Will the federal deficit be Trump’s nemesis? – Asia Times

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This research appeared earlier this week in the Asia Times ‘ International Risk-Reward Monitor, a regular examination of market forces.

Given our current position of information about the new government’s intentions, we foresee a steadily deteriorating socioeconomic environment in 2025 with continual high interest rates, higher than expected inflation, and weaker than expected earnings.

The Biden Administration bequeathed Donald Trump the largest-ever federal deficit ( at 6.1 % &nbsp, of GDP ) in an economic expansion. &nbsp, The president-elect wants to renew&nbsp, his 2018 corporate tax cut at an estimated cost of$ 400 billion per year, &nbsp, and&nbsp, eliminate taxes on Social Security income at a cost of about$ 150 billion per year. &nbsp, That would raise the federal deficit, now at$ 1.7 trillion, by about a quarter, minus possible revenues from additional tariffs ( which now bring in about$ 80 billion a year in revenue ), and whatever cost savings&nbsp, his team can obtain from spending reductions.

What didn’t go on forever didn’t, according to Okun’s Rules, and the United States doesn’t continue to run up the federal deficit continuously. But it has a price to pay to continue doing so for the near future. America doesn’t encounter a” Liz Truss time” ,&nbsp, as Swiss Re economist&nbsp, Jerome Jean Haegeli&nbsp, told the Wall Street Journal&nbsp, November 21, referring to&nbsp, the blowup of the UK tie business in October 2022 after the short-tenured prime minister proposed deep tax cuts. &nbsp, For the time being, the US can fund the Treasury’s saving need with&nbsp, local resources. However, that comes at a high price, and it’s possible that financial pressure may become stronger in 2025.

Unlike the aftereffects of the 2008 World Financial Crisis, when foreign central banks financed the boom in Treasury loans, US regional economic institutions&nbsp, absorbed the bulk of post-Covid Treasury financing, with some help from international personal investors and US homes. The presence of financial institutions in Treasury funding is more clearly visible graphically in terms of levels.

Lenders can continue to get Treasuries, but only if interest rates remain high. According to McKinsey, return on equity for large parts of the finance sector would be lower than the institutions ‘ individual cost of capital without the rise in interest rates of the previous two years. The supply on medium-term Treasuries is approximately equivalent to the bank’s loans from the central bank, which means that the deficit cannot be funded by the legendary printing press. Deposits, while, cost much less than borrowed money, and the Biden Administration’s massive governmental increase of 2019-2020 unleashed a flood of payments into the banking system. Payments rose much faster than institutions ‘ loans and leases, and were channeled into Treasuries.

That began a period in motion. Federal subsidies caused the gap to balloon, but a sizable percentage of those subsidies were reinvested back into the Treasury securities that provided the deficit. The grants unleashed prices, and the Federal Reserve&nbsp, raised interest rates, making Treasuries appealing for businesses. &nbsp, Higher interest rates&nbsp, doubled the cost of servicing the federal debt, to$ 1 trillion last year from$ 500 million in 2020.

In short, the rising of Treasuries on banks balance sheets, the higher price setting, the higher deficit expected to doubled interest payments, and higher inflation are all facets of the same problem.

What could go bad?

For one thing, a year ago, the surge in payments that made it possible for banks to purchase Treasuries with inexpensive customer money stopped. Lenders will have to make a higher yield than they already receive for immediately money from the Federal Reserve in order to continue funding the deficit. The secured over funding rate is currently higher than the supply of five-year Treasuries.

Businesses can use inexpensive reserves to finance buying of Treasury securities, but no expensive borrowings from the central bank. As we see in the chart above, &nbsp, the year-on-year shift in business businesses assets of US Treasury and Agency stocks tracks the year-on-year shift in payments.

Lenders will only be able to continue funding the Treasury gap once the spread between the central bank’s cost of funds and the produce on Treasury securities has dried up. One chance, of course, is that the main institution could provide cheaper revenue to the banks. That would in effect allow the printing press to fund the Treasury deficit, which is a badly inflationary move. Fed head Jerome Powell didn’t do this.

Another possibility is that medium-term Treasury yields need to climb. Rising long-term curiosity rates, though, may reduce if not eradicate economic growth.

Furthermore, US households may stop consuming and purchase a lot more government securities. &nbsp, American families save only 4.4 % of their disposable income, or about$ 1 trillion a year. If homeowners doubled that to$ 2 trillion a month, they could fund the gap by themselves. However, a rapid decline in use may lead to a recession, lower taxes revenues, and a bigger deficit.

Accidents are often feasible – for example, a big problem in the multi-trillion industry for short-term funding of government securities. As the Federal Reserve shrank its portfolio holdings of Treasuries, the illiquidity of the Treasury market ( as measured by the bid-asked spreads of off-the-run Treasuries ) worsened.

However, it’s unlikely that a liquidity seize-up would cause any long-term harm. Central banks have a way to react to these kinds of situations; they simply purchase whatever is available until the market drops.

The consequence of the expansion of US debt, high inflation, high Treasury rates and high debt service costs is likely to be gradual – a headwind, not a cyclone. &nbsp, This will hit US consumers the hardest.

US consumers borrowed money from credit markets to maintain their level of consumption after the Biden subsidies expired in response to high ( and significantly higher than expected ) inflation. Credit card debt increased significantly, while the interest rate on revolving credit increased from 14 % to 22 %. Revolving credit’s total interest payments increased from$ 100 billion to$ 250 billion last year.

The tax cuts that Trump’s team has &nbsp, discussed don’t have supply-side effects. Extending the old corporate tax cut doesn’t change incentives to invest, and removing taxation of Social Security benefits won’t bring more 70-year-old into the workforce. &nbsp, Tariffs cannot help but increase prices, both for consumers and for production inputs. Higher tariffs on imported capital goods will likely lead to a lower investment because the US currently imports more capital goods domestically than it produces.

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Will the federal deficit be Trump’s nemesis? – Asia Times

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Subscribe right away and get the first year for only$ 99. With a one-month trial for only$ 1, you can sign up for the exclusive rate of$ 99.

Does the federal deficit been Trump’s nemesis?

David Goldman discusses the financial issues facing the incoming Trump administration, forecasting a deteriorating culture in 2025 marked by persistent high interest rates, inflation, and weaker revenue – challenges that will weigh heavily on US homes.

Germany’s governmental panic risks euro stability

Diego Faßnacht examines Germany’s possible transition away from tight fiscal control as the CDU/CSU partnership announces plans to lower the constitutional debt cap to fund tax cuts and fiscal reforms, evoking a new era of higher loan and looser economic policy.

Kiev mulls a” Christmas unpleasant” as Russia increases ground

James Davis reports that Ukraine’s status is deteriorating amid dwindling recruits, lower motivation, and strained tools. President Zelensky presumably ordered troops to hold jobs at all costs until Trump’s opening, hoping to keep negotiations leverage.

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Calling inequality unnatural, Thomas Piketty shows a way forward – Asia Times

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Book Review: Nature, Culture, and Inequality by Thomas Piketty, translated by Willard Wood ( Scribe )

Thomas Piketty’s Character, Society, and Inequality is a little guide that lists an issue of great value: Is the social injustice we observe every day normal?

Drawing on traditional economic data from all over the world, Piketty identifies a trend toward greater political and socioeconomic justice from the late 18th centuries. From 1914 to 1980, this was especially evident in Western nations. Since then, that craze has slowed significantly.

Piketty explains that injustice manifests in various ways in different cultures, as well as in various ways in the same societies throughout history. Disparity, he says, has “followed dramatically different trajectories – social, economic, cultural, civilizational, and religious”.

This shows us that people culture is more adjustable, and therefore more pliable, than some have assumed. ” It is society in the broadest feel”, he argues,” and more particularly political participation” that “provides an argument for the variety, education, and structure of the social inequalities we observe”.

There is no justification for us to maintain the 20th century episode of growth toward greater fairness in the present. In truth, without significantly addressing injustice, Piketty argues, we may wish to properly address the climate crisis.

Piketty is the co-director of the World Inequality Lab and a professor at the Paris School of Economics and the École des Hautes Études en Sciences Sociales ( EHESS). He is best known for his landmark 2013 book Capital in the Twenty-First Century, which became a bestseller and sparked a global conversation about capitalism, injustice, and tax policy.

Piketty argued using historical data and statistics that if the return on capital exceeds the economy’s growth rate, it follows that riches will become more and more focused. This, in turn, leads to disturbing rises in inequality, which are not only harsh but undermine democratic and normative values, trust in institutions and social cohesion.

Piketty’s new guide is designed to make his thought accessible to a wider audience. It is based on his book A Brief History of Equality ( 2021 ) and his lecture on inequality from the World Inequality Database in 2022.

Verbal in tone, and accompanied by attractive colour charts, the text moves rapidly through topics including income and wealth disparity, gender inequality, the rise of the welfare state, education spending, progressive taxation of income and inheritance, the collapse of imperial assets, public debt crises and the climate crisis.

Piketty presents what he believes to be the key to a more simply and lasting world by dissing some of his key insights about the evolution of income and wealth disparity throughout history.

Income and wealth disparity

When it comes to income ( who earns what ), the bottom 50 % of earners receive 5-6 % percent of total income in the most inegalitarian countries ( e. g. South Africa ). In more egalitarian countries ( e. g. those in northern Europe ), the bottom 50 % earn 20-25 % of total income.

The distribution of wealth ( who owns what ) is even less equal. In any nation on earth, the poorest 50 % do not own more than 5 % of the world’s total wealth.

Even though they have been significant, the main issues with reducing disparity in the 20th century were the distribution of income. ” When it comes to the transmission of wealth”, Piketty argues,” things have changed quite much”.

As he points out, the “great redistribution” of property in his native France, largely between 1914 and 1980, had” a significant impact on reducing disparity between the richest 10 % and the next 40 %”, via the emergence of a “property-owning middle class”. Despite this significant development,” the poorest 50 % have hardly ever benefited from the transfer of property in the last two decades.”

Piketty argues that, like the 20th century action towards greater justice, new styles of increasing injustice are not obvious. Nor are they explainable in terms of “personal talent, native endowment or natural temperament”.

The notion that “great disparities are somehow’natural’ because ability or entrepreneurialism is unevenly distributed across individuals ( or countries, or ethnic groups ) is frequently “used to argue that efforts to reduce inequality will either be ineffective or reduce growth and prosperity, or both,” as journalist Jonathan Portes once remarked.

This claim is not supported by the historical data, says Piketty. He refutes the notion that “very large inequalities are the inevitable outcome of a well-functioning market economy,” which predominates in much contemporary economic thought and policy discussion. The key to understanding reductions in inequality, he argues, is that they are directly related to a country’s political culture and institutions. They are primarily a result of the historical function of collective political mobilization to influence change.

What works: Sweden vs. the United States

Sweden in the 20th century, Piketty writes, is an example of the power of political organization, social struggle and” the ability to build new institutional outcomes”.

Until around 1920, Sweden, like other European countries, was “extremely inegalitarian”. Its political system was elitist. Only the richest 20 % of men could vote. Votes were distributed based on individual wealth: the more votes you could cast, the wealthier you were.

The Social Democratic Party and the trade unions then “put the state capacity of Sweden in the service of a different political project” through” collective mobilization.” Instead of “using the records that had made it possible to allocate the right to vote,” they instead used them to “impose a progressive tax, with the aim of funding access to education and healthcare.”

The Swedish example, according to Piketty, is instructive on a number of fronts, according to Piketty. Firstly, it shows that” a country is never inegalitarian or egalitarian by nature”. That “depends on the government’s power and goal.” Secondly, Sweden’s social democratic policies led to it becoming both one of the most equal societies in the world, as well as one of the richest.

The United States makes an interesting comparison. In recent history, the wealth of its middle class has been shrinking. Having at one point reached wealth distribution patterns similar to Europe’s, it is now headed in the direction of” Europe’s pre-World War I levels”.

Between 1932 and 1980, inequality decreased in the United States. The nation’s prosperity and rising income levels were present during that time, which” stifled neither economic growth nor innovation.” The totemic Reagan-era reduction of high tax rates in the 1980s failed to deliver on its promises to its backers. Economic growth in the United States in the period 1990-2020 was half what it was in 1950-1990. Inequality accelerated.

Addressing inequality

Despite how imperfect the process has been, the welfare state’s creation was the most crucial factor in addressing inequality in the 20th century. Progressive taxation was used to fund increased spending on healthcare, pensions, housing, infrastructure and education. According to Piketty, the roughly tenfold rise in public spending over the past century was a significant contributor to promoting individual freedom, reducing inequality, and raising productivity and living standards.

The question of what might represent “acceptable levels” of income disparity, according to Piketty, is” clearly a question that a democratic process and public deliberation should deicide”. However, he suggests a ratio of 1 to 3 or 1 to 10 between the richest and the poorest. These levels can accommodate diversity of aspirations, while maintaining the incentives “necessary for social and economic organization”. Nothing, economically or socially, justifies ratios of 1 to 50 or 1 to 100.

Low tax rates and astronomical corporate incomes were not a key component of the United States ‘ historical advantage over its competitors in terms of productivity, especially in the industrial sector. It was its lead in education. The “near-universal” access to secondary education the United States achieved in the 1950s was not realised in Germany, France and Japan until the 1980s and 1990s.

Since then, despite the significant expansion of access to tertiary education, with its acknowledged advantages, spending on education across Western countries has stagnated.

Inequality and the climate crisis

Returning to the “nature” theme at the conclusion of his book, Piketty argues that understanding inequality makes it easier for us to comprehend the problem of climate change and what we need to do in response. He succinctly summarizes his main point in an interview with Manuela Andreoni, a reporter for the New York Times:

If we don’t address our inequality challenge at the same time, there’s no way we can preserve… planetary habitability in the long run.

This is a result of the Global North’s comparatively high carbon emissions in comparison to those of the Global South. However, it is also a result of global carbon emission disparities, particularly the large carbon footprints of the wealthiest 10 %.

According to Piketty,” It is obvious that we’re going to have to change our production and consumption regime throughout the world.” This will need to be society-wide, but with particular focus on the rich and the middle class:

If you don’t demand a lot more effort from the people at the top, there is simply no way for the middle-class and lower-income groups to accept the kind of transformation that is needed.

According to Piketty, the climate crisis “may result in a greater demand for equality than we’ve recently seen.” In the 20th century, many countries achieved the expansion of access to health care and education – and,” to a lesser extent, transport, housing and energy” – by taking these parts of the economy out of market frameworks and viewing each of them as a public good.

” A similar shift”, he suggests,” could help the world curb climate change and stop biodiversity loss”. Piketty responds to Andreoni’s question about sceptical and cynical responses to a proposal like this:

that’s what we did for education and health. We recently decided that learning about this and that was important for all children at the ages of 6 and 10, 15, and then 18, respectively. And we didn’t let the market system decide this. And now, no one wants to return to the previous circumstance.

At Deakin University, Christopher Pollard is a sessional academic in sociology and philosophy.

The Conversation has republished this article under a Creative Commons license. Read the original article.

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Pacific island nations still lose out despite superpower rivalry – Asia Times

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A 140 million aid agreement signed on December 9 between Australia and Nauru is a primary example of the Pacific nations ‘ walking on a geopolitical wire in the twenty-first era.

The package provides Darwin with strong fiscal support, stable banking services, and policing and security resources. In exchange, Australia will have the right to object to any agreement Nauru may reach with various nations, particularly China.

The filibuster terms are comparable to the late last year” Falepili Union,” which gave Tuvaluans access to American citizenship and help for climate change in exchange for security guarantees.

Additionally, more details about a security agreement between the United States and Papua New Guinea were revealed just last week. It is now known to be fair US$ 864 million. In exchange for funding in military facilities development, training and equipment, the US increases unlimited access to six ships and terminals.

Even last year, PNG signed a ten-year, A$ 600 million offer to finance its own group in Australia’s National Rugby League competitors. In exchange,” PNG won’t mark a security agreement that would permit the presence of Chinese police or military forces in the Pacific.”

These preparations represent the political conflict that exists between the US and its allies in the Pacific, on the one hand.

This tactical conflict is frequently depicted in political commentary and mainstream media as an extension of” the great game” waged by rival countries. Pacific countries can be seen as attempting to profit from their own growth priorities, from a standard protection perspective.

However, this presumption that Pacific governments are “diplomatic value setters” who can pit China and the US against one another ignores the very actual power disparities that exist.

The danger, as the authors of one new research argued, is that the” China risk” tale becomes the explanation for “greater Western militarisation and financial dominance”. In other words, Pacific countries become political value takers.

Defense politics

The countries in the Pacific are vulnerable on a number of fronts: the majority have weak monetary foundations, and many are in debt. They are also at the forefront of rising sea levels and climate shift.

More bill and greater risk are the result of the costs associated with recovering from more numerous extreme weather events. Weather funding in the Pacific typically takes the form of concessional funding, as was reported at the UN COP29 summit this year.

The Pacific is already one of the country’s most aid-reliant areas. However, when victim nations continue to struggle to achieve their development goals, there is still much uncertainty about the effectiveness of that help.

Governments frequently lack the capacity to handle growing help packages at the national level. And they fight with the political responsibilities that the new political conditions demand.

In August, Kiribati also closed its borders to officials until 2025 to let the new state “breathing space” to attend to domestic politics.

In the past, Australia’s economic aid included institutional support and management. However, a significant portion of development aid is then geared more toward defense and policing.

Australia just committed A$ 400 million to the Pacific Policing Initiative, on top of a host of different security-related activities. This is all a part of a general increase in the so-called “defense diplomacy,” which has caused some observers to condemn the democratization of help at the cost of the Pacific’s most vulnerable people.

Lack of great belief

In addition, some political parties in the Pacific region operate largely unofficially and without complete plan manifestos. Most institutions lack political departments for examining foreign policy.

The end result is that small scrutiny can be given to international policy and security arrangements because they can get driven by personalities rather than by policy priorities. Pacific regions are even susceptible to corruption, as outlined in Transparency International’s 2024 Annual Corruption Report.

Executive Director of Transparency Solomon Islands, Ruth Liloqula, wrote about the effects of the Solomon Islands ‘ political conflict:

Since 2019, my country has become a center for political tensions and unusual disturbance, and undue effect.

Also, Pacific affairs specialist Steven Ratuva has argued the Australia–Tuvalu arrangement was one-sided and showed a “lack of great faith”.

Behind these developments, of course, lies the evolving AUKUS security pact tying together Australia, the US and the United Kingdom, a response to growing Chinese presence and influence in the” Indo-Pacific” region.

The responses from the Pacific countries have been political, perhaps because they cannot “rock the submarine” very much given their relationships to the major powers at play. But past Pacific Islands Forum secretary-general Meg Taylor has warned:

Pacific leaders needed to start raising their voices for the sake of their fellow citizens because they were being sidelined by significant political decisions affecting their place.

While there are clear benefits associated with strategic alliances, the substantial effects for Pacific countries are still incomprehensible. Not a second target is on record to be accomplished by 2030, according to the UN’s Asia and the Pacific progress report on sustainable development goals.

Unless these alliances are grounded in great faith and real sustainable development, the grass effects of geopolitics-as-usual may never change.

Sione Tekiteki is a senior teacher at Auckland University of Technology’s Faculty of Law.

This content was republished from The Conversation under a Creative Commons license. Read the original post.

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Trump 2.0: Asia in a highly risky place in America’s inflation era – Asia Times

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As Asia brackets for the fantastic” Trump business” experience of 2025, the instructions from 2024 are fast piling up.

The biggest session is how badly the inflation-is-transitory deal worked out for buyers. And for citizens and earth officials who don’t appreciate a Donald Trump 2.0 president.

The&nbsp, US prices surge has some parents — from post-Covid supply chain disruptions to exceptionally low interest rates to an blast of over-the-top state signal. But Trump’s election is the mother-of-all part results from fiscal and monetary laws run rampant.

And Asia has the greatest front-row seats for what’s to come as Trump retakes the ropes with really big — and&nbsp, questionable — programs.

The Trump-to-be-war is the subject of the most attention. But far more attention should be on the fireworks sure to come as Trump ‘s&nbsp, policy promises&nbsp, meet with a fiscal train wreck unfolding in slow motion.

On January 20, Trump did gain a federal loan exceeding US$ 36 trillion. And depending on which columnist you follow, Trump may be about to axe the debt in significant ways with huge tax cuts, or given the enormous knife Trump has given Elon Musk, to aggressively reduce it.

Which result might result in significant risks for world markets.

Door No. One could see payment rating companies stumbling over US debt as US debt rises to US$ 40 trillion. Washington was quickly lose its final Premium standing, from Moody’s Investors Service. Asia is directly at the center of the conflict that a downgrade may cause in the world’s relationship, stock, and money markets.

Door No. 2 may see Trump’s Tesla tycoon patron trying to trim&nbsp, national spending&nbsp, by firing government workers here and there. However, Musk’s state performance product won’t make a gash until Team Trump is ready to attack the military and privileges like Social Security, Medicare, and Medicaid.

Deregulation and excessive grants for sectors like Musk’s private businesses would have much more success. A lack of funding in productivity-boosting industries and technologies made the US so vulnerable to inflation.

” With Trump and some good appointees focused on reducing diplomatic deficits”, says Andrew Tilton, &nbsp, an analyst at Goldman Sachs,” there is a danger that — in a sort of’ whack-a-mole’ way — burgeoning bilateral deficits was eventually fast US tariffs on another Asian economies”.

Tilton adds that” Korea, Taiwan and, particularly, &nbsp, Vietnam&nbsp, have seen big trade benefits versus the US”, things Trump 2.0 isn’t possible to let slip. As such, Asia’s leading trading nations does try to narrow surplus to “deflect” Team Trump’s focus away from them.

According to Barclays Bank analyst Brian Tan,” business plan is where Mr. Trump is likely to be most significant for emerging Asia in his second word as US leader,” inflicting “greater pain” on more empty economies.

Suffice it to say, America’s debt excesses also will challenge — and most likely plague — the Trump 2.0 era in ways the president-elect doesn’t seem to realize.

If ever there were a buckle-your-seatbelt moment for Asia, 2025 is it. The combination of runaway debt and inflation will limit the Federal Reserve’s ability to continue&nbsp, cutting rates. And even if Fed Chairman Jerome Powell tries, fiscal realities will result in higher-than-hoped long-term rates.

The state of the banking system is one of the pressing concerns of the Fed. Banks have been huge buyers of Treasury securities. If medium and long-term government debt yields fall faster than expected, will institutions experience stability issues?

This could trigger supply issues, too. If interest rates move too low or move too quickly, is it reasonable to ask if banks can continue to buy Treasuries?

According to Yanmei Xie, an economist at Gavekal Dragonomics, one of Asia’s issues is that it’s unclear who Trump will be in the White House in roughly a month.

The issue with interpreting trade policy in a second Trump administration is that Trump has publicly supported both positions and that Trump has publicly stated his views on them. The common feature is tariffs or the threat of tariffs: 60 % or more on China and 10-20 % on the&nbsp, rest of the world. But to what end?”

One possibility, she says, is that Trump will go with his once and possibly future trade czar, Robert Lighthizer, in pushing for a rapid, across-the-board disengagement from China.

Trump,” Xie says,” promised a four-year plan to phase out all imports of essential goods from China, including everything from electronics to steel to pharmaceuticals, and pledged to include strong safeguards to prevent China from bypassing restrictions by passing goods through conduit nations. In this scenario, there would be a ramping-up of coercive pressure on allies to join in the&nbsp, anti-China&nbsp, agenda.”

Trump might also use the threat of tariffs as leverage to strike a deal with China, despite the content of any such deal being very uncertain. This is the approach favored by Scott Bessent” – Trump’s pick for Treasury secretary –” who claims that Trump is in fact ‘ a free trader ‘ who will deploy tariffs to escalate to&nbsp, de-escalate,” Xie notes.

Another major Trump wild card is a US dollar devaluation, which many Trump advisers see as the fastest way to regain broad-based manufacturing competitiveness.

” China is unlikely to cooperate with this agenda,” Xie says”, but the theory of the across-the-board tariff on all trading partners seems to be that it will also be used as leverage in currency negotiations.”

Trump has in fact mentioned a Plaza Accord 2.0, which lowers the dollar against the yen.

In 1985, US President Ronald Reagan’s Treasury secretary, James Baker, managed to convince the most powerful industrialized nations to push the yen sharply higher and the dollar lower. It was the high-point of Reagan’s mercantilist policy mix, which inspired Trump. The Plaza Hotel, a landmark hotel in New York that Trump once owned, was the location of the transaction.

When Trump was in office, advisors like Peter Navarro and then-Treasury Secretary Steven Mnuchin made hints about Trump’s desire for a “new Plaza Agreement” that would send the Chinese yuan into a soaring range. Now, as&nbsp, Trump 2.0&nbsp, gears up, Trump seems ready to give the strategy another try.

Xi Jinping, the Chinese leader, would undoubtedly reject. Chinese officials are aware of how the 1985 currency deal caused Japan’s asset bubble in the late 1980s, which resulted in decades of economic stagnation. A stronger yuan would slam China’s crucial export engine, but many economists worry that a weaker dollar might cause inflation to go into the stratosphere.

One way Trump might try to engineer a weaker dollar is by commandeering&nbsp, Fed policy&nbsp, decisions. Trump and his advisers have made it clear that in January, the Fed’s independence will be in jeopardy. The” Project 2025 “scheme that Republican operatives cooked up for Trump 2.0 includes curbing the Fed’s autonomy.

Jerome Powell, Trump’s handpicked Fed chairman, had a challenging time during Trump 1.0. From 2017 to 2021, Trump cajoled Powell’s team with a verve never before seen from a White House. Trump attacked the Fed in speeches, press conferences and on social media. Trump even mulled firing Powell. That year, the Fed suddenly began cutting rates, adding liquidity to an economy that didn’t need it.

In October, Trump mocked Powell’s policymaking team”. I think it’s the greatest job in government,” Trump told Bloomberg”. Everybody talks about you like a god when you say, “let’s say flip a coin,” and you show up to the office once a month.

Trump also contends that presidents have the authority to compel the central bank to do their bidding. Trump said in August that the Federal Reserve is a very interesting thing and that it has sort of gotten it wrong frequently. He added that” I feel the president should have at least say in there, yeah. I feel that strongly. I think that, in my case, I made a lot of money. I was very successful. And I believe I have a better sense of instinct than those who, in many cases, would be chairman or the Federal Reserve.

Such maneuvers are of particular concern in Asia, where central banks have the largest stocks of US Treasury securities. Japan alone holds US$ 1.1 trillion of US debt, &nbsp, China&nbsp, US$ 770-plus billion. The largest investors in Asia have approximately US$ 3 trillion worth. Many pieces of Asian state wealth could be in danger as a result of Trump’s 2.0 presidency.

Trump’s antics here could send the dollar sharply lower. Many investors argue, of course, that continued dollar strength isn’t necessarily great news for the global financial system heading toward 2025 either. In recent years, the dollar’s “wrecking ball” tendencies have shook global markets. It sucked up outsized waves of global capital, disadvantaging emerging economies in particular. &nbsp,

When Tom Dunleavy, a partner at MV Capital, states that the risks posed by this wrecking ball dynamic are “particularly acute in emerging markets because” they rely heavily on commodities and have debt in dollars, he speaks for many. ” Oil, most trade and debt are still priced in dollars. And, he says”, The denominator of everything is going up.”

Regardless of the dubious logic behind it, the more crowded a continued-dollar-strength trade becomes, the worse the global fallout when depressed punters flee for the exits. If Trump’s Treasury team works to devalue the dollar, the U-turn could be particularly chaotic. The more chaotic a maneuver becomes the more inflationary it turns out to be.

Economists including former US Treasury Secretary Larry Summers are warning that Trump would be wise to abandon his campaign promises, in order to avoid sending&nbsp, inflation&nbsp, sharply higher. &nbsp,

Summers was right about US inflation being of the longer-lasting variety. Now, he worries that Trump’s plans to impose giant tariffs, cut taxes, deport undocumented workers and mess with the Fed’s mandate will boost inflation.

According to Summers,” If he sticks to what he said during his campaign, there will be an inflation shock that will be far greater than what the nation experienced in 2021.”

Summers worries that the upcoming Trump stimulus may bring prices down to the nine-decade high of 9.1 %, which was recorded in June 2022. In 2025, US inflation almost certainly will rule the world economy, even if this proves to be too pessimistic.

According to Kelvin Wong, senior market analyst at broker OANDA,” the incoming Trump administration’s ‘ America First ‘ policy may see a further escalation of deglobalization that could lead to headwinds to global economic growth and spurt another round of inflationary pressure resurgence.”

Wong points out that Trump’s mercantilist policies may cause the 10-year US Treasury yield to increase faster than the 2-year rate because of higher inflationary pressures.

Far from being transitory, US inflation may be about to get a very powerful second wind, one sure to blow Asia’s way early and often in 2025.

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Asia’s bond outlook upbeat for issuers in 2025: JP Morgan | FinanceAsia

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A combination of lower interest rates, lower failures, and more securities is good for businesses and governments looking to enter Asia’s bond market in 2025.

There are hopes for Asia’s tie business next year to beat 2024 which is expected to hit$ 160-165 billion in 2024 for Asia, ex-Japan. There is a lot of willingness from banks to provide in the area as issuers prepare to enter the market, which is helping to keep extends small.

Speaking at an early December press presentation in Hong Kong, Jessica Chen, head of China DCM, creation Asia ex-Japan, JP Morgan:” General spreads are small and look extremely attractive to issuers. In 2024, China is expected to overtake Korea in terms of release ( from 2023 ) as the country’s largest business”.

Chen added:” We are expecting$ 170 billion of supply in 2025 in Asia, ex Japan with stockpile to pick up over 2024. We anticipate that this pattern will continue as some businesses mortgage next year.

Another positive factor is that regional relationship failures are declining, and that the US Fed will cut interest rates even further in the coming year. &nbsp, &nbsp,

Soo Chong Lim, managing director, head of Asia credit research, JP Morgan, said:” Bond default rates declined to around 4.4 % in 2024 compared with 17 % in 2023, and we expect them to decline further to 3 % in 2025″.

Despite falling interest rates in the US, anticipation are mixed regarding home bonds and the potential for some headwinds. &nbsp,

Lim added:” We expect three]US Fed ] rate cuts in 2025 and China’s GDP to grow 3.9 % next year. There will still be market volatility, particularly for the Chinese real estate sector, which is recovering slowly after a number of years of volatility. For instance, in Hong Kong, the company occupancy rate will continue to decline as a result of the supply that enters the market.

In 2024, India – probably Asia’s best performing market– had a very powerful yr for bond issuances, a trend that is set to remain in the new year.

Puja Shah, head of Southeast Asia ( SEA ), DCM and sustainable finance Asia ex-Japan, JP Morgan, said:” The high yield bond market in India was a particular bright spot in 2024 with some large names coming onto the market. It is at$ 4.7 billion YTD, and we expect that momentum to continue into 2025 with around$ 5 billion in supply”.

The issuing of green bonds is expected to increase as well. Singapore-based Shah added:” We expect stable demand, at between 25-30 % of issuances, for sustainable ( green and social ) bonds next year in the region, compared with 25 % in 2024″.

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PM2.5 dust crisis drains city economy

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Dirty weather bill reaches significant B400bn/year

PUBLISHED: 17 Dec 2024 at 04: 46

Thick dust blanklets Bangkok in November. (Photo: Nutthawat Wichieanbut)
Thick sand blanklets Bangkok in November. ( Photo: Nutthawat Wichieanbut )

According to a recent conference, Bangkok experiences annual economic costs of over 400 billion ringgit as a result of air pollution, particularly fine particulates less than 2.5 microns or PM2.5.

One of the topics covered at the National Health Commission Office lecture to mark the 17th National Health Assembly was the estimated expenses of the city’s waste. The event featured panel discussions, including one on” Innovative Market for Clean Air Management”, an exchange of views among the private sector, academia and local societies.

Assoc Prof Witsanu Attavanich, a teacher from the Faculty of Economics at Kasetsart University, said the government’s main focus may be fostering a innovative business by adopting the Bio-Circular-Green Economy (BCG) unit for sustainable development.

The BCG design covers bioeconomy, which enhances the value of natural resources, round economy, which maximises resource efficiency and longevity, and natural economy, which promotes socioeconomic development by ensuring the sustainability of resources and the environment.

Assoc Prof. Witsanu argued that air pollutants may be addressed because it was both an environmental and economic concern.

The World Bank estimates the global cost of ill health due to air pollution amounts to US$ 8.1 trillion ( 273.5 trillion baht ) annually, equivalent to 6.1 % of global gross domestic product ( GDP ) last year.

Also, research on air pollutants found the amount of PM2.5 in Bangkok for one year lasts approximately 6-7 times, not just a couple of weeks as generally thought. He claimed that Bangkok alone incurred 400 billion baht annually as a result of PM2.5. ” The next in line suffering adverse effects from pollution are Chon Buri, Nakhon Ratchasima, Chiang Mai, and Khon Kaen”, he said.

Assoc Prof. Witsanu suggested using His Majesty King Bhumibol Adulyadej The Great’s royal wisdom to plant trees in accordance with the BCG concept for clean air management in order to promote economic development.

He claimed that this could be done in addition to promoting carbon credits in the public sector and supporting a circular economy by reducing the use of waste materials to produce additional benefits to generate income.

He suggested that steps should be taken to give farmers access to affordable, modern machinery. This would lower household debt and help farmers increase yield per rai, increasing household debt.

Panitarn Pavarolavidya, deputy secretary-general of the Federation of Thai Industries (FTI), proposed using a hybrid automatic city air purification tower called Fah Sai ( clear sky ).

He claimed that an air purification tower for the Fah Sai should purge up to 60 000 cubic meters per hour. The system has the ability to kill bacteria in both air and water. A tower should be simple to install and can be placed anywhere. He claimed that the machine costs between 3 and 5 million baht, which is reasonable in comparison to the social costs Bangkok residents must pay.

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India already has 1.45 billion people. Why does it want more children?

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AFP Indian Hindu devotees gesture before attempting to form a human pyramid in a bid to reach and break a dahi-handi (curd-pot) suspended in air during celebrations for the Janmashtami festival, which marks the birth of Hindu god Lord Krishna, in Mumbai on August 18, 2014AFP

Last month, India nudged earlier China to become the world’s most populous state, according to UN projections.

With almost 1.45 billion people today, you’d think the country may be silent about having more children. But suppose what? The conversation has unapologetically gotten loud.

Andhra Pradesh and Tamil Nadu have lately made child advocates for both of the southern states.

Andhra Pradesh is mulling providing incentives, citing low fertility rates and ageing population. The state also scrapped its “two-child policy” for local body elections, and reports say neighbouring Telangana may soon do the same. Next-door Tamil Nadu is also making similar, more exaggerated, noises.

India’s reproduction rate has drastically decreased, from 5 births per woman in 1950 to the current two-birth level.

In 17 of the 29 states and territories, fertility prices have fallen below the replacement rate of two births per person. ( A replacement level is one where a population level of one is sufficient to support a stable population. )

The five southwestern Indian state lead India’s demographic change, achieving replacement-level reproduction well ahead of people. Kerala reached the breakthrough in 1988, Tamil Nadu in 1993, and the rest by the mid-2000s.

Getty Images Newly born babies rest inside a ward on the occasion of World Population Day at Government Children's Hospital in Chennai.Getty Images

Karnataka and Tamil Nadu, the five southern state, each having a reproduction rate of less than 1.6 and Tamil Nadu, the other two. In other words, these claims have lower fertility rates than many other European nations.

However, these states worry that India’s shifting demographics, which vary in community levels between states, does have a significant impact on parliamentary seats and federal revenues.

They fear being punished for their powerful population control measures, despite being better monetary performers and making a sizable contribution to national revenues, according to Srinivas Goli, a teacher of demography at the International Institute for Population Sciences.

Southern states are also grappling with another major concern as India prepares for its first delimitation of electoral seats in 2026 – the first since 1976.

This workout will redraw political boundaries to reveal population shifts, good reducing political seats for the financially developed southern states. Many people worry that this will cause their financial problems and restrict the ability to make decisions about federal funding because position groups are allocated.

Demographers KS James and Shubhra Kriti project that populous northern states like Uttar Pradesh and Bihar stand to gain more seats from delimitation, while southern states such as Tamil Nadu, Kerala, and Andhra Pradesh could face losses, further shifting political representation.

Many, including Prime Minister Narendra Modi, have hinted that changes to fiscal shares and parliamentary seat allocations will not be rushed through.

Getty Images An elephant bearing the red triangle symbol of the Lal Tikon Fund to publicise birth control and family planning, enters a village to spread the news and offer informationGetty Images

” As a et, I don’t believe claims may be unduly concerned about these issues. According to Mr. Goli, they can be resolved through fruitful agreements between the federal and state governments. ” My issue lies somewhere”.

The crucial challenge, according to practitioners, is India’s fast age driven by declining fertility rates. India is expected to reach this milestone in just 28 years, according to Mr. Goli, while countries like France and Sweden took 120 and 80 years, respectively, to double their aging population from 7 % to 14 %.

This accelerated age is related to India’s unique ability to reverse a decline in reproduction. In most places, improved living requirements, training, and urbanisation normally lower fertility as baby survival improves.

But in India, reproduction rates fell fast despite modest socio-economic improvement, thanks to violent family welfare programmes that promoted little families through targets, incentives, and disincentives.

The unintended consequence? Take Andhra Pradesh, for instance. Its fertility rate is 1.5, on par with Sweden, but its per capita income is 28 times lower, says Mr Goli. With mounting debt and limited resources, can states like these support higher pensions or social security for a rapidly aging population?

Consider this. More than 40% of elderly Indians (60 years) belong to the poorest wealth quintile – the bottom 20% of a population in terms of wealth distribution, according to United Nations Population Fund (UNFPA)’s latest India Ageing Report.

In other words, Mr Goli says,” India is getting older before getting rich”.

Fewer children even indicate a rising age dependency ratio, which means fewer caretakers for an expanding elderly population. Practitioners warn that India’s care, community centres and old-age homes are ready for this change.

Getty Images Elderly women at Pramod Talukdar Memorial Old Age Home light Diya oil lamps as they celebrate Diwali in Guwahati, India, on November 1, 2024Getty Images

Urbanisation, migration, and changing labour markets are more eroding classic family support- India’s solid point- leaving more elderly people on.

While migration from populous to less populous states can ease the working-age gap, it also sparks anti-migration anxieties. ” Robust investments in prevention, palliative care, and social infrastructure are urgently needed to look after the ageing”, says Mr Goli.

As if the southern states’ concerns weren’t enough, earlier this month, the chief of the Hindu nationalist Rashtriya Swayamsevak Sangh (National Volunteers’ Organisation), the ideological backbone of Mr Modi’s BJP – urged couples to have at least three children to secure India’s future. “According to population science, when growth falls below 2.1, a society perishes on its own. Nobody destroys it,” Mohan Bhagwat reportedly said at a recent meeting.

While Mr Bhagwat’s concerns may have some basis, they are not entirely accurate, say demographers. Following a decade or two of declining population, Tim Dyson, a demographer at the London School of Economics, predicted that if people continued to have “very low levels of fertility,” they would experience” shortening population decline.”

A fertility rate of 1.8 births per woman leads to a slow, manageable population decline. But a rate of 1.6 or lower could trigger “rapid, unmanageable population decline”.

Arun chandra bose Kerala schoolArun chandra bose

” Smaller numbers of people will enter the reproductive- and main working- ages, and this will be socially, politically and economically disastrous. According to Mr. Dyson, this is a demographic process that is extremely challenging to reverse.

This is already happening in some countries.

In May, South Korean President Yoon Suk Yeol declared the country’s record-low birth rate a “national emergency” and announced plans for a dedicated government ministry. Greece’s fertility rate has plummeted to 1.3, half of what it was in 1950, sparking warnings from Prime Minister Kyriakos Mitsotakis about an “existential” population threat.

Demographers contend that it is pointless to encourage more children. This trend is unlikely to change, according to Mr. Dyson, given the societal shifts that have occurred, including the significant reduction in gender disparities as women’s lives have become more and more similar to those of men.

For Indian states like Tamil Nadu and Kerala, grappling with a declining workforce, the key question is: who will step in to fill the gap? Developed nations are focusing on healthy and active ageing, prolonging working life by five to seven years and increasing productivity in older populations, unable to reverse declining fertility.

Demographers say India will need to extend retirement ages meaningfully, and policies must prioritise increasing healthy years through better health screenings, and stronger social security to ensure an active and productive older population – a potential “silver dividend”.

India must also leverage its demographic dividend better- economic growth that occurs when a country has a large, working-age population. Mr Goli believes there’s a window of opportunity until 2047 to boost the economy, create jobs for the working-age population, and allocate resources for the ageing. ” We’re only reaping 15-20 % of the dividend- we can do much better”, he says.

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Hospital stops taking 30-baht patient referrals

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Discussed: 16 Dec 2024 at 04: 54

Maj Gen Dr Riengthong Nanna
Maj Gen Dr Riengthong Nanna

To help with financial losses, Mongkutwattana Hospital has stopped accepting inpatient referrals under the general protection healthcare card, or silver card scheme.

Maj Gen Dr Riengthong Nanna, the patient’s director and landlord, said the doctor stopped receiving silver card clinics from past Friday. The National Health Security Office ( NHSO ) runs the program, which produces the cards.

He claimed that since March, the NHSO has broken its commitment to pay outstanding debts incurred in referred inpatient cases. The total value is 44 million ringgit. ” If Mongkutwattana Hospital continues to offer solutions to the referred clinics, we may not be able to survive”, he said, adding the doctor had a similar issue in 2020, running up a bill of 13.2 million baht. The Administrative Court heard from the hospital at the time about the NHSO.

Because there hasn’t been any improvement in the case, the doctor has decided to turn away patients from clinics that refer patients until they pay or until the NHSO has made its debt payments, he said. He added that the hospital’s deal with NHSO may expire next year.

The NHSO, but, insists it is not in debt to the doctor. Atthaporn Limpanyalert, assistant secretary-general of the NHSO and NHSO spokeswoman, said NHSO has a resources to give facilities. But, in the case of Mongkutwattana, the situation is complicated.

The second debt, which was Mongkutwattana Hospital’s referring doctor, is a 13.2 million baht outstanding debt. However, the patient’s deal with the NHSO was scrapped to an inappropriate budget allocation in 2020.

The doctor no longer has a budget because it no longer has a contract with the NHSO. The NHSO is not required by law to use the National Health Security Fund to pay the bills of referring institutions ‘ private hospitals. Due to ongoing inquiries into outpatient data in Bangkok, the NSHO has yet to spend Mongkutwattana Hospital for another 44 million bass block of debt.

Some clinics have requested a review of$ 2.1 billion in payment data. A key reimbursement funds worth 1.2 billion baht is currently being investigated. He said the NHSO may delay the settlement of both expenses until the work is finished.

For these reasons, Dr Atthaporn said, payment to the referring doctor cannot been made for today. The NHSO table, however, approved an advance payment to the doctor and approved a transfer of 60 million baht to Mongkutwattana Hospital on November 6 to address the patient’s cash issue.

The NHSO does ask another facilities to accept people for more care in the event that Mongkutwattana Hospital stops offering outpatient referral services, such as Chulabhorn Hospital and Phaet Panya Hospital.

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Loan shark targets ministry canteen

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PUBLISHED: 15 Dec 2024 at 17: 35

Police arrest the two suspects on Saturday. (Police photo)
Authorities assault the two suspects on Saturday. ( Police photo )

According to the Crime Suppression Division, two people were detained on Sunday in the Ministry of Culture’s Huai Khwang district’s meal court for loansharking. &nbsp,

Authorities were informed by spies that some vendors at the foods court are debtors to a group known as” Toh Flash &amp, Fluke,” who gave money with 20 % interest, according to CSD key Pol Maj Gen Montree Theskhan. During lunch breaks, the group’s debt collectors frequently threatened the contractors, saying they were afraid of the police because they claimed to be” well connected.”

Two people connected to the crew were detained on Saturday at the food judge. They claimed to be collecting money to pay off a loan shark called” Gram” ( Gram ). Authorities will increase the research.

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