Adam Tooze on 'How a Decade of Financial Crises Changed the World'

Reuters.com's Peter Thal Larsen talks to Adam Tooze, Columbia University history professor, who joins the dots from the 2008 crash to Brexit and U.S. elections. Podcast release date: 4 September 2018.

Professor Adam Tooze is author of Crashed: How a Decade of Financial Crises Changed the World.

Domain: adamtooze.com

Twitter profile: History, economics, politics, theory. Professor, Columbia University. Director of the European Institute. Born UK, raised FRG (Germany).

Twitter: @adam_tooze
Tweets by adam_tooze

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Trade War Begins: Why China’s Growth Doesn’t Work For America Anymore

President Trump Announces Trade Tariffs On China Imports

BloombergQuint.com video above published Jul 6, 2018.

Trump tariffs on Chinese goods fulfill campaign promise: Peter Navarro

White House Office of Trade and Manufacturing Policy Director Peter Navarro says President Trump has given China every possible avenue to address the theft of U.S. intellectual property. Fox Business video above published Jul 6, 2018.

Trade War Begins: Why China’s Growth Doesn’t Work For America Anymore

No longer does the United States see the Chinese system of economic growth as a tolerable process, says Law Professor Raj Bhala, an expert in International Trade Law, in the video above. Raj Bhala is the inaugural Brenneisen Distinguished Professor, The University of Kansas, School of Law, and Senior Advisor to Dentons U.S. LLP.

According to Bhala, two Trump administration documents detail why Section 301 actions are necessary:

The first is a 215-page investigation report, issued on March 22 by the United States Trade Representative (USTR), summarized in the USTR’s language:

• “China uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to force or pressure technology transfers from American companies.”
• “China uses discriminatory licensing processes to transfer technologies from U.S. companies to Chinese companies.”
• “China directs and facilitates investments and acquisitions which generate large-scale technology transfer.”
• “China conducts and supports cyber intrusions into U.S. computer networks to gain access to valuable business information.”

The second is a 35-page report, issued on June 20 by the White House Office of Trade and Manufacturing (embed below), which contends that in addition to protectionist barriers, subsidized overcapacity, and cloud computing restrictions, China seeks to “acquire key technologies and intellectual property from other countries” and “capture the emerging high-technology industries that will drive future economic growth and many advancements in the defense industry.”

A third document is April 18 testimony to Congress by Pacific Commander Admiral Philip Davidson that the CCP’s military intentions in the South China Sea threaten to “displace the U.S. as the security partner of choice for countries in the Indo-Pacific” and “prevent the United States from intervening in any regional conflict on China’s periphery”.

"… [T]he United States advocates for a free and open Indo-Pacific, supported by regional partners and allies that respect international law, freedom of navigation and overflight, and the free flow of commerce and ideas. ...[I]t is increasingly clear that China wants to shape a world aligned with its own authoritarian model and inconsistent with these principles. Through coercive diplomacy, predatory economic policies, and rapid military expansion, China is undermining the rules-based international order. We must be willing to cooperate with China where we can, while consistently and unapologetically confronting China when it engages in behavior that undermines the international order or harms U.S. interests in the region."

Bhala says that on July 6, 2018, President Trump changed the U.S. narrative on trade with China. He imposed under Section 301 of the Trade Act of 1974, a 25 percent tariff on $35 billion worth of Chinese imports into the United States, effective July 6, with more levies possible, up to $500 billion on Chinese goods, and China immediately counter-retaliated.

According to Bhala, the U.S. will no longer facilitate Chinese economic growth because the U.S. no longer believes Chinese Communist Party (CCP) led planning is good for the U.S. or the world--that the CCP’s economic behavior, not to mention military intentions, erode America’s economic vitality and thereby undermine its national security. Bhala adds:

"The European Union fought most of the rest of the world over bananas throughout the 1980s and 1990s. Canada and the United States have been whacking each other with softwood lumber since 1982 ... The prudent historical inference for businesses to draw is to re-think their models.

• Is there exposure to imports, exports, or foreign direct investment in China?
• What alternative sources of supply exist?
• Are alternative sales markets appealing?
• Are alternative production venues viable?

"Even if, perchance, hostilities cease with a truce or treaty, the re-think will prove useful. That’s because the new narrative is a testament to enduring Chinese-American tensions." Read more by Bhala here.

See also:

• Unsustainable: This is what the US imports from China | weforum.org

• Tariffs are getting real | SoundCloud.com

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BSA Trade Agenda: Modernizing Digital Trade, NAFTA & Beyond

Modernizing Trade for NAFTA and Beyond | bsa.org (The Software Alliance)--BSA.org’s digital trade agenda is intended to create a modern trade agreement that recognizes the enormous impact software has on the US economy. BSA sent a letter (embed below) to the Trump Administration outlining these trade priorities and emphasizing digital trade’s role as an engine of growth for the American economy in the coming decades.

The full agenda:

We released our digital trade agenda, outlining priorities for the Administration's modern #trade agreements: https://t.co/Pio7rarusU #NAFTA pic.twitter.com/OkoGJILvEG

— BSA (@BSAnews) May 23, 2017

We need to modernize #trade for the 21st century - #NAFTA is the place to start. @BSAnews outlines our priorities: https://t.co/GnbNkbQCHP pic.twitter.com/yEzxnR5Qbo

— Victoria Espinel (@victoriaespinel) May 23, 2017

BSA members
See also: software.org -- BSA Foundation

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Brexit a Month Later: Chicken Little Forecasts, Reality Check (videos)

Brits abroad | Brexit Breakdown:

Published on Jul 22, 2016: Now that the UK has a new government, Theresa May and her ministers have been looking further afield as the country prepares to negotiate its way out of the EU. James Blitz rounds up the week’s Brexit news.

U.K. PM Theresa May: Britain Won’t Leave EU Before End of 2016:

U.K. Prime Minister Theresa May speaks at a press conference following her first meeting with German Chancellor Angela Merkel. Published July 20, 2016

The only thing we have to fear is fear itself.--Franklin D. Roosevelt, U.S. President, FDR's First Inaugural Address (1933)

"... the arguments for big short-run damage from Brexit look quite weak ... Indeed, the rebound in British stocks, which are now above pre-Brexit levels, is already causing some backlash against conventional economists and their Chicken Little warnings. Sorry, people, sloppy thinking is always a vice, no matter what cause it’s used for." -- Paul Krugman, Nobel Prize-winning economist, June 30, 2016, NYTimes.com

Markets in Europe since the June 23rd Brexit vote: UK's FTSE100 UP +6.19%; Germany's DAX DOWN -1.07%, France's CAC40 DOWN -1.90%, Friday, July 22:

Top to Bottom: FTSE100, DAX, CAC40 (source: google.com)

CNN.com: [UK Prime Minister] May reiterated her commitment to Britain leaving the EU, following the vote to do so in a referendum last month. But although the country is leaving the EU, she said, "The United Kingdom is not leaving Europe. "I'm very clear, Brexit does mean Brexit," she said. "We will make a success of it. What we need to do in negotiating the deal is ensure that we listen to what people have said about the need for controls on free movement. But we also negotiate the right deal, and the best deal for the trade of goods and services for the British people." She also stressed that Britain should not be limited by focusing exclusively on its relationship with its European neighbors but should instead look to build beneficial ties throughout the world.

UK explores multi-billion pound free trade deal with China | BBC.com: "[UK] officials are looking at New Zealand's free trade agreement with China which took four years to negotiate and came into effect in 2008. Care would have to be taken over security concerns and the possibility of China "dumping" cheap imports in the UK - for example steel.... At the G20 many countries are now moving into practical mode ... [Brexit vote is] now a matter for the history books. The British public have spoken. The present challenge is seeing how the fifth largest economy in the world can take advantage of that decision, rebuilding a "close" trading relationship with the EU and new economic relationships with countries, like China, which, it should be remembered, has never had a free trade agreement with any EU country."

See also: News Review [24Jul] | DomainMondo.com:  As noted before on Domain Mondo, the EU actually needs the UK more than the UK needs the EU (which is why the UK, instead of EU-dependent Greece, will be the first member state to leave the EU)... UK Property Market Proves Resilient post-Brexit and One month after Brexit: ... "little Brexit effect on [UK] retail sales growth" and ecommerce transactions "showing similar growth rates to those before the referendum."

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Theresa May's First Speech As UK Prime Minister, Brexit, The Way Forward

Theresa May's  First Speech As UK Prime Minister:

Video above: Theresa May speaking at No. 10 Downing Street, London, July 13, 2016. May emphasized unity and social justice in her first speech as Prime Minister of the United Kingdom.

David Cameron's last day as UK Prime Minister:

David Cameron was given a rousing send off by MPs in the House of Commons. It was his last ever Prime Minister's Questions (PMQ), and in among the serious stuff - there were plenty of jibes and jokes and a few gentle words of thanks. He said he would miss it. Most importantly, at 3:27 in the video above, David Cameron answers the question from a Scottish MP about David Cameron's advice to his successor, Theresa May, concerning the way forward: 

"My advice to my successor [Theresa May] who is a brilliant negotiator, is that we should try to be as close to the European Union as we can be for the [mutual] benefits of trade, cooperation and security. The [English] Channel will not get any wider once we we leave the European Union, and that is the relationship we should seek."

While the British Pound Sterling (UK currency) has fallen since the Brexit vote on June 23, in relation to the U.S. dollar and Euro, thereby providing incentives for the British tourism industry, foreign investment into the UK, and UK exports, many will be watching what the Bank of England (BoE) does Thursday:

Euro | Pound Sterling Forecast | poundsterlingforecast.com July 13, 2016: "With a rate cut to 0.25% likely either tomorrow or next month and the chance of further Quantitative Easing (QE) being introduced, I expect the recent Sterling recovery to come under further pressure should the scenario unfold as I expect."

However, remember the current interest rate of the BoE is .50, while the European Central Bank (ECB) has resorted to negative interest rates, and currently has an interest rate of -0-% in an attempt to deal with the Eurozone's troubled finances and economy.

Opinion/Analysis: Theresa May would be wise to begin free trade negotiations with nations outside the EU, as soon as possible, with those agreements each having a self-executing "effective date" upon UK's departure from the EU. This would be beneficial for two reasons:

1. to reset expectations (and fears) away from the EU, and focus on the future and opening of world markets to the UK, including London's role as a global financial center; 
2. those agreements may become "templates" for the UK-EU agreement. Once the EU sees the "deals" the United Kingdom strikes with nations not in the EU such as Canada, U.S., Australia, New Zealand, China, Norway, and others, it is likely to want equal or even better terms for the EU since the United Kingdom is the world's fifth biggest economy and Germany's third largest export market. Germany's unions and businesses may likely drive the final negotiations, not Juncker et al.

Brexit Calendar--what's ahead: May has said there will be no UK general election “until 2020,” giving her plenty of time as Prime Minister to negotiate a transition and change in relationships between the UK and EU, and the UK and rest of world. Theresa May has also said she won’t trigger Article 50 to begin formal departure from the EU until 2017 at the earliest, and the process could take up to two years to complete. Here are some key dates within the near term:

• July 18: Vote on the renewal of the UK Trident nuclear deterrent. May has said it would be “sheer madness” to give up the weapons system.
• July 20: May's first Prime Minister’s Questions time in the House of Commons.
• July 21: UK Parliament goes on summer recess until Sept. 5.
• August: European officials go on vacation. May has promised a new government department, led by a pro-Brexit minister, to handle the UK's negotiations with the EU. This could be set up in August. UPDATE*: Theresa May has now announced her Brexit team (see below).
• September 4-5: G-20 summit in Hangzhou, China. May will meet many global counterparts for the first time.
• September 16: EU leaders meet without the UK for a summit and to chart the EU’s future direction.
• October 5: An EU meeting on Afghanistan could be May’s first meeting in Brussels as Prime Minister.
• November 8: U.S. Presidential election. May is well-positioned to continue the UK-US "special relationship" irrespective of whether Hillary Clinton or Donald Trump is elected.

*UPDATE Brexit means Brexit: Prime Minister Theresa May has handed responsibility for Brexit negotiations to those who campaigned to leave, appointing Boris Johnson as foreign secretary, David Davis as Brexit czar, and Liam Fox as chief of international trade negotiations.

• Foreign Secretary: Boris Johnson – probably the biggest surprise among the appointments, Johnson, who was born in New York, was a leader of the Brexit Leave Campaign, and is not known for his "diplomatic skills"--he once compared Hillary Clinton, the Democratic Party’s presumptive nominee for President, to “a sadistic nurse in a mental hospital” and said she is “everything I came into politics to oppose.” When Johnson was in charge of the Spectator magazine, an editorial described President George W. Bush as a “cross-eyed Texan warmonger” who “epitomises the arrogance of American foreign policy.” He also compared Russian President Vladimir Putin to Dobby the House Elf (from the Harry Potter films), and called him “a ruthless and manipulative tyrant.” Long before he was elected Mayor of London, Johnson, now 52, became a Euroskeptic during the 1990s through his work as a reporter in Brussels for the Daily Telegraph newspaper. Look out Jean-Claude Juncker! 
• Brexit Secretary: David Davis  – Davis, a Euroskeptic who has served as a minister of state for Europe and Conservative Party chairman, was appointed “Secretary of State for Exiting the European Union.” 
• Secretary of State for International Trade: Liam Fox – Fox, a prominent Euroskeptic, will negotiate new trade deals for the United Kingdom, and work closely with Davis.
• Chancellor of the Exchequer: Philip Hammond – Hammond’s  background is business, working in property, construction and oil and gas. Experienced in negotiating with EU counterparts from his time in the foreign office, he will work closely with Brexit czar Davis;
• Home Secretary: Amber Rudd - As energy secretary she represented the UK in climate change talks, gaining negotiating experience that will aid her in immigration negotiations. She previously worked in investment banking for JPMorgan and then in venture capital. She was also an aide to former Chancellor George Osborne.

See also on Domain Mondo:

• News Review: EU & Brexit ...: 10 Jul 2016
• Brexit Impact On Tech Startups, Business & Global Economy (videos) 09 Jul 2016
• Former BoE Chief Mervyn King: Brexit, Future of EU and London (videos) 08 Jul 2016
• London Property Market: Massive Undersupply, Cheap Pound, Uncertainty 07 Jul 2016
• Deutsche Bank $DB $DBK, Italian Banks, Approaching a 'Lehman Moment'? 06 July 2016

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