This weekend, is the USA drinking and dinning
in the last chance saloon? We open with the world view as seen from Mexico.
07/March/2017
Where Are We Today?
Hugo
Salinas Price
The US
has been regarded as the West's leader since WW II. The US led with the
objective of international cooperation to achieve orderly growth and prosperity
for the countries led by the US.
Now
suppose you have a football team, and the quarterback comes out and says,
"Quarterback is First!" and scolds members of his team, and insults
one of his team-mates and sends him to the bench in disgrace.
How long is that
team going to hold together? Not very long, I would say.
The
deeper fact is that the status of the US as the world's leader, since the end
of WW II, has ended and is finished. Mr. Trump's own plan to "Make America
Great Again" is sending, by his own admission, a silent message:
"America is no longer great."
If the US does actually clamp
down on imports, as Mr. Trump envisions, and begins to hide behind economic
protectionism through taxes on imports in true "developing world"
fashion, then the US will be blocking the spring from which the rest of the
world has been getting its dollars; there will be a scarcity of dollars in the
rest of the world and that will mean world deflation with all its consequences:
a rash of bankruptcies around the world for lack of dollars to service debt. (Emphasis added.)
The US
simply cannot have it both ways: it cannot issue the world's money, and indulge
in economic protectionism. If the US goes for economic protectionism, then US
dollar will, sooner or later, cease to be the world's money as steps are taken
to replace the dollar.
In human
affairs, when one leader is gone, it is not long before another leader takes
over.
As the US
passes from the scene as the world's leading country, who will inherit the
throne of world leadership?
With the
defeat of Napoleon Bonaparte's combined French and Spanish fleets at Trafalgar
in 1805, Britain obtained mastery of the world's oceans and of world trade for
the next century and more. Later, with the defeat of Napoleon at Waterloo in
1815, world leadership settled on Great Britain.
With the
1945 defeat of the Axis armies in WW II by the combined forces of Great Britain
and the US, world leadership passed from Great Britain to the US.
As 72
years of world leadership on the part of the US fade into history, who will
take over world leadership? I suggest it will be Eurasia: Europe, Russia and
China in economic cooperation.
More
I
am not so sure “it will be Eurasia: Europe, Russia and China in
economic cooperation.” I think it might be something closer to economic
anarchy. At least for a couple of decades.
From an
opinion I shared earlier in the week with a knowledgeable reader in Toronto:
What
we now use for money is merely an accounting trick. It has no intrinsic value,
nor is it exchangeable at the issuer for anything of intrinsic value. It
trades on people's faith that it will always have value, even if the value
declines over time, by inflation. For most of modern history, that faith has held
up, but been greatly abused.
I can think of several examples where
revulsion hit "modern" money, starting with the French revolution
Assignats, which morphed from a bond paying 5% into pure paper money paying
nothing until they collapsed. Everyone is told about the hyperinflation of the
German Mark 1921-23. More recently, Latin America in the 70s and 80s, Zimbabwe
2005-2009.
When the public's faith in the fiat
money collapses for whatever reason, the public revolts from the currency and
start using foreign currencies, barter, precious metals, and corrupt faux
pricing mechanisms, usually with the real settlement occurring outside of the
country, often in Switzerland.
Sadly, right now I think we are
flirting with disaster ahead. The euro is a ticking time-bomb, with negative
rates undoing the insurance, pensions, and annuities sectors. Japan is an
old age society gambling on something turning up to save the Yen. China is
mostly a corrupt accident waiting to happen. No one seriously trusts the Yuan,
which is why there is so much capital flight out of China. Trumpian
economics is a mystery even to President Trump. A 91 month long weak recovery
in the US economy, is skating on ever thinner ice, even before President Trump,
cuts taxes, builds his wall, and spends more on the military and imposes a
Border Tax, setting off a trade war. On March 15 the US must raise the
debt ceiling, though there doesn't seem to be any agreement by how much, nor
given Trumpian economics, for how long the new level will last.
The UK has its own existential problem
if Scotland or Northern Ireland separate, adding the Pound Sterling into the
mix.
I wish I had an answer other than game
theory's just hoping that no one gets an advantage from leaving the game, and
leaves. For now the money game, still works, but as robotics take away jobs in
the decade ahead, I'm not sure it can hold up for much longer.
It’s why I still favour holding as insurance, some
fully paid up, physical gold and silver.
Below, is America about to pull back from leadership anyway?
American Diplomats’ Comfort With Tillerson Gives Way to Unease
by Nick Wadhams 10 March 2017 10:00
U.S.
diplomats breathed a sigh of relief three months ago when Rex Tillerson was
nominated as secretary of state, welcoming the oilman as a seasoned manager who
would shield them from ideologues ready to gut America’s foreign policy
machinery.
Yet that
comfort is now giving way to unease, as the former Exxon Mobil Corp. chief
embraces President Donald Trump’s vision.
Tillerson supports the president’s goal to cut the State Department budget and shift its mission away from existing initiatives such as climate change, global health and development assistance beyond key allies, according to half a dozen people familiar with his thinking who requested anonymity to discuss internal matters.
“The issue isn’t a lack of resources, it’s how do we refocus the department on its core priorities, and this is a way of getting at that,” said Brett Schaefer, a senior research fellow at the conservative Heritage Foundation who has advocated a restructuring of the department but says he isn’t advising Tillerson. “It’s sort of a pressure exercise to force the people inside State and at USAID to rethink how budgets have been allocated and focus on critical priorities.”
That doesn’t mean Tillerson will rubber stamp the Office of Management and Budget’s proposal to slash 37 percent of the combined $50 billion budget for the State Department and the U.S. Agency for International Development to free up money for the military, but he supports the sentiment behind it, the people said.
More
As usual most weekends we leave the
last word to Jason in usually sunny California. What California does today,
America does tomorrow, goes the old adage. What America does today, the world
does tomorrow.
California Regulators Show Renewed Enthusiasm for Self-Driving Cars, In Attempt to Regain Prominence in a Flashy, Flawed Niche
N. Jason Jencka March 10th, 2017 3:35 am ET
The California Department of Motor
Vehicles this week unveiled proposed new regulations that would fast-track the
development and use of autonomous vehicles in the state. In a show of
remarkable faith in its homegrown tech titans, the state is proposing to allow
companies to “self-certify” their autonomous vehicle technology without
submitting to independent testing. Additionally, the draft regulations would
allow companies to conduct operational tests within cities by only notifying
cities of their plans rather than seeking approval from each municipality. As
the draft regulations are presently written, these could include so-called
“level 5” tests where no human is in the vehicle which then relies entirely on
its sensors and programming.
While this would position the state
to bolster its position at the leading edge of the highly-publicized sector in
its quest to compete for investments with rivals Nevada & Michigan, valid
concerns remain in terms of the viability of the technology and its value proposition
in the marketplace. Whether in regards to sensors that struggle with snow,
programming algorithms that result in speeds below the flow of human-driven
traffic or navigation systems prone to hacking, theoretical and actualized
issues remain. Observers of the space would do well to note though that one
measure in which none of California’s domestic competitors can compete is in
well-backed firms intent on disrupting the status quo, with rather little regard for the necessity and
nostalgia.
Sources:
Matt McFarland, CNN Money http://money.cnn.com/2017/03/10/technology/california-dmv-self-driving-car/
Mark Harris, IEEE Spectrum: ;http://spectrum.ieee.org/cars-that-think/transportation/self-driving/california-gives-the-green-light-to-selfdriving-cars
N. Jason Jencka is presently studying Finance and
Economics at Sierra Nevada College, located near the shores of Lake Tahoe on
the border of California and Nevada. His interests include the interplay
between world markets and the global political sphere, with a focus on
developments of both sides of the Atlantic in North America and Europe. In his
leisure time he enjoys connecting with those people that have an interesting
story to tell and a genuine desire to make an impact in the world.
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