15
ANALYSIS
of the US government. If Donald Trump
does in fact turn globalization back a bit
in favor of the domestic economy, this will
affect its main trading partner China, in
particular. The Chinese economy already
has lost momentum in recent years and
the steps towards less dependency on for-
eign trade have not yet been completed.
If the export potential to the USA is lost,
then interest rate pressure in the USA
could rise even further, as China was one
of the main purchasers of US bonds over
the years.
Fourth, there are several wars going on
just outside of Europe and the orientation
of Russia and Turkey, to put it mildly, is
still open. Both countries have assumed
an economic as well as a geopolitical role.
This means, as in the case of the centrifu-
gal forces in Europe, that a reorienta-
Brexit negotiations nor for the cohesion
of Europe ahead of important elections in
France and Germany. The political centri-
fuge is threatening to follow the economic
weakness. It has in no way been proven
that more integration in all political areas
is per se better than less, yet an uncon-
trolled disintegration would in any case be
risky. Europe’s experience with the sudden
formation of new alliances and partner-
ships has not been good at all.
Second, the concept of an economic
Twitter policy of the new US government
is a jolly mix of libertarian tax and bank-
ing policy, mercantilist trade policy and
Keynesian spending policy. Two things
must be said here: there still has not been
a lot of concrete information available yet
and not all of the ideas are bad. The infra-
structure of the USA needs modernizing,
also tax cuts by definition are in no way
a bad thing and, finally, there has been
criticism also in Europe of several aspects
of the trade agreements. With all due cau-
tion, these measures in sum are likely to
increase inflation, taxes and thus interest
rates, since they have a short-term effect
similar to steroids. There could be an ad-
ditional boost if the financial sector is ac-
tually deregulated further as has been an-
nounced. As we have learned in the years
prior to the financial crisis, more debt and
more freedom for the financial sector can
provide a great deal of momentum in the
short term. But unfortunately, we have also
learned that this momentum cannot last.
TRUMP’S POLICIES AND THEIR CONSE-
QUENCES
The third source of risk is close-
ly linked to the economic policy concept
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