The Surface Reason is China –
The Underneath Reason is Trump
Boy howdy if ever there was an article that showed the layers and ramifications of President Trump’s global trade reset, this is a good one. The multinational media do not want American voters to understand the dynamic, because if we did people would catch-on to how the global economy was structured upon removal of U.S. wealth…
Reuters is reporting on a significant drop in German industrial orders, and they specifically point to diminished orders from the U.K (small part) and China (big part) as the cause. However, the analysis stops at the part where China’s lack of industrial orders is the leading contribution to retraction in the German export sector.
What the financial analysis does not approach (ie. the third rail of multinational corporate admission that must never be outlined), is the reason why Chinese orders for German industrial goods have dropped.
The problem for China, and ultimately for Germany, is that Trump’s trade reset has stopped a big amount of U.S. wealth from arriving in Beijing. Simultaneously, Beijing is countering Trump’s tariffs by devaluing their currency. The rebound economic impact is doubled. China has: (1) less income; and (2) less value within their own currency.
Where does this dynamic show up?…. Anytime China is going to buy something.
China’s currency devaluation makes their exports cheaper; however, at the same time it makes any of their imports more expensive. As a consequence China buys less… and that now exhibits in lower purchases of German stuff. See how that happens?
So yeah, the ramifications for Merkel’s German economy -twice as bad as originally forecast- are based on China fighting Trump. The fact that China is bleeding cash, and has simultaneously dropped the value of their currency, means China can’t buy stuff.
All of those nations who were counting on Chinese purchases are now going bananas.
This is why the multinationals blame Donald Trump… and to make matters even worse – the U.S. economy is thriving, while they watch from the sidelines. It’s a delicious dynamic.
For more than three decades global economies have grown by removing wealth from the United States. The U.S. multinationals have countered the economic arguments by claiming those global economies have purchased U.S. treasuries; but that means we trade our current wealth for future debt.
President Trump has reversed this dynamic. We are repatriating our national wealth through new trade policies, and will pay for any incurred foreign debt by expanding our own economy and controlling our own destiny.
Here’s Reuters article (emphasis mine):
BERLIN (Reuters) – Weaker demand from abroad drove a bigger-than-expected drop in German industrial orders in July, suggesting that struggling manufacturers could tip Europe’s biggest economy into a recession in the third quarter.Germany’s export-reliant economy is suffering from slower global growth and business uncertainty caused by U.S. President Donald Trump’s ‘America First’ trade policies and Britain’s planned, but delayed, exit from the European Union.Contracts for ‘Made in Germany’ goods fell 2.7% from the previous month in July, data showed on Thursday, driven by a big drop in bookings from non-euro zone countries, the economy ministry said. That undershot a Reuters consensus forecast for a 1.5% drop.“The misery in manufacturing continues. The decline in new orders significantly increases the risk of a recession for the German economy,” VP Bank analyst Thomas Gitzel said.Germany’s gross domestic product contracted by 0.1% quarter-on-quarter in the second quarter on weaker exports, with the decrease in foreign sales mainly driven by Britain and below average demand from China.“The danger is great that negative growth will also be recorded in the third quarter,” Gitzel added. (read more)
