Latest news with #MarshallPlan
Irish Times
a day ago
- Business
- Irish Times
Like Nixon before him, Trump is weakening the dollar in a bid to correct the US's trade deficit
August 15th, 1971 was an auspicious day in global financial history. Then-US president Richard Nixon interrupted the evening broadcast of the US's most popular TV show – Bonanza – to announce the dollar (as a currency) was delinking from gold, a move that remade the global monetary system in an instant. The announcement effectively dismantled the Bretton Woods system that had prevailed since the end of the second World War. It had pegged the dollar to the value of gold (at $35 an ounce), with the rest of the world's currencies pegged at various (adjustable) rates to the dollar. Nixon's decision to detach the US currency from gold was driven by a simple anomaly in the global financial system. The US did not have enough gold to cover the volume of dollars in worldwide circulation. READ MORE [ Trump puts US dollar's role as dominant world currency up for grabs Opens in new window ] This meant the dollar was overvalued. It also meant the US was starting to run big trade deficits (on account of imports being cheaper and exports less competitive), something the country hadn't experienced since the 19th century. The overvalued dollar was also subject to speculative runs against it, which was undermining the country's foreign trading position. Without warning, Nixon jettisoned the Bretton Woods arrangement, ushering in a system of free-floating exchange rates that still prevails today. The move also exploded what many saw as the 'Marshall Plan mindset' whereby US economic interests seemed to chime with the economic interests of its allies in Europe and elsewhere. Despite the seriousness of the announcement, Nixon apparently fretted about the potential downside of alienating those addicted to the adventures of the Cartwright family, the fictional family upon which Bonanza was based. But his advisers convinced him that the announcement had to be decisive, reach the widest possible audience and go before the markets opened the following morning. Nixon, like Donald Trump, believed the overvalued dollar was hurting US exporters and workers and blamed the rest of the world for the US's predicament. As well as abandoning gold, he announced two other measures: a 10 per cent import tax (or tariff ), designed to force countries that had a trade surplus with the US to accept the adjustment; and a new system of price and wage controls aimed controlling inflation, which had begun to surge. The 'Nixon shock' – at it was called – was a unilateral attempt to devalue the dollar and rewire the US's trading relationships while maintaining US economic hegemony. The parallels with today and the so-called 'Trump shock' are striking. The Mar-a-Lago accord, the supposed blueprint to correct the US trade deficit through deliberate dollar weakening, is key to understanding Trump's disruptive economic agenda. The dollar has lost more than 10 per cent of its value against the euro, the pound and the Swiss franc since Trump came to office in January. Like Nixon, Trump believes the strong dollar has made local manufacturing uncompetitive, forcing the US to import more, leaving it dependent on foreign countries and lumped with big trade deficits. This has been amplified by what Washington sees as China 's unfair trade practices. Approximately five million 'well-paying blue-collar jobs' have been lost in so-called Rust Belt states, Trump's power base, since 2001, the year China joined the World Trade Organisation. Another problem feeding into this, in Trump's eyes, is the US role as global policeman and underwriter of European security, which leaves it with a large military expenditure, another driver of US deficits and debt. But where the Trump/Nixon comparison falls down is the country's current debt pile: $36 trillion and counting. This is tipping into an out-of-control zone and testing the limits of the US economy's reserve status. And it can't be simply blamed on the strong dollar or rigged trading relationships. It stems – in the main – from fiscal indiscipline, fuelled by several factors, including tax cuts under Trump's first administration. The 'forever wars' in Iraq and Afghanistan – estimated to have cost the US $8 trillion – similarly are not a function of the US's role as global policeman but part of the post-9/11 'neocon' agenda. In investment parlance, bonds hedge stock market risk. What that means in practice is that when stock markets drop, investors flee to safe-haven assets such as bonds. US bonds – known as Treasuries – are backed by the globe's strongest economy and are traditionally seen as the safest of safe securities. However, this relationship has begun to fracture. After Trump's 'Liberation Day' tariff announcement in April, stock markets nosedived but the yield on US bonds – essentially the US government's borrowing costs – which should have fallen as investors piled in, actually rose. Soured by Trump's tariff turbulence and his 'big, beautiful' tax Bill, which will add more debt to the pile, investors sold US bonds when, historically, they should have been buying them. In what was dubbed 'America's Liz Truss moment', the negative market reaction prompted an immediate U-turn in Washington. The US bond market used to be a boringly predictable segment of global financial markets, now it's a flashpoint. Like Nixon before him, Trump is attempting to use American economic might to bend the global economy to his will, but he is being hamstrung by the country's deteriorating financial situation.
Axios
3 days ago
- Business
- Axios
Behind the Curtain: An AI Marshall Plan
If politics and public debate were a rational, fact-based exercise, the government, business and the media would be obsessed with preparation for the unfolding AI revolution — rather than ephemeral outrage eruptions. Why it matters: That's not how Washington works. So while CEOs, Silicon Valley and a few experts inside government see AI as an opportunity, and threat, worthy of a modern Marshall Plan, most of America — and Congress — shrugs. One common question: What can we actually do, anyway? A lot. We've talked to scores of CEOs, government officials and AI executives over the past few months. Based on those conversations, we pieced together specific steps the White House, Congress, businesses and workers could take now to get ahead of the high-velocity change that's unspooling. None requires regulation or dramatic shifts. All require vastly more political and public awareness, and high-level AI sophistication. 1. A global American-led AI super-alliance: President Trump, like President Biden before him, sees beating China to superhuman AI as an existential battle. Trump opposes regulations that would risk America's early lead in the AI race. Congress agrees. So lots of CEOs and AI experts are mystified about why Trump has alienated allies, including Canada and Europe, who could help form a super-alliance of like-minded countries that play by America's AI rules and strengthen our supply chain for vital AI ingredients like rare earth minerals. Imagine America, Canada, all of Europe, Australia, much of the Middle East, parts of Africa and South America — and key Asian nations like Japan, South Korea and India — all aligned against China in this AI battle. The combination of AI rules, supply-chain ingredients, and economic activity would form a formidable pro-American AI bloc. 2. A domestic Marshall Plan: The Marshall Plan was America's commitment to rebuild Europe from the ruins of World War II. Now, the U.S. needs unfathomable amounts of data, chips, energy and infrastructure to produce AI. Trump has cut deals with companies and foreign countries — and cleared away some regulations — to expedite a lot of this. But there's been little sustained public discussion about what this means for the economy and U.S. jobs. It's very improvisational. Trump himself barely mentions AI or talks about it in any specificity in private. The country really needs "a combination of the Marshall Plan, the GI Bill, the New Deal — the social programs and international aid efforts needed to make AI work for the U.S. domestically and globally," as Scott Rosenberg, Axios managing editor for tech, puts it. One smart idea: Get the federal government better aligned with states and even schools to prepare the country and workforce in advance. Some states — including Texas — are eagerly working with AI companies to meet rising demand in these new areas. Yet many others are sitting it out. Imagine all states exploiting this moment and refashioning post-high-school education and job training programs. In Pennsylvania, Gov. Josh Shapiro — a possible Democratic presidential candidate in '28 — sees the opening. He hailed "the largest private sector investment in Pennsylvania history" earlier this month when he personally announced that Amazon Web Services plans to spend $20 billion on data center complexes in his state. 3. A congressional kill switch: There's no appetite in Washington to regulate artificial intelligence, mainly out of fear China would then beat the U.S. to the most important technological advance in history. But that doesn't mean Congress needs to ignore or downplay AI's potential and risks. Sen. Mark Warner (D-Va.), vice chairman of the Senate Intelligence Committee, got rich as an early investor in an earlier tech boom — cell phones — and has been one of Capitol Hill's few urgent voices on AI. "If we're serious about outcompeting China," Warner told us, "we need clear controls on advanced AI chips and strong investments in workforce training, research and development." Several lawmakers and AI experts envision a preemptive move: Create a bipartisan, bicameral special committee, much like one stood up from the 1940s through the 1970s to monitor nuclear weapons. This committee, in theory, could do four things, all vital to advancing public (and congressional) awareness: Monitor, under top-secret clearance, the various large language models (LLMs) before they're released to fully understand their capabilities. Prepare Congress and the public, ahead of time, for looming effects on specific jobs or industries. Gain absolute expertise and fluency in the latest LLMs and AI technologies, and educate other members of Congress on a regular basis. Provide extra sets of eyes and scrutiny on models that pose risks of operating outside of human control in coming years. This basically creates another break-in-case-of-emergency lever beyond the companies themselves, and White House and defense officials with special top-secret clearance. 4. A CEO AI surge: Anthropic's Dario Amodei told Axios that half of entry-level, white-collar jobs could be gone in a few years because of AI. Almost every CEO tells us they're slowing or freezing hiring across many departments, where AI is expected to displace humans. CEOs, better educated on AI, could help workers in two big ways: Provide deep instruction, free access and additional training to help each person use AI to vastly increase proficiency and productivity. This retraining/upskilling effort would be expensive, but a meaningful way for well-off people and organizations to show leadership. Get more clever leaders thinking now about new business lines AI might open up, creating jobs in new areas to make up for losses elsewhere. A few CEOs suggested they see a social obligation to ease the transition, especially if government fails to act.
The Hill
4 days ago
- Politics
- The Hill
French-American Foundation unveils 2025 ‘Young Leaders'
The French-American Foundation named its annual list of Young Leaders in the U.S. and France recognized for their dedication to public service and the transatlantic relationship. These 'rising stars' have expertise in various fields including defense, law, medicine, finance and technology. The 2025 cohort will join a network of 600 alumni selected since the 1980s, including former President Bill Clinton, French President Emmanuel Macron, and former Secretary of States Hillary Clinton and Antony Blinken, among others. 'The FAF Young Leaders program brings the best and the brightest from both countries together to assure that our oldest alliance remains vibrant and candid,' said Edward Wallace, chair of the foundation's board of directors. The program is structured to allow these individuals to participate in two, five-day seminars over two years where they engage with experts for informed, cross-cultural dialogues. 'If these past years have taught us anything, it is that we must continue to invest in our relationships with like-minded friends and allies in order to build a more connected, stable and peaceful world,' said Maya Henry, a foundation board member who was named a Young Leader in 2017. Since 1976, the French-American Foundation has worked to strengthen the relationship between France and the U.S. by connecting leaders and fostering common solutions for shared problems. U.S. Ambassador James G. Lowenstein created the foundation after a career in foreign service where he worked on the Marshall Plan in Paris in 1952. He built two French-American Foundations, one in New York and one in Paris. They work independently but have identical objectives and purposes to grow the French American alliance. Today, with 4,000 plus participants, the foundation continues to promote dialogue regarding issues such as immigration, cybersecurity and health care in an effort to strengthen the transatlantic cooperation. Notable Young Leaders part of the 2025 U.S. cohort include Michelle Burbage, an associate professor and director of the public health masters program at University of Cincinnati as well as David Coen-Tanugi, a venture builder from the Massachusetts Institute of Technology, focused on technological climate solutions and clean energy. Jeohn Salone Favors, President Biden's former assistant secretary of Department of Homeland Security, is also part of this year's cohort. He assisted in conducting back-channel talks between the U.S. and Iran under former President Obama. Other U.S. Young Leaders include: Tristan Gruska — head of utilities and construction at Palantir Tehcnologies. Camela Logan — research director and product lead at Meta Inc. Swati Rao Metlapalli — managing director, head of transportation and infrastructure at BNP Paribas's North America Investment Banking Teymour Shahabi — head of feature and learner strategy at Two Sigma Investment Tiffany Xingyu Wang — president of Oasis Consortium, and CEO and founder of Songsheet AI On the other side of the Atlantic, the French Young Leaders include Pascal Confavreux, deputy spokesperson and deputy director of communications for the French Ministry for Europe and Foreign Affairs. Guillaume Dubois, another cohort member, is the Founder & CEO of HappyVore. His company is the biggest plant-based food factory in France. Julien Jeanneney, professor of public law at the University of Strasbourg, will also join the foundation due to his work examining the French and American legal and political similarities and differences. Other French Young Leaders include: Lt. Col. Vérane Quétier — Lieutenant-Colonel, Commander of the Military Space-based Imagery Squadron Laurent Saint-Martin — Minister Delegate to the Minister for Europe and Foreign Affairs, in charge of Foreign Trade and French Nationals Abroad Angélique Delorme — deputy director of the Museum quai Branly – Jacques Chirac Fanny Marciano — managing director, head of private side corporate sales for France, BeNeLux and Nordics, JP Morgan Mathilde Saltiel — Partner, Latham & Watkin Aurélie Sannier — MD, PhD, associate professor of medicine (Université Paris Cité), specialist in pathology Read more about the 2025 cohort here.
Forbes
18-06-2025
- Business
- Forbes
Heed General Mattis' Warning, D.C.: Less Diplomacy Means 'More Ammunition'
In his January Inaugural Address, Donald Trump said, 'We will measure our success not only by the battles we win, but also by the wars that we end, and perhaps most importantly, the wars we never get into.' If that's the president's most crucial foreign policy metric – and it's a good one – then it's hard to understand why Washington is pulling back on investments that have prevented war and promoted peace for decades. Especially when foreign aid accounts for only about one percent of the federal budget, much of it actually spent within the U.S. Every American should hope the White House reconsiders its strategy before it's too late. "If you don't fund the State Department fully, then I need to buy more ammunition" — Former Defense ... More Secretary James Mattis. (Photo by Kevin Dietsch - Pool/Getty Images) In 1947, America did something unique in world history when it launched the Marshall Plan, spending $187 billion in today's dollars to rehabilitate the economies of 17 European countries. Most extraordinary of all, we spent over 20% of those funds on the recovery of our World War II adversaries, Germany and Italy. The plan worked, establishing a stable and prosperous Europe, a network of reliable allies, and a massive market for U.S. companies. Last year, the U.S. exported almost $250 billion of goods alone to Germany, France, Italy, and the Netherlands. This exercise of 'soft power' – which describes the use of foreign aid, diplomacy, and the promotion of American values abroad – turned out to be every bit as consequential to strengthening America and winning the Cold War as our military's 'hard power.' But soft power is on the outs in Washington. Secretary of State Marco Rubio says the administration plans to reduce the Department's staff in the U.S. by 15 percent while closing and consolidating more than 100 bureaus worldwide. At the same time, China now has a larger diplomatic presence worldwide than the U.S. and a massive global infrastructure and investment strategy. Its Belt and Road Initiative is the largest infrastructure project in history, involving more than 140 countries and drawing an increasing number of nations into its orbit. China is rapidly filling the void because the U.S. has vacated its historic and influential presence. On his first day back in office in January 2025, President Trump signed an executive order freezing all foreign aid, including the President's Emergency Plan for AIDS Relief (PEPFAR). Since its creation in George W. Bush's administration, PEPFAR has saved more than 25 million lives and prevented millions of HIV infections, including those in America, as the AIDS pandemic has been brought under more control. Although the Trump administration subsequently allowed a waiver for the continued distribution of HIV medicine, many other key aspects of the PEPFAR program are in jeopardy. President Trump has also ordered the closure of Radio Free Europe and Radio Liberty, which reaches 50 million people each week in places where media freedom doesn't exist. Even Cookie Monster, Oscar, and Elmo are on the chopping block. Less soft power for Elmo: International adaptations of "Sesame Street" have been impacted by cuts in ... More federal funding. Since the early 1970s, Sesame Workshop, the producer of Sesame Street, has collaborated with local broadcasters to develop unique, culturally adapted versions of the show in over 150 countries. These international co-productions often include local languages, characters, and educational priorities, making "Sesame Street" a global neighborhood. Because the Department of Education has cancelled its key grants, Sesame Street has become a dead end in several nations. There's little question that some of the money Washington spent in recent years on foreign aid was wasted or devoted to pet ideological causes. This likely explains why 59% of the public supports reducing foreign aid, even as they vastly overestimate how much America spends on it. (Opinion polls often show Americans believe more than a quarter of the federal budget goes to foreign aid. As stated earlier, the real figure is around 1%.) However, I'd ask my fellow Americans – and our leaders in Washington – to recall something General James Mattis, then commander of the Central Command, said in 2013 about the perils of making reckless cuts to foreign aid and diplomacy. Testifying before Congress, he said, 'If you don't fund the State Department fully, then I need to buy more ammunition. The more that we put into the State Department's diplomacy, hopefully, the less we must put into a military budget as we deal with the outcome of an apparent American withdrawal from the international scene.' To meet President Trump's goal of ending and avoiding wars, Washington can't just slash budgets. It needs a new framework for soft power that prioritizes America's interests and delivers peace through strength. A great place to start would be the new 'Blueprint for How America Wins in the World' from the U.S. Global Leadership Coalition (full disclosure: I am a Vice Chairman at USGLC). I spoke recently to USGLC President Liz Schrayer, one of the sharpest thinkers I know on foreign policy and the exercise of U.S. power. Amid growing threats from China, Russia, and Iran, Liz walked me through several steps America can take to be stronger, safer, and more prosperous, including: Making these soft power investments should appeal to the most hardboiled realists in Washington – and compel the White House to reverse course on some of its proposed aid and diplomacy cuts – because they all make America safer. If we want to stay one step ahead of China, prevent the next pandemic from reaching our shores, keep our borders secure, and grow our economy, America must show up, lead with strength, and make smart investments abroad that deliver on American interests. Otherwise, our service members are going to need more ammunition.
Yomiuri Shimbun
17-06-2025
- Business
- Yomiuri Shimbun
Mahathir Urges ASEAN to Create United Front Against U.S.; Warns High Tariffs Will Be ‘Very Damaging for America'
The Yomiuri Shimbun Former Malaysian Prime Minister Mahathir Mohamad Members of the Association of Southeast Asian Nations should create a united front in negotiations with the United States, former Malaysian Prime Minister Mahathir Mohamad said in a recent interview with The Yomiuri Shimbun. The following is excerpted from the interview, which was conducted by Yomiuri Shimbun Correspondent Tetsuya Mizuno. *** America is a big market. High tariffs affect the market; it hurts the market. Exporters to America face troubles. They can't sell as much as they used to. But America itself is going to face a lot of troubles. This is because America needs import; without it, the American industries cannot function, especially without micro-processors or microchips. [U.S. President Donald] Trump has put a pause on electronics because he knows that he needs the electronics to keep supplies in the American industries. He has already given in. Later, he has to give in more. Things will be expensive in America. Other countries will also suffer. Other countries should work together to continue this world trade. The trade should go on with an enhancement. They should take the place of America to supply certain things. It will take time. It is disruptive. I think very soon America will have to solve Trump's high tariff. The high tariff will create a shift away from America. This would be permanent. America will lose a lot of its trade because people will be able to get from other sources. Once they have been identified from other sources, they will not go back to America. It is inevitable the U.S. reduces its trade by high tariffs. People will have to look for other partners. China provides good partnership. China has great technological capabilities. It can produce whatever the U.S. produces. It will take a little time. It will be soon. Trump does not want to side with ASEAN. He wants to deal with individual countries, because the country will be weak. ASEAN coming together and putting a united front in negotiation with the U.S. is the best approach. The better future for ASEAN is when there is no dominant country, not China, U.S., nor anyone. It is not that ASEAN is leaning toward China. It is America who pushes ASEAN to China. If America does not impose high tariffs, we [ASEAN] want to be friendly with the U.S. and China, which both are big markets. But America rejects ASEAN, pushing us toward China. We need a market. China is the biggest market for Malaysia. If America pushes us, we have no choice but to go to China. The recovery after World War II was partly due to the Marshall Plan. The package supported the European countries' recovery. Following that, there are trends on globalization and the borderless world, which has contributed to world trade. What Trump is doing now is to reverse the Marshall Plan. We should go back to the world trade system. We should give more power to the WTO. Japan is a great investor. Malaysia had been able to industrialize because of the Japanese investment. Japan has a big role to play to help countries in Southeast Asia with industrialization and trade. Right now, Japan is in the trough. But I have great faith in Japan and Japanese people who are coming up with new ideas and products, especially in the field of medicine. I think Japan will catch up and recover. It may not be in the industrial products, but there are other sectors where Japan can excel. A democratic system has failed in a selection of leaders. A lot of bad leaders like people who do not believe in climate change, people who believe that the solution to the conflict is to go to war, these people are now in charge in many countries. That is why we have the problems. Japan should not be a neighbor of the U.S. only, but a neighbor to the rest of the world. It should be an enabler for the rest of the world. Japan should consider the best thing for Japan in the world, not as a partner of the U.S. Mahathir Mohamad Mahathir, 99, entered politics after working as a general practitioner. He served as Malaysian prime minister twice, from 1981 to 2003 and from 2018 to 2020. He promoted the modernization of his country, advocating the Look East Policy, an economic policy modeled after Japan and other countries.
