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What the Scandals Obscure

All the news lately is about the Democrats’ increasingly rapid rush to impeach President Donald Trump for all sorts of increasingly plausible reasons, and that might well redound to Trump’s benefit. There’s always an outside chance it all turns out to be a “deep state” conspiracy that vindicates the president and exposes all his enemies, and for now it’s distracting attention from some worrisome economic news.
You might have never heard of the Institute for Supply Management’s manufacturing index, but the stock markets watch it closely enough they took a dive on Tuesday when it reported that for the second consecutive month the manufacturing sector of the economy was in contraction, this time more severely than the month before. Farm bankruptcies are lately up, too, along with farm suicides, and growth in both the overall American economy and the interconnected global economy is clearly slowing, with several big and important national economies already in recession.
Which is bad news for assembly line workers and farmers and stockholders and eventually everyone else in the entire world, but it’s also very bad news for Trump. Despite three years of unrelenting scandals and outrageous “tweets” and deliberate provocations Trump has generally stayed above 40 percent in the public opinions because the grow domestic product and stock markets were up and the unemployment was rate low. The trajectory wasn’t much higher than it had been during the last six years or so of the hated administration of President Barack Obama, but it gave Trump and his talk radio apologists something to brag about, so all the die-hard Trump fans and a lot of the more reluctant supporters were willing to put up with all the rest of it.
All the rest of it is pretty hard to put up with, though, at this point even for the die-hard fans, and harder still if Trump can’t run for reelection on the boast of the the greatest economy ever. He won his first Electoral College victory despite losing the popular vote by three million or so because of the Republican party’s longstanding hold on the prairie and southern states and a mere 70,000 votes spread around the usually Democratic Rust Belt states of Pennsylvania and Wisconsin and Michigan, where they bought into his promises that he’d revive the agricultural and manufacturing sectors. Neither are faring at all well at the moment, many economists fear the service sector will be dragged down along with them, and if current trends continue for another 13 months Trump might well lose to even the looniest left nominee the damn Democrats might come up with.
There’s a strong argument to be made, after all, that Trump’s unilaterally waged trade war against most of the world is the primary cause, or at least has something to do with it. The tariffs have raised prices on foreign goods not only for the Wal-Mart customers but also for the manufacturers of everything that requires foreign parts, which is a lot stuff, which is bound to be bad for business. Of course the retaliatory tariffs have essentially barred America’s farmers from the lucrative global markets they’d come to rely on, but Trump boasts that “I sometimes see where these terrible, dishonest reporters will say ‘Oh Jeez, the farmers are upset.’ Well they can’t be too upset, because I gave them $12 billion and I gave them $16 billion this year.”
Of course Trump didn’t reach into his own pocket for that sum of money, which is more than Obama spent on the automakers’ bail-out, which at the time outraged all the farmers and the rest of Republican party, but we expect a lot of farmers will be mollified, along with a lot of laid-off factory workers, even if they still come out on the short end of the stick. Part of Trump’s appeal to these voters is his shared hostility toward the pointy-headed know-it-alls from the coasts who want to take away their semi-automatic rifles and reconfigure the ethnic makeup and sexual orientation of America, and they’re willing to endure the pain while Trump delivers the greatest trade deals ever.
>He’s not yet delivered one, though, and at this point he seems unlikely to strike one in time for reelection. The Chinese dictatorship can endure its people’s hardships more easily than an American president with a pesky free press and upcoming election ever can, and being stereotypically inscrutable Asian types they regard the next 13 months or so as a mere blink of the eye, whereas Trump likely sees it as a hellish eternity. Trump is still feuding with the European Union and the Brexit-ing British, along with most of South America and Africa and all the Asian countries that used to be on board with a Trans-Pacific Partnership treaty aligned against China, until Trump pulled out of the Obama-era pact. Restoring mutually beneficial trade among the nations seems out of reach for the next 13 months or so, much less the greatest trade deals ever.
The smart money on Wall Street seemed to think so on Tuesday, and we expect that the factory workers and farmers will also notice if Trump’s grandiose promises aren’t kept. There’s no longer any semblance of a free market Republican party and none of the damn Democrats are willing to abandon their traditional protectionist instincts and thus don’t have much to say about it, as they do seem more preoccupied with reconfiguring the ethnic makeup and sexual orientation of the country, so we’ll sit on the sidelines and see how it all turns out. If the economy isn’t rosy come election day, the rest of it will smell very bad.

— Bud Norman

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Casualties of the Trade War

Trade wars are harder to assess than military wars, where you can tell who’s winning and losing by such metrics as ground gained or lost and casualties inflicted or suffered. The stock markets are probably the best indicator of how a trade war is going, and lately they indicate that President Donald Trump’s trade war with China is not going well.
When the Dow Jones Industrial Average hit a record high on July 15 Trump took full credit, but we don’t expect he’ll assume any responsibility for the 2.9 percent drop on Monday nor the 6 percent drop since the record high. The huge sell-offs in nearly every sector of the economy have clearly been a response to the tariffs Trump had imposed on Chinese imports and the retaliatory tariffs China imposed on the considerable exports America’s agricultural and aviation and other high-tech industries relied on selling to the first or second largest economy in the world. China has also signaled it will resume manipulating its currency to gain a foreign trade advantage, Trump has urged via “tweet” that the Federal Reserve Board retaliate by artificially weakening the dollar, and so far the smart money isn’t buying Trump’s assurances that America is going wind up with the greatest deal in the history of the world.
We can’t claim to be smart money, but we’re longtime observers of geopolitics and global trade and domestic political pressures, and we figure the smart money is right to be worried. Trump claims to have a Nietzschean will to power and personal rapport with Chinese dictator Xi Jinping that will soon result in that greatest deal in the history of the world, but he went bankrupt several times in the casino business despite house odds and he’s clearly in the inferior position in these asymmetrical negotiation.
Trump’s trade policies are inflicting severe damage on China’s economy, but his good buddy and brutal dictator Xi needn’t worry about that. He doesn’t have to face reelection, the repressed Chinese press isn’t going to make a fuss about an economic downturn, protesters will be cowed from gathering on the streets, the country’s privately held businesses will try to stay privately held, and in keeping with China’s ancient traditions Xi’s looking well past the current spat and a hundred or so years down the road.
Trump, on the other hand, has to deal with the daily headlines from that pesky free press and independent Fed and powerful companies and restive farm state Republicans and the rest of our democratic process, and he never thinks beyond the next news cycle. As much as he clearly envies his dear friend Xi’s dictatorial powers, Trump is obliged to appease the gods of the stock market and public opinion. There are just 15 months until the next presidential election, which is a blink in the eye of a Chinese dictator and an eternity to an American president, so between now and election day we don’t expect Trump to deliver to America the greatest trade deal in the history of the world.
The best case scenario is that Trump agrees to a desultory return to the status quo, with China making some slight concessions in their undeniably unfair trading practices, and Trump’s die-hard fans calling it the best trade deal in the history of the world. The smart money won’t be impressed, but given how crazy the Democrats are these days Trump might yet win reelection if the stock markets are slightly up and the unemployment rate remains low.

— Bud Norman