Tariff shock points to the instability of a shifting world Mohamed El-Erian Mohamed El-Erian is president of Queens’ College, Cambridge, and an adviser to Allianz and Gramercy · 4 Apr 2025 It’s a question on many minds — “just tell me how things will end up!” — as the global economy undergoes a genuine paradigm shift that goes well beyond the US tariff announcement currently shocking global markets and businesses. Think of it as a “three-S” change in how things work: structural, secular and systemic. This shift sees politics overwhelmingly driving economics at a time when many domestic economies are unusually vulnerable to tricky external forces. America’s once-anchoring global role is not only changing beyond what most CEOs and investors have been bracing for. It is certain to trigger similarly unsettling behaviour on the part of other countries. In just weeks, the US, once seen as the reliable engine of the global economy due to its “exceptionalism”, has become subject to increasing ...
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Another FT jeremiad! This time from a Mr. Strain who truly strains the essence of political economy! For this dimwit, deficits do not matter (!); they make consumers rich (! - dear oh dear!); and manufacturing is sheer "nostalgia for the past"! Try telling somebody who holds a loaded gun... that you won't hand him the butter! "Vice-president JD Vance argues that Trump “believes in economic self-sufficiency”. Well, to see the benefits of such self-sufficiency, look to North Korea. Still, Vance is right. Trump is a true mercantilist who views trade deficits with hostility. But his tariffs should not be expected to cut the deficit, which is driven by the fact the US invests more than it saves. Look again to his first term, which saw the US current account deficit rise by 18 per cent from the first quarter of 2017 to the first quarter of 2020. Moreover, we should not pay special attention to manufacturing or be excessively concerned about the trade deficit. The average w...
Another Jeremiad from the FT: "Trump’s justification hinges on a naive belief that treats trade imbalances as if they were the profit and loss account of a business, and not the culmination of highly specialised supply chains. He also considers factory work to be the fount of economic development, ignoring how decades of free trade has enabled America to rise up the industrial value chain and become a global leader in services and innovation." No, the FT is right. Factory work is not "the fount of economic development". In fact, capitalism invariably "farms out" manufacturing to its peripheral regions and nations, keeping its "command centre" (as Schumpeter called it) in the metropole (compare also Krugman's notion of "clusters"). Yet, a nation that becomes the linchpin or pivot of finance capital inevitably has an overvalued currency that induces excessive and crippling concentration on "services and innovation" with co...
This geremiad was in the FT today - and my comment to it: "Thomas Sampson, associate professor of economics at the London School of Economics, said the formula was “a figleaf for Trump’s misguided obsession with bilateral trade imbalances” and there was “no economic rationale” for the tariffs. “As long as the US does not save enough to finance its own investment, it has to borrow from the rest of the world. That requires it to run a trade deficit. Tariffs don’t change that logic.” So, according to this genius, "the US does not save enough"! But Pettis (and my humble self) would instruct him that the US can never save enough so long as wits like himself and his country deposit their savings in the US! For which Americans have to pay interest (chiefly on Treasuries) and because of which an overvalued greenback makes it all but impossible to export anything from America, except s__it like Facebook and Netflix and so on! And then they come crying about "the internatio...
Private Capital Firms Sink on Trump Tariffs Shares of the largest US private equity firms, including KKR, plummeted on Thursday following President Donald Trump’s tariff announcement US President Donald Trump Photographer: Kent Nishimura/Bloomberg Save Translate You’re reading the Going Private newsletter. Private markets and the forces moving capital away from the public eye. Delivered Tuesdays and Fridays. For subscribers only. Bloomberg may send me offers and promotions. Sign Up By submitting my information, I agree to the Privacy Policy and Terms of Service . Welcome to Going Private , Bloomberg’s twice-weekly newsletter about private markets and the forces moving capital away from the public eye. Today, we’re looking at the immediate effects the Trump administration’s tariffs are having on private equity and private credit firms. Plus, the financing for Clearlake’s planned acquisition of Dun & Bradstreet — Isabella Farr If you’re no...
😄 🤣 😂 More pathetic than the European threats are those by the Chinese rats - or their attempts to invade Taiwan! (If push came to shove, their navy would be like sitting ducks in a pond -waiting to be blown out of the water. Just look what Ukraine did with the Russian Black Sea fleet. And the Taiwan Strait would become a bath of Rat blood.) China Hits Back at Trump Tariffs with 34% Duties on All US Goods - Bloomberg Ratland China Hits Back at Trump’s Tariffs With 34% Duties on US Goods 4 April 2025 at 6:10 pm GMT+8 Updated on 4 April 2025 at 7:09 pm GMT+8 Save Translate 4:10 China retaliated against new US tariffs with a slew of measures, including levies on all American imports and export controls on rare earths, escalating the trade fight with President Donald Trump. Beijing will impose a 34% tariff on all imports from the US starting April 10, matching the level of Trump’s so-called reciprocal tariffs on Chinese products. Chinese authorities also announced other measures in...
The merit of this Gerard Baker column in The London Times is that it covers many of the essential issues. Its demerit is that it doesn't tackle the crucial dilemma of a hegemonic capitalist metropole national economy: and that is that a capitalist hegemon must provide the currency to oil global trade and must simultaneously ensure that it is a "hard currency" as a store of value. But these requirements mean that the US must run huge current account deficits and accumulate fiscal debts. Therefore, it must import manufactured goods and capital and export services in the form of financial, technical-managerial, and military know-how and protection. To square this circle, the US hegemon must run a "protection racket" whereby it can ensure material manufactured supplies from its allies and be compensated by them financially for its hegemonic protection. The problem with what the Trump Administration is doing is that its protection racket is not protecting its natural...