Home About Us Principles Process Performance Press Markets Commentary Contact-us


July 2016 archive

July 2016

I participated in the annual meeting of the Bretton Woods Committee last week in Washington (for those not familiar with it, the group defines itself as: "a non partisan network of prominent global citizens which works to establish the value of international economic cooperation"). In other words, the antithesis of the views which Mr Trump, Marine Le Pen, etc, are espousing. Among the attendees were Secretary of the Treasury Jacob Lew, US Trade Representative Michael Froman, and senior officials from the World Bank and the International Monetary Fund. As the discussion took place in the immediate aftermath of the Brexit vote I thought it might be worth sharing some of my thoughts and observations.

I came away impressed by Froman, less so by Lew. Lew's most interesting comments focused on China which he believes understands the needs and the challenges required to restructure their economy, but is concerned that they may not have the political will to overcome them. He characterized their economy as having lots of private sector borrowings, but little public debt. Like others, he emphasized the importance and benefits of global cooperation, especially in the context of the headwinds created by Brexit, but was short on specific policy recommendations.

Froman, was more political, clearly trying to sell the Trans-Pacific Partnership (TPP). He cited the potential benefits of the pact to the American consumer, saying it would provide a savings of approximately $700 per family, and noted that current US tariffs average only 1.5%. He also touted the benefits of international trade to the US economy, making the point that export related jobs pay 18% more, and cited automation as being more of a threat to job growth than free trade. Not surprisingly, he warned against the evils of protectionism, blaming it for having been one of the causes of the Great Depression. Finally, he feels that if the US fails to take the lead in tariff reduction and trade agreements, the Chinese will fill the void.

       Continue Reading ...