Tuesday, November 20, 2018

Trump versus the Fed and big banks

Roger L. Simon writes that
The real danger to the president's reelection chances comes from the investment giant Goldman Sachs:

Goldman Sachs believes the U.S. economy will slow significantly in the second half of next year as the Federal Reserve continues to raise interest rates and the effects of the tax cut fade.
"Growth is likely to slow significantly next year, from a recent pace of 3.5 percent-plus to roughly our 1.75 percent estimate of potential by end-2019," wrote Jan Hatzius, chief economist for the investment bank, in a note to clients on Sunday. "We expect tighter financial conditions and a fading fiscal stimulus to be the key drivers of the deceleration

Whatever the case, powerful forces will be aligned against Trump on the economic front. Admit it or not, many of his political and media adversaries will be rooting for a recession, the more serious the better, even though the minorities they pretend to support will suffer most.

We could call this Cloward-Piven light, this time spear-headed by Ms. Ocasio-Cortez and Co., for whom the worse the economy does, the better. With any luck it will lead to socialism and the impoverishment of everyone. (Well, except for the leaders.)

But what can Trump do? Much will be a sophisticated balancing act. The tariff situation with China needs to be finessed particularly carefully. Most would agree that China's behavior has been egregious and previous administrations virtually absent when it came to confronting it, yet still this must be handled with greatest skill. The Chinese play a long game incomprehensible to most Westerners.

Nevertheless, a decent trade agreement with China might force Goldman to revise its prediction quickly. More importantly, it might preserve and enhance the already booming economy to such an extent that Trump would walk effortlessly into a second term.
Read more here.

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