Category Archives: Trade war

Cure Worse than Disease?

cure, Covid-19 virus, economy
Click image to enlarge

Is the cure worse than the disease? The war against the Covid-19 virus is destroying businesses and jobs. The Wall Street Journal in an editorial titled Rethinking the Coronavirus Shutdown thinks maybe so:

In a normal recession the U.S. loses about 5% of national output over the course of a year or so. In this case we may lose that much, or twice as much, in a month.

Our friend Ed Hyman, the Wall Street economist, on Thursday adjusted his estimate for the second quarter to an annual rate loss in GDP of minus-20%. Treasury Secretary Steven Mnuchin’s assertion on Fox Business Thursday that the economy will power through all this is happy talk if this continues for much longer…

And David Katz, the founding director of the Yale- Griffin prevention research Center, wrote in the New York Times

I am deeply concerned that the social, economic and public health consequences of this near total meltdown of normal life — schools and businesses closed, gatherings banned — will be long lasting and calamitous, possibly graver than the direct toll of the virus itself.

…A pivot right now from trying to protect all people to focusing on the most vulnerable remains entirely plausible. With each passing day, however, it becomes more difficult. The path we are on may well lead to uncontained viral contagion and monumental collateral damage to our society and economy. A more surgical approach is what we need.

Tariff Man

Tariff Man

Click on Tariff Man to enlarge the image.

On Saturday President Trump and Chinese President Xi backed away from the precipice of trade war. And stocks jumped up.

But on Wednesday, Trump being Trump, tweeted  “I am Tariff Man.”

And Wall Street jumped out the window.

Koch Brothers Abandon Trump

Koch Brothers Abandon Trump

The Koch brothers have jumped ship. They’ve given millions to Republicans in the past but they say they’re more interested ideas than party.

Daniel Henninger in the WSJ reports, “In an interview, Charles Koch said trade wars and prosperity were incompatible and that his organization’s financial support wouldn’t depend on party affiliation.”

Donald Trump called Koch “a total joke in real Republican circles.”

Koch Brothers Abandon Trump

Henninger askes, “what Republican circles?”

Rather than a one-off event or joke, the Kochs look more like a phenomenon emerging on the right and left, including MoveOn, Daily Kos, Breitbart, Black Lives Matter, Club for Growth and Netroots Nation.

Some voters will tie themselves to the Trump mast and ride it out. But Charles and David Koch aren’t a joke. That feud was a warning shot.

King Dollar Rate Hike

King Dollar

President Trump doesn’t want the Fed to raise interest rates. And he said so. Which is frowned on since the Fed is supposed to be independent.

It’s also awkward for Trump’s chief economic advisor Larry Kudlow, a strong advocate for a strong dollar. Or King Dollar as he likes to say.

Trump hired Kudlow in March. But in February here’s what Kudlow had to say on CNBC:

A strong dollar is an essential pillar of economic prosperity with minimal inflation, but we worry that the White House has not adopted this strategy. So we urge the Trump administration to return to the successful “King Dollar” policies that worked in the 60’s, 80’s and 90’s.

Uh oh. He went on to say:

We also worry that the recent widening trade deficit numbers will further tempt the administration into a weak dollar strategy.