Countdown to Economic Trumpageddon

Mon, 30 Jan 2017  |  

This article first appeared on The Adelaide Review website at this link: 


Countdown to Economic Trumpageddon

United States President Donald Trump is a proverbial ticking time bomb for US and global economic conditions and financial markets.

While US stocks have generally been strong since Trump’s shock election win in November, the optimism has been based on a yet-to-be-tested policy approach, which is focused on high infrastructure spending, cuts to company tax, and policies aimed at supporting domestic manufacturing.

These may prove to be positive for the US economy, but what is being understated by the markets is his approach to trade and old-fashioned protectionism. These policies by themselves have the potential to dislocate trade flows and unwind decades of successful specialisation, which has resulted in a rapid productivity growth, sustained low inflation and falling prices for many goods and services. This in turn has been pivotal in reducing global poverty and increasing the wellbeing of the bulk of the world’s population.

Trump has already bullied a number of US car manufacturers to abandon their plans for investment in efficient, low-cost producing countries such as Mexico. Those cars will now be produced in the US, clearly at a higher price to consumers and a loss of jobs and investment in Mexico.

This is the tip of the iceberg, if such policies extend to US–China trade relations. Any stalling or reversal in trade flows would chop away at global growth which would in turn undermine confidence in financial markets.

There already have been examples of Trump causing market ructions with a simple tweet. On December 6, 2016, Trump tweeted, “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!” Within 10 seconds of this tweet, Boeing shares dropped 1.6 per cent.

A few days later, Trump tweeted that Lockheed Martin, the main manufacturer of military aircraft, was imposing “out of control costs” on defence orders and that “Billions of dollars can and will be saved on military (and other) purchases after January 20th”. The Lockheed Martin share price fell 5 per cent.

If these tweets and possible policy actions on those fronts extend to the US imposing higher tariffs, the escalation of the currency tensions with China, who is a “currency manipulator” according to Trump, the consequences will be material and obviously negative.

According to World Bank data, global GDP has risen by around 350 per cent since 1980. Global trade has, over the same time, risen 750 per cent and directly contributed around one-third of bottom line economic growth. In other words, without greater global trade since 1980, global GDP growth would be around one-third less, which would have meant lower incomes and wellbeing around the world.

Lower growth also has negative implications for corporate earnings, investment and profits. It is noteworthy how strong global stocks have been over the past three decades, notwithstanding severe hiccups including the 1987 crash, the Nasdaq tech wreck and, of course, the more recent global banking and financial crisis. Weaker growth due to protectionist policies would harm corporate earnings, which in part accounts for the fickleness of markets whenever Trump tweets or talks about economic policy.

It is important to emphasise something obvious, but worth reflecting on – that Donald Trump will be president for four years. Over that time, he will be pulling the policy levers and leaving his mark on the economy. For at least the first two years, he will have a sympathetic Congress, meaning that many of his policy ideas will become law.

Clearly, it is early days for the Trump administration and he is lucky to be inheriting a strong economy with low unemployment, record-high stock prices, an improving budget and low inflation. In the US, the financial crisis is an increasingly distant memory.

This good news is vulnerable to policy missteps and overreach. Given Trump’s track record in business, during the Presidential election campaign and the period he was ‘President-elect’, there are significant risks for the economy and markets as he takes control of the policy levers. The risk being that he just might do some of the things he has been talking about.

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Wed, 29 Jul 2020



Covid19 has opened a door for Australians to positively accept significant changes that will lead to a shared good. This rare opportunity enables us to achieve sustainable economic and social goals that create a new ‘normal’ as our way of life.

These Ten Steps are presented as non-partisan recommendations to the Australian Parliament in the firm belief that, if they embrace them, the Australian economy and society will be greatly enhanced after the Covid19 pandemic has passed.

*A job for you if you want one.
A significant increase in part time and casual employment can be created that will enable you to enjoy a more creative and peaceful lifestyle and to live longer and better. The traditional age at which you would have been expected to retire will become obsolete as a result. An access age for pension and superannuation will become your choice. This will enable you to remain in paid work for as long as you want to, on a basis that you choose, while boosting the productivity and growth of Australia.

*You will get wage increases that will be greater than your cost of living.
A demand for enhanced innovative skills at all levels of employment will be created as the economy grows in strength, thereby enhancing your stature in the workforce and enabling executive salaries and bonuses to drop to levels that are accepted as justifiable by employees, shareholders and customers.

The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

Tue, 07 Jan 2020

This article first appeared on the Yahoo Finance web site at this link:   


The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

For many people, the cost of the fires is immeasurable. 

Or irrelevant. 

They have lost loved ones, precious possessions, businesses and dreams and for these people, what lies ahead is bleak.

Life has changed forever.

As the fires continue to ravage through huge tracts of land, destroying yet more houses, more property, incinerating livestock herds, hundreds of millions of wildlife, birds and burning millions of hectares of forests, it is important to think about the plans for what lies ahead.

The rebuilding task will be huge.

Several thousands of houses, commercial buildings and infrastructure will require billions of dollars and thousands of workers to rebuild. Then there are the furniture and fittings for these buildings – carpets, fridges, washing machines, clothes, lounges, dining tables, TVs and the like will be purchased to restock.

Then there are the thousands of cars and other machinery and equipment that will need to be replaced.