Trump's Tariff Threat: A War Call to Save the Dollar

 The possible loss of the dollar as the main international reserve or trade currency causes additional anxiety in the heart of the US government, administration, companies, and the global world order. 

Listen to what former US President and Republican presidential contender Donald Trump recently said about the matter; do not rely only on my word for it. Emphasizing the need of strategically implementing and eliminating sanctions quickly to prevent negative effects on the dollar and its symbolic relevance, he underlined their negative impact on the value of the money. Trump underlined the vital need of keeping the dollar as the world currency and compared the possible loss of this position to a major loss equivalent to declaring a third world country.

The Republican presidential contender also revealed at a recent meeting his plan to levy a significant 100% tariff on goods coming from nations that stray from using the US dollar in foreign trade. Although at first look the justification for this choice seems unclear, a closer look explains why the United States cannot negotiate maintaining the dollar's worldwide currency position.

In a quick historical perspective, the Bretton Woods agreement following World War II helped the dollar move to its position as world currency. The dollar was backed by a physical good - gold until 1971. But in 1971, President Richard Nixon broke off the dollar from the gold standard and converted it to a fiat money. The international reserve money then started depending just on faith in the US economy's capacity to fulfill its debt.

Lack of a physical asset supporting the dollar, together with its consistent devaluation and growing national debt, have caused anxiety within the world financial community. Concerns about the viability of US policy of continuous money creation and the approaching debt ceiling of unlimited nature have surfaced.
Over the past five years, attempts to substitute the dollar as the main world currency have run against many challenges. Initiatives including BRICS (Brazil, Russia, India, China, South Africa) have battled to agree on a shared monetary policy and currency. Based on IMF data, the US dollar still commands 59% of official foreign exchanges despite a slow decrease in its supremacy; the euro trails at around 20%.

For Donald Trump, maintaining the dollar's primacy is still a top priority, particularly in view of recent conversations with big nations such China, India, Brazil, Russia, and South Africa looking at substitutes for dollar reliance. Dollarization, this expanding trend, marks a deliberate attempt by nations to lessen their dependence on the US dollar in worldwide trade.

The dominance of the US financial system may be threatened by the development of Central Bank Digital Currencies (CBDCs). By using CBDCs to get beyond conventional financial institutions, nations could reduce the value of the dollar in next transactions. Further complicating the dollar's supremacy are geopolitical events such China's and Russia's attempts to circumvent the US-owned SWIFT system as well as America's strict sanctions on non-compliant countries.
Globally, foreign exchange reserves show the US dollar's dominance dropped from 85% in the 1970s to 58% in 2022. Countries are diversifying their reserves by looking to substitutes like gold more and more. Notable instances are India, China, Russia, and Turkey building significant gold reserves. Furthermore becoming popular as good substitutes for the dollar are currencies including the Australian dollar, Swiss franc, British pound, and euro.

The dynamics of oil trade have added another layer to the scene of currencies. As main oil consumers, China and India have enlarged their blocs to facilitate trade of their own currencies. This changes their reliance on the dollar-centric trading system. To enable transactions in their own currencies, China has been proactive in this regard by signing currency exchange arrangements with important allies including Russia and Saudi Arabia.

The fight for dollarization is essentially a calculated attempt by the United States to protect the dollar's current value and, hence, America's position in world order and global finance. This complex interaction of economic factors emphasizes the need of keeping the dollar's dominance among changing geopolitical environments. .

Israel's Economy is Collapsing

 Once praised as a major startup country, Israel is now struggling to prevent an economic crisis as fast declining financial resources cause The country is in a perilous state where money is disappearing at a concerning pace and economic problems are growing. Many people are wondering why Israel's current financial situation developed. We shall break out the main elements causing Israel's economic freefall in this video. 

With a cost of living skyrocketing a startling 38% over the average, Israel has suddenly become the dubious exception among OECD members, among nations. Particularly Tel Aviv has come to be associated with outrageous costs, negating the appeal of a Mediterranean paradise with the hard reality of a financial nightmare. The country is in a downward spiral, public unhappiness rising as prices climb steadily.

Reflecting the strain on the economy, Moody's—one of the top foreign credit rating agencies—recently lowered Israel's credit rating from A1 to A2. Particularly in the high-tech industry, foreign direct investment has dropped dramatically; in the first half of 2023 it dropped a stunning 68% from last year. Although world economic situation have some influence, Israel's domestic political unrest and economic volatility have discouraged international investors, therefore undermining trust in the country's future.

Israel's energy dependency on coal presents problems even if it has made progress in the use of natural gases. Israel's energy security has been threatened by disruptions in coal supplies from important suppliers such Colombia, South Africa, and Russia, therefore compromising its position as a developed country. The effects go beyond the high-tech sector and influence several sectors including building and agriculture. Shuttered thousands of companies have aggravated the financial crisis.

Blockades enforced by Yemen's Houthi movement create challenges for Israel's commerce hub, the Port of Haifa. The financial problems of the port have gotten worse and now raise bankruptcy questions. Concurrently, disturbances in other ports further hinder Israel's commerce operations, therefore aggravating income losses. A major economic driver, the travel industry has been crippled by flight cancellements, resulting in shockingly low visitor numbers and income.
Israel's economic development stands still among foreign uncertainty and internal policy mistakes. Public confidence in the government's capacity to promote economic recovery has been undermined by its short-term political gain-oriented emphasis instead of systematic economic problems. Temporary fixes for particular problems show insufficient in face of general economic problems, thereby stressing the need of complete solutions.

Economists caution that the continuous confrontation would cost Israel billions of dollars, therefore impeding chances for economic development. Constant military operations sponsored by US taxpayers worsen Israel's financial situation. Although the situation is still terrible, a financial collapse could force Israel to turn toward peace, therefore providing a ray of hope for a more sustainable and rich future for the country and its people.

How America benefits from wars?

 The Taliban now has a significant gift in the form of state-of- the-modern helicopters, attack planes, rifles, machine guns, and Humvees - the most advanced American armament as the Americans have left Afghanistan. This is not a one-time occurrence; whether purposefully or unintentionally, the United States has a past of arming terrorist organizations, criminal groups, and renegade governments.

Long a major component of U.S. foreign policy, armaments sales have long been a source of controversy. Originally starting during the Cold War in the 1970s, the Nixon government developed the Nixon Doctrine—the practice of arming counter-Soviet expansion agents. With nations like Ethiopia, Laos, Cambodia, South Vietnam, and even Iran gaining from billions of dollars' worth of American weaponry, this was a notable rise in arms sales.
Still, this approach frequently backfired. For example, the significant arms shipments to the Shah during the 1970s finally resulted in the Islamic Revolution in 1979, therefore turning Iran from a U.S. friend into a fierce enemy. Comparably, in Panama, where the U.S. had been a significant military ally for most of the 20th century, the situation became hostile when General Manuel Noriega, a former CIA agent, came to power and led a U.S. invasion whereby American troops faced American weapons.

Weapons shipments to Iraq to oppose Iran carried this trend into the 1980s, only to find themselves in hot dispute with Iraq following its invasion of Kuwait. American tanks and missiles also arrived in Somalia, which sparked American military action in 1992. The U.S. armed the mujahideen against Soviet forces in Afghanistan, only to subsequently deal with the Taliban, a group derived from the mujahideen, guilty in the 9/11 attacks.

Notwithstanding these historical lessons, the U.S. continued to sell weapons, increasing following the 9/11 events. The United States has sold around $200 billion worth of conventional weaponry to 167 nations since 2001; many of these nations have records of anti-democratic policies and human rights abuses. Among the nations most at risk—including Iraq, Libya, Yemen, Sudan, and the Democratic Republic of Congo—are those which get American weaponry most frequently.

Regardless of the political party in charge, this never-ending cycle of armaments sales benefits strategic objectives and American economy. It not only changes regional balances but also lets the U.S. influence client countries, get access to military sites, and persuade them to match U.S. goals at international venues like the United Nations.

The truth often runs counter to the American justification for its armaments sales—that they support democracy and peace. Frequently ending in the hands of non-state actors, American weaponry have driven wars and violations of human rights. American-made weapons have been abused by different parties from Syria to Yemen, underscoring the unexpected results of mass weapon sales.

Ultimately, the United States cannot simultaneously support conflicts and arming dubious governments while claiming to be champion of human rights, regional security, and world peace. The U.S. is a major cause of world insecurity rather than a supporter of peace and stability since the quest of economic advantages through military sales runs the danger of destabilizing areas and sustaining bloodshed.

More job cuts on the way as German economy struggles to recover

 After the announcement of the closure of two plants by VW, Europe's largest automobile manufacturer, experts are raising concerns that the downsizing of manufacturing extends beyond the automotive sector. The German Institute for Economic Research (DIW) highlights the vulnerability of companies in Germany due to heavy reliance on exports and industry. Similar to Volkswagen, many firms have struggled to adapt to the evolving landscape, particularly in the shift towards electric vehicles. This failure to innovate has led to a decline in their once formidable profitability, signaling a challenging period ahead.

The issue of restructuring is not confined to the automotive industry alone but permeates sectors such as machinery, pharmaceuticals, and chemicals. Even industry giants like BASF, the world's largest chemical producer headquartered in Germany, are contemplating shifting operations to Asia and reducing their workforce in response to soaring energy costs and bureaucratic hurdles. The structural challenges facing Germany are not transient but rather deep-rooted, necessitating a prolonged period of adjustment.

Forecasts predict a period of stagnation followed by a gradual recovery, indicating a protracted journey towards economic revitalization. While this timeline may be disheartening for businesses and policymakers, it underscores the imperative of resilience and sustained investment over the next five years. The hope is that through concerted efforts, the German economy will successfully navigate this transition phase.

As Europe's powerhouse, Germany continues to grapple with emerging from a recession, exacerbated by the struggles of EU automakers in phasing out traditional combustion engines in favor of electric vehicles by 2035. The impending wave of job cuts across various sectors poses a significant challenge, particularly given the country's heavy reliance on the automotive industry. Such mass layoffs could fuel disenchantment and potentially bolster support for far-right ideologies, thereby influencing the outcomes of the upcoming federal elections.

Why US, Canada, Australia & UK banning Indian Immigrants?

 A tsunami of immigration restrictions is sweeping numerous countries both throughout North America and Europe. Once known for their friendly policies, nations currently closing their borders are generating conjecture about the underlying causes of this change and how it may affect immigration going forward.

Immigration has become a divisive issue worldwide in recent years as many nations impose new policies especially aimed at low-income workers and people on temporary visas. Rising worries about economic stresses, packed public services, and housing shortages have driven these reforms. Let's now explore more specifically how this tendency is developing in some of the big nations.

Let's start with Canada's policies against low-paying employment. Historically noted for its open-armed stance to immigrants, Canada has lately retreated. Starting in September 2024, the nation will drastically cut down on the low-wage temporary foreign worker intake. Employers will not be allowed to hire low-wage employ Tuition Fee Waiver plan students in an area of ​​Canada showing an unemployment rate of six percent or above. Furthermore, from 20% to merely 10%, the proportion of TFW's enterprises can hire has been slashed. This action is a component of a larger plan meant to solve problems resulting from Canada's fast population increase.

The nation is struggling with more demand on public services and housing as immigrants flood it. Canada also has caps foreign student visas for two years. This divergence from Canada's historically liberal approach is mostly motivated by concerns that the flood of temporary residents—including overseas students—is taxing the nation's resources. Popular provinces like Ontario, British Columbia, and Nova Scotia very clearly show these limitations.

Although many Canadians blame the large number of immigrants for aggravating the housing situation, others contend that policy flaws and labor exploitation—rather than the migrants themselves—are the main causes. These policy changes probably impact a lot of migrants, especially the sizable Indian population in Canada, despite the continuous argument.

Turning our attention now to Australia, another highly sought-after immigrant destination, the government has also tightened immigration laws, particularly aimed at overseas students. The Australian government lately set restrictions on the amount of students universities may accept and raised visa charges for overseas students. These steps are meant to lower the nation's net migration rate, which shot to above 500,000 in 2022–23.

By 2025 the government wants this number halved. Australia's choice is partly driven by worries about its large student population stressing public infrastructure and the housing market too much. Like Canada, Australia is trying to balance its social and public service capacities against its economic needs.

The main causes of international students being subject to restrictions in North American and European countries are the constraints on public infrastructure and housing. Particularly affecting Indians, the new immigration policies in Canada, Australia, and other countries will have a major effect on people of Indian descent, who account for a sizable share of the migrant workforce and school enrollment in these countries.

TFWs and overseas students from India have been especially plentiful in Canada. Through the temporary foreign worker program, about 26,495 Indian workers entered Canada in 2023 alone. The decline in low-wage TFW intake would certainly have an impact on Indian workers, many of whom rely on these chances for their living. Furthermore, the cap on new foreign student visas in Canada has clearly caused the Indian student population to drop.

According to reports, this restriction—along with increased financial needs for study permits—is deterring possible Indian students from applying. Diplomatic tensions between Canada and India further complicate the matter since they have helped to lower visa approvals and student enrollment from India.

Over 70,000 foreign student graduates of recent Canadian migration policies in danger of deportation. These graduates—many of whom have finished their degrees and are working in Canada—may now be deported depending on changes in the laws controlling postgraduate work permits and routes to permanent residency. Widespread demonstrations calling for changes or abolition of these laws are being staged around the nation.

Regarding Australia, where a sizable fraction of the foreign student population consists of Indian students, the higher visa fees and intake limits are probably going to discourage many from seeking higher education there. This could cause the number of Indian students to drop as well as reduce the cultural and financial contributions these people make to Australian society. Indians currently in Australia on student visas or temporary work permits may find it difficult to move to permanent residency or land a job as Australia likewise aims to lower its net migration level. 

Germany's Economy Is Hurting Industry & Citizens

 In the past few years, Germany has been having big problems, which has caused its economy to do much worse. Europe's biggest economy is currently going through a period of downturn, and many industries are having a hard time. Because of this systemic problem, Christian, the CEO of Deutsche Bank, has asked everyone to work together to get the business of the country back on track. He stressed how important it was to change the way people work right away and told the German people they needed to work hard to stop more economic downturns.

At a banking summit in Frankfurt, Christian talked about how investors are becoming more worried about Germany's ability to reform and its level of output. He talked about how important it was to change the way people think about work and pushed for longer work weeks with more than 28 hours of work on average. Volkswagen, a German car company, has recently been talking about closing factories, which is the first time in the company's almost nine-decade history that this has been discussed. This has made the economic insecurity even worse. The German manufacturing sector, which used to be strong, is under more pressure because of rising prices and more competition from Chinese companies that make electric cars.
Following a narrow escape from recession earlier in the year, Germany's economy unexpectedly shrank in the second quarter. This has caused concern. With a 0.1% drop in gross domestic product from the previous quarter, Germany's economy did not do as well as experts had hoped. The COVID-19 pandemic and the war between Russia and Ukraine have shown where the Euro Zone's leading economy is weak, making problems like inflation and job losses even worse.

The war in Ukraine and problems with energy supplies have slowed down the manufacturing and export sectors, which are very important to Germany's economy. As a result, big companies have had to rethink how they run their businesses. Germany is vulnerable to outside shocks because it depends on Russian natural gas, which is a key resource for businesses like making cars and glass. Because of the resulting energy problem, many big companies have moved their operations outside of Germany. This is part of a trend called "de-industrialization."

The large number of refugees has also put a strain on Germany's economy, as the country is now home to many people who have been forced to leave their homes. The effects of this problem on society and the economy, along with rising unemployment and less spending by consumers, make it harder for Germany's economy to get better. It is becoming more and more important for the country's long-term growth and stability to find complete answers to these complex problems.

AfD surge alarms German businesses desperate for skilled immigrant labour • FRANCE 24 English

 

We are going to examine some business news now on the program, with Brian Quinn joining us on satday. We start with the historic showing we discussed in the news regarding the far right in German State Legislative elections. The outcome may not be well-received by businesses in the eastern part of the country. Indeed, the German business community has expressed significant concerns about the surge of the far right in recent years.

 

Sunday's electoral results will only exacerbate their worries. The AFD party, which emerged victorious in trinia state, has largely based its platform on opposing immigration. However, German companies are encountering a substantial shortage of skilled labor. The country requires an estimated 400,000 skilled immigrants annually just to sustain its workforce.

 

The demographic crisis is particularly acute in Eastern Germany, where the AFD has experienced its most robust growth in recent times. Thuringia  currently boasts a workforce of approximately 1 million people, but it is projected to lose 385,000 workers over the next decade, resulting in a quarter of jobs in the region remaining unfilled.

 

In Saxony, a fifth of the workforce is expected to retire in less than ten years, leading to a shortfall of around 366,000 jobs. For years, the AFD's xenophobic rhetoric has hindered German companies from attracting talent from abroad to the east. Business leaders in Thuringia  have established an association to counter that rhetoric. They are not only concerned about recruiting workers but also about attracting investment to the region.

 

People may hesitate to relocate to the area with their families as immigrant workers or individuals looking to leave. Potential investors will also question whether they want to establish their company or subsidiary in the region, and if they truly want to commit to the area. There is ample data indicating that foreign labor is crucial to the German economy. 

 

A recent study revealed that the German economy relies on foreign workers for its very survival. The German Economic Institute disclosed its findings shortly before the latest election, stating that in 2023, there were over 400,000 workers with foreign passports employed in Germany's five easternmost states. This figure represents an increase of 173,000 compared to five years ago. These foreign-born workers contributed to the generation of nearly 25 billion EUR in economic activity, accounting for almost 6% of the total for the entire country. In Saxony, where the AFD secured a close second, immigrant labor generated almost 8 billion euros in revenues last year, while in Thuringia , where the AFD emerged victorious, foreign workers created nearly 4 billion. The majority of these workers originate from Poland and the Czech Republic, with many engaged in construction, temporary services, research, and technology. These roles are particularly challenging to fill. As one individual highlighted, "We primarily require workers here. Germany is currently facing economic challenges, and we need skilled workers from abroad." Shifting our focus to today's trading activity, European indices commenced the week relatively flat following the anticipated German electoral outcome.