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There are certainly limits to the level of which trade deficits can grow. When they increase excessively the supplying nations will certainly reconsider there supplies. Certainly in a world where demand in not the problem. Why deliver to bad paying customer if the customers with money in the pocket are lined up with their demand. Rising energy prices accelerates the trade deficit of energy deficit nations. If they don't address PeakOil and become energy independent they will loose supply just overnight. Cuba has faced this in 1991 when the USSR collapsed and they don't have the foreign currencies they needed for purchasing elsewhere. Economists and sociologists researching PeakOil should be extreme interested in Cuba her PeakOil (both price and not-granting based) like situation of 1991. Ukraine faces this almost each quarter as they're mostly due trade deficits to late with their payments to Gazprom. By the Ukraine is also a transit country for Gazprom they're in a position to also cut of the gas supply to Europe, giving them the possibility to play power ball themselves. Trade deficits are also the most objective sign of the structural economic health of a nation. PeakOil increases trade deficits more than reality is ready, willing and able to accept. PeakOil could have the same effect as the Versailles Treaty had in Germany post World War I.

Author: Gijs Graafland

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