Saturday, March 18, 2017

Unexpected! The Economist Flabbergasted by "The World Economy's Surprising Rise"

"On the up" writes The Economist of the world economy, the weekly's front page devoted to its "surprising rise."
“IF WINTER comes,” the poet Shelley asked, “can Spring be far behind?” For the best part of a decade the answer as far as the world economy has been concerned has been an increasingly weary “Yes it can”. Now, though, after testing the faith of the most patient souls with glimmers that came to nothing, things seem to be warming up. It looks likely that this year, for the first time since 2010, rich-world and developing economies will put on synchronised growth spurts.

 … American employers, excluding farms, added 235,000 workers to their payrolls in February, well above the recent average.
Needless to say, all articles must address various caveats, but who do you think appears front and center in the negatives of an MSM outlet such as The Economist?
There are still plenty of reasons to fret: China’s debt mountain; the flaws in the foundations of the euro; Donald Trump’s protectionist tendencies; and so on. 
Plenty o' caveats, as we said. But of these, The Donald's name appears more and more often as we read through this issue's main article, notably towards the end, when the London weekly newspaper surmises about the "things that might yet derail the recovery."
Mr Trump might make good on the repeated threats he made in his campaign to raise import tariffs on countries he considers guilty of unfair trade, thus taking a decisive step away from globalisation just as the world’s main economic blocs are at last starting to get into sync.
In a separate editorial, the London weekly newspaper warns that
The tussle over who created the recovery is about more than bragging rights. An endorsement for populist economics … would also favour the wrong policies. Mr Trump’s proposed tax cuts would pump up the economy that now least needs support—and complicate the Fed’s task. Fortified by misplaced belief in their own world view, the administration’s protectionists might urge Mr Trump to rip up the infrastructure of globalisation (bypassing the World Trade Organisation in pursuing grievances against China, say), risking a trade war.
Indeed, The Economist, another bastion of the Western world (i.e., the free market) that shows signs of having been taken over by leftists, can not seem to figure out the puzzling question of why "In America imports of both consumer goods and capital goods are up" while the rest of the world is happily following along.

Why such good luck?

Why such unexpected good luck?

One thing that the London luminaries are 100% sure about, as the editorial states unequivocally, is that "Most important,"
the upswing has nothing to do with Mr Trump’s “America First” economic nationalism.
That is good to know, since The Economist is forced to admit that there is some amount of "speculation" — promptly mocked through the use of a Keynesian term (showing who is now lionized at a magazine once dedicated to economic liberalism) — running about:
There has been speculation that the “animal spirits” of business folk have been lifted by Mr Trump’s election in November, and that cuts in tax and regulations, and a subsequent return of the estimated $1trn of untaxed cash held abroad by companies based in America, will fuel a big boom in business investment.
Who'd thunk?

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