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With global trade volumes in decline and with no end in sight calls for protectionism and tariffs grow. Particularly with Trump’s election win. It should be noted that a mercantilist style trade war has been going on with Asia for quite some time, first with the Japanese and now with the Chinese as both held their currency values down to stimulate exports so this is not new by a long shot. That said nobody wins trade wars and protectionism, including tariffs are a disaster as we demonstrated with the Smoot-Hawley Tarif act during the great depression.

I have always said that higher interest rates are a non-starter due to the record or near record levels of debt found in nearly all levels of society both public and private. With default and delinquency rates increasing markedly of late higher rates will prove a toxic mix for economic activity. As recent history has shown that even with emergency level interest rates we struggle to maintain anemic 2% annual economic growth. With mortgage interest rates tipping 4% panic in the real estate sector is growing rapidly as higher rates not only crimp affordability and sales they are also associated with lower prices as history repeatedly shows.


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