Category Archives: Uncategorized

Trade War with China: Who Wins?

We are now facing an escalating trade war between the US and China – started by the US. The question is: can the US win? And what will it cost the world?

It is worth listening to Carlos Gutierrez, co-chairman at Albright Stonebridge Group, a major global corporation and former U.S. Commerce Secretary who spoke on 18 June on “Bloomberg Daybreak: Americas”:

He reminds us that the free-trade agreements that have been brokered since the 1980s are not as bad as Trump would have it: they have consistently given the US a surplus. The point is: There never was a similar agreement with China. And he doesn’t mince words in describing the dangers for the whole world. He urges restraint.

Clearly Trump is not listening. A few hours after Gutierrez talked to Bloomberg, Trump had threatened an additional 10% tariffs on another $200 billions worth of goods:

Trying to answer the question of “who wins a trade war”, Bloomberg has rounded some major experts asking them what they thought. While the answers are interesting, they all focus on the short term and unfortunately don’t go beyond are the framework of classical economic analysis which overlooks geo-political factors:

  • China has limited room to retaliate in a trade war escalation: It only buys $130 billion worth of American goods while the US deficit with China runs to $375 billion; this is a “high stakes game of poker” and “China will run out of U.S. imports that it can hit with tariff countermeasures long before the U.S. does” (Rajiv Biswas, IHS Markit Singapore);
  • China needs to open up to global innovation and investment: “both China and the U.S. and other countries can really benefit from this Made-in-China 2025 strategy” (William Zarit, chairman of American Chamber of Commerce in China);
  • This is creating a “perfect storm” for China’s export Industry: it’s not just Trump’s tariff war but also the probable US Senate ban on ZTE, the Chinese electronic producer that Trump wanted to save; such a ban would  stop it from importing the American chips it needs for its phones and other products, hitting at the very heart of Made-in-China 2025 strategy;
  • There will be winners and losers, for example, China will need to buy agricultural goods from other sources than the US and that will benefit countries like Australia and Brazil; many Asian countries that are part of the China value chain will be hit.

Instead, to evaluate the dangers from a trade war, we need to look at the longer term and more broadly to geo-political factors. And here, the picture is not so reassuring.

The trade war with the US is but a battle in a much larger war. A battle that surely hurts in the short run, but will leave China victorious in the long run. Because China has acquired the “soft power” weapons to win.

Forget the Trade War: China’s Soft Power is Poised to Conquer the World

What has been happening since Trump took over the White House is this: A political void has been created, a void in world leadership that China is eager to fill, and most likely will.

Consider the facts.

Read the rest on Impakter, click here.

Advertisements

Leave a comment

Filed under Economics, politics, Uncategorized

Trump Watch: Trade Wars to “Make America Great Again”

June 15 was a special day for Trump – good old television unexpectedly displaced his tweets. Two televised events gave him ample room to rant about fake news and push for his favorite justification for trade wars: resentment at “unfair treatment” of America by the rest of the world, allies included.

One was a surprise half-hour long  interview with Fox & Friends. A short video released by The Washington Post focuses on the main points he made:

The other was an 18 minute Q&A session with reporters outside the White House:

Significantly, Trump did not discuss trade at any point in either televised sessions, although on that same day he had just slapped steep (25%) new tariffs covering $50 billion in trade with China. Watching Trump make all his pet points, one is struck by the fact that he covered the same old topics. Those he’s been constantly and obsessively tweeting about.

First, Hillary Clinton and the possibility that his winning the presidency was never a clear-cut victory. He pretended to misunderstand the just released report from the FBI Inspector General – enabling him to claim the report “exonerates” him. The report does nothing of the sort, it reviews the FBI investigation into Hillary Clinton’s use of a private email server while she was secretary of state. It finds some faults with the then FBI Director James B. Comey for not adhering closely to protocol, along with others in his team, notably Peter Strzok and Lisa Page who were having an affair and exchanged over-the-top bragging emails.

Yet Trump calls the report a “horror show”, not because of what’s in it, he says, but because of the conclusion that there was no political bias in the FBI investigation.  Trump cannot accept that. For him, there was “total bias”; the FBI was a “den of thieves”; Comey is a “criminal”; the top FBI management is “scum”; if you “polled the FBI, the real FBI”, you’d find they all “love” him.

In short, there never was any collusion between his campaign and Russia. We’ve all heard that before, over and over.

Second point, on national security. America’s military, built up to the tune of $700 billion a year, will be bigger than ever. The wall is needed, borders must be secured, a “compromise immigration bill” cannot be supported. The separation of immigrant children from their parents at the border is regrettable but it’s the Dem’s fault.

Third point, the whole world and America’s closest allies especially, Europe, Japan and Canada, took “horrible”, “unfair” advantage of America both on trade and military aid. The only ally that got a nod of approval was Giuseppe Conte, the new Prime Minister of Italy, because they shared a common anti-immigration stand. This conveniently overlooks the massive differences in their stand: Italy, in spite of the recent spat with France over immigration – now resolved – is still receiving immigrants and does not separate children from parents.

For Trump, all will change now. We need to realize, he tells us, that President Obama “lost” Crimea, he “gave it away”. And that happened because Putin “had no respect for Obama”. With him at the helm, disrespect like that can never happen again. He is making friends with the right people, he can call up North Korea dictator Kim Jong-un anytime. And Putin, he feels, should be back in the G7.

What next: A Series of Trade Wars?

The mass of falsehoods was bewildering. Some American journalists wondered whether the Republican party would finally react, for example, Chuck Todd, NBC News political director tweeted:

Read the rest on Impakter, click here.

Leave a comment

Filed under politics, Uncategorized

Trump Watch: A “Historic” Summit with North Korea?

Just published on Impakter – I try to dissect what really happened in Singapore and what it means:

Predictably, Trump gushed over his “historic summit” with North Korea leader Kim Jong Un, making a string of optimistic declarations to reporters in Singapore. “I think both sides are going to be impressed with the result,” he said. “We’re going to take care of a very big and very dangerous problem for the world.” He claimed Kim’s commitment to denuclearization was “unwavering” and he added he would “absolutely” invite Kim to the White House to continue the talks.

No tweets yet, but plenty of videos of the event, here is the signing of the agreement – without releasing in advance the text to  journalists:

At the follow-up news conference, it became apparent that, with the signing of the so-called “Singapore agreement”,  the only thing of substance Trump obtained was that “working level talks” would now take place.

The point is this: They would have to take place within the framework of the agreement Trump and Kim Jong-un signed, just four points:

  1. to establish new U.S.-North Korean relations “in accordance with the desire of the peoples of the two countries for peace and prosperity;”
  2. to join “efforts to build a lasting and stable peace” on the peninsula;”
  3. to reaffirm the declaration Kim signed at his summit with South Korea’s president on 27 April 2018; and
  4. to recover the remains of Americans lost or killed during the Korean War.

Good intents and vague words. But that’s OK, it allows for total flexibility. The game will now be played at the diplomatic “working level” – and that means it’s in the hands of Mike Pompeo. And Trump was quick to reaffirm in a news conference following the meeting that sanctions on North Korea would continue.

Not a bad result. Trump looks like he’s achieve some kind of victory, and Kim Jong-un likewise. But it’s a meagre win for Trump – not much more than face-saving.

Read the rest on Impakter, click here.

Leave a comment

Filed under politics, Uncategorized

Trump Watch: G7, the Gig is Up!

The G7 fiasco was not entirely a surprise, but the extent of the damage done is stunning. Here’s my assessment of the future of the G7 (it’s coming up against China-led Shanghai Cooperation Organization that met at the same time as the G7!). The article is on Impakter, here is the opening:

This G7 was like no G7 ever since it was founded in 1997.  Even before leaving for Canada, Trump rocked the boat, suggesting the G7 should be a G8, with Russia back in – conveniently forgetting why Russia was kicked out in 2014 (for invading Crimea and abetting rebels in Eastern Ukraine).

Then he turned up late. A bilateral meeting with Macron had to be postponed. He missed most of a working breakfast on the issue of women, he skipped the climate change meeting. He left nearly a whole day early to fly to Singapore for his “historic nuclear summit” with North Korea’s dictator – even though this meeting is still two days off.

In the end, Trump blew it up, refusing to sign onto a joint communiqué he had agreed to before leaving. Expect the G7 never to be the same again – at least not until America produces another President.

In his news conference before leaving, Trump was his usual aggressive self, grousing about unfair tariffs slapped on the United States by its closest allies – a claim roundly rejected by economists. Far from being huge as Trump claims, average trade-weighed tariffs are marginal: the latest WTO data (2015) shows that for the EU they stood at 3 percent, Canada at 3.1 percent and the US was slightly lower, at 2.4 percent.

The problem is that they vary by product and in the US, states slam on additional barriers. Not to mention Buy American laws that keeps foreigners out of US government procurement. Moreover, it appears that Trump confuses the European VAT for a tariff. In short, the US trade deficit is not caused by tariffs but by Americans’ purchasing preferences.

Once on the plane, he tweeted his withdrawal, threatening future tariffs on automobiles and accusing Trudeau of “false statements”:

Then he doubled down with insults, calling Trudeau “very dishonest and weak”:

Something like this has never happened before, and the fact that the American President did it makes it a watershed event. It’s not just a matter of being astonishingly rude to democratically elected colleagues. It’s a matter of starting a trade war with allies that jeopardizes America’s leadership and threatens global prosperity. World politics won’t ever be the same again.

Read the rest on Impakter, click here.

Leave a comment

Filed under Economics, European Union, politics, Uncategorized

Trump Watch: It’s “Crooked Hillary”!

This week-end, as usual, my latest Trump Watch article was published on Impakter ( just updated this morning, 5 June 2018):

Among Western political leaders, Trump stands out. Normally, when the campaign is over, politicians forget the opponents they beat or at best, include them as allies in coalition governments. You never hear Macron mention Marine Le Pen and both Angela Merkel and Luigi Di Maio have formed governments with their opponents. Not so Trump. He is obsessed with Hillary Clinton and still treats her with insults, in campaign mode: “Crooked Hillary”! She is behind everything that’s wrong with this country!

The right words to describe Trump? Obsessed and delusional. His “Crooked Hillary” obsession is demonstrably  foundational. He tweets more about “Crooked Hillary” and everything he can attribute to her than about anything else. Even the policies he has launched and that could change the world come second, like climate change, North Korea, China or the trade war he has recklessly unleashed on America’s closest allies (Europe, Canada, Mexico).

Deep down, a doubt is eating him up: his electoral win was neither fair or indisputable. Hillary Clinton got over 2 million votes more than he did and that haunts him. We all know it was due to a quirk in the American electoral system: The votes she won in the cities weighted less than those he got in the GOP-controlled rural areas.

Trump can’t stand the idea that his win was not clear-cut, it drives him crazy. He denies the evidence, he takes refuge in delusions. His inaugural crowd was the largest, larger than Obama’s. Russia never helped him, neither did the Cambridge Analytica team (he is careful to never tweet about that particular scandal).

It was “Crooked Hillary” all along, a Dem conspiracy, they spied on him, they spied even before he got into the White House! The Justice Department and the FBI are infiltrated by Hillary Clinton people conspiring against him. The fake news press – CNN, the New York Times, the Washington Post etc – is systematically misrepresenting his presidency.

Predictably, this is the kind of Fox news he loves to retweet (and he broke with protocol to tout the jobs data before it was released):

He’ll never retweet the New York Times…And he probably did not read that NYT article. If he had, he wouldn’t be so happy. …

Read the rest on Impakter, click here.

Leave a comment

Filed under politics, Uncategorized

Italy: What the New Government Means for Europe

Yesterday was amazing, suddenly Italy had a new government! In this article, just published on Impakter, I explore what it really means:

On 31 May, Italian politics took an unexpected, spectacular turn. President Mattarella approved the very government he had vetoed – as was his constitutional right –  four days earlier. Now the two big winners of the March elections, Luigi Di Maio’s Five Star Movement (M5S with  33 percent of the votes), and Matteo Salvini’s The League (17 percent) finally got what they wanted.

It had taken 88 days of hard negotiations to get there. And the unlikely alliance between an extreme right party (The League) with a centrist party (M5S) that has socialist roots (in the Partito Democratico, or PD). Both are populists and anti-establishment, The League with its base in Northern Italy and support from business, M5S with support from young people and the South and a fluctuating political platform shaped by social-media.   Di Maio and Salvini had hammered a 56 page contract for a so-called “government of change” and selected as premier an unknown non-politician, the economist Paolo Conte.

What made Mattarella change his mind? Much of it appears to be the result of unexpectedly nimble political work on the part of Di Maio, who, despite his youth and lack of experience, is apparently endowed with unusual political instincts. Improbably, after insulting Mattarella and calling for his impeachment, he withdrew the accusations and instead met the President eye-to-eye. And was  able to change his mind. The idea of a “technical” stop-gap government to prepare a return to the polls was abandoned and Conte came back with a new list of ministers.

What is remarkable is that the new list had only one notable modification: Paolo Savona, the Euro-skeptic 81 year-old economist Mattarella had objected to, was moved from Treasury where he had been originally assigned at Salvini’s request, to Minister for Relations with Europe.

An apparently slight correction but a significant one: Savona’s new position is much weaker than at Treasury, he is a minister without portfolio (i.e. without the support of a full ministry). The new man in the Treasury post is Giovanni Tria, a well-known economist with a long career both nationally and internationally – in short, a more moderate figure.

HAVE POPULISTS TAKEN OVER THE ITALIAN GOVERNMENT?

On the next day, the international press, even staid and serious journals like Bloomberg, reacted with emotional headlines: the Populists have surged to power in Italy! They will take Italy out of the Euro and Europe!

Despite the scary headlines, investors took it in stride, and even welcomed the “stability” that a new government implied, as the Wall Street Journal was quick to note. In short, they have set aside the likelihood that Italy will exit the Euro.

Yet, the new man at Treasury, Giovanni Tria is really not very different from Paolo Savona. He agrees with Savona on Europe and that a reform of the Euro is essential. On the face of it,  pulling Savona from one key Ministry to another less powerful position seems like a gratuitous game.

How come markets are reassured by Tria and scared by Savona? What do investors know that the journalists don’t, what really happened?

THE REAL STORY BEHIND SAVONA’S REPUTATION

First, the scare over Savona was vastly exaggerated – almost a case fake news.

Read the rest on Impakter, click here.

Leave a comment

Filed under politics, Uncategorized

Italy 2018: Politics Shaped by Social Media

We are worried here in Italy with the way politics are playing out, a big mess. I just wrote about it on Impakter, here is the opening:

Italian politics is notoriously complex and unfathomable. One reason is that Italy often ventures in uncharted waters, foreshadowing the future. Today, Italy is the first big democracy in the West where social media gave birth to a leading party, the Five Star Movement (Movimento Cinque Stelle, M5S). Twenty-five years ago, Italy was where a media mogul famously won power: Berlusconi, an early version of Trump, served four times as Prime Minister between 1994 and 2011.

M5S won 11 million Italians, a third of the votes in the elections, two months ago. Since then, gridlock.  One of the worst in Italy’s convoluted political history.

Will M5S be better for Italy than Berlusconi?

Italians are weary, they all remember Berlusconi’s broken promises of reform, the endless series of sexual scandals (the Bunga-Bunga girls), the deeply embedded corruption that led to his being barred from running again (that prohibition was just lifted, he is now free to run again).

In short, since Berlusconi, the businessman turned populist-politician, appeared on the political scene, two decades of growth were lost.

With M5S, things may turn out differently but it doesn’t look promising. So far, M5S has given the Italians the usual spectacle of politicians hungry for power, with Luigi Di Maio, the young M5S leader initially demanding the job of premier – despite his youth (he’s 31) and total lack of academic credentials (he’s a college dropout), work or government experience.

How come M5S can’t express better candidates?

The Populist Roots of M5S

The party was anti-establishment and populist from the moment it was founded in 2009 by Beppe Grillo.  Who is Grillo? Very different from Berlusconi, he was in his fifties when he emerged on Internet, a (failed) comedian and political satirist, exiled from public television, but  a (successful) blogger whose main appeal was with the discontented. And back then, there was plenty of unhappy people.

The 2008 Great Recession had spread to Italy, causing unheard-of levels of unemployment, one the highest in Europe, especially among the young (over 40 percent). Waves of immigrants hit the coasts, turning into a tsunami with the Syrian war. And Italy, shackled by the rigid Euro rules, could not solve its problems with a quick devaluation, as it had regularly done with the Lira in the previous century.

Result? A strong dislike for Europe and hatred for the Euro, seen as the source of all the problems. Beppe Grillo was supremely adept at exploiting this discontent.

The rest on Impakter, click here.

Comments Off on Italy 2018: Politics Shaped by Social Media

Filed under politics, Uncategorized

TRUMP WATCH: Spygate? A Monster Story!

My latest TRUMP WATCH piece, just published on Impakter, this is the opening:

Has Trump lost touch? In a single minute, on 25 May, before leaving to give the commencement speech at the US Naval Academy in Annapolis, he managed to fire four tweets about Spygate. That’s the term he uses to talk about the FBI informant that supposedly “infiltrated” his campaign in 2016.

“Worse than Watergate!” Trump had tweeted a few days ago. But this time, it was a long statement, 190 words long, very unusual for Trump. So it had to be broken up to fit into Twitter’s framework.

Summarizing the four tweets, here is what he said: Spygate is a “monster story” but the “corrupt Mainstream Media hates” it (meaning it won’t share it); the “Informant” was “paid a fortune” (sic, how can he judge that?); and he was set up “way earlier than the Russian Hoax” began (not true).

Then he pretends to be horrified: “Can anyone even imagine having Spies placed in a competing campaign, by the people and party in absolute power, for the sole purpose of political advantage and gain?” Obviously not the case in a democracy like the U.S.

Yet that gives him the opportunity to chuckle, despite spending “far more money” than he did, the Democrats “LOST!” (in capital letters). Then he refers to what a Fox News journalist said (always Fox News, not part of the Corrupt Media):

Read the rest on Impakter, click here.

Comments Off on TRUMP WATCH: Spygate? A Monster Story!

Filed under politics, Uncategorized

TRUMP WATCH: Joining the Trade Pact Against China

This week more of my TRUMP WATCH articles were published on Impakter:

  •  TWEETS OF WAR warning the enemy – in this case Russia – of an impending missile strike in Syria (click here to read – updated with the news of the retaliatory attack on 14 April);  
  • HALF THE COUNTRY IS THE ENEMY: in this one Trump takes aim at California, reviling it as a “sanctuary state” overrun by hordes of criminal immigrants, ascribing the whole sorry situation to the “Dems” (see here);
  • CHEMICAL ATTACKS ON SYRIA: about Trump’s unprecedented tweets against Russia and the fact that, arguably, Trump’s own policies in Syria set the stage for “animal Assad’s” attacks (see here – also updated with the news of the retaliatory attack 14 April).

Here’s the latest one, JOINING THE TRADE PACT AGAINST CHINA, out on Friday 13 April:


Trump just woke up to the complexities of international trade. And how to push China into a corner. In the middle of his trade war with China, he has suddenly caught on to the TPP, the Trans-Pacific Trade Partnership: a clever way for the US to boost trade among Pacific-rim countries while excluding China.

In the middle of the night, this stunning mea culpa was tweeted out:

Well, only half a mea culpa. As usual, it’s Obama’s fault, and he “would only join TPP if the deal were substantially better than the deal offered to Pres. Obama.”

He may feel he has saved face, but in practice, this signals a major reversal in Trumpian trade policies. For once, he’d be joining an international treaty and not trying to pull it down.

And that is huge. Good for him to be able to backtrack.

I go on to analyze the damage done by the US pullout of the TPP and what might happen next now that the TPP has been signed by 11 Pacific rim countries, excluding the US.  

Just as the article was about to be published with a conclusion commending Trump for his wise decision to backtrack (never easy), he blew it, coming out with a seriously absurd blast against Comey and his tell-all book, calling him (among other things) a “slime ball”. 

Take a look, the article is here.

Comments Off on TRUMP WATCH: Joining the Trade Pact Against China

Filed under politics, Uncategorized

The World Number One Killer: Non-communicable Diseases

Here’s my latest article published on Impakter Magazine: 

Non-communicable diseases are the major global health issue that most people have never heard of. Yet it kills nearly 40 million people every year, more than traffic accidents (1.3 million) or scary communicable disease outbreaks like Zika and Ebola that do make it in the news, but rarely exceed 10,000 deaths. For example, the 2014 Ebola outbreak in West Africa killed 11,310 (latest Centers for Disease Control data).

NCDs include four major diseases that you can’t catch from someone else:

  • cardio-vascular diseases (stroke and heart attacks, 48% of NCD deaths),
  • cancer (21%),
  • chronic respiratory diseases (12%),
  • diabetes (3.5%).

This is not to belittle the threat or devastation caused by communicable diseases. Currently, the massive cholera outbreak in Yemen that has infected some 800,000 people in the past year and a plague outbreak in Madagascar that has killed nearly 100 people in two months are making the news. Rightly so, these are people in urgent need of help.

But NCDs should not be underestimated: They cause 70% of deaths globally, and nearly 50% of global disability. High-income countries are more affected than low-income countries (88% vs. 37%, 2015 data). As a result, there is a misperception that NCDs are a high-income country problem, but that’s not the case.

It’s a global problem.

And as I argue in the article, it’s a global problem the World Health Organization (WHO) has been addressing over the past two decades…almost single-handedly. To find out what is being done, click here. This is an issue I feel very strongly about, and it’s high time it be given the attention it deserves. The future of our children depends on it.

Comments Off on The World Number One Killer: Non-communicable Diseases

Filed under Health, Uncategorized