MARKET PERSPECTIVE
By J Mulraj
Nov 1-8, 2024
How Will Trump make America Great Again?
By: J Mulra
Donald Trump is the President elect of USA, triumphing over his Democratic opponent, Kamala Harris. The word triumph includes trump! Republicans also got a majority in the US Senate, and are likely to get one also in the US House of Representatives, completing the trifecta. Previously, the Dems had a trifecta between Jan 2020 till Jan 2023.
America has been saved by the bell! It probably wouldn’t have survived four more years with Harris as President, following the same, woke, policies as when she was VP to Biden. Four years which saw record inflation, high interest rates that made mortgages unaffordable and small businesses unviable, an open border which allowed over 10 million illegal immigrants to enter and ravage America, and mindless support to a war in Ukraine that would never have occurred under a strong leadership.
Geopolitically, the world is a dangerous place, and barbarians are at the gate, trying to enter countries militarily. When barbarians are at the gate, the electorate decided that a strong and unpredictable Donald Trump should be their leader to defend the country, rather than a weak Kamala Harris who laid out the welcome mat to over 10 million of them.
What can one expect Trump to do? He will assume office on Jan 20, 2025.
Domestically, he will finish building the wall to stanch the flow of illegal immigrants. He will deport the illegal immigrants that have entered USA under the Biden-Harris administration. Such was the wokeness of their policies that illegals were housed, freely, in five star hotels and in shelters for US war veterans, who were asked to move out! America has, for long, been a country that welcomed immigrants who entered legally and who contributed to the US economy. The illegal immigrants entered on a lie, stating that they were persecuted in their home country and sought refuge, and protection in America. Often, their contribution, on gaining entry, was violent crime.
Trump has also promised to, and will, cull a bloated bureaucracy. Bureaucracy came from colonizer England, which was across the sea, prompting a wag to describe a bureaucrat as a rat that crosses the c to get into the bureau!
Trump will also make America energy independent again, as he had, in his first term, by using the technology of fracking to produce oil (drill, baby, drill). This would bring down the price of crude oil from the current level of $ 75/b for Brent crude. It will have geopolitical benefits for USA as it will weaken the influence of OPEC plus Russia. With increased energy output, the price of gas (petrol) will come down, easing the household wallet, and lower freight costs will reduce inflation.
The hurdle to cross is environmental. Extracting oil using fracking necessitates the pumping in of large quantity of water, a scarce resource. A solution would need to be found for this. Trump may likely renew the Keystone pipeline project, to allow transport of Canadian oil to US.
As re climate change concerns, this report by Oxfam as much as $41 b. of the $100 b. given by the World Bank for various climate change projects are ‘impossible to track’ due to poor accounting! As per this Feb 2023 Reuters report, there are several examples of misreporting loans which are for other purposes but classified as for climate change!
Such as:
> A loan by Italy to set up a chain of ice cream and gelato stores which was classified as climate change! Huh?
> a loan offer by USA to set up a hotel in Haiti! Huh? Huh?
> Belgium backing a film on Amazon Rain forest! Huh? Huh? Huh?
> Japan financing a coal plant in Bangladesh and an airport in Egypt and classifying it as climate change! Huh? Huh? Huh? Huh? Coal plants and airports are contributing to, and not solving, climate change so this, by far, is the worst example of duplicity.
All examples should be called out and severely penalized for trying to cheat.
In the energy sector he will encourage growth of SWB (Solar, Wind and Batteries) which will be the cheapest source of electric power. He will also encourage manufacture and development of humanoid robots, as narrated in my earlier column ‘The Amazing Promise of Technology’. These would achieve enormous gains in productivity, enough to provide all with a universal basic income (UBI).
He will provide tax breaks to companies that will bring back manufacturing plants to America, and provide jobs domestically. He will lower corporate tax rates to make manufacturers competitive. America has successful, innovative companies which provide great products and are rewarded for their continued performance by the stock market. Nvidia and Apple are in a race for being the most valuable company; both are valued at over $ trillion each. The large companies then invest In the future. Google, for example, has a wholly owned subsidiary, AlphaFold, which has invested billions to research protein folding, and has revealed billions of 3D protein structures, for free, to all, to help understand how all of life’s molecules interact. Elon Musk promoted SpaceX has excelled in space exploration, exceeding the performance of aviation giant Boeing and even rescuing two astronauts sent to a space station by Boeing, in a failed craft. Another of Musk’s companies, Starlink, provides satellite communication service to the remotest of locations.
Technological innovation will drive the future. Trump will use the tremendous American ability for innovation.
Internationally, Donald Trump will end wars and conflicts, not prolong them, as the Biden-Harris team had foolishly done, by supplying Ukraine with a never ending flow of financial and military aid. The war was unwinnable by Ukraine, so the mindless prolongation of it by the constant supply of aid only resulted in avoidable death and destruction. Enough of Ukranian youth have died to make it demographically impossible for its country to achieve a birth rate to sustain itself as a society. A monumental error on the part of its leader Zelensky, and his supporters, on whose hands the deaths of Ukranian youth lie.
This is what the election of Trump has avoided a continuation of!
Trump simply has to inform Zelensky that US financial and military aid would no longer be available, for him to walk to the negotiating table. Simultaneously, Trump should, probably will, do a deal with Putin to revive, after reconstructing the Nordstream pipeline, supply of Russian energy to Europe.
That would help Europe, especially Germany, to recover lost competitiveness. More importantly, if Trump can strike such a deal, prise apart Russia and China. Biden was foolish to allow two of America’s biggest enemies to become economically interdependent, by ignoring Russia’s objections to NATO admitting Ukraine.
This is what Trump’s election has helped make possible.
Trump would also work towards finding a solution to the Middle East conflict, using his connections. As indeed it should. The conflict reflects human tragedy on an unimaginable scale, enough to make a stone cry. It needs a strong and focused leader to end it.
Trump would threaten to, then impose, import tariffs. America is the largest vacuum, sucking in foreign goods and services with its huge demand, as the world’s largest economy.
High tariffs can, probably will, lead to a trade war between America and China, which would lower global growth, since trade constituted 62% of global GDP in 2022. Countries will find a workaround high tariffs, by re-routing exports through third countries. During this realignment of supply chains, cost of goods will rise.
So Trump has the opportunity, the will, and the persona, to make these and other changes.
Last week the BSE Sensex fell 206 points to close at 79486.
The policies of Trump will create initial uncertainty and resentment by countries, like China, on whom high tariffs will likely be imposed. But the ending of senseless wars and the fall in crude price, helping tame inflation, will be hugely positive. Easing out of bureaucrats in America and changing rules and regulations to facilitate business, will help its economy grow. Let’s hope the deep state does not block his path.
Image created by Bing
Comments may be sent to jmulraj@asiaconverge.com
COMMENTS