Donald J. Trump the forty - fifth President of America has thrown off what limited restraints he had in his first year of his Presidency. He has dispensed with anybody who vaguely filtered his unpresidential invective and behavior. In the WhiteHouse Trump, surrounded by sycophants and weaklings, is unimpeded at "Being Trump". He lives in his own world of denial and revels in his own fantasies. He has simplistic solutions for complex problems. His unparalleled histrionic salesmanship and demagogic skills allow him to appear genuine to the disillusioned, vulnerable and gullible. His ignorance, simplicity and telling it how he sees it has allowed him to connect. It is all so eerily like Peter Seller’s Chancey Gardner in his prophetic movie “Being There”, where a straight talking simpleton is naively regarded as a political genius.
However The Donald is coming to the end of his lollipop as his problems mount and he is out there on his own. His twin stump promises getting even with China and building a border wall are all that remains resulting in them being the focus of his attention. Also he needs to get even with Bezos of Amazon for the success of The Washington Post for tearing his Presidency apart.
His current tweets on China and the wall do not reflect policy as much as they do his ego. What matters is that once again the believers of Chancey Gardner stand around and interpret his tweets like they are profound insights and carefully thought out and researched policies. Particularly dangerous is his outright attack on China which can have grave consequences. Also his delusion that an attack on his attorney is an attack on the country has to be a signal that he is closer and closer to attempt to make himself above the law.
THE TRUMP PRESIDENCY AFTER FIFTEEN MONTHS
Trump’s legal troubles mount daily. He has the unedifying revelations in Stormy Daniels’s litigation which place him and his fixer lawyer in legal jeopardy - the latter has already had his offices searched by the FBI, an earth shattering event. Then the courts have finally allowed an emoluments case to proceed against him which can explore what money he has made from his Presidency. Most serious is the Mueller probe that relentlessly soldiers on.
His WhiteHouse is in a shambles while his Administration, whose personnel go in and out the revolving door, is directionless - he currently needs ratification of three new Cabinet Secretaries. He daily attacks his Justice Department and ignores the fact that he promised to drain the swamp and is instead deepening it. His Republican Party has quietly deserted him - having allotted a billion out of the twenty - five billion he needs for his crazy wall. Many of the GOP legislators are voting with their feet - a record number of them retiring from Congress. The leaders of the Party are openly vying for superlatives to describe the looming defeat they face in the midterm elections using terms such as a "blue wave" or "tsunami". Mitch McConnell, leader of the Senate is fearful that they may lose the Senate as well as the House. This has been felt to be an impossible outcome as twenty six Democrats are defending their seats, ten of which are in States Trump won. Only nine Republicans are up for re-election and most of these are in States that Trump won with a resounding victory.
All this plus one freak outlier poll that put his support at about fifty percent finally emboldened Trump to go it alone.
CHINA WARFARE
In this environment, seemingly out of nowhere, Trump shot off tweets which have started a de facto Trade War with China. Now everyone knows that China are the bad guys and are ostensibly robbing us blind and ruining our economy. However everyone is happy with the economy and by Trump’s admission it is in the greatest shape ever. Also by Trump’s admission a Tariff war with China will result in “some pain” and drop in the stock market. (The latter rise to date he has used as the indicator of his great economic success). As the consequences unravelled and China revealed its first tit for tat, Trump instructed his "Trade People" to see how they could soften the losses to his farmers. It is difficult to understand how subsidizing or giving the farmers handouts versus them bringing in currency is “Good for America”. Soya beans are the biggest agricultural product that China imports but America can easily be replaced by Brazil that currently has a glut. Boeing is another potential loser and their orders can likewise be filled by Airbus.
Also the whole business of manufacturing has taken on a global perspective. Chinese companies are in America in towns such as Allentown. Geely, a Chinese company that has a big share of Volvo, is opening a car factory in South Caroilna. So the Chinese are becoming more and more responsible for American jobs. The goods made by China here need to be transported to American harbors and then shipped, all adding to employment and income. One wonders whether Trump has instructed his “trade people” to look into what that will cost the economy and the impact on the job market.
Donald Trump tweeted that America’s tariff on Chinese made cars is two and a half percent while China levies a twenty five percent tax on an American made cars entering China. However, very few American cars get into China in that fashion. They are in fact manufactured in China and not subject to tariffs. Ford for example is moving its production of Fusion to China and is heavily involved in the production of electric cars in that country. China can get rid of that tariff in a heart beat and appear to have made a major concession when for practical purposes they would have made none. The reason for getting rid of the car tariff is also self serving. Xi Jinping wants Tesla to export into China as he is heavily into the concept of electric vehicles. He regards that company as the leader in the field.
Xi Jinping when announcing this liberating of Chinese trade laws, which he has done on previous occasions, coupled this with an announcement that he has instructed his State Intellectual office to step up enforcement of the law. The latter is America’s biggest bone of contention - the insistence by China for American companies to share intellectual property with China in return for doing business there. (So Tesla beware!)
It is common cause that tariffs will increase the cost of products to the consumer, the Chairman of the Fed confirmed it lest there was any doubt. This is bound to create inflation which to date has been kept in check. Inflation means interest rates go up with all that entails to capital expenditure, construction, cost of living not to mention the stock market. What research has gone into that?
Then there are the international implications. China is desperately needed as an ally in the North Korean dispute. This attack is hardly a lesson in how to win friends and influence people. China also holds a huge chunk of American debt which it could offload creating havoc to the dollar. America is about to sell a large number of treasuries to pay for the income tax reductions and China is usually the big purchaser. Xi Jinping can devalue his currency again making its goods even cheaper.
Also China has its pride. They are sitting in the pound seats and they are not going to be humiliated. Xi Jinping has just been elected for life and hasn’t the same electoral pressures that Trump has and if necessary can tell the electorate they have to take bitter medicine
Too much has been read into the Chinese Premier’s announcement. This speech was scheduled long before Trump’s throwing down the gauntlet having been presented at an economic summit equivalent to the West’s Davos. Those least impressed were the participants of the Boas Forum in Asia - the consensus was this talk of opening up China was more of the same. Also ignored in the premature euphoria is that on the same day as the speech China laid a complaint against America with the World Trade Organization challenging Trump’s already instituted tariffs on steel and aluminum.
THE DEFENSE OF TRUMP
Initially the Trump apologists were all over the show, Secretary of the Treasury Minuchin did not deny that a Trade War might have already started and the Finance people such as Peter Navarro appeared ignorant as to what was going on. Trump’s special advisor on economics Gary Cohn had resigned over the issue so it was left to smooth talking incoming advisor Larry Kudlow to tell us what Trump really meant in his tweets. He once again stressed how bad the Chinese operators were and that something really had to be done. He played down the impact that the Trump tweets had. In addition he was optimistic that this would be sorted out between Peking and Washington. He implied that talks were going on - a fact that was flatly denied by the Chinese and initially not confirmed by the Trump team. He reassured that tariffs, if it ever came to that, would not go into effect for months.
What really helped calm the waters is that Kudlow is a free trader and in the past was dead against such actions. The fact that he now saw the necessity of this was a balm to the fiscal community. If good old Larry thinks that Trump is Chancey Gardner then he must be. So till the next tweet fears have been allayed.
Trump is already declaring victory as a result of the Chinese Premier's speech at the economic summit.
THE BOTTOM LINE
Thus far there has been no facts or figures to support the economic rationale for this blunderbuss approach to international affairs. All that has emerged is that it was executed because what China is doing is wrong. Now either this highly complex subject that has ramifications up the ying yang has been lengthily researched as to the impact and the moves and counter moves to China’s response or it hasn’t. Jay H. Ell believes that there is far more evidence that Trump is winging it than he has put into place a deep well thought out rationale and plan for this action. China’s wrongdoing has been around for decades and Presidents from both political parties, who were more responsible than Trump, obviously felt that righting the Chinese wrong was less important than risking turning America upside down.
WHY THIS IS JUST TRUMP’S EGO
During the presidential election Tony Schwartz who co authored Trump’s Art of the Deal revealed all that he had learned about Trump’s personality in the two years that he observed him. One story sticks out in Jay H. Ell’s memory. Schwartz related a phone call that Trump had where he shouted, screamed and threatened someone in an attempt to get him to do his bidding. He then placed the receiver in the cradle and turned to his co author and pensively enquired, “Do you think it will work?”
This whole episode smacks of the Trump real estate m. o. and is an effort to take control of a situation where he is becoming more and more isolated, out of his depth and less and less in control. So a tariff war, sending the National Guard to the border to thwart an imaginary invasion by Mexicans, attacking Mueller and Sessons and the rethinking yesterday’s decision to pull out of Syria are all being deployed to hold Donald’s fragile ego together. But maybe Jay H. Ell’s is being too pessimistic. Maybe Larry Kudlow can put this all together on the fly and get a satisfactory solution to the Chinese - Trump impasse. However, as Jim Cramer has pointed out it is Trump’s Art of the Deal that is up against the centuries old, Suntze’s Art of War and Jay H. Ell fancies the latter.
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