Trump Blows Up G-7 in Glorious Fashion

Trump Blows Up G-7 in Glorious Fashion

Watching German Chancellor Angela Merkel lose her globalist mind in public is exciting. Because it means that the geopolitical landscape is changing for the better. Her reaction to Donald Trump’s refusal to play politics at this weekend’s G-7 meeting in Italy was priceless.

And it is a harbinger of what is coming down the pike in U.S. – EU relations for the next three-and-a-half years. Trump stood firm against the Paris Accord on Climate Change while Merkel fumed and spittled.

She had nothing else to threaten him with except not playing nice with the other oligarchs. She tried this same tactic recently in Russia with Vladimir Putin who promptly put her back in her place, defeating her insipid virtue signaling on human rights with facts about the level of violence in her EU.

Trump needed to do this. The Germans were lining up to use their recent political gains at the ballot box to squash Brexit. The Democrats back home are preparing a “Night of the Long Knives.”

Trump had to go into the G-7 swinging at vitals and reassert the U.S.’s centrality to the group.

It’s been decades since this group has been so divided on issues. And it has not benefitted the world at large one whit. The G-7 exists to roll the world’s capital up into the big monied interests in the U.S. and Europe at the expense of everyone else.

Trump walked in and gave everyone a little dose of populism, which Merkel thought they’d vanquished with the Dutch and French election results.

It is as her finance minister Wolfgang Schäuble put it to former Greek Finance Minister Yanis Varoufakis, “It’s mine against yours.” Translation: “It’s my democratic mandate versus yours.” And, in the case of the 2015 Greek debt negotiations Schäuble’s was stronger.

Today, Merkel, Macron and the unelected technocrats of the European Union sought to bring the weight of their democratic mandates down on Donald Trump’s.

Oops.

The Paris Accord is the vehicle for Trump to hold the line against. Obama signed a treaty without the approval of the Senate. He never even asked for it. He just signed it and then directed policy through Executive Order to bypass Congress indefinitely.

Hillary would have continued this practice.

And now Trump has made it clear to everyone that he’s willing and, more importantly, capable of standing up to the political pressure and put America first. That sends a huge signal to all of the EU countries nursing grudges due to policies that don’t serve their needs as well as to his base back home.

In geopolitics, we call this a “twofer.”

The U.S. is no longer in cahoots with the core EU countries to strip-mine the rest of the continent and destroy their individual cultures in the process.

Civil War in Europe

Angela Merkel understands exactly what Trump just did. And, make no mistake, so did Trump. Trump just enflamed the secessionist movements across Europe. He put British Prime Minister Theresa May on notice not to betray Brexit.

Hungary’s Viktor Orban and the secessionists in Catalonia know full well that Merkel just lost a major pillar of her support. The Poles and the Baltics will have to tone down their anti-Russian rhetoric because the U.S. is no longer as committed to NATO as it was before.

Unless, of course, Germany is willing to pay up for decades of not honoring the NATO agreement about defense spending.

Trump presenting Merkel with a bill for NATO spending is just as ridiculous as the EU telling the Brits they owe the EU money for leaving. But, Trump doesn’t expect to get paid. He’s pointing out how ridiculous and hypocritical the EU is acting over Brexit.

Germany never honored its agreement while the U.K. transferred tens of billions to the EU while honoring theirs. So, who owes who what, Frau Merkel?

And this is setting up a split within the EU, a civil war as it were. Brexit, Italeave, Departugal, etc. are all secessionist movements, like what is evolving in Catalonia and, to a lesser extent, Venice.

These are political insurrections against more centralized control of the European continent by the technocrats in Brussels. And by seceding from the EU they take with them their assets underpinning the credit worthiness of those who remain in the euro-zone.

Merkel knows that if the EU doesn’t make Brexit as painful as possible it will embolden other countries and provinces. So, as always, Brexit isn’t about Brexit. It’s about Spain.

Catal-Exit Stage Left

Brexit isn’t as threatening to the EU because the U.K. never adopted the euro. But, Spain did and Catalonia seceding from Spain and issuing its own currency and bonds removes nearly half of the wealth of Spain that is currently backing Spanish sovereign debt.

Instantly, like the Swiss National Bank de-pegging the franc from the euro in January 2015, this would force a massive re-valuation of all euro-based assets.

Spain’s credit worthiness would drop below junk, if the ratings agencies had any real standards that weren’t overtly political.

Merkel knows that Trump giving these movements voice after stamping ou, Marine Le Pen’s (Madame Frexit) populist uprising in France is what the stakes truly are, not agreement about carbon taxes.

Yes, pulling back from the Paris Accord standards will make the U.S. more competitive internationally. And that is a problem for the sclerotic EU economy.

The main headache the EU has now is its deteriorating debt quality. And that is what Trump just attacked root and branch at the G-7.

Bring on the Trump and Putin show at the G-20 in July.

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About the Author

Tom Luongo
Tom Luongo is a Senior Financial Editor at Newsmax Media, Author of the Resolute Wealth Letter Tom is also a professional chemist, amateur dairy goat farmer and outspoken Austrian Economist. You can follow him at:” Twitter: twitter.com/tfl1728 Gab.ai/tfl1728 Periscope: www.periscope.tv/tomluongo