Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Globalization Hits a Brick Wall Named Trump

Economics / Global Economy Sep 06, 2019 - 05:49 PM GMT

By: Patrick_Watson

Economics

Until about 50 years ago, people paid attention to the area where they lived. They read local papers, shopped at local merchants, and socialized at local events.

Technology ended all that. Now we get our news from the internet. We buy imported goods. We converse on social media with friends thousands of miles away.

This “globalization” process changed the world, sometimes for the better but with significant side effects. Hence, today’s dissatisfaction.

Now, technology is swinging the pendulum back. Globalization is going in reverse. And again, the process will hurt some people.



We can’t stop it, but we can minimize this pain by letting it occur gradually. Give everyone time to adapt.

President Trump doesn’t see it that way. He wants to de-globalize now, no matter the cost.

Wrecking Ball

We all think Trump changed everything. He certainly changed some things, but it’s striking how many of today’s megatrends were already in motion before he took office.

wrote this in August 2016, when I thought Trump would surely lose the election.

Humanity spent the last 50 years globalizing. Now, thanks to certain technologies, that whole process is going in reverse. I think historians will mark the 2008 financial crisis as the turning point: Peak Globalization.

I don’t say this because I want a de-globalized world. What any of us want or don’t want is irrelevant. I believe the transition will happen whether any of us want it or not.

It will not happen in a linear fashion, though. The process that brought us to this point had starts, stops, and slowdowns. Reverse globalization will have ups and downs, too, but a new set of technologies will keep pushing it forward.

I didn’t anticipate that Trump would be in position to attack all things global—and particularly China—like a wrecking ball demolishes a building. As a result, this process I thought would unfold over decades is now occurring far faster.

The president’s trade war and attacks on various international institutions were big dents. But last week, he took it to another level, saying the US and Chinese economies should separate completely.



Sigh. Where to begin? I could fact-check these tweets and show how wrong he is. But let’s stick with the broader point.

As the rhetoric and tariffs escalate, it is growing clear that Trump doesn’t just want China to play fair. He wants to sever the economic relationship completely. We’re “better off without them,” he says.

In fact, he feels so strongly he orders American companies to look for alternatives to China.

Many analysts laughed off that threat. He can’t do that, they said. But what if he can?

He Has the Power

President Trump can impose tariffs (i.e., taxes) on Chinese and other imported goods because past Congresses allowed presidents to do so under certain conditions.

Trump has stretched that power far beyond what Congress intended, and he’s getting away with it. Yes, we’ve heard a few rumbles about legislation to reduce his trade authority. But it is nowhere near passing both houses.

And even if Congress passes a law ending Trump’s tariff power, Trump can veto it. Overriding his veto requires a two-thirds vote in both House and Senate—unlikely as long as a few Republicans stick with him.

So as a practical matter, nothing stops Trump from raising tariffs on Chinese goods as high as he wants. He doesn’t have to stop at 20% or 30%. He could make the tax 100%, 500%, 10,000%, whatever he likes. He has that power, right now, and Congress is too gridlocked to take it back.

Court challenges might stop him, but that would take time and courts might just say it’s up to Congress. Which, as noted, is hopelessly gridlocked.

Not Backing Down

When Trump tells US companies to abandon China, it’s not an empty threat. He has a way to force their compliance. He can make Chinese imports so expensive they have no choice.

This would, of course, quickly plunge the US economy into recession. Factories that depend on Chinese components would shut down and lay off their workers.

It would be bad… but I’m not sure it would make Trump back down. Nothing binds people together like shared adversity.

We see this already. Many farmers still support Trump even as his policies hurt them. Combine that with Trump’s ability to scapegoat others (hello, Jerome Powell), and I’m dubious even a deep recession would cost him much support.

Trump is president right now because he understands ordinal preference. He believes (correctly, I think) he doesn’t need to be everyone’s ideal. He just has to convince them the alternative is worse.

So, by the time Trump gets through demonizing whoever the Democrats nominate, even the Republican business owners whom his policies are devastating will hold their noses and support him, with both votes and donations.

He might still lose the election. But until then, he will keep doing whatever he thinks maximizes his side’s turnout. Attacking China seems to be high on the list.

I don’t see this getting better. I think it will get much worse.

But in the bigger picture, in the last few months globalization has gone from “unhealthy” to “critically ill.” The US-China trade relationship is its heart, and the pulse is slowing fast.

Major, epic economic change is happening before our eyes at an unnatural speed.

The Great Reset: The Collapse of the Biggest Bubble in History

 New York Times best-seller and renowned financial expert John Mauldin predicts an unprecedented financial crisis that could trigger in the next five years. Most investors seem completely unaware of the relentless pressure that’s building right now. Learn more here.

By Patrick_Watson

© 2019 Copyright Patrick_Watson - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules