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Tuesday, June 5, 2018

Bernstein: Catching up with the lynx [feedly]

Catching up with the lynx

Over a WaPo today: As you'd expect, I'm not at all happy to see the rollbacks in financial market regulations. But, given our ability to willfully forget the last financial meltdown, they're far from unexpected. One of my key points here is that the powerful, rich finance lobby faces little in terms of countervailing pushback. That is, this isn't good D's outnumbered by bad R's. Note also recommendation for a small tax on financial transactions. I plan to amp that up in coming weeks.

The strong jobs report at the end of last week confirmed that the job market remains on track. There was even a pop in middle-wage workers' paychecks. Here's some noodling on three things that could throw the recovery off track: Fed mistake, trade war, and supply constraints. I think the last one poses the biggest risks.

Note that I left out bursting finance bubble from the list of recovery de-railers. That's because I don't see near-term evidence of excessive speculation and under-priced risk. My concerns in this space are longer term.

Finally, while I don't think Trump's trade war is our biggest risk (unlike the respondents to this Twitter poll), I do think there's risks from his chaotic trade policies becoming unbound. Heretofore, they've been more bark than bite, but as the protectionists become empowered, I don't expect their actions to actually help working people. Instead, I expect them to needlessly piss off allies, dampen exports, raise prices on imports, and hurt workers in domestic industries that use the taxed metals as inputs. And there are millions more of those workers than there are in domestic steel and aluminum production.

"…these tariffs and their phony national security rationale won't come close to helping most workers displaced by imbalanced trade. They won't lead to investments in new, potentially competitive industries, like green battery production or other renewable technologies. They won't create significant job opportunities in places that have been left behind, even at our current low unemployment . They won't provide the apprenticeship, earn-while-you-learn program needed to train a displaced coal miner to be an MRI technician. They won't roll back the wasteful, regressive tax cuts that robbed the Treasury of the resources to invest in public goods, from infrastructure to human capital."

 -- via my feedly newsfeed

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