Ransquawk

Goodbye Rex; You didn’t understand the rules

When people wonder at the way in which Donald Trump reached the position he has reached, yesterday’s summary dismissal of Rex Tillerson as Secretary of State should go some way to answering their questions.

Trump can be crass, objectionable, opinionated and domineering but above all he is ruthless.

He surrounds himself with very few acolytes and trusts even fewer. He doesn’t rely on loyalty as he understands, in his world, that commodity is cheap to buy and sell. The first year of Trump’s Presidency was perfectly illustrated by the way in which he disposed of his Secretary of State and installed his man in the role.

WASHINGTON, DC – MARCH 13: Outgoing U.S. Secretary of State Rex Tillerson makes a statement on his departure from the State Department March 13, 2018 at the State Department in Washington, DC. President Donald Trump has nominated CIA Director Mike Pompeo to replace Tillerson to be the next Secretary of State. (Photo by Alex Wong/Getty Images)

Trump has tried to play the diplomacy game and found he is not really any good at it. That means it must be the rules of the game that are wrong not the game itself. However, Tillerson proved to be even less sure of the rules than his boss. Toe the line, don’t criticize, do as you are told and be both psychic and informed in advance.

Can’t do it? Don’t take the job.

Tillerson time wasn’t the shortest ever at fourteen months, that honour went to James Blaine in 1881 who survived nine months.

Jean-Claude, tell us something we don’t know!

The President of the European Commission, Jean-Claude Juncker earns a little over Eur 300k per annum. I think those of us who pay (for now) his salary should be entitled to expect more from him than to state the obvious.

Yesterday, Mr Juncker told the European Parliament that the UK cannot expect things to stay the same when it eventually leaves the EU and that it cannot demand to be treated in a similar fashion to those choosing to stay under Brussels rule.

That is something we all know but why not try to be more creative particularly concerning the Irish Border Issue. There is no question of the United Kingdom remaining just that, United. Even the Scots voted for union!

Therefore, the fate of the Irish Republic is in the hands of Brussels.

Dublin can threaten to veto any agreement that creates a hard border but with Mrs May being dominated by the fiercely Unionist DUP that seems to be the most likely outcome.,

It is doubtful, unless there is an “underground” move that is being kept under wraps, that there will be a transition deal to put before the European Heads of Government Summit next week, so the UK should move onto the offensive.

Divide and conquer. Treat the parts of the EU separately. There will be several individual states that favour closer relationships. Spain and The Netherlands. have alluded to such an outcome already.

Cultivate and prosper!

Inflation; wherefore art thou?

Wasn’t it said years ago that when the global economy started to pick up, Central Banks in the developed world wouldn’t be able to raise rates fast enough to cope with inflation?

The debasement of the currencies of the U.S., UK and Eurozone would lead to inflation which would be uncontrollable. Germany still believes that and has models to prove it.

Today’s inflation data in the U.S. was lukewarm at best but at least should allow the Fed to hike rates three times this year. The ECB is going to resist any change in monetary policy for as long as possible no matter what the Bundesbank says. The German position is being gradually weakened by the fact that Banque de France Governor Francois Villeroy De Galhou is now favourite to succeed Mario Draghi despite it being Germany’s “turn”.

If I were a gambling man which I could be persuaded to be, I would say that the rest of the Eurozone will be terrified of Jens Weidmann becoming ECB President since being subject to a severely tight monetary policy could easily choke off any hopes of growth. Sr Draghi has been at great pains to ensure a level playing field for all members of the Eurozone and a German ECB President could easily rip up that playbook and start again.

 

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