Guess Who’s Coming to Davos?

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The World Economic Forum, WEF, will be held January 23th through 26th in Davos, Switzerland and guess who’s coming? President of the United States Donald J. Trump and he will the first since President Clinton did so 17 years ago. Meetings are held annually in January and carry themes like, for example in 2000, “New Beginnings: Making a difference”. This year’s theme for the forum will be “Creating a Shared Future in a Fractured World” and considering President Trump after one year in office is turning to be a most divisive leader not only at home but abroad as well what says or tweets will be interesting, to say the least. But there is another twist to this that may make even more interesting, German Chancellor Angela Merkel may be coming and if she does she will join French President Emmanuel Macron in support of what could most fittingly call a “Europe First” economic policy.

The World Economic Forum (WEF) is a Swiss non-profit foundation, based in Cologny, Geneva, Switzerland who is “committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas” and is made up of the top 1,500 business leaders, drawn from 1,000 of the world’s top companies; 219 public figures, including 40 heads of state or government, 64 cabinet ministers, 30 heads or senior officials of international organizations, and 10 ambassadors; and 432 from civil society, including 32 heads or representatives of non-governmental organizations, 225 media leaders, 149 leaders from academic institutions and think tanks, 15 religious leaders of different faiths, and 11 union leaders. It is the who’s who of the world’s top economic brass. It is also an institution that runs contrary to Trump’s professed dislike for “globalists” and elites. So why is he going? According to a Wall Street Journal article,  https://www.wsj.com/articles/transcript-of-donald-trump-interview-with-the-wall-street-journal-1515715481, Trump wants to be “a cheerleader for the country”. He wants to tell the “story of what’s happening in the United States …and of tremendous things are happening in the United States”. In other words, he wants to boast about his claimed achievements to an audience which, for the most part, couldn’t possibly care any less. But crow he will for nothing feeds Trump’s ego more than to show off in front of a crowd he considers, though not mutually shared reciprocally by some, as his equal. Two individuals who do not agree with the President and who will also be speaking are German Chancellor Angela Merkel and French President Emmanuel Macron and that’s when things will get interesting. Why? Both Merkel and Macron will be speaking on the 24th, two days before Trump’s speech, and if they stick to the theme of the forum, theirs will be a plan for global economic unity and if the U.S. wishes not to be a part of it “very well and good wishes”.

In January Reuter’s article, Merkel is described as “the last defender of liberal democratic values” and whom Trump has accused of “ruining Germany”  (https://www.reuters.com/article/us-davos-meeting-merkel/merkel-could-join-macron-in-davos-for-epic-clash-with-trump-idUSKBN1F30HB).  Macron, who is a pro-European centrist and supports free trade with the global rules-based order, is believed by some, including Robin Niblett, director of the Chatham House think tank in London, that he will speak not only “about Europe. He will try to take up the mantle of the free world under Europe’s wing”. This is a post-Brexit Europe with strengthening economic ties to the Trans-Pacific Partnership of China and other Pacific region nations and who are looking for more partners in South America and the Middle East, two other regions where Trump’s popularity is nothing less than questionable. This will put to test the idea of “strength in numbers” against Trump’s “America First” and see who wins. Before you place your bets let’s take a look at a few things to consider.

First, has President Trump really wrong in boasting about his achievements in office? I guess that depends on whether he deserves the credit or is it just latent results from the Obama administration’s economic plans finally coming to fruition? The latter makes more sense because economies do not grow merely because you will it with threat or rhetoric or by having a garage sale of government property, stripping the power of agencies you believe hamper businesses, give more money to the top 1% through tax cuts, and declaring “America is Great Again”.  If it were that simple more would have tried it in the past and we wouldn’t have to make anything great again because we would already be just that. No, economies do not grow on charisma and showmanship they rely on ties with strong partners you can trust and businesses who see gains in the long term. So far, Trump is not seen by most to be trustworthy nor as a visionary.

On the other hand, there’s the European Union whose members have seen better economic days and their leadership are in a constant struggle to keep office. It’s a Europe which is witnessing one of its strongest, Great Britain, leave with no way of stopping it and may see further disintegration if it can’t turn things around quickly enough. Then enters China, the leader apparent of the Trans-Pacific Partnership after the U.S. withdrew, with it’s continually growing economy and yuan it’s willing to invest. The question now becomes one of whether you are willing to sell everything to the Dragon of the Far East with its monetary market manipulations and strict market practices that favor Chinese interest over investors. Then, there’s Russia, how will they react to the possibility of a Sino-European Union trade pact? This is a course that only a modern day Ulysses. Is French President Emmanuel Macron that man? Some believe he is but it all depends on how quickly he can bring to order a France plagues with its own economic problems as well as conflicts between the far right and left and terrorist attacks. If he can hold his nose above water long enough to stem the tide and keep his office he might bring in the ship in for France and even Europe. He’ll need allies, though, and that’s why German Chancellor Angela Merkel is so important for Germany is one of the only other economy Union. Unfortunately, Merkel shares many of Macron’s problems within her own country and may just barely remain in office in time for the Davos forum.

A globalist’s “Strength in numbers” versus isolationist’s “America First”, who has the better plan? In the past, close trade ties have proven to be a setup for world economic depressions. As one government goes terribly into debt others fall as their confidence in the markets fail them. What follows is a domino effect of global proportion that will not stop until all have fallen. But that was in the past at a time before international corporations and global multi-conglomerates. Our world today is one where borders, at least in a business sense, are completely meaningless. A world where information moves at the speed of light, and so does innovation and research. A world that can make anyone does not connect with it a pariah and one that can’t be trusted. Even Russia knows not fall into the trap of isolationism that its predecessor, the Soviets, clung to hard to maintain up to the bitter end. And yet, here we have a U.S President carrying on about how wonderful things in his government now that he has removed the reins that bind it can negotiate “a better deal”.

Scenario: It’s a world dominated by global corporations that provide and trade in contracted services and are regulated only marginally by countries sharing trade interests, trade without borders. The U.S., playing the isolationist game, participates only in those areas of negotiation it sees it will gain the most in spite of that fact the largest of its “American-based companies” are also part of the global network. No matter how hard the U.S. tries to increase its productivity and exportation of goods it never seems to do as well as countries in Europe and Asia. It finds its increasing deficit, the inability to control sudden stock market shifts and legacy obligations such as infrastructure rebuilding is to shake off thus stifling any possible gains it can make. The country tries through austerity programs to get the situation under control but is undermined when it finds itself having to rely more heavily on contracted private companies to provide basic services. Then one day, the unspeakable happens. It may be a war that engulfs several nations, famine, drought or any other natural disaster of some kind, either way, the markets begin to panic. Without any regulatory controls, the crash begins in, say Europe, and travels quickly around the world even before the markets open in their respected countries. In the U.S. there’s nothing to stop it for most of the regulatory tools set into place to prevent something like this were removed previously in order to see if by making it easier for revenue flow it would improve the economy. As the windstorm of economic disaster spreads it demolishes everything without something it could be anchored with. Then it hits China with its relatively high regulated market and a strong economy. It plays the part of much-needed firewall and the selling and devaluation come to a screeching halt. What comes next all depends on who your friends are and how close they are to you to be willing to back you up?

Fiction? Are you willing to bet “America First” on it?   

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