Trump May Kill the Global Recovery

In a sharp departure from this time last year, the global economy is now being buffeted by growing concerns over US President Donald Trump’s trade war, fragile emerging markets, a slowdown in Europe, and other risks. It is safe to say that the period of low volatility and synchronized global growth is behind us.

.. In 2017, the world economy was undergoing a synchronized expansion, with growth accelerating in both advanced economies and emerging markets. Moreover, despite stronger growth, inflation was tame – if not falling – even in economies like the United States, where goods and labor markets were tightening.
.. Stronger growth with inflation still below target allowed unconventional monetary policies either to remain in full force, as in the eurozone and Japan, or to be rolled back very gradually
.. Markets gave US President Donald Trump the benefit of the doubt during his first year in office; and investors celebrated his tax cuts and deregulatory policies. Many commentators even argued that the decade of the “new mediocre” and “secular stagnation” was giving way to a new “goldilocks” phase of steady, stronger growth.
.. Though the world economy is still experiencing a lukewarm expansion, growth is no longer synchronized. Economic growth in the eurozone, the United Kingdom, Japan, and a number of fragile emerging markets is slowing.
.. while the US and Chinese economies are still expanding, the former is being driven by unsustainable fiscal stimulus.
..with the US economy near full employment, fiscal-stimulus policies, together with rising oil and commodity prices, are stoking domestic inflation.
.. the US Federal Reserve must raise interest rates faster than expected, while also unwinding its balance sheet.
.. the prospect of higher inflation has led even the European Central Bank to consider gradually ending unconventional monetary policies, implying less monetary accommodation at the global level. The combination of a stronger dollar, higher interest rates, and less liquidity does not bode well for emerging markets.
..  Despite strong corporate earnings – which have been goosed by the US tax cuts – US and global equity markets have drifted sideways in recent months.
.. The danger now is that a negative feedback loop between economies and markets will take hold. The slowdown in some economies could lead to even tighter financial conditions in equity, bond, and credit markets, which could further limit growth.
.. Since 2010, economic slowdowns, risk-off episodes, and market corrections have heightened the risks of stag-deflation (slow growth and low inflation); but major central banks came to the rescue with unconventional monetary policies as both growth and inflation were falling.
.. These risks include the negative supply shock that could come from a trade war; higher oil prices, owing to politically motivated supply constraints; and inflationary domestic policies in the US.
.. this time the Fed and other central banks are starting or continuing to tighten monetary policies, and, with inflation rising, cannot come to the markets’ rescue this time.
Another big difference in 2018 is that Trump’s policies are creating further uncertainty. In addition to
  • launching a trade war, Trump is also
  • actively undermining the global economic and geostrategic order that the US created after World War II.

.. the Trump administration’s modest growth-boosting policies are already behind us, the effects of policies that could hamper growth have yet to be fully felt. Trump’s favored fiscal and trade policies will crowd out private investment, reduce foreign direct investment in the US, and produce larger external deficits.

  • His draconian  will diminish the supply of labor needed to support an aging society.
  • His environmental policies will make it harder for the US to compete in the green economy of the future.
  • And his bullying of the private sector will make firms hesitant to hire or invest in the US.

.. Even if the US economy exceeds potential growth over the next year, the effects of fiscal stimulus will fade by the second half of 2019, and the Fed will overshoot its long-term equilibrium policy rate as it tries to control inflation; thus,

achieving a soft landing will become harder.

.. By then, and with protectionism rising, frothy global markets will probably have become even bumpier, owing to the serious risk of a growth stall – or even a downturn – in 2020.

.. With the era of low volatility now behind us, it would seem that the current risk-off era is here to stay.

Xi Jinping, President for Life

He is abolishing term-limit rules and other norms that Deng Xiaoping created in the 1980s to prevent a repeat of Mao’s disastrous rule.

.. After taking power in 2012, Mr. Xi used an anticorruption campaign to purge rivals and concentrate power in his hands, breaking the post-Mao convention that power should be shared among a group of leaders loyal to different factions. China’s elite politics has since reverted to a winner-takes-all contest, as Deng feared.

Mr. Xi has created a Mao-style cult of personality, most recently granting himself the title of lingxiu, a term for a supreme leader not used in four decades.

.. Reformist adviser Liu He was promoted to the Politburo last October and is now tipped to become a vice premier as well as governor of China’s central bank. Mr. Liu is also due to visit Washington this week to discuss tensions over the lack of reciprocity in economic relations.

.. dangerous imbalances have built up in the financial system due to stimulus policies that require excessive debt, endangering China’s economic development.

.. By making himself essentially President for Life, Mr. Xi has made Chinese politics more volatile and unpredictable.

Donald Trump and His Work Wives

Mr. Trump’s penchant for hiring women into often vaguely defined but closely held roles.

.. “Women, according to Trump, were simply more loyal and trustworthy than men,” Mr. Wolff writes. “Men might be more forceful and competent, but they were also more likely to have their own agendas. Women, by their nature, or Trump’s version of their nature, were more likely to focus their purpose on a man. A man like Trump.” Mr. Trump, the author continued, “needed special — extra-special — handling. Women, he explained to one friend with something like self-awareness, generally got this more precisely than men. In particular, women who self-selected themselves as tolerant of or oblivious to or amused by or steeled against his casual misogyny and constant sexual subtext — which was somehow, incongruously and often jarringly, matched with paternal regard — got this.”

The term “emotional labor” gets vastly overused, but this is a textbook example. The women who work for Mr. Trump aren’t just required to perform their professional tasks; they also have to coddle and care for a volatile patriarch.

Donald Trump doesn’t just have a woman problem; he has a work wife problem.

.. the terms “work wife” and “work husband” sneaked into the lexicon, describing what are typically benign workplace intimacies: a close co-worker with whom you share not only tasks but also complaints and office gossip.

.. as women who work know, egalitarianism is not always the norm, and many of us have found ourselves serving as the caretaking “work wife” to the emotionally needier male co-worker or superior. This is common dynamic, if a seldom-addressed one (it certainly went unmentioned by the “Women Who Work” author, Ivanka Trump, who occupies this very role in her father’s professional world).

.. What Mr. Trump demands of his female subordinates, though, is something greater than your still-sexist but wholly run-of-the-mill concerns about gendered expectations in the workplace. Women like Ivanka Trump, Hope Hicks and Kellyanne Conway don’t just counsel the president and liaise with the press and public; they offer a feminine salve, simultaneously sanctioning Mr. Trump’s sexist commentary and buttressing his ego by situating themselves as little girls in need of direction from Big Daddy (literally, in Ivanka’s case).

.. Benevolent sexism is more insidious. In the view of the benevolent sexist, women and men should occupy fundamentally different roles, with the men as patriarchs and women, with our naturally maternal and gentle dispositions, as helpmates and caretakers. In some conservative, religious or simply strongly male-dominated communities, you see this dressed up as a form of feminism — the idea being that women can find respect and purpose by tapping into our intrinsic maternal nature.

.. When Mr. Trump’s defenders use the fact that the president has employed and encouraged a handful of women — to, as we now know, also serve as his uncompensated therapists — as a shield against accusations of sexism, they are deploying a similarly mendacious argument.

.. So what if the requirements for being treated as “special” involve playacting hyperfemininity, stroking a man’s ego and carefully managing his feelings? That’s just how men are, and that’s what men want.

.. Assumptions that women will monitor and manage men’s emotions span industries and political persuasions. It’s not that subtly sexist men refuse wholesale to hire women; it’s that they often hire a small number of us, with the unspoken but swiftly understood expectation that we will be the uncompensated “chief feelings officer.” Then they often lose respect for us because we play this very role.

.. But when faced with bosses or colleagues who require this hybrid of good-daughter devotion and quasi-maternal coddling from their “work wives,” women have two choices: Expend the unpaid effort and lose valuable time and energy, all while knowing you’ll never be as respected as a man who doesn’t have to handhold and head-pat his employer; or refuse to do it, and risk losing the job altogether. It’s not just the craven Kellyannes and Hopes and Ivankas of the world who opt for the former.

Money man: Robert Mercer

Reclusive U.S. billionaire Robert Mercer
helped Donald Trump win the
presidency. But what is his ultimate goal?

Bannon’s relationship with Robert Mercer is cited in a remarkable lawsuit brought by David Magerman, a former employee of Mercer’s hedge fund, Renaissance Technologies. On its surface, the lawsuit is a wrongful dismissal complaint against Mercer. But at its heart, it is an indictment of Mercer’s character and reputation that draws together his political views, his connections to Bannon and Trump and racist comments Mercer allegedly made to Magerman directly.

.. “I have a lot of respect for Bob Mercer. I think he’s a very intelligent person, a very thoughtful person,” Magerman told me recently. But he quickly added, “If the world knew what he was trying to do, they wouldn’t stand for it.”.. He’s fond of talking about the time, years ago, when a colleague he was visiting summoned a helicopter to his estate to whisk them into Manhattan.

There was no life-or-death reason for the extravagance, not even a business emergency. They were just going to a dinner, he says, and his friend rented the chopper to avoid the bother of traffic. From the helicopter, Magerman saw his fellow citizens travelling along a thin ribbon of perfectly good highway below.

.. “Either you are in awe of the grandeur of commuting, taking a two-hour drive and turning it into a helicopter ride, or you can just be, like, disgusted by the waste.” As though there were even a sliver of doubt, Magerman added, “I was in the latter category.”

It wasn’t just the waste that gnawed at him — it was the trespass of a moral principle. The helicopter commute was an example of something that, if everyone did it, would obviously be wrong. ”10,000 people can’t be flying helicopters from their backyard,” he said.

.. Magerman calls that helicopter trip “extra-societal” and “outside the realm of normal behavior,” words that also fit what he believes is wrong with Mercer’s relationship to the president. Magerman thinks Mercer has bought special access to impose “extra-societal” views on the Trump administration.

.. “The ultra-wealthy of today differ from the ultra-wealthy in past eras in that they have, a lot of them, no stake in the infrastructure of society,” Magerman said. He’s seen that their wealth does not depend on the health and stability of the country. In fact, they get rich on volatility and instability.

.. Mercer is not a finance guy; he is a computer scientist. But his research developing speech translation programs through pattern recognition can apparently also be used to discover obscure patterns in the financial markets and make an enormous fortune

.. Instead of poring over prospectuses and profit and loss statements, they apply their sciences to the data that affect markets. It’s called quantitative analysis, and they themselves are known as “quants.”

.. Medallion has pumped out annualized returns of almost 80 per cent a year, before fees.” Even in a bad year, it churns out more than 20 per cent returns.

.. “The people I worked with were great scientists. I mean, we could have solved a lot of important and interesting problems if we’d worked on different things. Instead, we made hundreds of millions of dollars,

.. The problem that Renaissance Technologies faced trying to predict market behaviour is, he said, essentially the same problem that Cambridge Analytica faces in voter analysis and persuasion.

.. Data analysts are largely skeptical that Cambridge Analytica could have had a decisive impact on the 2016 U.S. election or the Brexit referendum, but Magerman brushes that off with a reminder that so-called experts were also skeptical that computer algorithms could predict financial markets.

.. , “Bob thinks the less government the better. He’s happy if people don’t trust the government. And if the president’s a bozo? He’s fine with that. He wants it all to fall down.

.. They didn’t get rich by providing the goods, services and infrastructure that bring people into direct contact with their community and its interests — they got rich in financial markets, making money for the sake of it.

.. But the real shrinking of the role of government has been in Trump’s choice of cabinet members, whose aim seems to be to assail the policy goals of their departments.

Thus, the

  1. secretary of energy is someone who once campaigned to get rid of the Energy Department; the
  2. Secretary of Education has advocated against the public schools system; the
  3. Environmental Protection Agency director has a record of repeatedly suing the EPA; and the
  4. Attorney General has a reputation for opposing the expansion of civil rights.

Other departments are reportedly withering from neglect, as key positions are filled by unqualified people or not filled at all.

.. his daughter Rebekah was part of the transition team that helped Trump choose his cabinet.

.. Was it all worth it?

It’s like, was having surgery worth it?” Magerman says. “I mean, it was necessary. There was a disease that I thought, like, maybe I had a scintilla of a cure for.”