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A Prisoner of Trade War

Both sides of the American-Chinese trade war are now declaring a temporary cease-fire and trying to calm the global stock markets, but the arrest of someone named Meng Wanzhou, who is the chief financial officer of some Chinese company called Huawai, seems likely to complicate the armistice negotiations.
We’re embarrassed to admit that we’d not previously heard of of Huawai, which has only a tiny share of America’s lucrative “smart phone” market, but it’s apparently such a major player in the even more lucrative global market that it’s often called “China’s Apple.” Of course we’d also not previously heard of Meng, but apparently she’s the daughter of the Huawai’s founder and its presumptive next chief executive officer, so her arrest on charges of violating export controls and sanctions on Iran and other countries is being likened to China locking up Steve Jobs’ daughter and the presumptive CEO of Apple, which we figure would be a pretty big deal here.
Meng was arrested by Canadian authorities while on business in that country, but it was at the request of American authorities, and her extradition to this jurisdiction will likely be quickly expedited, so the metaphorical ball is now literally in America’s courts. So far as we can tell the charges meet the prima facie standard for an indictment, but most of our allies and President Donald Trump himself also stand credibly accused of playing fast and loose with international sanctions, so we’ll hold to faint hope that America’s judicial branch properly sorts out all the legal issues.
As for the geopolitical and international economic implications, those seem too complex to calculate and too much to hope for. Meng might prove such a formidable bargaining chip that the Chinese fold, to borrow a poker metaphor, but it’s also possible those inscrutable Chinamen will gladly sacrifice a mere daughter to save face, to borrow a grotesquely racist stereotype yet undeniably plausible outcome. Chinese dictator Xi Jinping doesn’t have to worry much about a pesky free press and an independent judiciary and public opinion, and perhaps cares even less about some capitalist pig dog’s daughter, while Trump can only wish for such freedom from constitutional restraints. All of Trump’s casinos went bankrupt despite house odds, and this Xi fellow seems an inscrutably wily Chinaman, if you’ll forgive the poker and racist metaphors, and we don’t expect this Meng woman’s fate to figure too significantly in the outcome.
The American stock markets dropped alarmingly on Tuesday, then took a day off on Wednesday to honor the funeral of President George H.W. Bush and his bygone era of American greatness, and then dipped deeply again on Thursday after the news of Meng’s arrest. By the end of the day the stock markets were reassured by some carefully reassuring language about the generally healthy economy from both XI and Trump and the heads of the Federal Reserve Board and the International Monetary Fund and the rest of the globalist financial establishment, and two of the major indices were largely unchanged and the third was ever so slightly up, so for now the smart money is holding out hope.
We’re holding out hope that things will muddle along, too, but we don’t expect that anyone ever will claim a complete victory.

— Bud Norman

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The Day After the Funeral

The stock markets and the special counsel investigation into the “Russia thing” and the rest of the news took a day off on Wednesday for the funeral of former President George H.W. Bush, but the pause offered little respite for current President Donald Trump.
In keeping with its classy ways the Bush family invited Trump to attend the state funeral at the National Cathedral, although they didn’t grant him the traditional eulogy that sitting presidents give for past presidents, and to his credit Trump was on his best behavior. He was clearly uncomfortable, though, sitting next to the former president he had falsely accused of being unqualified by virtue of a foreign birth, and the former president he had falsely accused of lying America into a war, and the former First Lady he has long vowed to lock up, as well another former president he has called the second-worst ever. Worse yet, Trump had to sit through several speakers praising Bush’s war heroism and expert statesmanship and gentlemanly demeanor and and genuine compassion for others and self-effacing sense of humor, and perhaps contemplate how even his most die-hard fans won’t be able to say the same at his own inevitable funeral.
Worst of all, Trump surely knew that the stock markets and the special counsel investigation and the rest of the news all resume today, and that it’s not likely to make him look good.
The rest of the world’s stock markets were open for business on Wednesday, and were just as panicked about Trump’s trade war with China as the American markets were on Tuesday, and today probably won’t bring that greatest-ever deal that Trump has promised with China. Trump might yet bully the all-powerful Chinese government and its formidable economy into submission, but for now the stock markets aren’t betting on it.
The mainstream media that used torment Bush for his mostly forgotten missteps spent most of Wednesday heaping praise on his war heroism and expert statesmanship and gentlemanly demeanor and everything else they suddenly miss about a bygone era of compassionate Republican conservatism, but they also found some time to speculate about some scary developments in the special counsel investigation of the “Russia thing.” Trump’s former campaign foreign policy advisor and short-lived administration national security advisor, the former three-starArmy Gen. Michael Flynn, has pleaded guilty to some serious felonies and stands credibly accused of several more, and on Tuesday it was revealed in open court that the special counsel is recommending no jail time partly because of the defendant’s long and distinguished military record but mostly because he’d been a genuinely repentant and very helpful witness in three ongoing criminal investigations. Special counsel Robert Mueller is a decorated Marine veteran of the Vietnam War himself and is no doubt taking Flynn’s undeniably distinguished pre-Trump career into account, but we doubt that Flynn would have gotten such a sweet deal without providing some pretty damning testimony along with documentation to back it up, so it will be interesting to see what Trump “tweets” about it today.
Trump is already “tweeting” some controversial “tweets” about his longtime lawyer and former campaign manager and a longtime pal with a very unsavory reputation dating back to the Nixon days, and his namesake son and favorite daughter and son-in-law are also caught up in “Russia thing” stories, and it’s getting harder for all but the most die-hard Trump fans to dismiss it all as “fake news.” The rest of the news, from the Korean peninsula to the soon-to-be-installed Democratic majority in the House of Representatives, is similarly foreboding. Trump might yet strike that artful deal that makes America great again, but for now both ourselves and the smart money aren’t betting on it.

— Bud Norman

Casualties of the Trade War

Trade wars are good and easy to win, according to one of President Donald Trump’s most famous “tweets,” but the smart money on Wall Street seems to disagree. The Dow Jones Industrial average plummeted a scary 799 points on Tuesday, the other major stock market indices dropped a similar 3-plus percent, and the clear cause was Trump’s apparently ongoing trade war with China.
After a dinner meeting with Chinese President Xi Jiping at the G-20 gathering Argentina on Saturday Trump announced that he’d won such majors concessions from China as huge agricultural buys from American farmers and eliminating any tariffs on American-made automobiles, and was therefore prepared to pause a trade war that has thus far proved disastrous for both countries, which led to big stock market gains on Monday. By Tuesday the Chinese were denying they’d made anything like the extraordinary concessions that Trump had bragged about, Trump’s economic policy advisors were walking most of it back, and Trump himself was “tweeting” that “President Xi and I both want this deal to happen, and it probably will. But if not remember, I am a Tariff Man.” A later “tweet” shouted that “We are either going to have a REAL DEAL with China, or no deal at all – at which point we will be charging major tariffs against Chinese product being shipped into the United States.” Despite the poor grammar, the “tweets” clearly communicated that the trade war continues, and won’t be easily won, so the smart money on Wall Street responded accordingly.
On our way home from an evening chore we heard one of the right-wing talk radio talkers say that Trump had nothing to do with the stock market drop, and he somehow blamed it on the Apple and Boeing companies instead, but Trump and his apologists always find someone else to blame. We’re more inclined to believe the smart money opinion of the JPMorgan financial juggernaut, which told its investors in a trading note that “It doesn’t seem that anything was actually agreed to at the dinner and White House officials are contorting themselves into pretzels to reconcile Trump’s tweets (which seem if not completely fabricated then grossly exaggerated) with reality.” We’re not impressed much by JPMorgan’s prose style, either, but it does clearly communicate the truth of the matter.
Trump’s apologists would do better to argue that China’s trade policies well deserve an aggressive response, as they do indeed charge unfair tariffs and make the theft of American intellectual property a condition of doing business with American companies and benefit from the slave wages paid to many of China’s workers, but it’s harder to argue that Trump is winning. As bad as China’s trading policies might be, Trump was claiming full credit for a booming stock market and rising commodity prices when he declared the trade wars with China and most of the rest of the industrialized world, so he can’t dodge blame for things going downhill ever since. Trump’s bad habit of doing his end zone dance before he reaches the goal line make him look the more ridiculous to the American public and on the world stage every time, and harder for him to make that great deal he’s always promising. China’s dictator Xi doesn’t doesn’t have to worry about public opinion, and although world opinion doesn’t favor him it does take him seriously, and China’s economy is either the biggest or second-biggest in the world, depending on how you figure it, and prematurely boasting about the concessions you won from him probably isn’t the best negotiating strategy with a wily Chinese leader and his traditional Chinese obsession with saving face.
The sort of low-key and culturally-sensitive and behind-the-scenes negotiations that might have yielded improved trade relations between China and a formidable American economy and steadfastly principled  and experienced American president aren’t Trump’s style, however, and for now we expect more tariffs and “tweets” and stock market downturns. In the long run Trump might yet get the greatest deal ever with his bull-in-a-china-shop approach, if you’ll forgive the culturally insensitive cliche, but on Tuesday the smart money wasn’t betting on it.

— Bud Norman

What’s Good for General Motors …

Being the hard-nosed and hard-hearted sorts of old-fashioned conservatives who embrace Adam Smith and Milton Friedman and their red-in-tooth-and-claw school of laissez faire capitalism, we’ve always voted against those damned Democrats for fear they’d arrogantly think they could run our incomprehensibly multi-trillion dollar economy better than the free markets comprised of the free men and women  who actually make it happen. Now we’ve got a Republican president who arrogantly thinks he better knows how to run both big and small corporations better than the executives who have made them successful, however, and at the risk of being called Republicans in Name Only we can’t say we like that any better.
The constantly feuding President Donald Trump’s latest feud is with the iconic and still-formidable General Motors Company, where the brains behind the operation have decided that their long-term fortunes require them to shut down five plants and lay off 14,000 workers in the United States, which Trump would prefer they not do, and he’s threatening whatever punishments he has at hand if they go ahead and do it. Most of those plants and workers are in some of the industrial midwest states that provided Trump his improbable electoral victory based on his promises he would protect manufacturing jobs, so we can well understand his political calculations, but Trump’s underlying economic theory is not so obvious.
General Motors’ explanation is that by shutting down those five plants and laying off those 14,000 workers they can reinvest the money they’re currently losing in more efficient plants with workers building more profitable products in the scarily looming days of self-driving cars and other high-tech automotive gizmos, and that if they don’t the whole company and all of its workers might eventually be out of business. We don’t know any more about the automotive industry than Trump seems to, but given General Motors’ long tradition of existence to its workers and customers we’re inclined to believe its executives have a better grasp of the company’s situation than we or Trump have. We’ve long observed that success of capitalism involves some creative destruction, and this looks like one of those situations.
We have sincere sympathy for those 14,000 thousand workers and everyone in those five communities that will see a major segment of their economy shut down, even if they don’t affect our non-existent political careers, but we’d hate even more to see the rest of General Motors’ hard-working employees eventually be put out of work in a futile effort to sustain an unsustainable status quo. We’ll always remember how our beloved Boeing executive Dad used to agonize over the layoffs he was sometimes forced to make to keep that company the world-beating entity it is today, Life is undeniably tough in the red-in-tooth-and-claw free market world, yet it does seem to get better over the long run, and so far we haven’t found any damned Democrats or damned Republicans who can credibly claim to make it better yet.
So far this Trump fellow’s meddling in the economy strike us as arrogantly intrusive as anything that even a self-proclaimed socialist such as Sen. Bernie Sanders or any damn Democrat might have done if they’d had the chance. Republicans used to complain that Democrats wanted to choose the winners and losers, but Trump’s trade wars have provoked retaliatory tariffs and thus chosen the steel-making sector of the economy over the steel-using sector that includes General Motors, the coal-mining industry over the many industries that would prefer to use less expensive and more environmentally-friendly sources of energy, and he also prefers the mom and pop Main Street retailers over an e-commerce giant offering better prices whose owner also happens to own that troublesome Washington Post. So far it’s worked out well enough, but recent trends and ancient history suggest it won’t last forever.
Trump is still feuding with the iconic and steel-buying Harley-Davidson motorcycle company, which shifted some work to Europe to get around Trump’s trade war with that entire continent, and now he’s threatening tariffs that would raise the cost of the Apple Computer Company’s hugely popular designed-in-America but made-in-China I-Phones by a hundred bucks or so, which probably won’t play well with young voters.  Apple dominates the huge high-tech sector of the American economy that has lately been taking a beating on the stock markets, which was helped wipe out all of the last year’s overall stock market gains, so the threat strikes us as both economics and bad politics.
Trump is currently blaming the stock market’s recent swoon on the guy he appointed to be Chairman of the Federal Reserve Board, which has recently nudged interest rates up slightly to a point that’s still far lower than historic norms in response to what Trump boasts is the great American economy ever, but we trust that the Fed knows more about monetary than Trump or we do. The inflation rate is a full 11 points or so lower than the worst we’ve seen since way back in the ’70s, but it is outpacing the modest gains in wages that Trump likes to brag about, and the Fed seems to be acting according to the time-honored economic principles that the free market has mostly thrived on. Lower or at least steady interest rates would be a short-term gain for the president, especially after two trillion dollars of debt that’s been racked up by his administration despite the best American economy ever, but in the long run we’ll better trust better than Trump the time-honored economic principles and the creative destruction of the free markets.
Nowadays that makes us Republicans in Name Only, and we have no faith any damned Democrat would do any better than Trump has, so for now we don’t have much say in the matter. Those immutable laws of economics and their awesome market enforcements are more powerful than  anything n the universe anything but God, however, and General Motors and Harley-Davidson and the Federal Reserve Board still hold some significant sway, and we expect they will eventually prevail over such puny forces as Trump or those damned Democrats.

— Bud Norman

The Art of the Unfinished Deal

Monday’s news was  full of the usual ominous legal developments regarding the “Russia thing,” as well the continuing fallout from President Donald Trump’s petty ongoing feud with the late Arizona Sen. John McCain, but there was also a rare story about actual policy matters. Trump has made some progress in his trade negotiations with Mexico, and naturally he was eager to overstate the accomplishment.
The White House press corps was invited to listen in on a congratulatory phone call between Trump and Mexican President Enrique Pena Nieto, and although there were a few embarrassing moments of silence while the staff scrambled to get the line working, both presidents praised what they’ve agreed to thus far and lavishly praised one another. Nieto also said three times in the brief call that he was hopeful Canada will also join in the agreement, which seemed to annoy Trump, and by the end it was clear that a deal had yet to be sealed.
The good news that a more cautious president would have modestly touted is that Mexico has agreed to new trade rules for automobiles, intellectual property rights and labor regulations. Such tweaks to current North American Free Trade Agreement are likely to keep some car-making jobs in the United States and Mexico rather than Asia, make it harder for foreign competitors to steal corporate America’s innovations, although Trump didn’t make a big deal of it many Mexican workers will get a big raise and safer working conditions.
The bad news that a more honest president would have admitted is that the new rules will likely make your next new car more expensive, China and the rest of the worst thieves of America’s inventions aren’t involved in the deal at all, and that the vast non-automotive sectors of the Mexican economy might take a hard hit that sends more Mexicans heading to the cross the border in search of work. Trump didn’t get the concessions he wanted on various tariffs, and he made concessions to Mexico about the length of time before he could renege on the whole deal and start all over again, but he could have made a case that incremental progress had nonetheless been made.
Trump has an unfortunate tendency to spike the football and do his end zone dance just short of the goal line, however, and on Monday he was boasting a great that’s far from done. As much as Trump hates it, NAFTA is still a ratified-by-the-Senate and backed by the full faith of the American government treaty, and Canada is a signatory to that treaty, and given the current state of relations with both trading partners since Trump’s election working out all the details is bound to be tricky. On December 1 Nieto will turn power over to President-elect Andres Manuel Lopez Obrador, and although Obrador was consulted in the negotiations he won office on a promise to take a harder stand against Trump, so things need to be wrapped up quickly. Canadian Prime Minister Justin Trudeau will also have something to say about it, and so far he’s taken a hard stand in the trade war Trump initiated.
Whatever deal Trump eventually gets will also have to be ratified by the Senate, and the mid-term elections in November could well further complicate that always complicated process.
Still, incremental progress in a long, hard process is an achievement worth noting, and we note that the stock markets were pleased to see a slight lessening of the trade war tensions. It’s not enough to crowed out all the rest of the news, though, and Trump isn’t the sort to make such modest boasts.

— Bud Norman

Trump Takes on Harley-Davidson

Harley-Davidson has long made the motorcycles of choice for American cops, criminals, and male middle age crisis sufferers, and ranks with Louisville Slugger baseball bats and Fender electric guitars and apple pies as one of America’s most all-American products. Nonetheless, President Donald Trump now regards the company as one of his  enemies in the world trade war he’s waging.
It all started with Trump imposing punitive tariffs on imports from the European Union, which predictably resulted in the EU imposing retaliatory tariffs on certain industries in the states that cast their electoral votes for Trump in the last election. Wisconsin was one of those states, and the Milwaukee-based manufacturer of the only significant American motorcycle was hit with tariffs that would raise the cost of their product by than $2,000 in the company’s second-biggest market, which predictably resulted in Harley-Davidson’s announcement that it would avoid the tariffs by building motorcycles for the European market in Europe.
Which predictably resulted in a series of “tweets” by Trump denouncing the company as un-American, threatening to impose new taxes “like never before” on it, and predicting its American customers will soon go bankrupt as its customers go elsewhere.
All of which, of course, is balderdash. Harley-Davidson’s decision to build motorcycles in Europe is the predictable self-interested economic response to the predictable consequences of Trump’s ill-advised trade war, which seems pretty American to us, and we’d note that Trump and his favorite daughter have long had the products they peddle manufactured in other countries for far less necessary reasons. Presidents are restrained by the Constitution from levying taxes on their political enemies, and even if Trump persuaded Congress to do so it would be a bill of attainder that is explicitly unconstitutional and downright un-American. If Harley-Davidson’s proudly American customers do decide to choose another motorcycle to show their solidarity with Trump, they’ll almost certainly wind up buying a German or Japanese model and paying much more for it because of Trump’s tariffs.
Pretty much everything about Trump’s trade war against the world is similarly stupid. Those employed in the steelmaking industry might benefit, but those employed in the more numerous steel-using industries are going to take a hit and anyone who buys a Harley-Davidson motorcycle or anything else made with steel is going to wind up paying much more for it. The Kansas wheat farmers and airplane-makers around here who rely on lucrative export markets to get by are going to take a hit from all the retaliatory tariffs, too, and so will all sorts of workers in all sorts industries that don’t need Trump’s protection and aren’t in his favor.
The post-World War II order that everyone agreed to at Bretton Woods and established a global market doing business with the Yankee dollar as the reserve currency unit has brought about an unprecedented era of global peace and prosperity, and despite all the ups and undeniable downs along the way America is also better off. Trump is convinced that by his sheer Nietzche-an power of will he can negotiate the rest of the world into cutting up the post-war world order goose and giving America all the golden eggs, though, and he seems to have persuaded a significant number of fans that he can.
At one of his continuous campaign rallies on Tuesday in West Columbia, South Carolina, Trump got big laughs by insulting an outgoing Republican South Carolina congressman and a dying Republican Senator and former Republican presidential nominee who haven’t been properly obeisant to the president, as well as a couple of late-night television comedians who constantly lampoon him. He also got big cheers for promising an escalated trade war against Germany, which he blames for selling more cars in America than America sells in Germany and thus creating a trade deficit, which he considers an unforgivable offense, even though everybody runs a trade deficit with somebody, which is how the world works.
The crowd loved it, even though the biggest employer by far in the nearby and thriving town of Greenville is Bavarian Motor Works, which is as iconically German as Harley-Davidson is iconically American. Those low-paying sweat-shop textile mill jobs South Carolina used to get by on have long since been outsourced to even the lower-wage and less-regulated countries where Trump and his favorite daughter have their branded neckties and women’s apparel made, but the state is by far better off with BMW running its biggest factory in the state, and why those rally-goers have more faith in Trump than the post-war world order that has brought them such peace and prosperity is hard to explain.
We have no particular affection for Harley-Davidson motorcycles, as their customers regularly interrupt our conversations on the local taverns’ outside drinking areas with their loud flatulence, and the last time we rode a motorcycle was decades ago and on one of those Japanese “rice burners,” but we’re now rooting for this iconic American brand and the rest of the world in their war with Trump.

— Bud Norman

Doubling Down on a Dumb Trade War

Way back when we were proud to be Republicans, it was largely because of the Grand Old Party’s principled stand for red-in-tooth-and-claw capitalism. When Republican nominee Mitt Romney accused President Barack Obama during a campaign debate of picking the economic winners and losers, and mostly picking the losers, we stood up and cheered. Now the Republicans are obliged to defend President Donald Trump’s protectionist trade war against the rest of the world, and to ignore the fact that he’s picking the economic winners and losers and mostly picking the losers.
On Monday Trump escalated the trade war with China by threatening $200 billion of tariffs on that country’s exports to the United States, his earlier threat of a mere $50 billion of tariffs having failed to force China’s capitulation to his trade demands, and of course China immediately responded with threats of retaliatory tariffs. Of course the stock markets hated the news, and so did everyone else with a basic understanding of the global economy. It’s bad economic policy, has warped America’s foreign policy to the point that North Korea’s nutcase dictator Kim Jong-Un is a an honorable leader much beloved by his starving people and Canada’s democratically elected Prime Minister Justin Trudeau is a weak and dishonest leader who awaits a special place in hell and all of our longtime allies are suspect, and in the long run it will prove bad politics.
Trump’s tariffs on steel and coal imports will surely be popular with people employed in those industries, but it will just as surely be unpopular with people who work in steel- and coal-buying industries, and anyone who buys anything made of steel or powered by coal, and the latter categories are by far a bigger voting bloc. There are also a lot of wheat farmers and airplane-makers who do a brisk trade with China and will surely be chagrined if China decides to buy from Argentina or Airbus, and a large chunk of Trump’s die-hard defenders will eventually notice that their shopping trips to Wal-Mart are suddenly far more expensive. The worst case scenario for a global trade war is the same as the last time a cocky and unprincipled Republican president tried it, which resulted in the Great Depression and eventually World War II, and even Trump will be hard-pressed to spin that outcome to even his most die-hard defenders.
The best-case scenario is harder to imagine. Red-in-tooth-and-claw capitalism has always resulted in the creative destruction of longstanding industries, such as buggy-making and Blockbuster video stores, but it has reliably replaced them with something the public has always found better. China isn’t the reason that coal-mining now employs a mere 50,000 workers in America, which is mainly because of mechanization and nuclear plants and fracking of natural gas and all those windmills along I-35 and other more healthy ways to generate the nation’s energy. We sympathize with those last remaining coal miners, but red-in-tooth-and-claw capitalism might well replace their jobs with something that doesn’t cause black-lung disease and an early death, and in any case they’re a small voting bloc.
Trump seems to believe the best-case scenario is back to the good old days when America mined coal and made all the world’s steel, and that his die hard defenders will prefer that to this high-tech age and what might come next. What might come next might well be far better, though, and we’ll bet on that rather Trump’s global trade war.

— Bud Norman

Feuding with Allies and Adversaries

President Donald Trump is in Singapore today, finishing his final preparations for tomorrow’s high-stakes summit with North Korea’s anti-American and nuclear-armed nutcase dictator. We’re holding out hope that it goes well, but the debacle Trump made of a routine meeting in Canada with six of our most stalwart allies over the weekend is not heartening.
Trump arrived late for the Group of Seven’s annual gathering, was tardy to or skipped altogether several of its planned meetings, and left early with trade wars and “Twitter” spats brewing against the other six nations and complaints that Russia’s anti-American and nuclear-armed nutcase dictator wasn’t invited. He was especially harsh about the host country’s pro-American and democratically elected Prime Minister Justin Trudeau, calling him “weak” and “dishonest” in in a series of “tweets,” and one of his advisors telling the Sunday morning shows that “there’s a special place in hell” for world leaders who dare invoke the wrath of Trump. He even rescinded America’s routine endorsement of the ritual “final communique “these things usually end with, and although Trump boasted that on a scale of zero to ten America’s relationships with it’s most stalwart allies was a solid ten, and blasted the “fake news” for saying otherwise, the world’s stock markets and most other objective observers around the globe will likely agree things did not go well.
America suddenly finds itself in a war of words and tariffs with Canada, of all places. Canada has an annoying tendency to punt on third downs during their football games and hold its news conferences in both English and French, and they can be awfully smug about their single-payer health insurance program, which we don’t want here, but that hardly seems reason to be feuding with its pro-American and democratically-elected Prime Minister at a time when Trump is lavishing praise on the anti-American dictators in North Korea and Russia. Except for that brief “fifty-four-forty or fight” contretemps way back in 1846 the Canadians have been polite and reasonable neighbors, and given that the size of the population and economy of the country is much smaller than America’s we don’t see them as an economic threat to the United States. Trump might well have some legitimate gripes about existing trade policies over soft lumber or dairy products, but those have always been worked out through existing world trade courts and other institutions without any personally insulting “tweets,” and given that Canada has been stalwart ally in nearly every actual war America has ever fought we can well understand why they resent Trump starting a trade war on the grounds of national security concerns.
Trudeau bluntly told the international press, in both English and that annoyingly redundant French, that although the Canadians pride themselves on being polite and reasonable they won’t be “pushed around,” and that he would go to to the trenches in any old trade war that Trump might want to start. The newly-and-dubiously elected populist leader of Italy agreed with Trump about letting Russia back in the former Group of Eight gathering, but he and the other five heads of states all agreed to retaliate against any tariffs Trump might impose. If this is a ten on a zero-to-ten scale of relations with our most stalwart allies, we shudder to think what a zero might look like.
Trump’s die-hard supporters will love it, of course. Over the weekend we talked with one who regards Germany’s previously pro-American and still democratically-elected Chancellor Angela Merkel as America’s most formidable adversary, and is glad that at long last we have a president who stands up to those snooty Europeans. On all the Sunday morning news shows Trump’s spokespeople were talking about Canada “knifing us in the back,” and explaining that it was a brilliant three-dimensional chess move meant to warn that nutcase North Korean dictator that if Trump is so hard on his most stalwart allies they should surely fear what awaits his adversaries. We can’t shake a lingering worry, though, that Trump is instead playing 52-card pick-up with the post-World-War-II order.
We also can’t shake an even scarier worry that this is all somehow personal for Trump, and has little to do with the more important geo-political and economic realities. Until he rode down that escalator in Trump Tower to launch his presidential campaign we never paid much attention to the failed casino-and-strip-club mogul and reality star, but since then we’ve watched him carefully enough to note that he takes things personally, and that he cares little for geo-political and economic reality. All of the other six heads of state in the Group of Seven, including that populist and dubiously-elected Italian, clearly regard Trump as a boorish and uneducated vulgarian intent on disrupting the post-World-War-II international order, and Trump surely knows that they make fun of of him when he’s not around, just like those swells on Manhattan’s social used to do when the vulgar usurper from Queens once showed up at their gatherings,
There’s also no shaking a worry that Trump’s peculiar antipathy to Trudeau is because the Canadian Prime Minister is objectively a more physically-fit and full-haired and handsome fellow than Trump, with bi-lingual skills and far better poll numbers in his homeland since his feud with Trump started, and that Trump can’t stand that. It’s especially worrisome when Trump segues from his Canadian debacle to that hight-stakes summit in Singapore about the Korean peninsula.
Kim Jong Un is several inches shorter than Trump, and even fatter, with just as ridiculous a hair-do, but we don’t expect he’ll be intimidated. He’s got nuclear weapons and inter-contintental ballistic missiles on his side, as well as an imbalance of power of conventional weaponry poised within range of South Korea’s essential-to-the-world-oder capital, and Trump’s trade wars with the more intimidating nuclear power of China haven’t yet yielded the expected negotiating advantage, even if they have enriched the Trump family’s various businesses. The fact that Trump is feuding with America’s most stalwart allies probably doesn’t worry him at all.
Still, we hold out hope.

— Bud Norman

The Avoidable and Inevitable Stock Market Swoon

Monday was another down day on Wall Street, and so far as we can tell there are several reasons for the recent stock market swoons. Part of it just the usual economics, but so far as we can tell the worst of it is some unusually stupid politics.
The seemingly biggest reason is that the Chinese have predictably imposed steep tariffs on many American products in retaliation for President Donald Trump’s unilaterally imposed tariffs on many Chinese products, and it seems a trade war has begun. At the same time, though, Trump is also waging war on some major American businesses, another heavy hitter has come under congressional scrutiny, and the usual economic disruptions are at play.
Trump has “tweeted” that “trade wars are good and easily won,” but the smart money on Wall Street and most sane observers elsewhere strenuously disagree. Trump has also retreated from some of his “tweeted” threats, which has always prompted stock markets rallies, but then he “tweets” another threat, such global economic powers as the European and Union and our neighbors to the north and sound issue retaliatory threats and the stock markets once again swoon. If the cycle continues until the rest of the world meekly accedes to Trump’s demand for American dominance of the global marketplace, we expect it will take a while.
In the meantime, one of the most dynamic sectors of the American economy is facing political problems, which are the worst kind of problems these days. Some of the biggest players in the high-tech industry that keeps coming up with all sorts of world-changing gizmos and gadgets and thingamajigs are now being “tweeted” about and summoned to congressional committees, which is not good for business, and the tech-heavy NASDAQ stock exchange has taken the worst hit lately in the recent downturn.
The on-line retailer Amazon.com has recently surpassed Wal-Mart as the world’s biggest store, and Trump has recently been “tweeting” that it’s a tax cheat which drives Main Street stores out of business and is bankrupting the United States Postal System. Much of that is entirely untrue and the rest quite debatable, but it’s been an undeniable drag on the drag on the company’s stock price, and given its enormous size there’s a big drag on the overall averages. For now there’s not much Trump can do about Amazon or its owner’s other notable property, The Washington Post, other “tweet” about it, what with those pesky constitutional prohibitions against bills of attainder and infringements of freedom of the press, but at least Trump is inflicting quantifiable financial pain on his even-richer nemesis.
The on-line social media giant Facebook has its own similar political problems, but for very different reasons. A web site that became extraordinarily profitable and powerful by allowing people to share videos of their cats and cell phone pictures of the taco they were about to eat and whatever else they had on their minds also wound up disseminating political propaganda from Russian-based “troll farms” through a firm tied to the Trump campaign during the last presidential election, and the resulting headlines have not been good for the company’s once red-hot stock price. All the propaganda was apparently pro-Trump, so Trump hasn’t “tweeted” anything about it, but the Democrats on those pesky congressional investigative committees have at least managed to inflict some quantifiable financial pain of their own. Facebook ended Monday down 16 percent from its recent high, and given its outsized influence that also accounted for much of that broader decline.
The computer chip-making giant Intel also took a huge on news that Apple Computers, another outsized company tech-sector and one of Intel’s biggest customers, is considering making its own computer chips. That’s the sort of business page news you’d expect on any day in the fast-moving and nerve-wrackingly dynamic high tech sector, though, and we’re the sort of red-in-tooth-and-claw capitalists and old-fashioned Republicans who are content to let the marketplace sort that out. As much as we love that old corner store that Mom and Pop once built out of brick and mortar, we equally hate bills of attainder and infringements on a free press, and we’ll let Amazon do whatever the state legislatures and the marketplace allows it do, and we’ll stay on Facebook just to keep apprised about which of our friends have recently divorced, so as to avoid any awkward comments.
Although we’re rapidly growing too old for such economic disruptions, we’ve long since learned to accept them as part of the ebb and flow toward something like progress. As rock-ribbed Republicans and red-in-tooth-and-claw capitalists we’ve long believed that all those sorry-assed consumers at the pay line could choose more wisely than the politicians, and we still resent those darned Democrats for presuming to make better picks of the winners and losers.
Nowadays, though, that seems to make us “Republicans in Name Only” or “cuckservatives” or “globalists,” as both parties have chosen their winners and losers. Steel and aluminum companies seem a good stock bet at the moment, but car makers and beer brewers and any other industries that use steel or aluminum look risky. If you have a stake in any of the several industries China is now slapping tariffs on, you might want to talk to your financial advisor about that. The Democrats can try to deprive all the social media-addled youth of Facebook, but we’d advise them that most of the political content from our friends is annoyingly liberal.
Oddly enough, yet another reason for the current nervousness on Wall Street is that the unemployment rate is currently low by historical standards and the overall economy seems to be doing well, so there’s the ever-present danger that the Federal Reserve Board will raise interest on loans past the virtually free-money rates that have sustained the whole enterprise since that last big crash. Such adjustments are another one of those disquieting disruptions we’ve learned to accept, but otherwise we’d prefer politics just stay out of it.

— Bud Norman

The Pros and Cohns of Protectionism

Even on a Tuesday day when a pornographic video performer called Stormy Daniels filed a lawsuit against President Donald Trump, the departure of National Economic Council director Gary Cohn was the biggest news out of the White House. The frequent comings and goings of Trump administration officials are usually newsworthy only because of the colorful characters involved and the chaotic situation they represent, but in Cohn’s case it could have serious consequences.
Cohn was one of economic advisers who tried to talk Trump out of imposing the steep steel and aluminum tariffs that were announced last week, as well as the rest of the protectionist agenda Trump has proposed, and his resignation suggests that talking Trump out of such cockamamie ideas is beyond his ability. The congressional Republican leadership also tried persuade Trump to reconsider, and although Trump is invoking national security reasons for imposing the tariffs so did his Defense Secretary and Secretary of State, as well as some of most stalwart defenders in the conservative media, so it appears that no one’s up to the task.
Cohn’s continued role in the White House gave faint hope to the free-traders, though, and his exit suggests the fight is over. His resignation wasn’t announced until the stock markets had closed for the day, but we expect the news will be met glumly when they open again today. Except for the aluminum and steel makers and a few other unionized industries hoping for similar protection from foreign competition, pretty much everyone is planning to pay more for aluminum and steel and try to pass the hit along the supply chain and down to the end consumer, steeling themselves for the inevitable retaliatory tariffs on American exports by friends and foes alike, and worrying what comes after that.
Cohn and the other sensible administration officials and the congressional Republican leadership and the conservative media defenders should have seen it coming all along, though, as well as all those steel-and-aluminum buying companies and export industries and other critics. Trump made quite clear during his seemingly quixotic campaign that he intended on waging a global trade war, and although he spouted off a lot of crazy talk that no one took seriously he was quite clearly sincere in about this particular threat. He’d been publicly critical of America’s trade with the rest of the world since President Ronald Reagan’s administration, claimed that America had been taken advantage of in every foreign relation since the Marshall Plan of President Harry Truman, and offered himself as the artful dealmaker who alone could set things right. Over the years Trump has been all over the place on abortion and immigration and “transgender rights” and almost anything else in the news — we like to joke that he’s taken more positions than Stormy Daniels — but he has never once wavered from a core conviction that he alone could renegotiate the entire world economy to America’s rightful advantage.
Although an estimable fellow, Cohn was never going to talk Trump out of this delusion. Cohn was always a controversial pick, with critics to both the left and right, and ill-suited to any role in Trump’s reality show. His only previous employer was at the too-big-to-fail Goldman-Sachs investment bank, where he rose through the ranks to a top spot, and the conspiracy theorizing sorts of liberals and conservatives have long noticed that Goldman Sachs has landed a noticeable number of former executives in both Democratic and Republican administrations for an noticeably long time, so that left him vulnerable. The stock markets and other centrist types were slightly reassured that at least Trump honored some of the time-honored presidential traditions, and held out hope Con would restrain Trump’s populist impulses, but a buttoned-down riser-through-the-corporate ranks has never prevailed in any reality show ever aired.
Cohn lasted on the reality show island longer than most of us expected, given all the anti-globalist conspiracy theorists who got a vote in each week’s cliff-hanging exile. He outlasted the defiantly nationalist chief strategist Steve Bannon, oh-so loyal and kinda cute communications director Hope Hicks, onetime establishment whipping boy and later chief of staff Reince Priebus, currently under-indictment former National Security Advisor Mike Flynn, that Omarosa woman who held some job or another before returning to a lesser-rated reality, along with countless others can’t quite recall. We think he did some good along the way, too.
As an observant Jew with universal human values, Cohn reportedly considered resigning after Trump insisted there were some “very fine people” marching alongside the neo-Nazis at a deadly rally in Virginia, and although he stayed on he helped fuel the public’s indignation. By sticking around he helped he shape and shepherd trough the Congress a tax bill that so far seems one the best things the Trump administration has done, and he’s also played a role in all the deregulation that has so far worked out well enough. He couldn’t talk Trump out of his crazy trade war, but at least his resignation might spook the stock markets and fuel the public’s indignation and give those congressional Republican leaders and other critics some chance of restraining the president’s populist impulses.
We’ll hope for the best for Cohn and all the rest of us, including that unfortunate visiting Swedish Prime Minister who wound up standing next to Trump during a joint news conference where both the American and Swedish press were asking all sorts of pointed questions about potential trade wars and the ongoing “Russia thing.” The video would have fed all the snarky late comics’ monologues if not for the lawsuit by the porn star, but even those easy and smutty jokes were among the first casualties of the trade war.

— Bud Norman