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How Goes the Trade War?

The post-Labor Day stock markets were all down on Tuesday, and the conventional wisdom is that it had something to do with the ongoing global trade war that President Donald Trump has been waging. Trump insists that China is getting the worst of it, and promises the Chinese will soon come begging to sign the most spectacular trade deal America ever made, with the rest of world falling in line shortly afterwards, but for now the smart money doesn’t seem to be betting on it.
China’s economy is indeed taking quite a beating in the trade war, but a downturn in the world’s second largest economy doesn’t bode well for the global economic forecasts, and around the world the markets are jittery about that. Even here in fortress America the bond markets are signaling that the smart money is nervous about the domestic economy’s short term prospects, business investment has been declining, a closely watched index of America’s manufacturing output just fell below 50 percent for the first contraction since 2016, and the smart money around the world will surely fret about that,
America is also taking quite a beating in the trade war, and its consumers are paying higher prices for Chinese goods or American-made products with Chinese parts, no matter what nonsense Trump spews about the Chinese paying all the tariffs, and the farmers and aircraft workers here in Kansas are losing vital markets, and so far it seems a trade war of mutually assured destruction. Trump remains confident it’s all soon leading to the best trade deal ever, with a stock market bonanza sure to follow, but for now both we and the smart money aren’t so sure about it.
Trump still boasts of his close personal friendship with the Chinese dictator Xi Jinping, but Xi is a dictator-for-life and Trump is a mere president who has to run for reelection next year, and hopes to run on boasts about the best economy ever, so Xi seems in the stronger negotiating position. Perhaps Trump would have a stronger hand if he were negotiating on behalf of an entire world fed up with China’s undeniably unfair trading policies, but Trump has also chosen to feud about trade with most of the rest of the world, and there’s a reason the smart money isn’t betting on the strategy.

— Bud Norman

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Another Foreign Adventure

President Donald Trump is back at the White House after a Group of Seven summit in France, and it was as interesting as the rest of his foreign adventures. As usual Trump didn’t return with any economic or diplomatic or military deals worth bragging about, and as usual he had a number of cringe-inducing moments.
Trump skipped a meeting with the other heads of state about climate change, explaining that he was tied up at more urgent bilateral negotiations with the German Chancellor and Indian Prime Minister, but both leaders were clearly at the climate change confab. He told a reporter that he had entertained second thoughts about waging a trade war with China and that “I have second thoughts about everything,” and his communications team spent the rest of the next day explaining the very uncharacteristic statement by saying that the president misheard the questions and meant to say he regretted not waging the trade war with even higher tariffs. Trump did brag about the big trade deal he’d negotiated with Japan, Japanese Prime Minister Shinzo Abe explained that he’d only agreed to continue negotiations.
There was some further bragging that  two high-ranking Chinese officials had called Trump to indicate their willingness to negotiate a quick peace in the trade war, which heartened America’s stock markets, but by the closing bell the Chinese government denied that any such calls has been made. The president also continued to hector the other leaders about allowing Russian dictator Vladimir Putin back into the club, despite Russia’s continued occupation of Crimea, which Trump blamed on former President Barack Obama because “Obama was outsmarted” and “it could have been stopped with the right whatever.”
Trump also claimed credit that there was any trade talk at all, even though several meetings on the topic were on the schedules handed out the international press at the onset. On the way home Trump “tweeted” that what all other the leaders’ most asked question was why he gets such bad press at home when he’s clearly doing such a bang-up job, a question which none of the world leaders asked publicly.
The next annual G-7 summit is set to be in America, so Trump also made a sales pitch to hold it at his golf resort in Doral, Florida. He spoke of how close it is to the Miami airport, helpfully explained that Miami is a large American city, and went on a such length about the gorgeous rooms and golf course scenery and ample parking that he sounded like a timeshare salesman in Branson, Missouri. Back home the usual nitpickers were making their usual nitpicking gripes about the emoluments clause to the Constitution and how presidents aren’t supposed to be enriching themselves with their office, and the world leaders whose constituents aren’t much enamored of Trump were rolling their eyes the way you might during a sales pitch for a timeshare in Branson.
Trump might yet swing the deal, though, and he needs it. Business is reportedly down in Doral since Trump became president, and Trump is lately griping that he’s losing billions he could have been making on paid speeches and other business deals he could be making if only he hadn’t so selflessly offered himself as a candidate for President of the United States. The nitpickers will nitpick, but Trump will pay them no mind. There’s a good chance the Democrats won’t get the Senate supermajority needed to kick him out office even in the more likely case they can muster an impeachment vote, while the die-hard fans haven’t minded the hundreds of millions his very frequent golf outings to his own wholly courses are costing the taxpayer, they and won’t begrudge him a few hundred million more in payments from foreign governments. By the time all those state attorneys general wend their way through the Trump-packed courts with their emoluments clause lawsuits he will at least be out of office.
The rest of the G-7 might well meekly going along with it, too, but we don’t see America getting a similarly sweet deal.

— Bud Norman

Placing Preemptive Blame

President Donald Trump is assuring the American public that the economy won’t go into recession for so long as he’s in office, and that if it does he’s certainly not to blame. Somehow that does not inspire confidence.
The stock markets have been up the last couple of days and the unemployment rate is still unusually low, while the gross domestic product has lately crawled forward at an Obama-era pace, but there are reasons for Trump and the rest of us to be nervous. The treasury markets recently went into an “inverted yield curve,” an obscure statistic that has presaged every recession of the last 50 years, business investment has lately been down, the federal deficit is up beyond Obama-era levels, such major economies as Great Britain’s and Germany’s are sliding into recession, China’s behemoth economy is rapidly slowing, and since July there has been a 6.4 percent decline in consumer confidence. The global smart money doesn’t seem to have much faith in Trump’s leadership, and increasingly sees it as yet another reason to be nervous.
All of which amounts to another conspiracy against Trump, of course. Trump explains that the “fake news” media — which now includes Fox News — is drumming up potentially self-fulfilling recession prophecies in order to deny him a landslide reelection. The media are merely reporting the official government statistics, but Trump is also skeptical of official government statistics. Back when President Barack Obama was in office and the stats showed slow but steady economic improvement Trump opined that the bureaucrats were cooking the books to make the boss look good. When Trump became president and the bureaucrats continued to report the same slow but steady trajectory he happily embraced it as official government statistics, but apparently anything that doesn’t look good is coming from the “deep state” cabal trying to make the new boss look bad.
Trump is also preemptively blaming Federal Reserve Chairman Jerome Powell, who has not done the severe interest rate-cutting Trump thinks is needed to prevent the upcoming recession that Trump assures us is not going to happen. Powell’s policies are quite prudent if the economy is the well-tuned ad humming machine Trump claims it is, and will come handy if that’s not the case and there are still interest rates to be cut, but if worse comes to worst Trump will have a handy scapegoat in the man he appointed to head the Fed.
No matter what, Trump will insist his global trade wars had anything to do with any global economic difficulties that might occur. He still insists that China is paying those billions of dollars of tariffs rather than the Wax-Mart shoppers, even as he backs off from his latest tariff threat for fear that Christmas shopping might not be as brisk, and there’s not reason a global trade war has anything to do with a downturn in the global economy.
Trump ran for president on the argument that all the military alliances and trading partnerships America had negotiated since the end of World War II were a raw deal, despite the relative global peace and prosperity that followed here and mostly abroad, and a promise that he’d knock it all down and negotiate a far better deal for the United States. So far he’s been fairly successful at the knocking it down part, but he’s not yet negotiated that sweetest deal ever.
None of the world’s dictators nor any of its democratically elected leaders have any reason to bail Trump out by agreeing to his demands for American hegemony, so that sweetest deal ever seems even more elusive. If they face any popular backlash to an economic downturn, both the dictators and the democratically elected leaders will happily and plausibly blame Trump.
On the other hand, the next recession might not happen before the next presidential election. There’s always a next recession, no matter who is president, what with the business cycle being an un-repealable law of economics, but they’re hard to predict. We’ve noticed they usually come at an inconvenient time for Republican incumbents, but despite his six casino bankruptcies Trump has often been lucky in his life.
An alarming 74 percent of the economists polled by the National Association for Business Economics expect a recession by 2021, but they probably have it in for Trump, and we remember the old joke about how economists have predicted the last 30 of the past ten recessions, and we hope they’re wrong. Not for Trump’s sake, of course, as we can’t stand the guy and will gladly blame his wrecking-ball economics if the global economy crashes to the ground, but because we don’t like recessions.

— Bud Norman

That Darned Inverted Yield Curve

The bond market has an inverted yield curve, a fancy term which means that the returns on two-year bonds exceed the returns on ten-year bonds, which means that the smart money is seeking safe haven from a coming storm. In plainer terms, an inverted yield curve has always been a reliable predictor of a looming recession.
Combined with some other distressing data about business investment and manufacturing hiring and economic downturns in such important countries as Great Britain and Germany and China, the news spooked Wall Street so bad that all the stock markets dropped by more than 3 precent with Dow Jones Industrial average having it’s worst day in decade. The three major American stock indexes have dropped a full 7 percent over the past three weeks, the Asian and European and South American markets are similarly panicked, and you can only imagine the anxiety its causing President Donald Trump.
Trump can and surely will still brag about the unusually low unemployment rate and how economic growth has been chugging along at a slightly better rate than the previous six years of the Obama administration, but for now he can’t brag that despite all his faults he’s delivered the greatest economy ever. For now he’s on “twitter” blaming Federal Reserve Chairman Jerome Powell for not more aggressively cutting interest rates, but Trump appointed Powell, whose policies have been in the long term interest of the country rather than the short-term political advantage of Trump, and the smart money isn’t buying it even the rubes in the red MAGA ball caps do.
The smart money seems to think that Trump’s trade wars and deficit spending and petty feuds with longtime allies and trading partners is largely responsible for the mess. When Trump retreated from his threatened increase on tariffs with China on Tuesday the stock market had a good day, which was quickly erased by Wednesday’s carnage, and it’s increasingly clear that the trade wars have taken a toll on the global economy. The Chinese economy has slowed, but given that it’s either the biggest or second biggest in the world that hasn’t helped global economic growth, and given that Trump’s good buddy and Chinese dictator Xi Jinping doesn’t have to worry about a recession during a reelection, So Trump’s not likely to win the greatest deal in the history of the world by election day. The British economy seems in recession due to its “Brexit” from the European Union, which Trump heartily and needlessly endorsed, the German government is blaming a recent economic downturn on Britain’s “Brexit” and a global economic downturn due to frayed trade relations, so the silver lining in the looming storm clouds is hard to find.
We’re not panicked, at least not yet, as the unemployment rate is still low,  but there are reasons to worry. During the last recession, the worst since the Great Depression, a Republican president and a Democratic Congress agreed on a controversial bail-out bill that was hated by both the far left and the far right, but won the endorsement of both major party presidential nominees. In retrospect we begrudgingly admit it might have averted a catastrophic economic meltdown, and note a couple of years later a Democratic president and Republican Congress didn’t get in the way in the longest economic expansion in America’s history, but we worry that such bipartisan solutions aren’t at all possible in the current political climate.
America carefully coordinated its monetary and other economic policies with our allies and trading partners during the last global recession, which might well have averted the worst of it, but that’s harder to envision happening these days. Trump has been antagonistic toward allies, obsequious toward enemies, and is not going to save the day with the greatest deal ever made.
Trump is not entirely to blame, of course. Adding to the world’s economic anxiety is an eye-popping 50 percent drop in the Argentine stock market after one of those Latin American socialist crazies got elected president, and Trump is right to argue that several of the Democratic contenders for his job are just as bad. If the economic excrement hits the fan between now and election day, the Democrats will happily place blame where blame is due but won’t do anything to bale out the country to the political benefit of Trump. None of our longtime allies seem interested in helping Trump, either, except for a few fellow populist and authoritarian nationalists.
Still, we’ll hold out hope for the best and leave it to Trump to worry about the worst. If he can’t run for reelection on the argument that for all his faults he’s wrought the greatest economy ever he’s in bad shape, as he he’s not very popular and has a lot of faults to overlook. We’ll also hold out hope that the damned Democrats don’t nominate some Latin American socialist crazy who would make things even worse, and for all our short-term worries we’ll place our long-term faith in the resiliency of the America’s still more or less free market economy and the eventual genius of the American people.

— Bud Norman

A Trump Retreat in the Trade War

The stock markets were all up on Tuesday, mostly due to President Donald Trump backing off his threats to impose the further tariffs on Chinese imports that have lately been dragging the stock markets down. Trump is loathe to admit a mistake, but he hates a slumping stock market even more.
By backing off his threat of another 10 percent tariff on $300 billion of such popular Chinese imports as cellphones and laptop computers, at least until the Christmas buying season is well underway, lest retail sales suffer, Trump has tacitly admitted that all his talk about how the Chinese are paying the billions of dollars in tariffs rather than the American consumer was pure balderdash. He won’t openly admit it, of course, and his die-hard fans will indulge him the fiction, but the smart money in stock markets and the rest of the world know the score.
Trump somehow became President of the United States on the argument that he wrote “The Art of Deal,” and that as the world’s greatest negotiator he would deliver the greatest trade deals in the history of the world, but for now he’s more intent on maintaining a slow but steady economic status quo. This makes it harder for him to deliver on his promise of that greatest trade deal ever with China in time for his reelection day, as he has clearly blinked in these high-stakes negations and the Chinese are stereotypically wily enough to notice, but if the stock markets are up and the unemployment rate is down ob election day the die-hard fans won’t mind.
This all comes as the brutal Chinese dictatorship is brutally cracking down on pro-democracy protestors in Hong Kong, which Trump cares little about and rightly assumes that most of the voters in America care even less about. and he is not going to express any indignation about that. Trump claims that his very close friendship with Chinese dictator Xi Jinping is the reason that Sino-American relations are going so swimmingly, and he’s not one to let a brutal crackdown on pro-democracy protestors get in the way of a such a beautiful friendship.
November is a long ways off, and the next November even longer off, and there’s no telling how things might be by then. We’ll hold out hope that economy will be chugging along at a slow but steady rate, prepare as best as we can for the worst, and not expect that Trump or any damned Democrat will strike the greatest deal ever made.

— Bud Norman

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

The Latest News from the Trade War

The big story on Tuesday was another round of Democratic presidential primary debates, where the center-left types reportedly clashed with the more leftward types, but our brother and his wife are in town and the weather’s been far too nice to bother with that at the moment. When we got home we were more stuck by the latest on news on the ongoing trade war with China.
President Donald Trump has “tweeted” his assurance that “trade wars are good and easy to win,” but his trade war with China has thus far proved neither good nor easy to win. Trump and his die-hard fans have been telling us for at least a year that China is down on its knees begging for any trade agreement Trump might grant them, but the latest presidential “tweets” signal that the Chinese are willing to hold out for better terms until at least the next presidential election, when they might get the chance to negotiate with another administration. Naturally Trump is blaming the Democrats for daring to choose someone who might challenge him, and promising that if he gets reelected he’ll deliver the greatest trade deal the world has ever seen, a trade deal so great your head will spin.
We don’t have much faith any of these Democratic contenders will do any better, but neither do we worry our heads will fatefully spin with what Trump brings about. The trade war is is definitely harming China’s economy, as Trump triumphantly “tweets,” but only the most slack-jawed yokel in a red “Make America Great Again” ball cap believes that America is benefiting from all those billions of tariff dollars the Chinese are pouring into our best-ever economy. The tariffs are being paid by the MAGA-cap-wearing suckers lined up at Wal-Mart with a basketful of Chinese goods, the world’s two biggest economies are both taking a hit, the rest of the world’s economy are slowing as a result, and it all makes it somewhat more likely another administration will finish the negotiations. Chinese dictator Xi Jinping, described by Trump as a “close friend,” doesn’t have to worry about any upcoming election campaigns, and survive an economic slowdown more easily than any head of state from a more or less democratic nation.
Once upon a time in the Grand Old Party we could have imagined well-credentialed Republican experts dealing with China, and such establishment presidents as Eisenhower and Nixon and Reagan and a couple of Bushes guiding them along. China is indeed an unfair trading partner, stealing intellectual property and occasionally manipulating its currency and charging unfair tariffs, but they’re doing that to the rest of the world, too, and we think a unified world could convince them to stop. Trump has instead chosen to start trade wars with the rest of the world, but most of these Democrats are even more isolationist and protectionist than Trump, and those well-credentialed Republican experts who use to handle these matters in a way that furthered global peace and prosperity are sitting next to us on the political sidelines.
On such a sunny summer day as this,  and with our brother and  sister-in-law in town, we’ll hope for the best.

— Bud Norman

The Latest Round in Trump’s Bout Against Mexico

As it turns out President Donald Trump won’t be imposing drastic new tariffs on Mexican imports, an idea he proposed that alarmed every serious economist and all the stock markets and big businesses and small farmers and even more than a few congressional Republicans, and he’s proclaiming a great victory about the concessions Mexico has yielded in response to the threat. At the very real risk of being called enemies of the people, we think Trump merely averted disaster.
Trump threatened the tariffs to get Mexico to do more to stop the flow of migrants from Central America, and Mexico has apparently agreed to deploy some military units to its southern border and detain on its own soil the asylum-seekers who have recently reached its northern border while the American justice system sorts out all the tricky legal details of their numerous cases. That’s enough that Hugh Hewitt, the conservative commentator and radio talk show host who was a fellow steadfast Never Trump type until Trump won the Republican nomination, proclaimed in the headline of an op-ed piece in The Washington Post — of all places — that “Trump’s big win leaves critics sputtering.”
With all due respect to the once-respectable Hewitt, the critics don’t seem to be sputtering. In its usual careful and confident cadence The New York Times reported that the Mexican government had already agreed to both demands months before Trump issued the threat, other conservative and liberal media have noted without any discernible stuttering that the Mexican government has been either unwilling or unable to make good on promises made in the face of Trump’s even crazier threat to shut down the entire border between Mexico and the United State. For now it’s probably best to wait and see if Trump’s big win resolves or even slightly eases the admittedly serious situation on our southern border, and to hold out only faint hope.
Trump responded to The New York Times with an extended “twitter” tirade, concluding that “the failing @nytimes, & ratings-challenged @CNN, will do anything to see our Country fail! They are truly The Enemy of the People!” He returned to “twitter” to gripe that if President Barack Obama had struck such sweet deals “the Corrupt Media would be hailing them as Incredible, & a National Holiday would be declared.” We’re supposed to pity Trump even in his moment of triumph, as there are clearly seditious sorts out there who dare question what he says, but it looks like sputtering to us, and poorly punctuated sputtering at that.
The disaster that surely would have followed those threatened tariffs or a complete border shutdown has for now been averted, though, and for now Trump is entitled to crow about that. Sooner or later Mexico’s nationalist instincts will be roused to resist Trump’s nationalism, on the other hand, and there’s no telling what Trump do then, except to say it will work out badly for all involved. Mexico will probably get the worst of it, which will allow Trump to claim another big win, but that doesn’t mean that America will be any better off.

— Bud Norman

The First Casualty of the Trade War

Trade wars are good and easily won, President Donald Trump assures us, but we have to admit they make us nervous. Somehow we can’t find a single case in the past several millennia of economic history where a trade war was anything but disastrous and anybody actually won, and with the bluntness Trump’s fans so admire we’ll just come right out and say that we don’t expect his generalship will make his ongoing trade wars come out any better.
Since taking office Trump has been taking on pretty much the entire world, having won the presidency partly on the gripe that the entire world has been taking advantage of America ever since it emerged from the post-World War II ashes as the world’s preeminent economic and military and cultural power, but his biggest battlefront has been with China. On Friday Trump further raised the tariff on $200 billion worth of Chinese goods from an already-high 10 percent to 25 percent, which he apparently is allowed to do under the current constitutional order, and before the closing bell on today’s stock markets China is expected to retaliate in kind. The stock markets have been wildly down and then incrementally up throughout the squabble, on fears that Trump is screwing up a carefully built post-World War II international economic order that has for the most part brought increased peace and prosperity to the world and then faint hopes that the great dealmaker might yet deliver on his promise of the greatest deal ever made.
China is indeed a devious trading partner that dumps its excess supplies on world markets and steals intellectual property and occasionally manipulates its currency and exploits more or less slave labor, as Trump claims and even the looniest Democrats agree, so we’ll not deny that a tough negotiating stance is required. Even so, China has emerged from its post-World War II ashes with an economy that is huge by any measure and even bigger than ours by some suspect measures, and it’s a major client of the agricultural and aviation export industries that make up a huge chunk of our beloved Kansas economy, and we’d prefer it was dealt with in a cautious, carefully deliberated way, informed by history and the best expert opinion. Cautious and carefully deliberated and informed by history and expert opinion is clearly not Trump’s style, on the other hand, so for now we’ll remain just as nervous as the stock markets.
We’re just as rank amateurs about all this global economic order stuff as Trump, but with a bravado he might admire we’ll say we’ll go right ahead and say we would have played it differently. China is indeed taking advantage of America in various insidious way, but it’s doing the same to the rest of the world, so we would have availed ourselves of that Leader of the Free World status America’s wiser leaders rightly earned in the post-war years to unite the rest of the Free World and its overpowering economic might against China, which would surely realize it couldn’t take on the rest of the planet, and might even agree to free trade and human rights and full membership in the modern world. Rank amateurs that we are, we note that even the looniest Democrats and the most impeccably credentialed old-fashioned Republican foreign affairs and trade policy experts seem to agree.
Trump is a bolder sort of fellow than ourselves, however, and he chose to take on the rest of the world, so we have no choice but to hope he’s right. His routine renegotiation of the re-branded North American Free Trade agreement has a few billion in upsides for Wisconsin dairy farmers and a few other industries, which Trump claims are the difference between the worst and best trade deal ever negotiated, but it’s currently stalled in the Republican-majority Senate because of the tariffs Trump used in the negotiations that are currently hurting the economies of states held by free-trade Republicans. Meanwhile in the rest of the Free World the European Union is going through a nasty divorce from the United Kingdom. and Trump is taunting the British Prime Minister with sneering “tweets” and threatening the EU with higher tariffs, and demanding they all pay more for the North Atlantic Treaty Organization. Trump’s Latin American foreign policy seems in retreat in Venezuela, we can’t discern any policy for the “shit-hole” countries in Africa, North Korea is once again conducting missiles test in Asia, where we’re threatening trade wars against everyone, and the possibility of a united front against those undeniably devious Chinese seems remote.
Trump and his most ardent admirers would have us believe that he’s a self-made multi-billionaire who can easily best these Chinese bums in international trade negotiations, but we’ve read enough of the “fake news” to know that he’s a billionaire’s son who’s gone bankrupt six times in casinos and strip-clubs despite house odds and bare breasts, and ran airlines and football teams and scam universities and other ventures in into the ground, and given his well documented business record we don’t trust in his acumen to run an international economy. He’s lately been crowing about all the money his tariffs have been bringing to the federal treasury, but his national economic council director Larry Kudlow had to acknowledge on one of the Sunday news shows that the money is coming from American consumers rather than China, and sooner or later the average Wal-Mart shopper will notice that Trump tells a lot of lies about his trade wars. Our guess is that those wily Cheese have already noticed, and that we’re in for a bumpy ride.

— Bud Norman

The Good, the Bad, and the Ugly News

The economic news has been undeniably good lately, with the unemployment rate lower than it’s been since the height of the Vietnam War and the gross domestic product growing incrementally faster than it has in more recent history, but the rest of the stories in the papers look bad for President Donald Trump.
Although Trump has been doing a celebratory end zone dance ever since the special counsel investigation into the “Russia thing” ended without any indictments against him, the problem still lingers. Attorney General William Barr had a hard time answering the Senate judiciary committee’s questions about his rather rosy four-page assessment of the report’s 400-plus pages, then declined the House judiciary committee’s request to go through a more thorough grilling about the matter, and now there’s talk of a contempt of Congress citation. Barr had testified to the Senate that he had no problem with special counsel Robert Mueller’s own bad self giving his account of the report to Congress, but Trump has since declared that he won’t allow any further questions from anyone about the report that he claims completely exonerates him, and that doesn’t look good.
The damned Democrats in Congress are asking all sorts of other pesky questions, and Treasury Secretary Stephen Mnuchin is contesting a law which seemingly requires him to turn over the presidential tax records that might yield answers, which also doesn’t look good. The courts will eventually settle all of it in one way or another, but the state and federal judicial system is also pursuing 16 criminal cases that were referred to other Justice Department jurisdictions and therefore redacted from the special counsel’s report, and we expect all of those to look bad. There’s also ongoing news about the illegal immigrants Trump seems to have hired and exploited at his still wholly-owned businesses, the security clearances he granted for family and friends despite the objections of intelligence officials, a few lawsuits filed by state attorneys general alleging that Trump’s still wholly-owned businesses impeachable violate the Constitution’s emoluments clause, and a few other problems too numerous to recap here.
So far America isn’t entering any new wars, but the old low-level ones in Syria and other hotspots continue, and Trump is leaving a military option open for Venezuela’s disastrous but purely domestic problems, and he sending a carrier fleet to counter the recent bellicosity of Iran, which Trump promised would never dare challenge America so long as he was president. Trump also promised the American public it could sleep soundly at night without worrying about a North Korean nuclear threat, and although it was obviously premature he was able for a time to note that at least North Korea wasn’t doing any missile tests, but lately they’ve been once again testing missiles.
While the economy continues to chug along, Trump can only claim so much credit. Despite two years of Republican control of both chambers of Congress the only significant legislation affecting the economy that was passed and signed into law was a big tax cut, which so far resulted in the kind of budget deficits that the hated President Barack Obama sanctioned in the darkest days of the Great Recession, and at a time when Republican orthodoxy would be paying down the national debt. Trump has used his executive powers to roll back a lot of ridiculous federal regulations, but a lot of airline travelers and other consumers are likely to note he’s also reversed some reasonable ones that saved them some serious money. As orthodox Republicans we still blame Obama for the late and initially sluggish recovery that followed the Great Recession, which we still insist was caused by the Democrat’s crazy Clinton era subprime mortgage lending policies, but as objective observers we have to admit the economy has lately been more or less on the same upward trajectory that it had been during the final days of the Obama administration. Fairness compels us to admit that at least Trump hasn’t screwed that up.
Being no fans of either Obama or Trump, we give all the credit to the remarkable resilience of America’s free market economic system and the steady hand of those quasi-governmental know-it-all bards at the Federal Reserve Board. Despite our amateur advice they kept the economy going through the dark days by printing up dollars and distributing them at near-zero interest rates, which eventually started something of a boom, so we humbly admit it didn’t result in the hyperinflation we’d worried about and was possibly a good ideal. Now that Trump is bragging about the greatest economy ever, which according to both Republican orthodoxy and the left wing’s Keynesian economics is a time for higher interest rates and quantitative easing of the money supply and paying down debt, Trump is trying to get the Fed to keep the monetary pedal to the metaphorical peddle. Alas, his own chosen Fed chairman disagrees, and Trump’s two latest nominees to the Fed board have been obliged to withdraw their names from considerations because they’re both so ridiculous that even some congressional Republicans wouldn’t go along.
During his surprisingly successful presidential campaign Trump promised to make America great again by bullying the country’s trading partners into more favorable trade deals. “Trade wars are good and easily won,” Trump tweeted to the nation, with the same cocksureness as when he assured us we could sleep soundly without fear of North Korea’s nukes, but so far that’s also not turning out well.
Trump got some billion-dollar concessions for America’s dairy industry when the renegoiated the North American Free Trade Agreement, which he claimed was the difference between the worst trade deal ever and the best trade deal ever, but his rebranded US-Canada-Mexico Treaty is having a hard time getting ratified by the Senate, where the Republicans still hold a slight majority. Republicans in agricultural states, which as always are crucial to the party, are reeling from from the declining commodity prices that have resulted from the rest of the world’s inevitable retaliation against Trump’s tariffs, and other Republicans from states where their export-driven economies don’t need Trump’s protections are also restive.
Meanwhile,Trump’s trade war with the far more formidable opponent of China doesn’t seem either good nor easily won. Trump continues to play hardball with the Chinese, threatening to up the tariffs on Friday if they don’t accede to his demands, but the congressional Republicans from states and districts that used to do a lot more export business with China are balking, and of course even the Democrats from the states and districts that might benefit from Trump’s protection from China’s imports are disinclined to side with the president, and anyone paying higher prices on the Chinese-made goods at at Wax-Mart is likely to be irked.
The good news for Trump is that for now the economy seems to be chugging along well enough, and that so long as it does and nobody gets nuked a sufficient number of voters spread around the electoral map won’t care much about the rest of the news. The bad news for Trump is that the economy tends to go up and down no matter who’s in the White House, and unnecessary trade wars and military interventions in Latin America never seem to help, and if the economic news sours the rest of the stories in the papers in 2020 will suddenly be outrageous.

— Bud Norman