Trump's governance shows why he's a serial bankrupt

[OnDoutside]

by Paul Sommerville

Donald Trump has had a bad week, global markets or Gary Cohn not so much. One month ago world markets suffered a disquieting volatility event, with the main world stock indices falling between 10 and 15pc in a four-day period. Two weeks ago, although not as intense, we saw a renewal of this volatility with more wild swings. Ultimately, however, the USA bourses have recouped at least half of the losses. European and Asian indices have recovered also, but in a somewhat more muted fashion. This week, despite the news flow seeming more dramatic, the price movements have been more subdued in comparison.

Trump, after being rebuked by the Swedish Prime Minister during a joint press conference for his new trade tariff policy, learnt the news that he is likely to be sued by Stormy Daniels, the "adult entertainment" star. If the US President admits being a party to an agreement that paid Daniels to stay quiet (the "hush agreement&quot the Federal Election Commission may view it as a violation of campaign finance law. Later the same day he was forced to accept the resignation of Gary Cohn, the director of the National Economic Council and his chief economic advisor.

Cohn joins a very long line of team members that have either quit or been removed. His departure has been coming for some time. His jump from Goldman Sachs Group to Donald Trump's administration helped him unlock more than $284m in pent-up bonuses, stock holdings and other investments through the Wall Street bank. He will now be able to access this cash, possibly tax free, through the special break available to rich people picked to join the government, which lets them cash out and defer their capital gains taxes indefinitely.

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The Chinese are one of the biggest external buyers and their role will become even more vital. The 2018 deficit total could exceed $1trn for the first time ever. Trump believes he is in a strong position as the US is the biggest consumers for the world's exports but he fails to appreciate his position is weak. Any indication of a reluctance to continue to buy US treasury bonds by the Chinese will send bond yields higher and the US economy into a tailspin. It is very easy to see how Trump is a serial bankrupt. His wish to promote more fair and reciprocal trade for the USA has some validity and if he sticks to this he may win some success but picking a major fight with the Chinese would be a huge mistake. The markets this week, despite the headlines, have taken this "trade war" news very calmly as they are betting that even Trump cannot be that stupid.

https://www.independent.ie/business/world/paul-sommerville-trumps-governance-shows-why-hes-a-serial-bankrupt-36691247.html