Sunday, 10 August 2014

Who benefits from trade wars?

Who benefits from trade wars? The political interests of the US are going against Europe's economic interests. The latest chapter of the American anti-Russia operations with sanctions across the board has got several responses including a flying ban that does now allow US, EU and other countries airliners to use Russian air space plus ban on agricultural imports.

The next chapter could be a cancellation of all contracts involving supply of gas and oil and this could happen in the coming months when cold weather returns to Europe. It would be just a matter of weeks for all supplies to Europe to be cut off. Who benefits from this? Does EU manufacturing and agriculture benefit from this? Do utility companies benefit from this?

The one certainty is that as soon as gas and oil prices start to go up, production costs will escalate and ordinary consumers will be hit by an inflationary tsunami. What about the difficult act of balancing budgets? Even the most powerful EU economies are bound to suffer the brunt of the crisis. European governments are already bracing themselves for claims and counter claims for loss of revenues.

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