The stock market leaps gracefully this morning as – Phew! – China and the US agree to end the massive world-shattering trade war before it has even begun. Both sides remove tariffs that they piled on in fits of righteous wrathful fury just days earlier, and everyone will now live peacefully and harmoniously ever after in mutual win-win friendship, with free-flowing soybeans, and new improved corporate governance at ZTE later.
Meanwhile, the rest of the planet beyond the stock market still doesn’t rule out unprecedented economic mayhem on the grounds that Trump and Xi (in their own ways) might just be overestimating their respective nations’ bargaining positions and cannot make pragmatic concessions for fear of face-loss.
There are all sorts of little details no-one wants to think about. Surely, if China lowers tariffs on US products, it must do the same for all other countries? How can the US increase exports of commodities when the producers are already operating at or near full capacity? What’s the point if the international flow of beans is simply redirected among markets – China buying more from the US, forcing everyone else to buy more from Brazil, leading to a net change of zero?
The answer to this last question is that to Trump’s infantile and superficial mind, the fall in the US trade deficit with China equals a Big Win. If Xi and his regime can restrain their own over-aggressive insecure instincts, it should be easy to fob Trump off.
Now a horrible complication enters the picture: Trump (says William Pesek) is factoring a Nobel Peace Prize into all this by way of Kim Jong-un under supposed guidance of Leninist uncle-substitute Xi (it all goes back ultimately to the Kenyan Nemesis who won the accolade, which has lost much of its integrity since the Scandinavian medal-bestowing sages got a Panda-mauling for honouring Liu Xiaobo – but of course Trump has trashy taste).
Pesek notes that this does not bode well for emerging markets. Does Trump playing four-dimensional chess over a delusional prize for a delusional deal with North Korea courtesy of delusional warm-and-fuzzy cooperation from Beijing bode well for anything?
Even more horrible thought: Xi senses a strategic opportunity, and gets what he wants out of Donald (US troops out of Asia, free soybeans for life) in return for persuading the Nobel bureaucrats (still guilt-stricken for hurting the Panda’s feelings over Liu Xiaobo) to give Trump his tacky prize. I mean – this is 2018.