Greenland, Canada and the Panama Canal: What is the real plan here? | Forexlive
Here is my base case.
Greenland:
This is a real pet project of Trump’s. He’s a real estate guy, it’s the biggest island in the world and there are only 56,000 people there. Denmark is weak, there is already a US base on the island and there are probably a lot of natural resources waiting to be discovered. Plus, imperialism is kinda fun.
Panama canal:
Some friends in shipping have been complaining to him about the cost to use the canal and they don’t like it. America did build the canal but American ships or those bringing goods to America don’t get any special deal. Meanwhile, it’s one of the greatest monopolies in world history and funds all of Panama’s government, allowing the rest of the country to be a giant tax-free money laundering operation to fund things like the Trump Hotel in Panama, which was once the largest building in Latin America. Of course, that project was something of a disaster (I lived there) and it was later re-named and he probably holds a grudge.
Canada:
It was a lame joke that he’s beating to death.
Now for the fun part.
(Warning: Do not take this seriously and certainly don’t devise some kind of trading strategy based on it. This is for fun)
What if I’m wrong? What if there is some kind of strategy here?
The obvious answer is that it’s a move to counter China. It would aim to create some kind of schism in the world that puts the Americas (or at least the Caribbean and east coast of the Americas) firmly in the US sphere.
Panama Canal
I did a deep dive on China shipping, and surprisingly, blocking the Panama Canal wouldn’t be that big of a deal. Virtually all Chinese goods to Europe and Africa flow through the Suez Canal or round the Cape of Good Hope. For places like Brazil and Argentina, circling Cape Horn would be a moderate shipping headache but wouldn’t materially change the economics or trade with China. T
Two spots do stand out as more-vulnerable — Venezuela and Cuba. Both are precarious economies that would have significant trouble trading with China if forced to go the long way. Nearly half of Venezuela’s oil goes to China and 50-70% of it goes through the canal.
If Trump really had imperial designs, then Cuba is surely the starting point and an invasion is not something you broadcast in advance but blocking its canal trade and tightening the screws on the economy even further would lay the groundwork for regime change.
Greenland:
There is some talk of tightening Arctic shipping lanes as some kind of grand-master strategy but it doesn’t make sense to me. Ships could use the Russian route instead as it’s not that much of a detour. Some people see some kind of global warming angle but to even get to Winnipeg, which is the coldest major city in the world, global temperatures would need to rise 5-7 degrees Celsius. In that kind of scenario, you’d have a total breakdown in pretty much everything.
I have to think it’s more about exploiting resources that are there, or might be there. It would increase US landmass by 23% and the monetary costs would be low. I mean, even if you bribed every person in Greenland with $1 million, that would only be $56 billion. Compare that to the $200 billion already spent by the US in Ukraine or the $953 billion in the scam known as the Paycheck Protection Program.
Given that tech bros have also taken over the Republican Party, it might be seen as a test case for how effective they can run algos. If you can manipulate an election, why not try to manipulate a country into joining the United States?
If that works, then Greenland would just be the test case for…
Canada
Let’s say that Elon and the tech bros tweak the algo and Greenlanders join the US willingly. There won’t be bribes but the US money will flow in and Greenlanders would have the option of moving to the United States.
Not only would it achieve its goals for Greenland, but it would become an amazing propaganda tool, a minnow on the fish hook that would be used to catch the whale — Canada.
There is the kernel of a plan there and Trump already hinted at the rest of it, saying he would use ‘economic force’ to convince Canada to join. The US can wreck virtually any global economy with the wave of a pen and Canada is highly vulnerable. The vast majority if the economy is directed to the US, with no alternatives. The oil pipelines from Canada almost all go in one direction, and even some critical Canadian pipelines for domestic use take a short-cut through the USA.
Now Canada is also the USA’s biggest export market so it could deliver major pain to the US as well but if the US were to steadily undermine Canada’s economy via trade and other under-handed methods, while leveraging social media, it would have a chance. Drive the loonie to sub-50 cents and offer to merge at par and provide free movement into a better-paying economy and that’s a compelling offer.
To be honest, I think the major problem with it is the Republican side, because if you were to give Canada the proportionate House, Senate and electoral college votes, the US election results would be very different. But Canada is insanely rich in resource wealth and in some kind of robot-dominated, no immigration world, you could run an impressive closed economy.
Just please god don’t let this clown anywhere near any kind of negotiation:
Kevin O’Leary