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Maybe Irony Isn’t Dead: If The U.S. ‘Imports’ A Recession, Can We Slap Tariffs On It?
Irony and satire may indeed be dead in the Trump era, but that shouldn't stop everyone from at least trying to point out instances of both when they invariably pop up.
2017's "synchronous global growth" story has morphed into a U.S.-centric narrative about late-cycle fiscal stimulus providing enough of a sugar high to ensure that the current expansion has enough momentum to become the longest in recorded history (it's already the second longest).
There are myriad problems inherent in the curre
Many years ago some interviewer asked Henry Kissinger what was the best way to achieve peace in our time. To paraphrase, he said just get everyone economically entangled and dependent on everyone else. Then no one can afford to go to war because they have too much to lose. It is interesting that the most bellicose among us around the globe are those least entangled. I once saw a diagram of the formal joint agreements among all the various auto companies around the globe. They numbered well over a hundred. Add in the multiple joint supplier agreements and it’s many hundreds, across all continents. I don’t honestly know how they are going to determine whose cars get nailed with Trump’s and everyone else’s tariffs. There are no truly “American” cars (so many actually made in Canada or Mexico or the US from Japanese and Canadian parts) or “German” cars, made in the Carolinas from foreign and US parts, or “Japanese” cars, made in Tennessee or Ohio or California out of everyone’s parts. No matter how this goes it will affect everyone. Good luck figuring out how. What we have been doing for the last four decades is just what Henry told us to do. It worked, too, because it allowed ordinary Americans to buy stuff they otherwise couldn’t afford when their real incomes stagnated for 20+years. It also help fuel global growth that made us all more prosperous. Good luck trying to mess with this sweater without destroying the whole fabric.
Just to build upon what MrLucky posted above, it’s all about acclimation (or in biological terms Acclimatization) to a very delicate and complex tapestry of globalized supply chains, agreements, relationships, etc. MrLucky used the wor “fabric” which conveys the context well.
The micro aspects of the economy and financial markets (entities that make up the larger system or “fabric”) have acclimated to a global economy, and in a sense, are sufficiently dependent upon that state (globalized economy) to (optimally) function properly.
If one believes this, then any destabilization of the globalized infrastructure would lead to “nonoptimal” function of the many micro elements in this greater system. It’s a “dependency” of sorts.
This is a very good article H. It makes one think outside of the box, and most importantly it raises the whole idea of a “dependency” that’s evolved over time….This is a dependency that makes historical shock correlations to the present situation completely meaningless and useless. We are treading in new territory. However, I still think much of this in the end will be Trumpinian political posturing.
“ But — and this is a big “but” — the interconnectedness of global markets means that the risk of financial contagion is now greater. “
That Goldman recession model is really good at predicting recessions after they start