The markets’ man in the White House is on the way out.
It didn’t take long for the futures market to react. After it was reported Tuesday evening that Gary Cohn plans to resign, Dow futures plunged 410 points, or 1.7%, at the moment. He matters to Wall Street. As Director of the National Economic Council, he’s President Trump’s top economic adviser. He’s also a former Goldman Sachs executive and a free-trade Democrat.
He was one of the few remaining “globalists” in the White House. He’d opposed the tariffs on steel and aluminum imports that Trump has been proposing and tweeting about since last week, including Trump’s now immortal “Trade wars are good” tweet on March 2:
“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”
And that philosophy is anathema to Cohn and the stock market. But he apparently has lost that battle. He is expected to leave over the next few weeks, joining the list of high-profile departures from the White House.
“According to people familiar with his thinking,” cited by the New York Times, there may have been many reasons, and “officials insisted there was no single factor behind the departure.” But in the end, the top item on the list was likely his fervent opposition to tariffs and trade wars. “Mr. Cohn, a longtime proponent of free trade, believed the decision could jeopardize economic growth,” the Times said.
Cohn is – or was – the markets’ guy in the White House. And now he’s on the way out.
Trump told the Times in a statement: “Gary has been my chief economic adviser and did a superb job in driving our agenda, helping to deliver historic tax cuts and reforms and unleashing the American economy once again. He is a rare talent, and I thank him for his dedicated service to the American people.”
According to the Times:
White House officials said that Mr. Cohn was leaving on cordial terms with the president and that they planned to continue discussing policy even after his departure.
People close to Mr. Cohn said that he had planned to stay for roughly a year, and that he had accomplished a number of things he cared about. That included the $1.5 trillion tax cut that Republicans passed last year.
So everything is hunky-dory and everyone is on best terms. And since Cohn is already wealthy and will likely slip right back through the revolving door on Wall Street into a top slot, he doesn’t even have to write a kiss-and-tell book, unlike so many others before him. And that must be a relief for the White House.
But markets are not happy. Dow futures are down 420 points at the moment, or 1.7%. S&P 500 futures are down 40 points, or 1.5%. Nasdaq futures are down 100 points or 1.5%. The Nikkei, minutes after opening in Tokyo, is down 180 points, or 0.8%.
The futures market is often enough no indicator of how stocks will be doing during regular trading hours. But it is an indication that the Tariff Tantrum has re-emerged with some magic up its sleeve.
There is a lot of opposition even among top Republicans and in Corporate America to these tariffs and igniting a trade war, but Trump has not yet backed off. However, I would expect Trump to change his mind if the Dow heads down something like 10% over the next few days. As we have seen in the past, politicians get wobbly knees when the stock market craters. But if it doesn’t, if this is nothing but a little hiccup, Trump’s stance might have some staying power.
For the year 2017, the US trade deficit in non-petroleum products hit an all-time record of $734 billion in 2017. The US trade deficits by country. Read… How Out-Of-Whack are US Trade Relationships? 2017 Trade Deficit Worst since 2008
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In general, all bad news has turned around pretty fast with this administration. I still think we have 18 months of wind at our backs from the tax cuts. That said, a trade war is a death blow to the US economy.
Trump is going to put Harley-Davidsons out of business.
But for earlier tariffs some years ago specifically designed to rescue Harley Davidson, Japanese motorcycles likely would have put HD out of business then.
Seems Trump is doing exactly what he campaigned on. A complex subject for sure with innumerable moving parts, but Trump seems willing to accept short term pain to achieve far longer-term goal. Will be fascinating to watch.
HD caters to a particular demographic (old) not exactly who a younger demographic wants to emulate. Millennials now outspend Boomers – they seem less interested in driving around without a muffler just irritate those around them. Young people these days – they just don’t understand the value of being a jerk.
Fewer consumers hell bent on driving around making a lot of noise, fewer customers for HD. Trump is not helping but he is not the core problem with HD – their customer base is dwindling. As Billy Joel said decades ago “at least he can polish the chrome”.
About a year ago I saw some comments about an electric dirt bike in a offroad forum. They were both dubious about electric off road bikes but cognizant of the opportunity’s that _silent_ dirt bikes offered.
“cognizant ” isn’t a word I would use to describe Harley riders.
No Harley Davidson will do that on their own.
I may not be as into motorcycles as I once was (these days when I need a new ride I just head to my local friendly BMW dealership and allow them to take me to the cleaners; the old Honda is still in my garage though) but one thing I can tell you for certain about Harley-Davidson owners here in Europe is they care little or nothing about sticker price. At most they’ll just take out a bigger loan.
US HD owners are often horrified when they learn what their European colleagues pay not just for the motorcycles themselves but for parts, accessories and service. It’s not an extra 5-10% due to higher tariffs that’s going to deter them.
As a proof of this I offer to you the dismal sales data of the 500 twin: it’s manufactured in India and it’s made to be cheap (US models are assembled locally). Nobody wants it because it just doesn’t appeal to the average Euro HD owner.
Who’s a different breed than what Americans would call a “biker”: those chaps usually ride old Honda’s, with the VT600 being a huge favorite due to ready availability of used spare parts and commanility with other models.
Thank you for your donation to this site the other day!! And for the attached comment about taking advantage of the crushed dollar (ouch!). Good timing :-)
MC01- I didn’t know H-D made a 500 twin, and it made me think of the Honda VT500, a beautiful bike and a bit of a collector’s item in the USA. So, it seems Honda’s making a VT600? It must be wonderful.
No, that lot were doing that all on their own.
In my opinion and from general observation of Donald Trump from far away – Donald Trump is not the First Cause of most of the disagreeable events / behaviours that we observe. They were always there.
Donald Trump is a Trend Follower of the Warren Buffet persuasion. He doesn’t create anything, he just uses and directs what is already there.
When Donald Trump sees a trend forming, if his instinct tells him this is of some benefit to him then he gloms onto it.
Once his position is cleared, he uses his not insignificant media and communications skills to amplify the already ongoing trend so his established positions will be “in the money” faster. This he does both in business and politics.
So we may not like what Donald Trump is doing but what he is doing are all things that were happening anyway and would have played out pretty much the same way with a different Emperor – only perhaps a bit slower.
Those trends, the policies, the attitudes, those obscene war-making powers invested in one person, are all part of what is wrong.
Donald Trump happens to be someone who delights in rubbing it in too – in a way that is good, because it is a very effective communication, even the worst dum-dum’s can get it! The EU is certainly getting more clued in for every day.
So what’s the trend?
Globalization turns into national borders, both geographical and economically?
Agree, and this win the votes now? The voters are thinking, if I get rid of the competition of global labor force, I will have a job! Guess what? Voters are just being played. Borders are useless. All the rich and powerful see this trend, and if they lose global labor force, they will use machines, robots, terminators.
The voters need to adapt, and see 2 steps ahead. To survive, the voter’s true enemy is NOT global labor force, it is the rich and powerful and you need to neuter their power. — Occupy the central banks.
The rich and powerful see that Globalisation moves the borders and the border controls from a known fixed location and onto everywhere – credit cards, loans, housing, transport, buying / selling, …, bars, telecoms … and right onto their bottom lines.
They decided to push back and return the costs of maintaining the integrity of the state and society in general to the taxpayers.
I used to work for a large supplier of HD. They could DO NO WRONG. HD regularly has LARGE recalls but it DOES NO WRONG. Now that KC is closed York Union Town has much higher leverage in negotiations. If York strikes, HD is completely down. That’s why they opened KC but seemed to forget about hedging Union risk.
Harley Davidson is toast anyway.
Millenials are not at all interested in hd
On top of this.. big price tag for discretionary items like hds don’t help.
One can only hope. A lifestyle brand for Republican hipsters like Paul Ryan and Scott Walker, with sweatshop labor clothing and crappy, high-maintenance vehicles trading on a chest thumping patriotism.
“believed the decision could jeopardize economic growth,” So if we aren’t willing to continue amassing incredible amounts of debt by handing the world 70 BILLION a month or so, we might jeopardize growth!!!!! LOL, LOL, LOL
Some 68% of income in the US is derived from interest on debt. So yes, globalists love “free trade”, especially since the precedent is they can privatize gains and socialize their losses.
Tariffs, like any other trade barriers, don’t improve a country’s trade balance, merely reduce the overall level of trade. Other countries will immediately retaliate with their own tariffs, reducing US exports as well as imports. The US runs a trade deficit because US consumers consume more than they earn. Germany, in contrast, runs a trade surplus because consumers there eschew debt.
Referring to a $70 billion trade deficit as “handing the world 70 billion” is a gross oversimplification and misrepresentation of reality. It’s not like the money just leaves and nothing comes back. That $70 billion is spent on goods demanded by US citizens, firms, and governments. Trade and money flows are complex and multifaceted. Your understanding of international trade is simple and one-dimensional. Much like your red-headed hero.
The Smoot-Hawley tariff bill was responsible for turning the 1930s depression into the Great Depression. By all means, let’s try it again.
“Germany, in contrast, runs a trade surplus because consumers there eschew debt.”
Germany runs a trade surplus because of the……..EURO.
Germany ran a trade surplus even when the super-hard deutschmark was in circulation.
“Germany runs a trade surplus because of the……..EURO.”
Even when DM was high, they frequently ran surpluses.
They run a surplus, as they make good things, that last, that peopel want, and are willing to pay for.
“We have got to stop making what we want them to buy, and start making what they want to buy” Edsel Ford. Pre the GM Bail out, at the Detroit Motor show.
America still hasn’t got the message.
Germany got it, pre 1910.
You make plenty of good points which I am not writing to oppose so much as insert the additional policy questions of, “Do we really need all of these cheap products assembled half way around the world only to be shipped here,” and “Does it ultimately benefit a country if you hollow out the middle class by offshoring jobs to lower cost jurisdictions?”
A neighbor accused me of being a global warming denier a month ago and even went so far as to tell me she hopes my kids are the ones who find out the results. Well, where are all these global warming advocates on the inherent wastefulness of shipping? BTW, this goes for the whole Amazon model, too.
As to the latter question, the American dream is dead because the confluence of fiscal and economic policies has been formulated solely for the benefit of large banks and corporations. Trump or not, something’s got to give and our future world will be much different than today.
I agree with everything you said. The US is not served well by mindless consumption of cheap Chinese-made crap. I can level the identical criticism of my own country (Canada). Both Canada and the US are plagued by a consumerist “buy everything right now and buy it on credit” mindset to the detriment of our long term well being.
And thank you for bringing up the apparent wastefulness of shipping every damned little thing we consume from across the ocean. NOBODY talks about that, but it’s got to be a massive misallocation of resources and a colossal waste of energy. Globalists conveniently ignore so many costs and externalities when singing the praises of their cherished internationalist philosophy.
So the question is, what is the solution?
I would start with a massive shift from income taxation to consumption taxation. That’s the most effective deterrent to over-consumption, under-saving, and chronic trade and budget deficits. It may not be enough on its own, but it goes a lot further in addressing the real problems than erecting tariff walls. There’s a reason governments more or less stopped erecting such barriers – they never worked.
Protectionism is suddenly enjoying a groundswell of support not because of any theoretical or practical evidence in its favour, but because it allows us to blame our own failings on someone else. It also offers the illusion that solving our problems will be cheap and easy, with the costs borne by someone else. Alas, there is no free lunch, and Band-Aid solutions like tariffs will do nothing but harm.
“And thank you for bringing up the apparent wastefulness of shipping every damned little thing we consume from across the ocean. NOBODY talks about that, but it’s got to be a massive misallocation of resources and a colossal waste of energy”
Mostly these days of chinese owned and built ships.
Speaking of Germany, subsidies and trade deficits with other nations. Mercer International, with 2 pulp mills in Germany, from their financial statements,
“In September 2004, we completed construction of the Stendal mill at a cost of approximately
$1.1 billion, which was financed through a combination of government grants of approximately
$332.0 million, low-cost, long-term project debt, which was largely severally guaranteed by governments in
Hard to compete when other countries offer subsidies like Germany does for “full employment” and “savings”. I wonder whose savings financed the German Pulp mills (owned by and American Corporation.
u.s. state & fed govt. also offer massive subsidies (do your homework), especially to foreign mfgrs. & domestic cos. in the MIC complex, etc. problem is the u.s. subsidies get ‘financialized’ by the wall street mafia.
The market is going up over the next few weeks, does not matter what trump does
I’ll take the opposite bet….The market is going to go down over the next few weeks, does not matter what trump does.
The market is going to move sideways over the next few weeks…does not matter what trump does. There…I believe we’ve covered all of the possibilities. ;-)
Where is Truman’s one-armed economist?
Get a pair of those 3-d glasses and you will be able to see the market move backwards, away from you, into the screen.
I rather think the market is most likely to come down to a somewhat reality.
Trump is right on this. The main problem is capital and global trade is favored over labor, particularly US labor. Let the globalists cry. We need manufacturing back. At the end of the day, Europe would never retaliate because we’d put a tariff on their fancy cars, like Trump said. Although the real trade war is with Asia.
Wanna bet on retaliation? In Canada, people are so fed up with Trump they would do anything to get some licks in if the Traiffs go through. Everyone hates a bully, and trade has to work for both parties. It has to be a win win, and not I won at your expense.
I also expect the ill feeling to be directed at US tourists this summer if this continues. Between 27% softwood tariffs, and threats against our steel and aluminum industries, BC is not going to be a welcome destination.
I also know many folks who have quit traveling to the States. In one year decades of good will and support has evaporated. Good for Gary Cohn. Hopefully the DOW will drop 1,000 tomorrow and start waking people up.
From Bloomberg: “All U.S. smelters use older-style technology that runs at less than 300 kiloamperes, according to AME Group, compared with 23 percent in China. About two-thirds in the U.S. are even more antiquated, running at less than 200 kiloamperes versus 4 percent in China. At least half of China’s industry is using the latest technology of 400 kiloamperes or higher, compared with 4 percent elsewhere in the world.”
The jobs are gone through automation and inefficiency. Tour the Kitimat smelter to understand why they have been operating 24/7 for the last 60 years. They continually upgrade and modernize. This is just one example
Protecting inefficient industries is not a recipe for economic success.
The US has a nearly balanced trade relationship with Canada since Canada imports a lot of high-value items from the US. Canada is totally the wrong target:
China has been exploiting NAFTA by transshipping steel and aluminum through Canada and Mexico. Putting tariffs on China alone does not solve the problem. NAFTA needs to be renegotiated or China’s multi-decade trade war will go on unabated.
I have no problem with renegotiating NAFTA. I think it should be. Many Mexicans too feel that it should be renegotiated. It has become an issue in their upcoming election. There are lot of Mexicans that want to exit NAFTA.
Over on Acting-Man.com there’s an article about 3 weeks ago that gets to the heart of the problem that Trump is trying to deal with. If debt is going up faster than GDP then eventually the US Treasury bills are going to have a run on them. By exporting all the US manufacturing to China we are effectively selling the acreage under our feet 100 acres at a time.
In 2003 Warren Buffet said Trade Deficits were bad. Its like selling the farm at 10 acres at a time The link shows he posted that in 2003 and still has it on his website
Since 2003 Warren Buffet has gone volte-face on this issue saying these same deficits are okay https://www.youtube.com/watch?v=iim4LG6pK64 . Seems to me that when you’re part of the problem, you’re going to go along for the ride.
I’m not sure that Trump can sort out the loss of manufacturing or the issues of US Debt so I’d advise getting some precious metals
Exactly Wolf. Thanks for pointing it out. From Canada.
Everyone who isn’t a huge winner from the current system has a sense that current trade deals could use a great deal of improvment. And we probably could take steps to lessen or dependence on cheap labor from impoverished countries.
President Trump doesn’t need to understand the fine points of all of this, he just needs to sell it and hire bright capable people to follow through in a consistent way to accomplish these very difficult tasks.
But that last part he seems to be an utter failure at. He surrounded himself with all the wrong people and you can celebrate many of them departing. But you should be asking why they were there in the first place. There are plenty of brilliant people who would love to renegotiate NAFTA. But such delicate deals need a firm and steady hand to guide the process and keep everyone from getting skitish when things get hard.
Trump offers the opposite as his adminstration has been volitiale with regards to personel retention and public messaging.
That’s in goods. Add in services and Canada has a net trade deficit with the USA. The USA has the surplus! So yes, Canada is the wrong target.
Paulo is correct. Up here there is less and less love for the yanks. If 40% of americans support trump, then there is a problem we will have to react to. Less travel to usa, less buying US products,… it may actually add up.
OK, good chart.
To make any charts effective in describing the current state, we would need these charts also :
(1) Tariffs that the USA applies to R.O.W. (rest of world) exports to USA (not just steel or aluminum)
(2) Tariffs applied to USA exports by our FIVE LARGEST trading partners
(3) Largest tariffs applied to USA exports by any trading partner
Many here are discussing TEOTWAWKI scenarios, as are the elitist globalists like Cohn, without even mentioning the actual tariff numbers that are already baked into the system.
WHY ARE THE NUMBERS NOT MENTIONED ? Easy, because the USA is not applying the biggest — or even the most — tariffs.
Let’s not let the numbers, the facts, interfere with our ruminations, right ?
CANUCKs are the best USA trading partner there has ever been for the USA, and our trade practices are contemporary with respect to Trade Policy.
If the Giant Vampire Squid would loan me millions in USD straight from the Federal Reserve USD paper fiat printing press mint at near zero interest rates I would be more than happy to buy a few Harley Davidson motorcycles from the local Canadian HD franchise dealership showroom, but as it stands liquidity is not flowing up here in Canuckistan from my perspective of the aftermath of the GFC, and Fed Balance Sheet 08 acquisition at that juncture.
Trump is sitting on a trifecta of trouble for the USA with the at least 50% overvaluation on the stock market, $22 trillion unserviceable Deficit, & QE Withdrawal. Stimulus going forward for the USA will be comprised of Fed Balance Sheet normalization at an unprecedented historically never achieved rate, Six Sigma Event market crashes in Finance, Banking, RE, and Big ticket item Retail.
Best case scenario is trade war mayhem so that Trump can claim he found two quarters, and three dimes, behind the couch cushions for an extra two points on his ratings likeability.
Trump would strike back with tariffs on autos. The U.S. can do without the European cars. We have several large automakers based here. They would do fantastically if they could sell a lot more $30k to $60k autos to fill that high end supply. After houses, cars have to be the biggest industry. Bring high priced autos home and the trade war is won.
The workers in those companies Harley, Levis, etc would get better jobs in the auto industry.
Auto tariffs is where Trump should have started. It makes a lot of sense for America, so that’s why I think Europe won’t test Trump.
With autonomous vehicles less than a decade away, privately owned cars are going the way of the Dodo anyways and there’s little need to prop up the US auto industry. Even in cities with bad public transportation options (ahem, Seattle), Uber and Lift now largely eliminate the need for vehicle ownership, and services like Car2Go or ReachNow fill the gap for longer trips. I read recently that less than 50% of US 18 year olds now have a driver’s license: many younger millennials just don’t see the need for car ownership. The future will be one of buying transportation a la carte, on demand, as needed. The savings for the average person will be huge and it’s a future that’s not too far away.
Mark – About 60% of the population being too poor to own and operate a car does a lot to eliminate private car ownership.
An extreme example is Brazil, lauded for running their cars on biofuels etc. Well, 90% of the population is poor and can’t even dream of owning a car. Their top 10% get to own cars and run them on sugar-cane ethanol the rest of the population toils in the fields growing like it’s the 1800’s.
I think autonomous vehicles are a long way away, at least for general usage. The autonomous vehicle hype reminds me of Segway – then the hype was it would revolutionize the world of personal transportation. It didn’t and only has relatively few users, most of whom hire them. Autonomous vehicles are enormously complex, use a large amount of extra energy in order to navigate, and will be orders of magnitude more expensive to mass produce than current automobiles. I don’t think they will be a mass market product, just one which is rented out when necessary and only a relatively small amount will ever be made.
Fair enough P but I don’t think it should be taken out on tourists, who are just folks on holiday. It would be un-Canadian in my view.
I’m all for standing up to these ultimatum, bully- tactics but with trade retaliation, not on Ma and Pa and the kids who like it here.
Will it hurt us more? Maybe, but sometimes the smaller guy has to make it clear he can take it.
My first idea for retaliation was California wine but then I thought ‘but California is probably on our side’
So let’s just go tit-for-tat. Oddly, the two countries are almost in balance on steel ( as they are in trade generally)
So the US puts 25 % on our steel, we put the same on theirs.
Let’s not make it one people giving the cold shoulder to another people.
“I also expect the ill feeling to be directed at US tourists (in Canada) this summer”
Care to speculate about “Snowbirds” from Canada in Florida this winter?
Before the U.S. put the Softwood Lumber tariff on, Canada slapped a 150-230% tariff on U.S. made Gypsum Wallboard. Nice opening move- idiots. But total silence from Canada.
And according to Canadian news (mostly a lot of CNN, NBC recycled garbage) Trump is the new Anti-Christ. Pathetic.
We have as much or more manufacturing in the US as we ever did; we just have fewer manufacturing jobs.
That seems to be the dilemma: more and more, who needs humans?
Correct. A lot of folks can’t understand, or perhaps refuse to accept the impact of automation and AI on manufacturing’s need for humans. The answers to these problems are going be more sociological than economic. What to do with all the people who are no longer needed for workers.
The answers are sociological, and political.
“What to do with (etc.)”
Why wait to be “done with”? Why not think about ways to sustain oneself?
Some version of subsistence farming and hand-crafted appurtenances?
You are absolutely right. Automation ought to be seen as a boon: increasing wealth and productivity while freeing people from tedious, mindless work. Would you want to spend your days doing backbreaking labor in a rice paddy under the hot sun? How about hammering uniform widgets together or driving a truck long distances? Me neither.
All we need to do is ensure the gains are widely spread throughout society, rather than concentrated in the ownership class. It’s a political problem, but definitely solvable. I’m an optimist.
So, if everything is automated in the U.S. why do we need imports from China?
The Algos running the stock market absolutely need humans lest it fails the task of tyranny appointed to it via the systematically connected in the Oligopoly that ultimately controls the so called Greatest Show on Earth otherwise known as the New York Stock Exchange-NYSE.
That’s what humans are all about, Charlie Brown.
You could construct a nuanced argument to defend trade tariffs. However such arguments are not coming from the President.
But there would be consequence to the other exteme. Mainly we will quickly find out how willing people are to pay for American labor on all their goods… Perhapes we never go far enough to notice an impact but someone is full of shit if we are supposed to believe that the only consequence will be a can of beans cost 2 more cents to magically bring back a bunch of jobs…
The problem with talk of trade wars is no one knows what will be the last straw to start one or what the fall out would be. And claiming they are easy to win is basically the standard level of mindless rambling I have come to expect from the white house.
Nuance and this President should never be in the same sentence. He does not attract good talent and what he has is leaving or has left.
“Europe would never retaliate.” I find it hard to believe anyone could have convinced themselves of that. Trade barriers are always own goals, inflicting as much harm on the initiator as on the target. That won’t stop Trump, nor will it stop Europe and others from retaliating. Which is why trade wars are so mutually destructive, not something that can be “won”.
Europe would never retaliate because we’d put a tariff on their fancy cars,
I have five EUR here which says the opposite. Europe would retaliate for several reasons:
1) Because unifying the EU along a (more) singular purpose is simply much more important to the EU-politicians than preserving BMW sales figures for the US. Nothing works as well for that as a common enemy.
2) BMW & Co can sell much more in China for less effort. The US is kinda a mature market lots of regulation, bureaucracy, … that they don’t have in China.
3) Germany is pretty pissed off over Nord Stream 2 being sabotaged by the US with the help of their vassal states within the EU (Denmark Poland and Sweden). The US tariff’ing EU trade would be the perfect opportunity to discuss whether it is really in the vassals best in the future interests that they follow a Washington who does not care about the vassals businesses or maybe they like to do more business with Germany to “pick up the slack”.
The Brexiteers are running the same line of “Oh, No, they wouldn’t …” – failing to see that the way the EU internal political interests and priorities are aligned, the EU really will to follow through regardless of there being a monetary price to be paid!
“The Brexiteers are running the same line of “Oh, No, they wouldn’t …” – failing to see that the way the EU internal political interests and priorities are aligned”
BAD example as the EU is “Oh no they wouldn’t” walk away with no deal.
Worse for both.
The group in the EU that deliberately created the circumstances that lead to Brexit. Is now deliberately creating a situation that will lead to Brexit, NO DEAL.
Brexit is madness, a madness, Junker and his Brussels EU Dictators, want. The harder the better as far as they are concerned. It justifies huge budget cuts, particularly in aid to the east.
Imo the circumstances that led to Brexit have been largely created by the British themselves. I am British. The only EU factor that has encouraged Brexit is their treatment of Greece and the Southern European states, however, this has had relatively little coverage in the British media and I don’t think it factored into the Brexit referendum.
The main factors which were important in the referendum were immigration (from what was the Eastern Bloc, but this was a decision made by British Governments, although widely portrayed in the UK as being the fault of the EU), and the neglect of many areas of the country over the last 38 years due to neoliberalism (again blamed on the EU by both the mass media and politicians).
Brexit is a madness, but one caused by successive British governments, the UK mass media and the UK elite. The EU would have had us stay, but now, due to the arrogance of the current UK government I feel the EU is increasingly happy to see us go. It will affect the UK far more than the EU.
So the deliberate failure to police EU borders, allowing Large numbers of Illegal economic migrants, to enter the EU travel to Calais and camp there whilst attempting to illegal enter England, where they would then apply for Asylum. Along with he Brussels attitude that the English had almost full employment and should simply sped more money on the illegal immigrants, those abusing the system the east, and fake asylum seekers.
Had nothing to do with the circumstances that lead to Brexit.
Wake UP. The Brussels Dictators and Junker, played you. And Yes. Brexit is madness. England would be better staying in the Eu and forcing changes to freedom of movement and border controll.Junker and the Brussels Dictators dont want England as you always say NO to their nasty little power grabbing plans. After the Brexit vote the first complaint from Poland Without England who will stand with us now against Brussels
England was our country, we were driven out in the 60’s, by the immigration policy’s of the times, and the immigration problems since have only got worse.
Within days of the Brexit vote to leave, the jungle camp in Calais was cleared, as it was no longer needed by the EU.
The EU Dictators, played England AND WON, wake up to the reality.
There’s a lot that needs fixing and we’re running out of time. Wake up and smell the coffee.
I wake every morning and make myself an espresso and drink it in the peaceful early light. My coffee smells great as I ponder the problems of the world.
But sadly I have not a clue as to the ‘Fixing of Them’. ; )
Same with my late afternoon Bailey’s and coffee. No solutions yet, but I will keep working on it.
In extremis, I will (and do have, to some extent) a personally derived solution.
The nanny state isn’t going to save me.
Predication: US manufacturers will (of necessity) pass the tariff costs along to consumers (whether stretched consumers can afford to pay them is a different story). That means a big burst of inflation over the next couple of years, right when interest rates are going up. TL;DR: stagflation. It’s going to be 1978 all over.
There are other, better ways to address trade deficits that don’t break the global economy.
they will try but succeed likely only partially. Extra cost will be re-distributed between manufactures and consumers. As for automation as a major reason for job cuts it is 90% wrong. You are unable to compete with Chinese work force and the only winning side is those who have an increased margin. After tariffs implementation those high margins for “certain persons” will be lower and this is it.
If a cheap labor force is cutoff do we think our companies will suck it up and pay a union worker $30 an hour for labor or will they poor billions more into automation to cut jobs and pay shareholders with higher margin and more competative cheap goods in the future.
If you have cheap ass labor your right, who needs automation.
Because over time automated labor is cheaper. Period. Ask any major manufacturer. Long over due to tax the robots.
At the moment employers have cheap ass labor. I think automation is going to become more expensive, since we have used up a lot of the Earth’s resources. But there will be a lot of poor people around for a long time.
There are SIGNIFICANT cross-border tariffs that are already operating ALL OVER THE WORLD. And these did not “break the global economy” . And likely won’t in the future.
Whether or not “trade deficits” need to be addressed, AND HOW, is one discussion.
But stating that these two tariffs — taken in isolation — will “break the global economy” without stating any supporting data is not helpful.
SUPPORTING DATA to be included: TARIFFS ALREADY being fully applied by ALL PARTIES, that, apparently, HAVE NOT broken the global economy. That is the beginning of the discussion.
The swamp is draining itself. What we are witnessing, is the bad guys who’ve shredded this country to smithereens in the past, are all showing their true colors by bolting the WH. Anyone from GS, does not have one middle class American in mind. Good riddance to Cohn. Hopefully he wont let the door hit him in the a$$ on his way out.
Besides, Trump’s tactics are all about shrewd, and ballsy negotiation. Most people in the world don’t understand this. He’s making everyone on the other side, shrivel in fear, and then when he gets what he wants (which is going to be good for America), the other side will cough up all sorts of goodness for us. NAFTA has been a terrible deal, so if Trump uses trade war threats to get a better deal, then is there really gonna be a ‘trade war’ ? Doubt it. If anything, we’ve been clobbered by everyone else, who have protections up the ying yang. China does not let much of our goods or services into their country. (except for cheap stuff like Mickey D’s burgers, that doesn’t give us any jobs here in the US). Im sick and tired of these other countries constantly whining. Most Americans are clueless anyway on how bad these other country’s are about taxing our exports or preventing such into their countries. Trump at least has some balls to begin doing something about it. No other President we have had, really ever dealt with any of this. They’ve all been total whimps.
Nice fact-free nativist rant.
The U.S. is one of the biggest dumpers of subsidized agricultural commodities worldwide – from wheat to soybeans. Midwestern farmers are very unhappy with the current situation. Rural jobs will be greatly impacted by this. I live in farm country and know how unhappy farmers are about protectionist trade policies.
do not exaggerate the market reaction to Cohn departure. The market will reverse either tomorrow or 2-3 days later. But if the market goes down Cohn is the last reason for this debacle. A general market is overvalued, especially several mega stocks that worth 10 times vs their right value. can you imagine what will happen to major indexes if AMZN, FB, TSLA, NFLX and several more will be valued in an honest way. As for Cohn departure this is another globalist team loss that is good for US. No pain no gain.
“The swamp is draining itself. What we are witnessing, is the bad guys who’ve shredded this country to smithereens in the past, are all showing their true colors by bolting the WH. Anyone from GS, does not have one middle class American in mind. Good riddance to Cohn. Hopefully he wont let the door hit him in the a$$ on his way out. ”
The swamp is draining itself? Why were these guys hand picked by Trump in the first place? And replacing Cohn with Larry “I did a ****-ton of coke in the 80s” Kudlow is a huge improvement? And billionaire Trump cares about the middle class? Get real, dude.
“He’s making everyone on the other side, shrivel in fear, and then when he gets what he wants (which is going to be good for America), the other side will cough up all sorts of goodness for us.”
Sure, whatever. The world has never been this black and white, and it never will be. Trump is just going to talk tough a little bit, and all sorts of great things will happen. Yeah, sure.
Put it this way… if YOU could realize this, that all it takes is a little bluster to produce “all sorts of goodness” for us, then why don’t you think the people who are A LOT smarter than you (and I don’t mean insult by that) hadn’t realized this, oh, say, decades ago.
It always amazes me when people who know little to nothing about a topic throw out some comment they think is revolutionary, like… self-driving cars will never work because of…. snow! As if the people who literally spend their waking lives working on and thinking about these things didn’t think of that already.
GARY OUT… STORMY IN..
A banker replaced by a hooker.
Oh, the irony
Look at the positive side of it… tax-payers do not have to bail out hookers.
“Look at the positive side of it… tax-payers do not have to bail out hookers.”
No they just subsidise most of them, as very few pay tax, on much of their income.
Also, at least hookers are honest about their profession.
They do have to bail out their pimps. Donald Trump as DeNiro in Taxidriver, aka Travis Bickel? Stormy Daniels as Jody Foster? Gary Cohen as Harvey Keitel? Melania as Cybil?
Given my experience with both I’ll take the hooker any day of the week.
Except this Friday, my agenda is already full.
Now only down 305 as I write. Also given the lofty levels at which it is perched it is small fry when you deal in percentages. But the stock market gyrations shows Low VIX is passe in 2018 and the markets are getting its version of ‘The Gathering Storm’.
The bigger question is will the Fed follow through in March if the markets some more?
Support Tariffs. Tax foreign goods, cut payroll tax. This is why millions of workers voted for Trump, and I am glad he is finally going to try to deliver. That said, we need tariffs to protect our workers from low wage sweat shops, not to protect us from Canada where workers are adequately compensated.
Wake me up when someone manages to cut payroll tax…
President Trump could have done that — even if temporarily — instead of the Tax cut that was enacted.
REDUCING THE PAYROLL TAX would have accrued directly to wage-earners like the lower class, the lower middle and the middle middle, without benefiting Mitt Romney, Warren Buffett, G.S. alumni or the Hollywood elite at all.
There are some legitimate criticisms of the tax cut that was enacted, benefiting some of the highest-paid people — those who have prospered nicely in the last decade or two — as opposed to the middle and lower classes who have struggled just to tread water.
Good point you made.
So he is running away before people realices how much the tax cut is gonna cost the government and the people? There are no free lunches after all.
People forget that in exchange for all the US Treasuries that we sell to foreign countries as IOUs for their cheap imports we sell them “protection” with the US navy and our Nukes.
That’s where the balance of trade is neutralized.
Speaking of the US Navy:
Exxon wants to drill for oil near Cyprus and Turkey’s Erdogan, ” … has stepped up provocations and sent warships to prevent the foreign companies from drilling.”
What a concept, using our military to control the extraction and ownership of oil …
Please don’t confuse people with facts.
Anything that upsets Cohn and Goldman is surely good for hardworking honest Americans.
Then rolling back regulations, cutting taxes, etc. must surely be bad for hardworking honest Americans.
On balance, given that Trump is enthralled by the banking class, you must think this administration has been absolutely terrible, right?
America is the global currency and it must run deficits to supply dollars for trade. Trump’s domestic policy is to weaken the dollar and implement tariffs to increase exports is at odds with being a global currency. It is nearly impossible to substantially decrease deficits while being the global currency. Asian countries don’t benefit from a weaker dollar since it reduces the value of their large dollar reserves. This is a dilemma known as the Triffin Paradox. America can not run perpetual trade and government deficits and at some point trading partners will repudiate the dollar. Long term viability of the dollar is questionable. A global reset along with a new global currency through the IMF awaits us in the future.
You wrote: “America is the global currency and it must run deficits to supply dollars for trade.”
This statement is used so often – but it’s wrong. The euro is the second largest reserve currency and the second largest and sometimes the largest trading currency, and the Eurozone runs a big trade SURPLUS with the rest of the world. Which negates your statement.
Not only that, but budget deficits exacerbate trade deficits by pushing consumption out ahead of a country’s capacity to produce. Excess consumer and/or corporate debt can do the same thing.
Germany runs a massive trade surplus and budget surplus, not so much as a matter of policy , but as a result of national character. Germans are frugal and austere by nature. It shows up in their trade and budget surpluses and their low consumer debt levels.
If the US wants to solve its trade imbalance, it needs to rein in its budget deficit and implement tax reform that shifts the burden of taxation from income to consumption. Lashing out at trading partners is a diversion.
Germany runs a massive trade surplus because they have a currency that’s about a third of what it should be.
The Euro is trading slightly over purchasing power parity vs. the USD right now, so the Euro is absolutely not undervalued.
Having recently flooded the world with USDs maybe the US is about to create an artificial shortage of USD? Wash, rinse, repeat! Just another round of financial warfare against the rest of the world!
I don’t understand how the U.S. lawfully controlling its own currency is waging war on the rest of the world. If anything, the rest of the world has been abusing their access to dollars for their own benefit. Tariffs are pea shooters in a trade war. Stopping foreign abuses of dollar money markets would be using the big guns.
How convenient for Cohn. Tell me, do you still get to liquidate previously held investments tax free on joining the administration?
We manufacture “money” for the world out of think air and they give us real stuff for it. What a great deal for the US. We get to be the world’s consumers and let everybody else in the world word to support our lifestyle!
What a great system!
Lets not pretend Cohn is anything other than the person who is looking after GS’s interests. Free trade is not his big thing…. its free money from taxpayers to bail out his buddies. The signal may be that bailouts will be less favourably looked at.
Aren’t they ALL squidsmen afterall
India has a host of issues but they also have the largest growing middle class. If China allowed their money to increase in value, they’d have a much larger middle class who could actually afford the products they produce even if cost of production increased with some US manufacturing returning . A ~2.5 billion population between the two countries and silk roads everywhere, hmmmn. American’s can only consume so much.
Hmm you forgot 1 basic fact.
The two states you mention, HATE each other.
Why aren’t you asking these questions?
1. Why don’t you have the goods overseas customer would be willing to buy and pay the price for?
2. Why aren’t you cost-competitve (in most areas)?
Have a look in the mirror!
You have a look in the mirror. Ignorance and anti American Bias will be looking back at you.
Their problem is not. Their pricing. Or their good’s.,
Their problem is State Sponsored UNFAIR COMPETITION.
Mainly from CCP MAFIA STATE China.
The EU have just said they’re friends and allies to the US. I’m not so sure on that but both sides need to sit around the table and act like adults. It would damage both sides.
Free trade should mean low (or no) tariffs on both sides. The current policy is many countries protect their products and manufacturing jobs with tariffs while the U.S. does not. That is crazy and stupid policy. Manufacturing jobs are what created a middle class in this country. But the globalists care nothing about the working class here. They want low U.S. tariffs so they can move production to China or Mexico and re-import products back to the U.S. market. Free trade is a Trojan Horse for U.S. corporations to pump up profits by exporting manufacturing jobs. This has devastated our economy and society. It needs to change.
Free trade should mean low (or no) tariffs on both sides. The current policy is many countries protect their products and manufacturing jobs with tariffs while the U.S. does not.
Other than China and maybe Japan, who does that? Not your NAFTA partners, that’s for sure.
The EU levies a 10% tariff on U.S. autos. The U.S. levies only a 2.5% tariff on European autos. There are other examples. China has a whopping 25% tariff on U.S. autos.
I agree philbq. This is the message the globalists do not want us to know.
I questioned the hiring of Cohn from the start, if Trump wants to drain the swamp.
“Free trade is a Trojan Horse for U.S. corporations to pump up profits by exporting manufacturing jobs.”?
The problem is the US and others did not ensure the playing field was level, and the rules were the same for everybody, BEFORE opening the gates of Globalisation.
Today the playing field is still Heavily Tilted, in the favour of countries like china and their Globalised Vampire Corporate Allies.
china is still waging Economic War on the West. Through subsidised Energy and Finance, to its state owned companies.
Nobody can compete with, Free Land, Free Energy, and Free Money. NOBODY.
I think it is a case of a rat fleeing a sinking ship. Perhaps Powell and company are about to let markets normalize and Cohn doesn’t want to be a target for blame. Perhaps Cohn is just tired of all the noise and resistance.
One thing that is particularly nauseating to me is the fact that the world doesn’t have economists anymore. They were replaced by the monitorist school, a bunch of brainless mathematicians.
As wrong as Marx may have been, at least he TRIED to understand history. These morons (including their web page wannabees) are clueless. Do people really think that people are going to allow their homes to be taken away?
The article on Toronto real estate is an example. A family saves up $100,000 for the down payment on a house and it gets wiped out in one year!
Marx focused on trade, politics, history and war. Bernanke stared at 6 month old heavily manipulated numbers. At one point, the FED said he needed to be taken in for a “refresher course in subprime.”
Think about that for a second. The chairman of the federal reserve doesn’t know what a mortgage is!
In fact, these people are blazing idiots. They say simple things and make them sound like strokes of genius because they’re speaking to ab audience of innumerate imbeciles even dumber than they are.
It’s OBVIOUS that UPS is going to end up in bankruptcy, just as it was OBVIOUS GM and GE would, It’s OBVIOUS that US trade deficits are going to eventually destroy the US economy. It’s OBVIOUS that free trade doesn’t work and only came about because the senate was bribed. It was even spelled out in detail in the Wikileaks emails. It’s OBVIOUS that China’s “economic growth” plan is a military plan.
Evolution works because selection in random. If we relied on planning, we’d be dead.
This has to end really well.
One good thing will come out of this: If Trump gets the trade war he seems to want, then all the inflation the Fed has been exporting for the past decade will come home to roost in spectacular fashion. Trump supporters will lash out and blame the rest of the world for that too, but there will be nowhere to hide. Quantitative Easers and protectionists will ultimately reap what they sow.
What percentage of the US economy is exports these days?
US imports more than it exports according to the report Wolf reported on.
All throughout the 2017 business news cycle, I found myself thinking “Be careful what you wish for…” Escalating the trade war (because a war already exists) with China is yet another example. Suppose China says “Fine…for every dollar of tariff imposed on Chinese products, we will sell one dollar of U.S. Treasuries. Better yet, two or three dollars…maybe ten.” Who do you suppose would be the winner and the loser in that battle in the trade war, especially if it’s coincident with the Fed’s planned QT? And if the Fed reverses course and returns to QE to counter China’s move, well that would surely suck now, wouldn’t it. Be careful what you wish for…
Exactly. Michael Lebowitz has a good analysis of tariffs and U.S. foreign debt here:
“… how making imports into the U.S. easier, via tariffs and trade pacts, has played out.
U.S. corporations moved production overseas to take advantage of cheap labor. Cheaper goods are then sold back to U.S. consumers creating a trade deficit. U.S. dollars received by foreign producers are used to buy U.S. Treasuries and other dollar-based corporate and securitized individuals liabilities. Foreign demand for U.S. Treasuries and other bonds lower U.S. interest rates. Lower U.S. interest rates encourage consumption and debt accumulation. U.S. economic growth increasingly centered on ever-increasing debt loads and declining interest rates to facilitate servicing the debt….
Therefore, the important topic not being discussed is the United States’ (in)ability to reduce reliance on foreign funding that has proven essential in supporting the accumulated debt of consumption from years past.
…If the United States decides to equalize terms of trade, then we are redefining long-held agreements introduced and reinforced by previous administrations. In breaking with that tradition of “we give you dollars, you give us cheap goods (cars, toys, lawnmowers, steel, etc.), we will most certainly also need to source alternative demand for our debt. In reality, new buyers will emerge but that likely implies an unfavorable adjustment to interest rates.”
The U.S. consumer cannot handle higher interest rates.
“Be careful what you wish for…” Escalating the trade war (because a war already exists) with China is yet another example.
Of course, the USA already imposes numerous and large tariffs upon Chinese exports, while the Chinese don’t really have many tariff barriers to USA products at all.
Not true, Robert. China imposes a 25% tariff on U.S. autos. There are many other products where China protects their markets. The irony is that China understands the importance of keeping manufacturing jobs at home. The leaders of this country serve their corporate masters in allowing the export of jobs.
( You missed the “/sarc=off” qualifier at the end of my post. I have begun using /sarc=on and /sarc=off qualifiers because sarcasm DOES NOT present well in written posts. )
Well Robert, there is a trade war. It’s just that we’ve been losing it thus far. That doesn’t mean a tit-for-tat tariff tactic is the solution. How’s about we figure out a way to replace the Chinese-made other imported products that occupy 90% of Walmart’s shelf space with American-made products that are as relatively inexpensive, with equivalent quality, as the imported products. Emphasis is on equivalent price and quality. Surely a country with the wealth and brain-power of ours should be able to figure out how to do that. If we do, we have a shot at winning at least some battles in the war. Tit-for-tat tariffs aren’t going to cut it though.
“…Chinese-made and other imported products…”
You are correct. Civilizations with “an eye for an eye” justice policies, just become places full of one-eyed people. So your point is definitely valid.
However, if our leaders conclude that Chinese and other trading partners are taking advantage of us, and many requests for more fair polices have gone unanswered, then PUSHING BACK can be a good tactic to jump-start negotiations.
Clearly ignoring high tariffs on exported USA goods has not been helpful thus far.
An opening gambit does not signal the end of the game, merely the beginning.
Good point you made !
“Surely a country with the wealth and brain-power of ours should be able to figure out how to do that.”
May be the country can. But then what happens in the interim and the interim is a long while. Also if you figure out and if you will not be able to do much about it then what?
Assume you figure out that the Chinese products are made with labor that costs 1/100th, free to pollute policies, inhuman working hours, squalor working conditions, subsidized power and aided by exchange control. Now what do you do about it?
“Tit-for-tat tariffs aren’t going to cut it though.”
Agreed. Everyone loses. But what other choice have you got, given that competitive conditions are unequal.
Similar is currency manipulation. Every one wants to depreciate their currency and export their way to prosperity. And who are these exports aimed at? Americans!
Why has it become a hot button issue suddenly? Because only now America has woken up to the fact that their middle class has been gutted (true whether you like Trump or not) and is retaliating! [Who are the major trading partners of the US that have gained in the process – China (manufactured products), Japan(electronics) and India (services)]
I do not know the solution but basically, bad choices are all you have got, unless playing fields are level.
“Fine…for every dollar of tariff imposed on Chinese products, we will sell one dollar of U.S. Treasuries. Better yet, two or three dollars…maybe ten.”
Let them sell all of them, there is plenty of demand for them.
Seeing someone leave the white house isn’t a huge headline anymore. It seems to be a weekly episode of Survivor – White House Edition. Looks like his own daughter and son in law might go in the next episode.
As for tariffs I think a good way to measure an outcome would be to look at how much a nation produces a certain product and how much they consume that product. If they supply more than they consume, adding a tariff to imports won’t hurt since they are self sufficient. But where they fall short in supply, they will have to beg for imports and pay dearly in return.
Slap tariffs on steel, it won’t compensate for the weak productivity of an uneducated nation.
The current US economic policy is to make the dollar stronger. Hence highter rates, getting rid of “imaginary” cash and try to cut government expending, the last one has been throw out if wack thanks to the new tax cuts and subsidies.
Expensiver credit and less money in circulation plus highter rates increases the mighty green value after all.
The real reason Gary Cohn is leaving is because the US president will have to raise taxes and maybe create new taxes to afford the tax cuts and subsidies he have, and Cohn doesn’t want to be associated with the ugly consequences of his brilliant tax cut idea.
There is no money for nothing in the US, even if they just print money, a cost has to be paid.
A tax cut is always the government just stopping getting money from one source to then get it from another one.
A better name would be “tax redirection”, those taxes the rich are not not paying? Is now up to you to pay! Not the exact same taxes of course, we will just raise other taxes and maybe create new ones.
So the Chinese government OWNS the Waldorf-Astoria, after taking control of Anbang Ins? The trade imbalance was tolerated to make consumer goods affordable for the hourly help, while the title was quietly transferred. The rich must be fuming.
I’m not sure I believe Trumps commitment to higher tariffs and I think his announcement may have motivations other than our current trade deficit. One reason I’m skeptical is that China and the EU are the true elephants of our U.S. trade deficit, and these two players are not the largest exporters of aluminum and steel to the U.S. A second reason is that Trumps apparently open to lifting these tariffs against Canada and Mexico, two of the largest steel and aluminum exporters, in exchange for a renegotiation of NAFTA:
This suggests other countries could also earn exemptions by renegotiating a multilateral or bilateral trade agreement with the U.S. Finally what’s most curious to me is that there is a Special Election next week on March 13th, to elect a Congressperson for Pennsylvania’s 18th Congressional District:
What’s curious here is that Pennsylvania’s 18th Congressional District includes Pittsburgh which is home to the steel and aluminum producers Alcoa, US Steel, and Allegheny Technologies. This is the heart of steel and aluminum country. I’ll be less skeptical about Trumps motivations if tougher talk and additional tariff announcements continue after this election is over. I hope that’s not the case because in my opinion trade wars are almost always a bad idea.
I made a short term trade this morning and exited with a small profit. Kinda predicted that the market was overreacting yesterday.
It’s a bear trap. Too obvious