Is Donald Trump anti-fragile 1
Nobody grabs the dollar
contentRead on one side
The hedge fund manager and author Nassim Nicholas Taleb has described these two strategic approaches as "anti-fragile" and "fragile": "Fail almost" and "be foolish"That was the motto of the California boom years after 2008. Internet companies profited from disorder and uncertainty, they were prepared for their own failure and could therefore take the risk to produce systemic shocks. In contrast, New York stock exchange managers had to admit in 2008 that their elaborate calculations to minimize risk were for the bin. They were not prepared for the one unlikely event, the black swan of a systemic financial crisis.
There is a reason why uncertainty is currently working to the advantage of Donald Trump's America, which can also be described in game theory. Trump is about to blow up the old world order, in world trade and in foreign policy he is changing the rules. Or better: He cancels every rule. The opinion is widespread among former partners that this should not be offered. Canada will not be "pushed around" by the USA, that was the statement by Justin Trudeau, which angered Trump after his departure from the G7 summit, and in Germany, too, the opinion is prominent that one must "bring Trump to his senses" by it is met with gestures of strength.
Show strength against the stronger?
This may seem necessary as a political stance, but whether it will work as a strategy is at least questionable. By breaking old alliances, Trump creates negotiation situations in which he is the most powerful player at the table. In game theory, positions with the largest market share are usually assigned a disproportionate share of power. For example, Germany only represents 16 percent of the total population and 20 percent of economic output in the European Union. Nevertheless, nothing works without Germany because it is almost impossible to get something done against the will of the greatest player.
In the areas of conflict in which Trump has been the loudest and most erratic in recent weeks - in the trade dispute with the European Union and especially Germany, in the negotiations with Kim Jong Un - he is always the biggest player. If there were to be a war with North Korea, Kim Jong Un would have to be sure of the extensive destruction of his country. It could likely attack its immediate neighbors in return, but whether a North Korean weapon would actually reach America is not certain. The greatest fragility in relation to the disruptive event "war" lies in North and South Korea; Trump can afford accordingly high stakes. Maybe he's delivering embarrassing free propaganda to Kim Jong Un. But perhaps he will also succeed in denuclearization, which all his predecessors in office failed to achieve.
The dollar is the bank
It is not entirely dissimilar in the trade conflicts with Germany or China. The volume of goods from the Federal Republic on which the USA could theoretically impose import duties was 118 billion euros in 2017. In return, the USA exports goods worth 53 billion euros to Germany. The Ifo Institute has noted that the US current account is almost balanced if you apply it to the entire EU and include services. In order to use this pound in the conflict, Europe must act as one. With a view to internal European interests, this may not be completely impossible, but it is always associated with coordination efforts. After years of internal competition, the European economy has differentiated itself. Germany is an industrial location, the Netherlands, Malta, Ireland and Luxembourg offer American digital companies favorable conditions, and France is strong in services and luxury goods. The economic interests differ accordingly.
The USA has the most powerful weapon in the event of a disruptive trade war: the dollar. Trump can, as Yanis Varoufakis described again last week, go into virtually unlimited debt without the markets punishing him for it - simply because the USA is the largest economy and because the Fed would never oppose its own president. In theory, the EU could counterbalance this. However, since the euro is designed as a common currency without joint debt, that does not work. As long as the dollar is the currency that no economic region can do without, America has the bank. And betting against the bank is complicated.
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