American Bubble Economy | Opinion

Donald Trump has suspended US tariffs on imports of various countries in China to 10%. Investors collectively relieved. However, the last week’s events showed that the president was severe when promoting the interests of his political base at the cost of Wall Street. Its administration also promised to reduce the United States’s trade and economic deficits. Trump policies are an existential threat to the American Bubble Economy. As Japan invented three decades ago, there is no easy way.

The Bubble Economy means the financial sector disperses the real economy. Prices of assets are well infected and are disconnected from their underlying foundations. Companies are managed to increase financial performance instead of market share. As property prices go up, the surplus value replaces real savings. The bubble economy depends on the continuous increase in debt, which is mainly used for economic purposes and not investment. Credit growth also promotes business interests.

The United States meets that description. The cooperation of its economic, insurance and real estate sector for GDP has doubled since 1945, but the manufacturing sector has been reduced by more than half. In recent years, US actions have almost quoted a record high. At the end of last year, the overall wealth of houses is 5.7 times more than GDP, which is higher than its long -term average. Half of its long -term level of savings. Last year, the total Debt (private, public and financial) exceeded $ 100 billion, three times higher for American national income. Private capital companies and companies cost billions of dollars to rebuild shares and purchases, but business investment is very weak.

In the United States, capital tickets have contributed to the financial bubble. According to Federal Reserve data, foreigners currently have $ 57 billion of US financial assets. Purchases of US economic values ​​kept the yields of bonds and increased the prices of shares. Capital tickets have financed the enormous financial deficits of the US government. According to Husman Funds John Husman, these deficits promoted the total demand, directly and indirectly contributing to the record interests of the US companies.

The United States Bubble Economy has political problems. Its financial benefits are unevenly distributed. Home wealth is close to the historical maximum, but as the Treasury Secretary Scott Bes has pointed out, 10% of the most rich Americans have 88% of the United States, but 50% are in debt. In addition, the former coverage fund manager does not lead to a strong salary growth called “the most finished economy”. The establishment of the manufacturing industry is good for the benefit margins of companies, but hurt workers.

The bubble economy is inherently fragile. Debt does not continue to increase indefinitely faster than income. Soon or later, the tax deficits are required or the country breaks down. According to Begents, the United States is addicted to public expense. “Dealing period is required,” he said. Stephen Miran, President of the Council of Economic Advisors, believes that big capital tickets in the EU are constantly leading to overrated dollar, which is harmful to competitiveness and is responsible for its large trade deficits. The tariffs want to repel these pressures.

It was not clear that Trump or his financial advisers were trying to explode the financial bubble. But their actions are equivalent. As Julian Garan points out, Trump has taken the idea of ​​ending a long stress on workers in his last note, in his last note, which means that it has concluded decades of financial capital.

Participating in national income should increase at the cost of business purposes. Reducing the financial deficit can also harm business interests. Import tariffs and forced to make more companies in the US can increase the pressure on the results. If the benefits of companies are declining, the stock market, which has been historically quoted, is falling too much. Once capital gains have been replaced by losses, homes should save the amount of more and more depressed. A vicious circle replaces the bubble economy floating.

Richard Duncan of Macrowatch fears that reducing foreign demand for American values ​​will increase long -term interest rates in the United States. He is also concerned about the runs of the dollar as foreigners cut their US financial securities.

One particular advantage in issuing the World Reserve Currency is that the United States has been able to obtain heavy trade and economic deficits for a long time without losing market confidence. However, early this week, the United States Treasury Bonds have increased. The Bond Market Drop Trump administration has provoked the concern that the administration is facing its own “truss moment”, which refers to the vulnerable administration of the British Prime Main Street to the vulnerability of the Wall Street. The recent market refers to turbulence. In addition, the Japanese experience indicates that rebuilding the bubble economy is a difficult process.

In the second half of the 1980s, the real estate sector and the Japanese actions reached severe evaluations. Debt Shot and Financial Engineering have increased business interests. At the end of the decade, Tokyo politicians decided to change the course. The Bank of Japan has raised interest rates with the intention of puncturing the bubble. A senior officer Washington post “no harm to the real manufacturing economy. The earth and wealth will not be visible, but false.” This is an illusion. After the fall of Japan’s Bubble Economy, there have been many banking crises and economic growth for two “decades”. Earlier this year, according to UBS Global Returns Yearbook, the American stock market represented 64.4% of the total global value. Coincidentally, the Japanese stock market represents the same share of the MSCI EAFE index in 1988, which follows the evolution of the actions of the developed countries of Europe, the Middle East and the Asia-Pacific region. In the next decade, Japan’s weight in the reference index was reduced by more than two -thirds. Investors should be noted in American values.

The authors are columnists Reuters Breaking Views. Views are yours. The responsibility of the translation written by Pierre Longa Leblanc Fifodies.