Let's talk about the EU and Canada's big moves.... - Belle of the Ranch

Well, howdy there internet people. It's Belle again. So, today we're going to talk about how Trump's Donroe doctrine has failed.

Trump added his name to the Monroe Doctrine, which is a long-standing US doctrine of keeping European influence out of the Americas. His tough rhetoric, tariffs, and military threats have completely backfired. This will be an under-reported story.

So, we have three pieces of news that factor into this. The first one gets a little technical, so stick with me, but it's probably the most consequential.

The European Central Bank or ECB, picture it kind of like the Eurozone's Federal Reserve, has decided to open up things a bit and allow loans in euros to any central bank as long as they aren't sanctioned. I'm going to greatly oversimplify this because understanding all the mechanics isn't as important as understanding the effects. Picture it like a pawn shop for countries. In times of liquidity stress, foreign central banks can borrow euros from the ECB. The foreign central banks provide high-quality euro based collateral like government bonds in return.

Here's the part that matters. In order to access this line of credit, the foreign central banks need to have euro based assets. This increases the likelihood that foreign central banks will hold euro assets which in turn makes the euro more used in finance, trade, and reserves. It makes their bonds more attractive. This is a move to make the euro more like the US dollar. Some will say it's a move against the dollar. Right now, the dollar is the reserve currency in the world and the euro is second. This move will make it more competitive.

The big picture here is the EU has made a very tangible move toward becoming a world power alongside the US and China. It's happening. As far as the Donroe doctrine, the new ECB rules say they won't be disclosing which central banks take advantage of their line of credit, which means Europe could very well extend this line of credit to countries in the Americas, and Trump wouldn't even know.

Next up is the development with the EU's SAFE program. SAFE stands for Security Action for Europe. Again, cutting out the technical stuff, it's a program that provides low-cost long-term loans for weapons and defense investment to member states. Canada has officially joined. Carney signed a while back, but it's official now. Canada, which is in the Americas, has joined an EU defense program. The Canadian Defense Minister said, "The agreement strengthens our collective security, supports the development of key defense capabilities, and gives Canadian industry access to European defense markets while contributing to European and Ukrainian security.”

Then there's the third development that is more speculative. There is serious talk in policy circles about Canada joining the EU. Carney has poured cold water on the idea, which makes sense right now. Because of Trump's 51st state rhetoric, Carney has to maintain a hardline on any perceived sovereignty issues. But this chatter doesn't seem totally idle.

The short version, too late, is that the Donroe doctrine is leading to more European influence in the Americas and a world that has more options for economic stability than just the dollar. This is another step toward the US losing superpower status.

Anyway, it's just a thought. Y'all have a good day.