The Sublime Logic of Tariffs

Tariffs are like emotional relationships.

Whether married to mutual political ideals or just hanging tight with each other. Tariffs can mirror the quality and trust in relationships between countries. It examples in friendly politics between two sovereigns, as with Canada and the US. And like BFF moments, good tariffs foster fair and beneficial trade relationships that can support balanced economies and political maturity.

Of course, having common borders is the sweet spot.

NAFTA alliances share borders, language, fosters easy migration of labor forces and seamless integration of products and services. Born over time such economic relationships like this thrive. But then heartbreakingly examples like Brexit challenges that premise.

Even to the most ambitious finance/economist the relationships that energize tariff agreements is complex.

It’s true. We owe China a lot of money. So, give thought to the reasonings in how sublime satisfaction in negotiating good trade deals in exchange of goods and services, is a mighty influencer to how you do business. Think Shades of Mid Continental Nail.

If you’re a goods producer reliant on the smallest alterations in price of off-shore raw goods or exchange rates. This behavior deviance will change your bottom line or unit price increases to customers. Also consider this. Contractual agreements governing digital services are altered when mirroring exchange rate conversions that govern cross border intellectual property partnerships.

This is the perfect time to enlist BCSContent to evaluate change influencers and produce compelling digital media for your business.

 

The Embraceable Unthinkable Economic Realignment of Wealth

 

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We are economies of unthinkable times.

Global wealth is distributing and realigning itself.  Generations ago, we would think this an unthinkable Europe, an unthinkable United States, an unthinkable global economy. Our financial markets have morphed into macro economies that have become “impossibles”.  Never before has this event been written or told about. It bears repeating that unless our nations learn to think forward and learn the new rules, some economies will fail completely.  The paradigms shaping how we invest, how we use our monies is far different from where they were just a few decades ago.  We market our businesses globally. From Wall Street to in-home labor how countries manage wealth influences us all.

Who could have thought that the elite congress of the Eurozone would be seeking to borrow from China, a country that once ranked 99th in the world for income per capita?

Who would predict that Germany, led by her first female leader Angela Merkel, would be drawing up plans for the realignment of a new Europe?  Just one generation ago, Germany was a divided country, reuniting itself while seeking economic and political parity in the world.

Facing a looming fragmentation, the Eurozone is dependent upon rapidly reconstructed fiscal decisions that may be their only hope for restoration.  In my opinion, the new realities are that Eurozone countries have evolved to finance dependent sovereigns, a unity of welfare states. Without the power to inflate or grow out of debt, they are suffering the throes of failing solvencies in the absence of liquidity.  The global financial markets are now looking beyond Europe to China for  monetization.

The structural and fiscal global calamities that are tearing apart the fundamental economic survival of countries are creating teachable moments.

The relocations of accumulating wealth and human capita are shifting the paradigms of global power. China in efforts to realign its economy from manufacturing to services and a more robust domestic consumption, is attempting to boost export liquidity. There should be little doubt that this is a currency war era. Unless we move to change how we think about our businesses therefore how we invest for our future, the road in solvency maintenance will be long and rough; for some perhaps unattainable.

Institutional economists remain so mired in the old constructs of economics, that they are unable to recognize the ever-evolving fundamentals of the new norms; of how the world’s populace is changing its wants versus its abilities to fulfill.  We’re not paying attention to the fact that there is a fundamental neuroscience that is changing the way our brains are responding to how we manage business and personal wealth.

This absence of forward thinking amongst monetary regulators, policy makers and drivers of fiscal policies is causing global social upheavals that are signaling the need to recognize new norms.  This economic tsunami will carry in its wake societal transformations. The United States’ success in maintaining its global leadership will depend on how well we navigate this wave and how we include ourselves in the changing global environment. The TPP (Trans Pacific Partnership) is not essential for now but is an imperative for the future.

Like any evolving organism there are paradigms that must be present in order to intelligently judge whether an economy will survive.

Has it the capability of growth?  When faced with financial indebtedness a country must have the ability and agility to grow out of its debt.  The engine must have a sound monetary policy to move.  Instituting too severe austerity measures will only stall the recovery process.

Can it grow strength in it federal institutions? Policy makers must understand that the creation of a fiscally strong country requires new thought processes.  Fiscal and monetary policies must be agile enough to grow into the new norm and trans-borders.  Government maturity has become the most important factor in foreign investing.

Has it created strong and agile banking institutions?  The biggest part of the EU collective crises is its lack of solvency, for a few member states.  This is a watershed moment that the United States’ has yet to face; yet many economists fear the likelihood is not far away.

Does the country have the ability to distinguish the difference between having liquidity and lacking solvency? The mechanisms for cryptocurrency or blockchain technologies must be set in place to bridge moments of insolvency or bank failures especially in m1 economies.

Will a country understand the importance of building firewalls to insure that in the short term technocrats will not sabotage growth?

Social advents like Occupy Wall Street has impacted how the financial markets think then behave. The outcome of how we trade, buy and sell our markets is no longer predictable when using the same old data interpretations.  The word “unlikelihood” has become the standard in calculating economic outcomes. This way of forecasting is rapidly becoming commonplace; and is penetrating deeper into our systems.

Though we struggle under a morass of mounting debt, the United States is not a cash poor country.  We do not lack the resources to participate successfully in global wealth realignment. French President Sarkozy stated in a recent address that Europe must be “refounded”.  The same holds true for the United States.

In my opinion, we need a national reawakening moment as well.