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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 414.48+0.7%Jan 9 4:00 PM EST
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To: TobagoJack who wrote (62039)3/16/2010 10:49:15 AM
From: KyrosL3 Recommendations  Read Replies (2) of 219208
 
Free trade has been great for USA's management class. They are reaping the benefits of outsourcing while enjoying cheap goods. But the worker bees, most of them Obama voters, do not have it so good, having lost their nice manufacturing jobs. So it's understandable that with double digit unemployment, even rational economists would overcome their love of free trade and go for the jobs, especially if they are Democrats.

During the Great Depression, the USA was China and Great Britain was the USA. After trade was restricted, Great Britain did OK, the USA did terrible. The politicians here are becoming more and more aware of this, especially with guys like Krugman pounding the table. And Krugman got his Nobel for his trade work, so he has credibility.

Another development that makes trade war palatable is that the US has become essentially self sufficient in natural gas. At the same time its oil production is trending up and its oil consumption is trending down.

In two or three years the USA will be largely out the Middle East and probably out of other overseas places as well. If trade is restricted, there will be less reason to guard oil supply and trade routes for others. Plus we can't afford it anyway. Drastically reduced defense expenditures will be a big plus for the US.

So the probability of trade war has gone up, though still below 50%, IMO.
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