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Rabobank’s Senior Asia-Pacific Strategist, Michael Every writes about why we stand on the edge of a potential global trade war, which many see as irrational.
Michel Every argues that financial markets are not pricing for the possibility of a global trade partly because the irrationality seems to reduce the probability of this outcome. However, there are multiple interpretations of what ‘rational’ means for all actors involved.
One can make the argument the US and China are both acting rationally, while the basic assumptions that our global system is rational may themselves be irrational!
On that basis, the risks of trade wars may be higher than markets currently suggest. To read this extremely informative article please click here to read more.