s demand is so effective because it points to an underlying political weakness of the German position. The buildup of Germany’s TARGET2 claims on southern Europe is much more uncertain and more unpopular in Germany than China’s dollar assets or Switzerland’s reserves are in those countries. Germans are not worried that they are too successful as exporters, but they are deeply concerned about the quality of assets purchased with their current account surplus: U.S. subprime mortgage paper before 2008, southern European debt after the financial crisis. German taxpayers face a potentially large bill but one that would only be due if the euro collapsed.

In fact, the American attack plays into German domestic politics, and into critics of Angela Merkel, and sets the stage for an election campaign that will be fought around two policies — the euro and refugees — on which the American government will play an opposition role. The likely new U.S. ambassador to the EU, Ted Malloch, says he would bet on the euro collapsing and that he wants to “short the euro.”

But what would be the consequences of a euro breakup? It would weaken Europe as a competitor but also make it more unstable as old national rivalries are unleashed again. In the past, Americans saw Europe as a pole of stability in an uncertain world. The new vision wants European instability, political as well as economic. The end result is that Europe would be more fractious — indeed, more like Donald Trump’s America.

Trump’s Currency War Against Germany Could Destroy the EU
FP
#14771275
Wow, you're quick to catch on. That was already apparent when they attacked Deutsche Bank and VW. But I guess since that happened under Saint Obama, the press couldn't believe what they were seeing and chose not to mention it. :lol:
#14771284
Frollein, you haven´t got the article essence.

The US will use many instruments trying to dismantle or to destroy the EU.
The current administration will assist and shelter Brexit and is going to incite distrust among EU members.

The US now sees the EU as threat. And they will attack on many fields. Ideologically, legally, economically.

I personally anticipated this kind a war tactics years ago. Geopolitically, the US always used Britain as a vehicle to stop EU development. Now that Britain is gone, and in order to keep sway over Europe, the US MUST attack more openly.
#14771290
Dr Cosmo wrote:Frollein, you haven´t got the article essence.

The US will use many instruments trying to dismantle or to destroy the EU.
The current administration will assist and shelter Brexit and is going to incite distrust among EU members.

The US now sees the EU as threat. And they will attack on many fields. Ideologically, legally, economically.

I personally anticipated this kind a war tactics years ago. Geopolitically, the US always used Britain as a vehicle to stop EU development. Now that Britain is gone, and in order to keep sway over Europe, the US MUST attack more openly.


They already attacked the EU when they smuggled the economic bomb aka Greece into the Eurozone. As I said, you're quick to catch on. Applause!
#14771293
For Frollein catching VW and Deutsche Bank for obvious fraud is an attack to dismantle the EU. Germany treating Greece like shit in the process wiping out 1/3 of its GDP is also an American conspiracy to dismantle the EU. Obviously German fraud and behaviour against EU fellow members are American conspiracies.

But the explicit attack towards the EU by Trump is well just merely a continuation of the previous conspiracies and nothing to look at cause it's from the guy she supports. :lol:

Of course Frollein just wishes to wash her hands for the fact that German behaviour in the debt-crisis was defined precisely because Merkel had to placate people like her and for what purpose exactly did she do that? So that they become Trump's useful idiots? :knife:
#14771296
Frollein wrote:They already attacked the EU when they smuggled the economic bomb aka Greece into the Eurozone. As I said, you're quick to catch on. Applause!


The people never voted to join the EEC, no Labour leader since Harold WILSON has ever given the public a say on our continued membership of the now E.U & without CAMERON would never do so.

This country should have listened Gen. Charles De Gaulle, who vehemently opposed our membership for very sound reasons.

He believed, rightly IMHO, that this country was a 'Trojan horse' for American hegemony between Europe & the then Soviet Union.

This is something that OBAMA tried with the UKRAINE, when he visited Europe at that time, railed against PUTIN, then withdrew after lighting the fuse & waited for the two obvious idiots in this country(HAMMOND-FALLON)to duly increase spending on defence at the expense of health & fairness.
#14771458
Dr Cosmo wrote:Frollein, please: You never have shown analytic talent for geopolitical developments here on PoFo.
Your strengths is ranting, keep it. Go to Facebook, try trolling there. Or meet with Decky to chat, thats the right party for you.


Says the chief EU propagandist whose best contribution so far was "Germany the beloved Superpower." :lol: Why don't you go back to Wikipedia to edit the Germany entry into utter bullshit, as you did with that thread?
#14771472
I don't quite see how trump plans to take on China, the Middle East and Europe at the same time ....

Of course he's a bit of an idiot but surely the power behind the throne - bannon - sees the strategic folly in this :?: :?:

Also, isn't the alt right about saving judo Christian civilisation? :?:
#14771474
It's amazing how insecure and frustrated America is today. They elected a typical jock and bully president to get back their old jobs and position in the world, which makes it totally transparent how much they're failing. Insecure and frustrated Europeans also support him like he's a messiah that can save them too, no matter if he wants to destroy their economy actually. They're even more pathetic of course than the Donald's American fans are.

It's clear that it's arrogance and aggression the Donald believes in, and if soft power doesn't work, then he'll go further. But how could soft power work for him, when the U.S. doesn't dominate global trade anymore?
#14771479
layman wrote:I don't quite see how trump plans to take on China, the Middle East and Europe at the same time ....

He seems to have some vague ideas about tying up with Putin to achieve his political aims and to get into the Russian oil business at the same time.

I don't think he has a very clear idea about European politics. Our dear friends on the British Isles have fed Trump their standard narrative about the evil 4th Reich that needs dismantling. Trump wants to liberate Europe from German domination again, so he can negotiate with each country at a time from a position of strength (that's what the Brits want too). He doesn't realize that a lot of this is wishful thinking on the part of the Brits and that the EU is actually more solid than their propaganda makes it look like.

It should surprise nobody that Trump doesn't have the subtlety of our British friends who are better at hiding their intentions. What he is saying in public is what he has heard in private from his British acquaintances.

Of course he's a bit of an idiot but surely the power behind the throne - bannon - sees the strategic folly in this :?: :?:

Also, isn't the alt right about saving judo Christian civilisation? :?:

Bannon thinks of himself as a bit of a "Leninist" (he probably means Marxist) who believes in creative destruction. So yeah, they are in earnest about shaking things up a little. Anyways, they want to remove Merkel with all her Muslims.

Trump may indeed trigger a regime change in Europe, but politics being more dynamic than these fat old oligarchs can comprehend, it could well be a regime change he doesn't like at all (US-inspired regime change seldom works according to plan).

With the pro-European anti-establishment Macron leading in the polls in France and the social democrat died-in-the-wool European Schulz leading in Germany, the Trumpistas and Bexshitters may face a strong alliance that doesn't take a kind view of Anglo plutocracies.
#14771485
“Trump is the first American president since the E.U. was created not to be in favor of deeper European integration,” Mr. Leonard said. “Not only that, but he’s against it and sees the destruction of the European Union as in America’s interest.”

This quote implies you believe America once supported Europe integration which is something you guys always denied.

You seemed to always think it wanted a divided Europe.

Anyway s, it's interesting thst both trumpists, and anti American Europeans like Atlantis, want to suck up to Russia these days.

I guess putin will have a field day playing you off against each other.
#14771497
layman wrote:This quote implies you believe America once supported Europe integration which is something you guys always denied.

You seemed to always think it wanted a divided Europe.

Nobody ever said that. It is common knowledge that the US wanted the EU as a tool to expand and consolidate Nato. That is why your government is even now pushing for Turkish membership which nobody in Europe wants. And that is why the US and the UK have been pushing for Ukraine membership, which is rejected in Germany, France, etc. And that is why the UK wanted the East enlargement even you are now complaining about people from the East.

The US/UK don't want to destroy Europe outright. They want to weaken the EU and the Euro to be able to dominate Europe. Because they know that a united Europe will be able to defend its own interests.

Putin was ready to create a free trade zone from the Atlantic to the Pacific before the US engineered the fascist coup in Kiev to "fuck the EU." An independent and neutral Europe is far more useful to Russia than a vassal. But the US will never accept anything but vassal status for Europe.

Merkel was publicly humiliated by her US allies in the spy scandal. But that is nothing compared to the humiliation she suffers by the Yanks now, after she has played the American game at the expense of the interest of her own country. You Brits will never understand that, but loyalty is what counts more than anything to her.

We are witnessing the death of the trans-Atlantic alliance.
#14771498
Fascist coup in Kiev give me a break :eh:

I guess this how you can justify to yourself Russians marching in there and killing people. Oh they are only just fascists, like those terrorist children in Aleppo ....

Rationalisation and hypocrisy.

Still I'm sure putin is laughing his ass off while his agents work to break up the Eu while you and other Eu supprters kiss his ass.

As for the end of the transatlantic Alliance, quite possibly. You don't seem that happy on the outside but between this and brexit you must be jumping for joy.

All I can say is careful what you wish for.
#14771504
The EU represents the globalist mindset. This is the only reason they are a threat to Trump and 'America First'. He knows he can not work with them because they are diametrically opposed. He needs to work with individual countries who will put their national interest first. The destruction of the EU is not necessary, but they need to decide what they actually are. Are they one country in the making or a mini UN? It is only their globalist view that is the problem.
#14771506
And that is why the UK wanted the East enlargement even you are now complaining about people from the East.

It was in Germany's interests too, the French opposed it only.

Putin was ready to create a free trade zone from the Atlantic to the Pacific

As Trump initiates trade wars with China and the EU, which will result in China and the EU getting closer to each other, his vision may come true sooner or later. However, maybe it's time for him to consider dumping his pro-Trump puppets in Europe.
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