A Twenty-First-Century History of Greed

Date: 15-06-2018
Source: TomDispatch By Tom Engelhardt

How the Last Superpower Was Unchained
American Wars and Self-Decline

Think of it as the all-American version of the human comedy: a great power that eternally knows what the world needs and offers copious advice with a tone deafness that would be humorous, if it weren’t so grim. If you look, you can find examples of this just about anywhere. Here, for instance, is a passage in the New York Times from a piece on the topsy-turvy Trumpian negotiations that preceded the Singapore summit. „The Americans and South Koreans,“ wrote reporter Motoko Rich, „want to persuade the North that continuing to funnel most of the country’s resources into its military and nuclear programs shortchanges its citizens‘ economic well-being. But the North does not see the two as mutually exclusive.“

Think about that for a moment. The U.S. has, of course, embarked on a trillion-dollar-plus upgrade of its already massive nuclear arsenal (and that’s before the cost overruns even begin). Its Congress and president have for years proven eager to sink at least a trillion dollars annually into the budget of the national security state (a figure that’s still rising and outpaces by far that of any other power on the planet), while its own infrastructure sags and crumbles. And yet it finds the impoverished North Koreans puzzling when they, too, follow such an extreme path.

Clueless is not a word Americans ordinarily apply to themselves as a country, a people, or a government. Yet how applicable it is.

And when it comes to cluelessness, there’s another, far stranger path the United States has been following since at least the George W. Bush moment that couldn’t be more consequential and yet somehow remains the least noticed of all. On this subject, Americans don’t have a clue. In fact, if you could put the United States on a psychiatrist’s couch, this might be the place to start.

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Avoiding the Sino-American Technology Trap

Jun 18, 2018 Laura Tyson, Project Syndicate

Laura Tyson, a former chair of the US President’s Council of Economic Advisers, is a professor at the Haas School of Business at the University of California, Berkeley, and a senior adviser at the Rock Creek Group.

The Trump administration is right to push back against China’s violations of world trade rules, particularly with regard to advanced technologies. But US high-tech industries‘ ability to weather the challenge posed by China will depend less on curbing China’s progress, and more on supporting innovation at home.

BERKELEY – With its ambitious Made in China 2025 strategy, China has made clear its objective to secure global economic leadership in advanced technology industries. This places it in direct competition with the United States – which currently leads in those industries – in what is emerging as an undeclared but intensifying cold war over technologies with both commercial and military applications.

With its investments in such dual-use technologies, China is seeking more than to compete commercially with the US; it is also seeking greater military and geopolitical power. And it has deployed a variety of methods – including weak intellectual property (IP) protections, technology transfers as a condition for joint ventures with Chinese partners, evasion of export controls, and regulatory harassment – to acquire such technologies from the US and other trading partners.

Economic Growth in U.S. Leaves World Behind

Date: 15-06-2018
Source: The Wall Street Journal

Second-quarter growth on track to exceed a 4% pace—the fastest of any quarter in almost four years

The Commerce Department reported Thursday that sales at U.S. retailers rose 0.8% in May from a month earlier.

The U.S. economy is revving up just as Europe and other major economies lose steam, jeopardizing a rare period in which the world’s largest economies have been accelerating in unison.

The European Central Bank on Thursday took another step toward ending the massive stimulus measures it has used in an effort to boost growth since 2015. But ECB officials also said they would hold interest rates steady through summer next year, a sign that they felt the eurozone economy remains fragile.

In an indication of growing economic vigor in the U.S., the Federal Reserve on Wednesday tapped the brakes again, raising the benchmark interest rate by a quarter of a percentage point and signaling it may quicken the pace of future rate increases because of a strengthening economy and tightening labor markets.

The economies’ diverging paths were expressed most prominently in the euro, which on Thursday suffered its worst day against the dollar in two years. The euro lost 1.88% against the U.S. currency, its biggest drop since the day after the U.K. voted to leave the European Union.

The central bank announcements over the past two days offered the latest evidence that heady growth expectations for Europe and other major economies outside the U.S. might not be achieved, defying analysts who began the year convinced that the world economy’s first synchronized expansion in years would continue.

The International Monetary Fund said in January that the world’s seven largest economies each grew more than 1.5% in 2017, and it predicted more solid growth this year. Global manufacturing was booming and the IHS Markit global purchasing managers index that month was its strongest in nearly seven years.

Many investors counted on a revitalized Europe to lead that growth in 2018. But recent labor strikes in France, political turmoil in Italy and softer economic data are causing investors to rethink that premise. Germany last week reported that factory orders dropped 2.5% in April, while eurozone growth was 0.4% in the first quarter, down from 0.7% in the final quarter of 2017. On Thursday, the ECB revised down its eurozone growth expectations for this year to 2.1%, from 2.4%.

The Unexpected Winner From the Trump-Kim Summit: China

Date: 14-06-2018
Source: The Wall Street Journal

Beijing had worried that its interests might get short-shrift in the Singapore summit

BEIJING—China is setting its sights on a key role in North Korea’s future, seeking to be part of any peace treaty, weapons inspections and economic assistance, after emerging as a surprise beneficiary of the summit between the U.S. and North Korean leaders.

Chinese officials are expected to stake out their positions for a post-summit North Korea when U.S. Secretary of State Mike Pompeo visits Beijing on Thursday to discuss the outcome of the talks between President Donald Trump and North Korean leader Kim Jong Un.

At the top of China’s agenda are an easing of the economic sanctions that pressured North Korea into negotiations and working on ways to provide security guarantees to give Pyongyang the confidence to dismantle its nuclear program.

The Divine Right of Donald

Elizabeth Drew is a contributing editor to The New Republic and the author, most recently, of Washington Journal: Reporting Watergate and Richard Nixon’s Downfall.

Jun 11, 2018 Elizabeth Drew, Project Syndicate

While the US presidency has grown stronger over the years, during the Trump administration Congress has been especially timid and subordinate. Will Trump’s recent claims to quasi-royal authority change that?

WASHINGTON, DC – US President Donald Trump may not seem to have much in common with North Korean dictator Kim Jong-un, but Trump’s autocratic tendencies are becoming more apparent by the day. Propositions regarding the extent of presidential power that once would have been considered preposterous – both constitutionally and according to longtime practice – are now being discussed as if they were normal ideas.

Kim might find in Trump – the first US president to meet with a North Korean leader (a gift to Kim before talks even begin) – a kindred spirit, at least compared to previous US presidents. But America’s founders would be appalled at what has become of the ideas they enshrined in the US Constitution. Determined not to establish another king, they considered the Congress more significant than the presidency and put it first in the US Constitution, with presidential powers defined in Article II. Trump is taking direct aim at an essential concept: that the president can be held accountable to the citizens.

Ignore your instincts: A case for owning euro-zone shares

Date: 07-06-2018
Source: The Economist: Buttonwood

The contrarian wisdom of George Costanza

IN AN episode of “Seinfeld”, a 1990s television comedy, George Costanza, a serial failure played by Jason Alexander, decides that every instinct he has is wrong. So he resolves to do the opposite. He is soon squiring a new girlfriend and is up for a dream job. “It’s all happening because I’m completely ignoring every urge towards common sense and good judgment I’ve ever had,” he says.

Success in investing often means going against the grain—and your own feelings. To do otherwise is to be swept along by the general greed and fear. Still, fear is a useful emotion. It would be unwise, for instance, to ignore the recent turmoil in Italy, where bond yields spiked in response to concerns that the country might be on the road to leaving the euro. Though the worst fears have subsided, the coalition that was eventually given the president’s blessing to form a government looks capable of causing trouble.

American firms will be hit hard by retaliatory tariffs

Date: 09-06-2018
Source: The Economist

America’s trade partners fight back

“LOOK at all these bikers…we love the bikers!” declared the pre-presidential Donald Trump, surveying a crowd of motorcycle-owners gathered by the Lincoln Memorial in Washington, DC, in 2016. Riders of Harley-Davidsons, in particular, have been among Mr Trump’s noisiest supporters since the early days of his campaign. Riders of “hogs” often see themselves as rowdy rebels. Perhaps this is why many have identified with Mr Trump’s disdain for conventional politics.

Alas, the love affair may be heading for trouble. Mr Trump’s trade policies have put Harley-Davidson in a double bind. The company uses a lot of steel and aluminium to make its bikes. Although much of that is domestically sourced, Mr Trump’s tariffs on imports have led to higher prices for locally made metals, too, thus raising costs. And the European Union is poised to impose retaliatory tariffs on a variety of American exports, including motorcycles and whiskey. Harley-Davidson had bet on a continued boom in European sales, which make up about 16% of its total.

Trump’s Shot Heard Round the Foot

Jun 5, 2018 Daniel Gros, Project Syndicate

Daniel Gros is Director of the Brussels-based Center for European Policy Studies. He has worked for the International Monetary Fund, and served as an economic adviser to the European Commission, the European Parliament, and the French prime minister and finance minister. He is the editor of Economie Internationale and International Finance.

The imposition of steel tariffs on European producers was an unprovoked attack, to which the EU has vowed to retaliate. But instead of engaging in a costly strategy of escalation with their biggest trading partner, Europe’s leaders should swallow their pride and indulge its president’s insistence on running the US economy into the ground.

BRUSSELS – The first salvo in the transatlantic trade war has now been fired by the United States, which is imposing stinging tariffs on steel imports from the European Union (as well as from Canada and Mexico). It was an unprovoked attack, to which the European Union has vowed to retaliate. Moreover, US President Donald Trump has announced an investigation into whether car imports threaten national security. Any tit-for-tat response could thus quickly escalate from steel to the automotive industry, which is vital for Europe.

Unfortunately, it seems that emotions and short-term political posturing, rather than economic logic, is dictating the EU’s reaction. For starters, there is a key inconsistency in the discourse of the EU (and other US trading partners). The EU argues that tariffs on steel imports mainly hurt the US itself, and most economists would agree. But this also implies that counter-measures taken by the EU will mainly hurt Europe.

The New Tech That Terrifies OPEC

Date: 02-06-2018
Source: The Wall Street Journal

U.S. shale oil drillers are boosting efficiency with giant pads and walking rigs, lowering prices to a point that could hurt exporters like Saudi Arabia.

What doesn’t kill you makes you stronger.

Two years ago, it looked like Saudi Arabia was winning its fight against the U.S. shale oil industry by furiously pumping crude to drive down prices. Some drillers went bust and many more flirted with bankruptcy while oil drilling in places like West Texas and North Dakota collapsed.

The Saudi effort backfired. Instead of killing shale it spurred a wave of innovation that transformed drilling in the U.S. into a highly efficient industrial process, dramatically lowering costs and boosting output. During the next oil bust, it will be the Saudis who have to worry.

“High prices tend to create sloppiness in this industry because people focus only on growth,” says Doug Suttles, chief executive of shale driller Encana. “Downturns make you focus on cost because it’s the only thing you can control—the oil price is out of your hands.”

US-Aufseher stufen Deutsche Bank als „Problembank“ ein

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Die Deutsche Bank ist mit ihrem US-Geschäft laut Medienberichten weiter in die Bredouille geraten. Die US-Einlagensicherung FDIC habe das Geldhaus im ersten Quartal auf eine Liste von „Problembanken“ gesetzt, schrieb die „Financial Times“ gestern unter Berufung auf eingeweihte Kreise.

Die Deutsche Bank erklärte in einem Statement, als Konzern „sehr gut kapitalisiert“ zu sein und über „erhebliche Liquiditätsreserven“ zu verfügen. Nach der Ankündigung fiel die Aktie auf einen historischen Tiefstand: Der Kurs des größten deutschen Kreditinstituts notierte zum Börsenschluss in Frankfurt mit 7,15 Prozent im Minus und lag bei 9,07 Euro.

Die Deutsche Bank befindet sich seit Jahren in der Krise. Der neue Konzernchef Christian Sewing hatte deshalb erst in der vergangenen Woche drastische Umstrukturierungen angekündigt. Er plant den Abbau von 7.000 Stellen und die Schrumpfung des schwankungsanfälligen Investmentbankings.