Will Trump's tariff be the cause of the next recession?

Apparently Trump is living in an alternative reality pegged to his emotional outbursts and absent knowledge of public policy issues. In real life, sound decisions come from the best advice on a subject as the usual way to govern not by promises made at a campaign rally in a circus-like atmosphere and drunken party goers. For stand-up comedians being funny and sarcastic might be acceptable behavior but not for the leader of western democracies where U.S. and world politicians are observing with dismay a charade that resembles more a psychopath’s conduct than a comedian President.

Many political observers predicted the collapse of the market due to Trump’s administration destructive policies and they were right about the facts but wrong about the timing. The issues in front of Americans today are how to stop the drive towards the abyss and still have a functional democracy? Should the President be consider normal and be afforded a private interview by Director Mueller or be subpoena to testify in front of the Grand Jury? Trump is impervious to the difference between reality and fiction and where he lives in the virtual reality of a video game where he can always win.

Here is one transcending fact about the U.S. economy as recently reported by the Bureau of Economic Analysis (BEA): "The United States recorded a government debt equivalent to 105.40 percent of the country's Gross Domestic Product in 2017." Simple accounting tells us that if liabilities are larger than assets—WE ARE BANKRUPT!

Trump nevertheless, handed billions in tax cuts to his circle of oligarchs while the country is in technical bankruptcy! If Trump is expecting to renegotiate the foreign debt held mainly by China and Japan like he negotiate his bankrupted casinos for a few cents on the dollar, he doesn’t understand the most basics principles of financial markets. He never attended graduate school at Wharton as he claims for he could not pass the entrance requirements. This is not surprising if his most sophisticated reading material was a MacDonald’s menu. Trump’s actions can result in the world ganging up against America as it stops being the beacon of the world in its social science of human achievement.

Tariffs have already prompted threats of retaliation from America’s leading trade partners; European Union President Jean-Claude Juncker has discussed putting tariffs on “blue jeans, bourbon, and Harley-Davidson motorcycles — three iconic American exports”. Trade Minister of the western world are openly warning Trump that his rhetoric and actions may sink the world into a deep and dark recession.

According to WH staff, Trump’s decision to launch an “easy” winnable trade war was born out of uncontrollable anger with the burning scandals of his own creation now creeping up on him like his sexual habits, his lack of ethics, his abuse of power, and most damming his collusion with the Russian who brokered his election.

White-house staff often report that the president is detached from his surroundings arguing with himself, firing advisers or staff that refuse to commit suicide or go to jail on his behalf as he considers it an unquestionable loyalty owed him for the privilege of serving in his administration.

The people who elected Trump should think about all of that for a moment as staff inside the White House are telling the press that bad political news causes the president to become rabid with anger when he decides that the best way to respond to his worst instinct to launch a trade war. This is policy making out of sheer emotional instability and dictatorial rule that in the past has resulted in bloody precedence of a kinetic war.

Trump’s dangerous decision-making is view by many as the new normal. He does not consult with his economic and diplomatic advisers on the best way to implement his chaotic policies like tariffs and just acts on his own outburst of anger to make public announcements. The White House was virtually unprepared for the all-too-predictable angry response from foreign leaders after Trump’s monumental decision on tariffs before it was made. Nobody in Congress, the State Department, the Treasury Department or the Defense Department had been told that a new policy was about to be announced or given an opportunity to weigh in in advance.

Wilbur Ross, the un-dead Trump administration’s commerce secretary, who also has a shady past over a deal with a Russian businessman connected to Vladimir Putin. The connection took place while serving as vice-chairman of the Bank of Cyprus. As the front line spokesman for Trump’s justification of tariffs just patched up a communication email to all concern and approved by Trump as the whole policy plan.

We learned from inside the White House that the reason this kind of behavior hasn’t happened before, is that Trump’s advisers have been able to keep his worst instincts in place. Moreover, many of the gate keepers are leaving or being fired with few sober heads, like Secretary of Defense Jim Mattis, that have to figure out ways to coaxing Trump away from his psychopathic destructive impulses and toward a more measured, conventional policy approach. 

Diminishing marginal return to short run production begins when?

The point at which the initial change occurs mathematically is the derivative in simple view of The Law of Diminishing Marginal Returns.

In practical economics what happens is that an additional factor of production causes a relatively smaller increase in output.

Diminishing returns occurs in the short run when one factor of production is fixed and the other(s) such as capital, labor, or technology is varying.

If the chosen variable factor of production is increased there the point where it will become less productive is the point where the tangent line touches the curve and there will be a decreasing marginal and then average product.

This law only applies in the short run as in the long run, all factors are variable.

Law of diminishing marginal return curve explained:

What are the international commercial term differences between FOB and CIF when applied to export/import of merchandise?

Alfonso Llanes, Master Degree in International Development

Answered just now

The short answer is it describes Cost Insurance and Freight (CIF) or Free on Board (FOB).

The United Nations Development Program www.undp.org/content/undp/en/home.html publishes a shipping guide of terms used for international shipping under the title:” UNDP-Shipping-Guide.pdf”

This guide provides the reader with ample information about the many terms in use today for conducting world trade. The guide is a complete overview of shipping arrangements, documentation and International Commerce Terms (Incoterms). In addition, it provides guidance to employees working in functions that include interaction with procurement and logistics or for the staff who would need a better understanding of shipping activities worldwide.

For example: what are the principles of effective shipping arrangements, methods and mitigation of risks that commercial transactions must endure? Also, it provides an overview of the options available for optimizing the organization’s logistical capabilities for planning, implementing and evaluating a transportation exercise suitable to the value/risk of the merchandise to be transported.

The guide also provides an introduction to the need for cargo insurance and the types of coverage.

· Explanation of different Incoterms and their appropriate use for contracting shipping services and conditions of carriage such as FOB, CIF, CF, FAS and so on.

· Packing and marking requirements for ports of entry as well as Customs procedures.

· It discusses the choice of shipping documents required such as bill of sale, certificate of origin, bill of laden and so on.

· Also, attention is paid to cost, frequency / regularity, reliability, speed and handling required for a given shipment like oversize/weight, fragile, refrigerated etc.

Transportation is the essential link between buyer and seller, and both parties are interested in completing not only the sale but safe and complete delivery of the purchased merchandise. The effort requires the intervention of third parties with corresponding staff to accomplish all the steps required to complete a successful transaction and shipment from port of departure to port of entry. The particular voyage involved, whether it is over land, sea, air or a combination of all will certainly be subject to certain costs and risks that can be mitigated by appropriate methods of dispatch, insurance coverage, suitable packaging instructions, and the proper handling and responsible action of all the parties involved in the supply chain.

The mode of transportation is of significant importance for estimating cost, risk, scheduling, handling, loading/discharge and inter-modal such as ocean, ground or air mode of transporting cargo.

Inter-modal transportation has had a tremendous impact on facilitating movement of cargo from origin to destination under a single set of documents for the whole operation where the operator is legally responsible for a satisfactory overall performance at each stage of the transport supply chain. For instance, an ocean container loaded in Hamburg, Germany delivered to the port of New Orleans and then by truck to Kansas City, MO., must go through several stages where each stage has to perform specific tasks to complete a process. The entire voyage moves under one set of documents while is being handled by different agents throughout the process which starts by picking up the cargo at the origin warehouse and then delivered to the port, loaded on a ship and delivered to the port of entry for Customs clearing and finally completing the ground delivery portion of the merchandise.

Aside from the mechanics of shipping other functions must also be completed for a successful international transaction to take place. Trade finance is one of those functions where a financial institution intervenes to make sure the buyer gets the merchandise under the conditions agreed for purchase and the seller gets paid for the merchandise sold under the contracted terms.

This is where a special set of terms such as (Incoterms) become crucial for negotiating and contracting the purchase, transportation and payment of merchandise sold in one country but delivered other destination(s). Each stage requires specialized agents in various fields: Cargo labeling and packaging, handling to/from one transportation mode to another, loading/unloading from port of origin/destination, prper documentation, Customs clearance, final transportation/delivery/distribution and payment of merchandise.

As globalization grows and the world economies shift, what is it the best investment?

Emerging market investment is certainly full of opportunities but not without risk. Equity isn't the only option when it comes to emerging markets. There is an ample field of fixed income category that has grown over time and emerging markets debt has become a worthwhile asset of its own.

The Fixed Income Market

Global fixed income covers a variety of debt obligation types: bank certificates of deposit, bonds, loans, and commercial paper, among others.

The unique feature of these products is a legal contract for the issuing entity to pay the creditor a stated rate of interest plus the full principal invested over a defined time period. “This contractual obligation is what makes fixed income a lower-risk asset class when compared with equities. Issuing entities include sovereign and municipal governments, government agencies, corporations and special purpose vehicles (SPVs) backed by assets such as mortgages, auto loans or credit card receivables or asset backed-securities.” Most tradable fixed-income securities have a credit quality rating from a rating agency such as Moody's or Standard & Poors which helps investors realize an assessmentof an individual bond's creditworthiness.

According to the Bank for International Settlements, (BIS), the size of the global bond market was $82.2 trillion in 2009, making it the world's largest investment market. More than half of that figure is debt issued outside the U.S. The size of the world equity market is estimated to be about $36 trillion. Bond market growth has come from different sources, in the issuance of new product types and an increase in the number of countries willing, able and qualified to participate in the international sovereign and corporate debt markets.

Emerging market debt had its origins back in the 1970s, when multinational banks in the U.S. and Europe were active lenders to the governments of developing countries, specially, in Latin America.

The world economy experienced difficulties in the late '70s and early '80s, from a steep rise in oil prices, double-digit inflation and high interest rates. These factors led a number of less developed economies to fall behind on their external debt servicing obligations which led to the Mexican debt crisis of 1982, followed by other countries under these conditions multinational banks found themselves holding a bag of nonperforming debt assets.

But new opportunity came out of this crisis; U.S. and European banks began swapping their nonperforming loans and by the late '80s this practice had grown into a reasonably systematic market, which was initiated with the Brady Plan in 1989. This plan was named after U.S. Treasury Secretary Nicholas Brady serving at the time.

The Brady-based bond market was an early instance of “securitization”: the creation of trad-able securities backed by specific assets and cash flows. Banks were able to convert their outstanding LDC loans into Brady bonds, which were trad-able instruments, denominated in U.S. dollars and collateralize by U.S.Treasury Bonds. “ Secured Brady bonds allowed the banks to systematically write down the nonperforming loans on their balance sheets. In 1990 Mexico issued the first Brady bond and the market responded by growing to the sum of $190 billion, which represent 13 countries in its first six years.

At the same time, the world economy was going through major changes. The Berlin Wall was torn down and the economies of Eastern Europe and the former Soviet Union joined the global community. In the southeastern part of the world China, India and the markets of Southeast Asia were rapidly evolving into high-growth, prosperous economies. As these economies grew in size and creditworthiness, the global debt and equity markets tagged along. Capital was flowing from the developed markets of North America, Europe and Japan into emerging markets, which became the alternative term for LDC countries. A large portion of this investing was speculative, which included hedge funds and others seeking to gains from the potential returns offered by the liberalizing markets.

However, growth on the fast lane got ahead of itself and liberalization outpaced the implementation of a sound legal and economic infrastructure. Weak banking systems and current account deficits made these countries vulnerable to external financial shocks. In 1997 Thailand's currency, the Thai baht, depreciated by more than half; the Korean won followed shortly thereafter, with a 70% plummet.

This uncertainty by the currency shocks led to massive capital flight from the region, causing local bond and stock markets to nose-dive. But, the crisis didn't stop at the steps of Asian countries when investors perceived emerging markets as a single asset class and cashed out of their holdings in Eastern Europe and Latin America as well as Asia in a massive flight to safe capital heavens. But bad things didn’t stop there as the Russian government defaulted on its outstanding debt obligations in August 1998. This created massive global financial dislocation including the well-publicized meltdown of the massive hedge fund Long Term Capital Management in the fall of 1998. In 2007–8 the mortgage financial crisis brought the world capital markets to its knees with the threat of a financial melt down in the US economy. The Obama administration was able to save the day by issuing a large financial package to rescue the failing banking system followed by stiff regulations to prevent a repeat with critical mass.

In 2017 currency manipulators ran down the value of the Mexican peso as NAFTA became an issue for the Trump administration and uncertainty about the outcome of inter-connectivity of the markets in the NAFTA trade agreement became a reality. In short, there are plenty of investment opportunities in emerging markets but those investments are not risk free.

 What course would help in financial data management for, data science, big data, or data analytics.

Alfonso Llanes, studied at Florida International University

Answered just now

Transforming data into knowledge is the current trend of data driven decision making, machine learning; as a consequence, the Internet has become a giant data warehouse. Nonetheless, this data has to be collected and index from any source then combine as machine data from multi-site clustering and automatic load balancing scale to proprietor’s relational databases for understanding and use.

Open development platforms for customizing and meet specific requirements are available. For instance, the Splunk platform makes it easy to customize. Splunk Enterprise is available to meet the needs of any project. Developers can build custom Splunk applications or integrate Splunk data into other applications.

“IBM provides multiple data warehouse offerings so that clients can select the right workloads and platforms based on their requirements to deliver a high performance data foundation.”

In recent time businesses have been slow to implement big data analytics in supply chain management than in other areas of operation such as marketing, manufacturing or finance. However real time analytics of vast, rapidly growing and very messy unstructured data-sets were largely absent as data had been driven in the recent past, by statistics and quantifiable performance indicators.

Here are some schools that offer training in the field of big data analytics.

University of Arkansas

Weber State University

Stanford Data Mining and Applications Graduate Certificate

University of Delaware

Columbia University

Big Data Certificate

Certificate in Engineering Excellence Big Data Analytics and Optimization (CPEE)

Certification of Professional Achievement in Data Sciences

Certified Analytics Professional

Cloudera Certified Associate (CCA) Administrator

Cloudera Certified Associate (CCA) Data Analyst

Cloudera Certified Associate (CCA) Spark and Hadoop Developer

Cloudera Certified Professional (CCP): Data Engineer

EMC Proven Professional Data Scientist Associate (EMCDSA)

IBM Certified Data Architect – Big Data

IBM Certified Data Engineer – Big Data

Microsoft Certified Solutions Expert (MCSE): Data Management and Analytics

Mining Massive Data Sets Graduate Certificate

MongoDB Certified DBA Associate

MongoDB Certified Developer Associate

Oracle Business Intelligence Foundation Suite 11 Certified Implementation Specialist

SAS Certified Big Data Professional

SAS Certified Data Scientist Using SAS 9

IBM Professional Certification Program

What are the trends in the international trade since 2010 and the most traded commodities?

The historical record indicates that, international trade has grown remarkably in the last couple of centuries. After a long period of slow growth and of up and down cycles after the Second World War, international trade started growing again, and in the last decades trade development has been faster than any previous time in history. “Today, the sum of exports and imports across nations is higher than 50% of global production. At the turn of the 19th century this figure was below 10%.”

Transport and communication costs have decreased across the world In a substantial way, and the creation of the World Trade Organization (WTO) has promoted preferential trade agreements particularly among developing countries. Trade among developing nations South-to-South tripled in the period 1980–2011.

International trade is a desirable outcome because it allows countries to specialize, and produce goods where they are relatively efficient, while at the same time, importing the goods where they have not competitive advantage. This is the essence of the comparative advantage argument that supports gains from trade in which the Ricardian doctrine on trade, allows countries to make what they are best a doing and import the rest.

Empirical evidence shows that while trade leads to economic growth on the aggregate, it also creates winners and losers within countries – so it is important for policy makers to consider distributional consequences of trade liberalization within each country.

There was a long period during the 18th century considered stagnant for international trade as globally the aggregate of exports and imports never exceeded 10%. In the course of the 19th century, a technological period triggered a period of remarkable growth in world trade which was called 'first wave of globalization'. The first wave of globalization came to an end with the beginning of WWI, when the rise of nationalism led to a slump in international trade.

After the end of WWII trade started growing again. With this new wave of globalization international trade has grown faster than ever before. Today the sum of exports and imports across nations is higher than the value of 50% of the global production.

https://ourworldindata.org/inter...

The last few decades have not only seen an increase in the volume of international trade, but also a growth in the number of countries joining WTO through which preferential trade agreement take place.

“These numbers include notified and non-notified preferential agreements (the source reports that only about two-thirds of the agreements currently in force have been notified to the WTO), and are disaggregated by country groups.”

This figure shows the increasingly important role of trade between developing countries (South-to-South trade), contrast by trade between developed and developing countries (North-to-South trade).

At the end of 1970s, North-South agreements accounted for more than half of all agreements but by 2010, they only accounted for about one quarter. Today, the majority of the existing preferential trade agreements are between emerging economies. The increase in trade among emerging economies over the last 50 years has been supplemented by a change in the composition of exported products from-to- these countries.

“These figures, produced by the World Bank, correspond to the Standard International Trade Classification, in which 'food' includes, among other, live animals, beverages, tobacco, coffee, oils and fats. The resistance that geography imposes on trade has long been studied in the empirical economics literature, typically under the label of 'gravity trade models'. The main conclusion in this literature is that trade intensity is strongly linked to geographic distance. Data from the 19th century onwards for countries around the world is available in the International Historical Statistics (IHS). These statistics – originally published under the editorial leadership of Brian Mitchell (since 1983)”

Links to trade data

Penn World Tables

Data: Real and PPP-adjusted GDP in US millions of dollars, national accounts (household consumption, investment, government consumption, exports and imports), exchange rates and population figures.

Correlates of War Bilateral Trade www.correlatesofwar.org

Data: Total national trade and bilateral trade flows between states. Total imports and exports of each country in current US millions of dollars and bilateral flows in current US millions of dollars. Export and import value index and volume index.

Available at: Online at http://data.worldbank.org

UN Comtrade

Data: Bilateral trade flows by commodity

Bilateral trade flows can be sorted by goods or services, monthly or annually, with choice of classification (including HS codes, SITC, and BEC). Data is likely to be very time consuming to collate as there is no bulk data download unless a user has a premium site license.

UNCTAD stat

UNCTAD stat reports export and import data between 1995 and 2016 but primarily to different regional groupings than any one country, so it's probably not best suited to comparing country-to-country bilateral flows.

Eurostat - COMEXT

Also, the Eurostat website 'Statistics Explained' publishes up-to-date statistical information on international trade in goods and services.

World Trade Organization - WTO

The WTO offers a bulk download of trade datasets which can be found here. Amongst these are annual WTO merchandise trade values and WTO-UNCTAD-ITC annual trade in services datasets.

How does our national savings rate impact our trade deficit?

Some economists claim U.S. trade deficits are caused by the low savings rate of Americans. But mainstream trade journals continue to assert that trade deficits don’t really matter.

On June 20, 2017, the Coalition for a Prosperous America released a research paper, “Do Savings Rates Cause Trade Deficits?” by CEO Michael Stumo and Research Director Jeff Ferry that shows why globalist economists are wrong about what causes trade deficits, offshoring and job losses.

They write, “A popular, but misleading, claim is that low U.S. savings, relative to investment, causes our trade deficit. For example, Harvard professor and former Reagan administration advisor Martin Feldstein has said that the U.S. fiscal deficit, which indeed reduces national savings, is the cause of the trade deficit. ‘If a country consumes more than it produces, it must import more than it exports.’”

Other economists view the issue of trade deficits with a different lens. They say that America is exporting its paper money for goods made in China and other countries that need reserve currencies such as dollars, to purchase raw materials from other countries.

The traditional macroeconomics equation of basic Gross Domestic Product does not reflect the issue of currency markets or exchange rates. For instance the recent tax cut Trump instituted in the American economy places the GDP to debt ratio at 106% which inflates the value of the dollar or undervalues the dollar reserves many countries are already holding. In contrast the EU has a GDP to debt ratio of 81% making it a more desirable reserve currency.

Everybody agrees that reform is needed in currency exchange markets and not only in merchandise trade markets for as long as budget deficits and national debt continue to rise, specially, in the USA for its dollar preferred place in the world as a reserve currency retracts while other currencies begin to displace it.

These real-world changes directly impact one or more variables within the identity GDP equation, transmitted through by mathematical necessity. In short, national savings is related to the trade deficit in an accounting sense but it is not its causation.

The relationship between savings and trade deficits can be best explained in a mathematical accounting identity but this do not reflect the causal relationships between savings, investment, and trade flows. A merchandise trade deficit reduces the incomes of domestic workers however; exporting paper money reduces the cost of imports which benefits the lower income brackets.

In 2005, the Federal Reserve Board chairman Ben Bernanke argued that “the large and growing U.S. current account deficit is caused not by anything happening in the U.S., but by decisions taken by emerging economy nations to run very high savings rates, pursue export-led growth, and lend money to other countries, especially the U.S. He called the situation a global savings glut. These excessive inflows of foreign savings raise the U.S. dollar exchange rate, drive down our interest rates, and force our economy into a trade deficit.”

Tactics of Surplus Producing Countries Use

Many authors agree that “Export-oriented or investment-oriented countries can utilize domestic and foreign policies to reduce consumption, increase production and export at very competitive prices.”

In the case of China:

Wage growth is constrained to below the growth of worker productivity

Undervalued exchange rate

Government subsidizes to Chinese manufacturers

Vast amounts of surplus labor that produces more than it consumes

Unethical accounting practices for valuation and investment