by Michael Every of RaboBank via Zerohedge
‘Lead balloon.’ That graphic description of public failure apparently dates from the US in 1924, and ironically was itself such a poorly-received idiom that it didn’t appear in the American press again until 1947. A few decades later, and the phrase was so well known that a derivative of it inspired one of the greatest rock bands of all time. Today, 99 lead balloons fill our sky.
To illustrate the point I don’t even have to look at headlines about the US-China trade war – though I could pick any number of them showing how serious this is getting, and how global the impact is likely to be. My favourite today contains a quote from a US semiconductor maker who states “We’re too far into free trade that the world cannot have countries not trading.” Sorry mate, 1913 called and wants its ‘Great Illusion’ back;indeed, reports are that China’s surveillance camera-maker Hikvision is next in the US firing line. Standing with me not on the side of the (Norman) Angells is Eli Lake writing for Bloomberg, who argues “The tech cold war has begun. To which I can only say: It’s about time. If this ban is just a bit of brinkmanship designed to pry a better trade deal out of Beijing, however, then it’s a blunder. The national security implications raised by Huawei’s technology transcend any trade dispute.” And while US tech is in the headlines, so is US farming, where federal subsidies are set to rise sharply to offset trade-war pain.
I could choose from a series of stories in Turkey, where the authorities are both trying to prop up the currency and cutting rates at the same time(?), as well as about to clash with the US and NATO allies again over their preferred choice of anti-aircraft defence system in a major way.
I could point to Italy, where Deputy PM Salvini is promising to change EU rules to allow a 15% flat tax, another Deputy PM Di Maio says tax cuts are coming in the 2020 budget, and former PM Getonlini argues a new election is needed.
I could point to Australia, where the RBA Governor has said he’s considering a rate cut in June and unemployment now needs to be BELOW 5.0% for him NOT to cut rates, making a mockery of all the “Jobs market is on fire wages up soon!” claims he’s been making, and I’ve been pooh-poohing, for so long. AUD still hasn’t quite sized that shift up yet, but if you think ‘one and done’ is enough to right this particular ship, you are in for a surprise.
But for a change, let’s go back to the UK and PM Theresa May. The May-bot, as she is sometimes referred to in the press, has just experienced yet another cataclysmic political circuit failure. The weeks she spent wasting precious time granted to the UK by the EU as a temporary Brexit extension, all the while infuriating her own party by sitting down with opposition Labour, and then not giving them what they wanted, came to naught – of course. May then tried a last-gasp Hail Mary to offer a watered-down compromise on a temporary customs union and a second referendum…but only if Parliament passes her Withdrawal Agreement (WA) in an early-June fourth-time-lucky vote. The PM succeeded…in uniting her fractured party and the House of Commons: everyone now wants her to go, and go now. Even MPs who backed her last time now say they will refuse to do so, and this morning there is so much vitriol from the Conservatives the WA may be dropped over the White Cliffs of Dover and May, who has tied the string to her wrist, will follow. Then comes a leadership election…and quite possibly PM Boris Johnson. It’s perhaps not a surprise that GBP is struggling to hold on to 1.27, and the intra-day low of 1.2441 seen back in January this year must surely be laying out the welcome mat and preparing for visitors.
But, sorry, I can’t stay away from China for long. Former British Governor Chris Patten has stated in an interview with Bloomberg that the proposed extradition law about to be steamrollered through Hong Kong’s Legislative Council would break China’s “One Country, Two Systems” and risk undermining the city’s rationale as an international trade hub – a cry the American Chamber of Commerce has publicly echoed. “If China starts to treat Hong Kong as though it was simply part of the mainland, as though it were Shenzhen or Shanghai, sooner or later the international community will be encouraged to think, well, in that case that Hong Kong ceases to be special,” says Patten, who states that the law would be the “worst thing” to happen to Hong Kong since 1997 – which will make him even more popular in Beijing.
For those not following this development, Patten says the proposed law removes the legal firewall between Hong Kong and China, with the former risking being subject to the Chinese “rule by law” system with “no real distinction between the courts, the security services and what the [Communist] party wants to happen.” Recall the US-China Economic and Security Review Commission annual review published in November 2018 already flagged the US should review its treatment of Hong Kong and China as separate customs areas for dual-use technology exports due to the “troubling” political trends there; against the current political backdrop might the US react to the extradition legislation’s passage by acting on that front? It’s an indication of places one conceives of as being true balloons suddenly looking ‘leaden’ due to this trade war.
Meanwhile, with the North Korea, Iran, and Venezuela situations all looking like they could burst at once, which really isn’t a coincidence at all, once again cheesy pop lyrics of the past hold worryingly prophetic wisdom.
Back at base, bugs in the software; Flash the message, “Something’s out there”
Floating in the summer sky; 99 lead balloons go by
99 lead balloons floating in the summer sky; Panic bells it’s red alert
There’s something here from somewhere else
The war machine it springs to life; Opens up one eager eye
Focusing it on the sky; As 99 lead balloons go by
99 Decision Street, 99 ministers meet; To worry, worry, super scurry
Call out the troops now in a hurry
This is what we’ve waited for; This is it boys, this is war
The president is on the line; As 99 lead balloons go by