Monday Sanity Break, 11 June 2018 – the Big Meeting
Tomorrow President Trump meets President Kim in Singapore. Mr Trump says he will know within one minute if President Kim is ok so if the meeting goes on that presumably will be good news. Mr Trump has dismissed the myth of the wily oriental so that already is progress.
Politics and economics are of course intertwined. Mr Kim presumably wants a deal that makes his people more prosperous. Mr Trump wants to look like the man who got the wily oriental to a satisfactory agreement to give up his missiles and nuclear warheads. Hard sledding, as each President will want to look good.
President Trump faces many hard issues. The one I believe is his hardest is partly because he lacks knowledge about economics. America’s large trade deficit is mainly because its spending is larger than its income. President Trump is increasing American spending and this is making its trade deficit worse. China's and Germany‘s trade surpluses are due to controlled national spending. This is economics 101 but barely mentioned by journos – eg weekend FT ended a long article with one sentence that hinted at this truth.
Where are Mr Trump’s economic advisors? Are they all too scared to tell him one of the great truths of economics? Does no G7 leader have the guts to tell him he’s barking up the wrong tree? Said leaders seem to think Trump is just barking mad.
There is another iron law of economics that needs exposure. It is the design flaw in the currency issue in the Eurozone. A fixed exchange for the Northern Zone and Southern Zone nations is a recipe for Northern prosperity and Southern economic misery. Check out the rates of unemployment, gentle readers. Maybe pointing this out would help President Trump begin to think about America’s trade deficit.
Ho, ho, it is on with the show. Assembled leaders seem to lack basic knowledge of economics. In Warsaw Henry and Mrs T were refused entry to the ‘Royal Palace’ – an oddity in a Republic – because the EU presidents were supposedly meeting to discuss who knows what. Will Brexit be abandoned? Or will Northern Island rejoin the Republic of Ireland? All because of a silly border issue. Or were the said Presidents discussing the design flaw in their own baby monster? Or whether Germany is crushing Southern Eurozone by having a cheap Euro relative to their national productivity while Southern Euro is groaning under the weight of a heavy Euro relative to their productivity.
Incidentally, reconciling the two issues discussed here – relative spending and relative productivity - requires a pass in Economics 201. Sadly, no one with such a qualification seems around to advise the global presidents with one exception. I bet President Xi has mastered basic economics.
Fiona Prior is swept away by the fetishised beauty of Angelin Preljocaj’s ‘Snow White’. More here.
Henry’s message from Warsaw, or was it Prague, may be worth a glance.
Caaarlton! Had a by which was a great relief. Coach Bolton must be frustrated that his team can blow open Richmond in the foirst 15 minutes of the season and run the Swans close until ¾ time but have registered only one win so far this year.
Anyway, that remains to be explained. Now we are hyped up for the world cup of soccer, or ‘futball’ as they call it here. Australia has little hope of progressing to the second round but we know will give it a glorious go.
Image of the week.