Global Realpolitik – A Cold Reality Awaits Trump

President-elect Donald Trump is at the cusp of assuming command of the greatest empire in human history, uncomfortable as that might sound for Americans whether it is the “Trump” or “empire” component – or both. Regardless, like a world champion team in sports the USA as # 1 will forever be a target by allies and enemies alike with respect to influence and envy in general.

The media often portrays that Trump has kindred political ‘friends’ such as Russia’s Putin, other ultra-conservative leaders, autocrats and those waiting in the wings specifically the upcoming national elections in France and Germany. The illusion is that it’s a clubby cabal of co-conspiratorial right-wingers whose personal and political commonalities are strongly intertwined.

The global realpolitik is that the world stage is, and always has been, a verifiable merciless and ruthless jungle with short, fragile alliances for the purpose of achieving self-serving, short-term objectives. The open dirty secret is that no one really wants a lasting and enduring agreement because then they’re politically “locked in” so they need an exit strategy which goes by the name “loopholes”. It’s the de rigueur face-saving diplomatic linguistic mechanism to legally disengage gracefully.

Maintaining power always supersedes maintaining peace and prosperity. Stability is boring and more importantly unprofitable which is why volatility is – for lack of a better word – good for business. If the level of volatility remains within manageable margins it is controllable to the extent that a leader can resolve the crisis and be considered a savior. The media sometimes is an accomplice by overstating a crisis which makes the recovery even more spectacular in favor of those in power.

Trump’s “bromance” with Putin will be short-lived because they are ultra strong-willed individuals with fragile egos, each still desperately seeking respect and approval. It matches the concept in the movie “The Matrix Reloaded” (2003) when Neo asked the Oracle, “What does the Merovingian want?” to which she responded, “Like all men with power. More power.”

Additionally the US and Russia are historically, politically and culturally vastly different entities and for this reason are incompatible for enduring medium or long-term agreements outside of Europe and Cuba.

And because of Trump’s unpredictable and contradictory personality, Putin will find dealing with him maddening and secretly wish that Hillary Clinton won the election. Though she’s despised, she would have been a level-headed professional and more predictable leader with whom he could have dealt more successfully.

Trump will learn the price of “leveling up” in a political arena which is alien to him where competing world interests threaten America’s core interests. We shall see to the extent whether ultra-conservative leaders with huge egos can be flexible enough not to provoke a crisis that no one can control.

Source by Albert Goldson

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A Deep Recession in a Global Economy

Fear and emotion are the rule every day in the global financial markets. We have seen shock and awe financial bailout plans, the overnight consolidation of many troubled financial services giants, and a liquidity crisis that impacts markets across the globe.

In Germany, the collapse of the rescue plan for Hypo Real Estate may mean a disaster in that country similar to the recent bankruptcy of Lehman Brothers in the United States. Also, consider that in the Netherlands, Ireland, and Greece, bank rescue has become the order of the day while Iceland is in the middle of an economic meltdown.

Recently, South Korea urged banks to sell foreign assets to raise dollars and promised to use its currency reserves to shield lenders from the financial crisis engulfing the United States and Europe. Meanwhile, National Australia Bank continues to lose value due to worldwide concern about the resilience of the financial system and China’s economy will not escape an economic slowdown if its exports are hit by this widening world recession

The United Kingdom has just announced the details of a £50bn rescue package for its banking system. The bailout includes a proposal to use taxpayers’ money to invest in banks. This plan was two weeks behind the bailout plan in the United States and financial stocks in the United Kingdom crashed due to the plans delay.

The truth is that bad mortgage loans have been bundled and sold to banks in every country in the world. So, nobody is immune from this mortgage crisis and economic contraction in this age of globalization. It is a global reality that international leaders do not seem to understand.

The problem is that this is the first deep recession in an increasingly global economy. So, the actions of each country need global coordination. Indeed, there is a real need to attack this economic crisis with international unity and cooperation. A unilateral approach to the crisis will not be effective and will make this downturn last much longer.

Already, the dubious result of handling a global economic recession without coordination can be seen in Germany and Ireland. Ireland announced that it would insure bank savings while Germany (Angela Merkel) decided it would not. The next day, with money pouring out of Germany toward safer harbors, the country then decides to reverse itself and insure bank deposits.

Of course, the European Union has criticized these unilateral moves by Ireland, Germany, Denmark and others to guarantee bank deposits. The real question is what were these countries suppose to do? Should they wait for a run on their banks and slide into the economic abyss? The European Union should have acted more quickly and with better leadership in this global economy. There also should have been much better coordination from Europe with the actions of the Treasury in the United States as well.

In America, the Dow Jones Industrial Average is down about 40% from its all-time high. Since the financial markets have now lost more value than the average bear market of 28%, it is safe to assume that the country is in the middle of a deep recession or maybe something even worse.

However, as global markets continue in a free fall, and well known financial pundits tell the average investor to get out of the financial market since it may fall by another twenty percent, it is important to understand that the country is not going to go bankrupt.

The problem is that in the near term it may not feel that way on Main Street in America. The unemployment rate could increase to around eight percent, and many good people will lose their jobs. Inflation will eventually escalate and many small businesses will close for good. Meanwhile, a lack of spending on non-discretionary items this holiday season will make for many long, bleak days in the retail industry.

However, it should be understood that economic recession cycles are a normal part of living in a world of inexact balances between supply and demand. This may well be a deep recession, but remember the words of John Rockefeller after the stock market crash of 1929. He said; “These are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again.”

It took awhile but he was right then and his words will prove to be correct about this current financial crisis once again. It’s a deep recession in an increasingly global economy and international economic cooperation is the best formula to bring it to an end.

Source by James W Smith

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