May 31, 2017 Patrick Oliver-Kelley


The Fed is likely to raise rates yet again, but perhaps not this month. It is looking to trim its $4.5 trillion balance sheet which will influence it interest rates hikes. Housing starts have been puzzling in that costs are rising and sales are slow. Jack Welch ex GE Chairman observed that our great economy risks being eroded by the toxic political debate in our country.

The US has two geopolitical imperatives: dominating the world’s oceans and ensuring the disunity of Eurasia. Trump’s doctrine has no room for transatlantic alliances. He is pursuing a mercantilist and an isolationist foreign policy. This endangers our transatlantic and our American anchor in Eurasia. This will end American global hegemony. His isolationism will put paid to our alliances and commitments abroad. His mercantilism focuses on trade balances which brings China, Germany, Mexico, and Japan onto his radar screen. The immigration debate is about more than just economics. Research has consistently found that the economic benefits of immigration are huge for immigrants, themselves, but that the economy as a whole also benefits greatly.

One of the great achievements of free society in a stable democracy is that many people, for much of the time, need not think about politics at all. The president of a free country may dominate the news cycle many days – but he is not omnipresent – and because we live under the rule of law, we can afford to turn the news off at times. A free society means being free of those who rule over you – to do the things you care about, your passions, your pastimes, your loves – to exult in that blessed space where politics doesn’t intervene. In that sense, it seems to me, we already live in a country with markedly less freedom than we did a month ago. It’s less like living in a democracy than being a child trapped in a house where there is an abusive and unpredictable father, who will brook no reason, respect no counter-argument, admit no error, and always, always ups the ante.

Trump said in his inaugural address that “it is the right of all nations to put their own interests first and that America does not seek to impose its own values on anyone else. This is in stark contrast from the polices of both Bush and Obama. Trump’s foreign policy underpinnings are nationalism. So NATO and the EU which have nothing to do with immediate, domestic economic goals of the US, these two organizations are not worth supporting. NATO demands a US overseas commitment with little material gain in return. Obama complained, just as Trump did, about the failure of member states to meet their 2% of GDP on defense. But Obama tried cajoling the members, not a tactic Trump has in his playbook. No matter how hard the Europeans tried to explain the intricacies of the EU, Trump was not able to comprehend. The EU runs a large current account surplus with the US, for Trump then, The EU is a rival viewed through his mercantilist lens, not a foe. Both Obama and Trump see that it is a multipolar world and that the US is in relative decline and cannot act unilaterally. But Obama sought to enhance US power by relying on allies and supranational organizations. Trump’s solution is to retreat into Fortress America. The risk must be that this approach may push America’s traditional allies away from Washington. Angela Merkel said over the weekend that Europe could no longer completely rely on the US. “We Europeans must really take our own destiny into our own hands.” The US is no longer a trusted ally. “We are Six against one.” The one being Trump and “talks were very difficult and very unsatisfactory.”


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