Garbage in the US Election and Beyond
US Election Rhetoric
The US election has been filled with a lot of rhetoric, with recent examples coming from both the Republican stage and the White House. Currently, Trump is making headlines by driving a garbage truck while wearing a high-visibility orange vest.
The media is also contributing to the high-visibility rhetoric. For instance, Edward Luce, the US national editor of the Financial Times, and Martin Wolf, the paper's Editor-in-Chief, have openly referred to Trump as "fascistic". Luce suggests that Americans are not bothered by this, implying that the republic may be in danger, while Wolf implies that Trump won't leave the White House if he wins. These are significant claims from a newspaper that takes itself very seriously.
Financial Criticism and Trump's Economic Policy
Financial criticism of Trump's policies points out the contradiction between his populist stance, which advocates for economic independence, social justice, and political sovereignty, and the drastic $2 trillion cuts to government proposed by Elon Musk.
In an interview, Trump's economic policy advisor, Bessent, argued that US debt was spiraling out of control due to government spending, threatening a "European-style malaise". He suggested that the US is on the verge of a major international realignment involving trade, currency, defense, and values.
US Debt and Economic Growth
Bessent believes that the US must grow its way out of debt, which requires deregulation and a better net export position. He aims to bring the fiscal deficit back to 3% by 2028. Bessent also called for 60% tariffs on China, arguing that imposing high tariffs for a future date would result in a surge in supply-side capital expenditure.
Global Economic Developments
In the UK, the recent budget saw significant tax increases and changes to fiscal rules to allow for increased government investment. The Bank of Japan left rates unchanged at 0.25% due to the instability in local politics.
In the Middle East, tensions are escalating, with Israel warning Lebanese citizens to leave the Hezbollah heartland city of Baalbek. Iran has threatened a "definitive and painful" response to Israel for its recent attack.
Sanctions and Supply Chains
A US drone-maker has been sanctioned by China for supplying Ukraine's army. The company can no longer use Chinese suppliers for tech inputs or critical components. This shows that China can use its power to turn off the supply of goods as required, which could necessitate a rapid diversification of global supply chains away from China.
Bottom Line
There is a lot of rhetoric and noise to sift through in the current political and economic landscape. It's important to stay informed and consider the potential implications of these developments. What are your thoughts on the current state of affairs? Share this article with your friends and join the conversation. Don't forget to sign up for the Daily Briefing, delivered every day at 6pm.
