I was surprised the Democrats hadn’t already made their move to replace Biden, at least ahead of primaries given Sleepy Joe is a massive liability to their electoral fortunes and I can think of a couple of reasons why this hasn’t been settled in favour of Newsom who I agree wants to do it, but maybe cannot. Why ? Because of Kamala Harris who, despite being largely despised by the party hierarchy and been sidelined for most of the Biden presidency, still carries a lot of weight with a large chunk of the US ethnic population and is unlikely to step aside whilst she holds this Trump card
I suspect this is why Jamie Dimon, a democrat at heart and patriotic American, is backing Nikki Haley as the best option to stand against Trump
The geopolitical split seems to be along the lines of the BRICS (Russia, China, Iran and Saudi) who seem to be looking at a post reset multi polar world of trade backed by hard commodities with the US as you say withdrawing its role as global policeman to something akin to a geo political VAR So who wins in 2024 is crucial to this direction because, the other question is where does Europe fit given it, unlike the other sides, increasingly lacks collateral and credibility
The reason I struggle with the idea of a BRICS-based reset is the absence of a consumer of last resort. This means a different financial system to the dollar based version and one that seems more restrictive, perhaps based on Ricardian equivalence of a couple of centuries ago.
Pax Americana works because the US is the enforcer and the consumer of last resort, meaning there is a positive payoff for getting onboard.
Pax Europa is less effective because the strongest power, Germany, is the primary exporter and requires the weakest members to be consumers. The payoff is not export-led growth as in Pax Americana, but transfer payments. As with any handouts they are the road to perpetual second class citizenship.
If China were to open up its financial system to its trading partners and commit to importing their export surpluses then the BRICS might emerge to rival the dollar. With all the countries vying to be net exporters they will still need the US to buy from them.
That is why the post 2011 Greek (sic German lenders) bailout Eurozone reform made no sense and should raise questions Whilst Germany was happily exporting to the US and China, sucking in trillions of dollars, the Commission imposed fiscal compacts on the periphery to ensure those dollars stayed put Even Germany didn’t spend it
Now that Powell has raises rates, how much of those ‘Eurodollars’ have exited back onshore and, as Germany descends into slump, how great are the stresses in the Eurozone financial system ?
Great piece
I was surprised the Democrats hadn’t already made their move to replace Biden, at least ahead of primaries given Sleepy Joe is a massive liability to their electoral fortunes and I can think of a couple of reasons why this hasn’t been settled in favour of Newsom who I agree wants to do it, but maybe cannot. Why ? Because of Kamala Harris who, despite being largely despised by the party hierarchy and been sidelined for most of the Biden presidency, still carries a lot of weight with a large chunk of the US ethnic population and is unlikely to step aside whilst she holds this Trump card
I suspect this is why Jamie Dimon, a democrat at heart and patriotic American, is backing Nikki Haley as the best option to stand against Trump
The geopolitical split seems to be along the lines of the BRICS (Russia, China, Iran and Saudi) who seem to be looking at a post reset multi polar world of trade backed by hard commodities with the US as you say withdrawing its role as global policeman to something akin to a geo political VAR So who wins in 2024 is crucial to this direction because, the other question is where does Europe fit given it, unlike the other sides, increasingly lacks collateral and credibility
The reason I struggle with the idea of a BRICS-based reset is the absence of a consumer of last resort. This means a different financial system to the dollar based version and one that seems more restrictive, perhaps based on Ricardian equivalence of a couple of centuries ago.
Pax Americana works because the US is the enforcer and the consumer of last resort, meaning there is a positive payoff for getting onboard.
Pax Europa is less effective because the strongest power, Germany, is the primary exporter and requires the weakest members to be consumers. The payoff is not export-led growth as in Pax Americana, but transfer payments. As with any handouts they are the road to perpetual second class citizenship.
If China were to open up its financial system to its trading partners and commit to importing their export surpluses then the BRICS might emerge to rival the dollar. With all the countries vying to be net exporters they will still need the US to buy from them.
That is why the post 2011 Greek (sic German lenders) bailout Eurozone reform made no sense and should raise questions Whilst Germany was happily exporting to the US and China, sucking in trillions of dollars, the Commission imposed fiscal compacts on the periphery to ensure those dollars stayed put Even Germany didn’t spend it
Now that Powell has raises rates, how much of those ‘Eurodollars’ have exited back onshore and, as Germany descends into slump, how great are the stresses in the Eurozone financial system ?