The G-7 Will Be a Seminar in Anger Management: Mark Gongloff

June 8, 2018, by Mark Gongloff

(Bloomberg)

Welcome to Bloomberg Opinion Today, an afternoon roundup of our opinions on business, politics, markets, technology and more. New subscribers can sign up here.

Today’s Agenda G-6 leaders must figure out how to handle Trump. China’s the likely winner of the Trump-Kim summit. The economy’s not in trouble … yet. Those “gig economy” fears were overblown. ICYM

RIP Anthony Bourdain. The “witch hunt” found more witches. The president may help speed the legalization of weed.

G-7-Minus-1

Parents know managing a tantrum is a choice between resisting or capitulating to the tantrum-thrower’s unreasonable demands. Give in, and you only encourage more bad behavior. Fight, and you risk ruining everybody’s day.

The leaders of the “G-6” – Canada, France, Germany, Italy, Japan and the UK – will get a taste of this dynamic at this weekend’s Quebec meeting of the G-7 (those six, plus the U.S.). They have to figure out how to deal with a President Donald Trump who is showing zero signs of summit enthusiasm:

He’s not looking forward to getting together, and plans to leave early; He’s eager to rip up trade deals that have stood for years; He’s expressed regret that serial bad actor Russia isn’t joining. (It was ejected in 2014 for annexing Crimea.)

Mohamed El-Erian writes the G-6 leaders face parent-like choices. Do they indulge Trump’s trade fit in order to coax a little U.S. cooperation on other, more important global issues, including the Iran deal he broke? Or do they stand on principles, isolating Trump but making little or no progress elsewhere?

Bloomberg’s editors suggest the G-6 hold firm with Trump in private and be somewhat accommodating in public. That could help him save face, avoid completely fracturing the G-7 and buy some time for other, natural pressures to cool off Trump’s trade anger. After all, to paraphrase Emmanuel Macron, Trump won’t be president forever (right?). And just as tantrums eventually pass, the inexorable, tectonic movement toward ever-freer global trade will outlast him and his tariffs, writes Tyler Cowen.

Bonus trade-war reading:

Jonathan Bernstein on why Congress ceded the power over trade policy to the president. Meghan O’Sullivanon the trade spat’s silver lining for Canada. Trump-Kim Summit’s Likely Winner: China

Trump may not be preparing for next week’s summit with Kim Jong Un – unless you believe his claim that he has been preparing all of his life – but China sure is. James Stavridis writes that, while Trump and Kim play sluggish checkers, China is playing the complex game of Go. Its goals are very long-range – say, 200 years – and it seems to be out-strategizing Trump. Already its ZTE Corp. has gotten off outrageously easily for repeatedly flouting U.S. law, notes Tim Culpan. One big risk is that Trump, in his eagerness for a deal, any deal, caves not only to North Korea but to China, too.

At least Dennis Rodman will be there.

Econopocalypse Not Now

I’ve written before about how the long economic expansion that began back in 2009 may be nearing the end of its shelf life. Noah Smith takes a deeper dive into the indicators and sees no signs of an imminent collapse – though there’s evidence we could get a slowdown (or a Wile E. Coyote-style cliff-plunge?) by 2019 or 2020.

One typical sign a recession is coming is when the Treasury yield curve inverts – meaning short-term rates are higher than long-term rates. We’re not quite there yet. But Tim Duy warns the Federal Reserve might just keep raising short-term rates even if we do get there.

At the very least, Mark Whitehouse notes U.S. companies are definitely using the new tax laws to bring cash home from overseas. We’re just not sure how much is getting pumped into the economy yet:

So Much for the Gig Economy

One perk of being at or near full employment is that it’s easier for people to get full-time jobs with benefits. That might explain why — despite gallons of ink and tears spilled about the rise of the “gig” economy – the percentage of Americans in “alternative work arrangements” is lower than it was in 2005, points out Justin Fox:

Chart Attack

Connecticut could be the next muni-market blowup, warns Brian Chappatta.

Luxury brands are smart to put rich millennials in charge of their digital operations, writes Andrea Felsted.

“Putting Deutsche [Bank] and Commerzbank together would go some way towards creating a German champion, but it’s like strapping two turkeys together in the hope they’ll fly.” – Lionel Laurent

Weekend Reading

EPA chief Scott Pruitt’s days may really be numbered this time. – Ramesh Ponnuru

What if Robert Kennedy hadn’t been assassinated? – Jonathan Bernstein

Congress could easily create new ways to push Supreme Court justices to retire. – Stephen Mihm

Finding new uses for old drugs could help lower drug costs, but drugmakers are reluctant to fund such research. – Max Nisen

Want the risk, illiquidity and volatility of the art market but worry it doesn’t have enough risk, illiquidity and volatility? Just mix it with cryptocurrency! – Lionel Laurent

Governments are better off supporting carbon-capture technology than forcing mass electric-car adoption. – Leonid Bershidsky

Instead of banning plastic straws, we should put our energy into cleaning up abandoned fishing nets. – Adam Minter

Kickers

“Don’t Eat Before Reading This” – Anthony Bourdain’s 1999 New Yorker essay going behind the scenes of the restaurant business.

Life on Earth might have started much, much earlier than previously thought. (h/t Barry Ritholtz)

Maybe we can reverse global warming by turning air into gasoline.

When did reality TV become so monstrous and exploitative? “The Real World: Boston” is a good candidate.

Here’s why Fred Rogers (of “Mr. Rogers’ Neighborhood”) was so good at talking to children.