The Newest War

I think yesterday will mark the beginning of our newest war. Yesterday is the day the Trump Administration announced new stiff tariffs on solar cell imports and washing machines. China and South Korea will not be pleased. Nor will American consumers, who will end up paying more for electricity and home appliances. Some people will be pleased though. They include stockholders in Whirlpool, domestic solar cell producers (if there are any), and some people who will end up being hired by Whirlpool, although their numbers likely will be dwarfed by the number who lose their jobs in the solar industry. In short, there will be some winners and some losers in the short term. The long term is a different matter.

We’ve been down this path before so we have some idea what to expect. In fact, a lot of what’s happening these days is reminiscent of the years leading up to, and the early days of, the Great Depression. Then, the nation decided to pull back from its open border policies, both in commerce and immigration. It seemed like a good idea at the time, at least to some people. But as we know, it didn’t turn out so well.

That’s not surprising. For when one nation takes actions that hurt other nations, it’s reasonable and predictable to expect retaliatory measures. And that’s why I suspect yesterday marked the beginning of the newest war: it could well be the day the 21st-century trade wars commenced.

The problem with trade wars isn’t only economic. The larger problem is that they often lead to military wars. And casualties. And that’s exactly where I fear we’re headed. I will be surprised if we don’t find ourselves at war with China in my lifetime. And perhaps Russia, too.

Meanwhile, our stock market is looking a lot like the market in the 1920s. And we know what happened in 1929. I’m not predicting a repeat performance, but it’s safe to say there are risks that are being minimized or ignored. And that’s never a good thing.

Given extraordinarily high asset values and a highly leveraged corporate sector, along with unprecedented peacetime sovereign debt levels, it’s easy to imagine an eventual outcome that entails a lot of financial carnage, especially against the backdrop of economic inequality the likes of which we haven’t seen since the 1920s. Yet we don’t seem to be concerned.

The nation chose to go in a belligerent, self-centered, tribalistic direction in the last election. It was a foolish decision, but it was the decision we made. And now we’re seeing it play out.

The worst is yet to come. Nonetheless, I suspect most of us will come through it just fine. But some of us won’t. And it’s hard to know today who the winners and losers will be. We just have to keep our ears to the ground and be quick to react, I suppose.

We’ll do our best for you, Vera. And for your parents and your uncle Andrew. I suppose it’s my main mission in life now. I consider myself fortunate to have all of you in my life. Fortunate indeed.

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