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Trump angst looms over economic elite at IMF meetings

The world’s economic elite spent this week invoking fears of protectionism and the existential crisis facing globalisation while avoiding any mention of Donald Trump by name.

But the US presidential candidate and his anti-establishment politics have loomed large at this week’s annual meetings in Washington of the International Monetary Fund and World Bank. He has been a sort of Voldemort for the global economic order — like the villain in Harry Potter, his name is spoken only in hushed tones and behind closed doors.

“It is terrifying,” said one senior official of the prospect of a Trump victory in the November 8 election before laying out a scenario in which a President Trump would lead the US into a default on its debts, the collapse of the dollar and US treasuries as safe haven assets and the tumbling of the global economy into a 1930s-like crisis.

Mr Trump has raised the possibility of trying to renegotiate the terms of the US sovereign debt much as he did repeatedly with his own business debts as a property developer. He also has proposed imposing punitive tariffs on imports from China and Mexico and ripping up existing US trade pacts.

Invoking one of the founding fathers of the international system, John Maynard Keynes, Christine Lagarde told the world’s finance ministers and central bank governors that the challenge “lies not so much in developing new ideas as in escaping from old ones”.

“If our founders were here today, they would surely be concerned. They shared a conviction that trade and openness are beneficial to those who embrace them,” the IMF managing director said. “Now, those principles are facing their biggest test in decades.”

Mr Trump’s name may not have appeared in the voluminous economic reports published this week, but he was clearly on the authors’ minds.

The IMF labelled political risks and the uncertainty bred by the US election and the UK’s decision to leave the EU and as the biggest immediate concerns facing the global economy.

In its latest World Economic Outlook, the fund included a box outlining the potential costs of raising tariffs and other trade barriers. It read like an attempt to dissuade a presidential aspirant considering a protectionist path.

“Once a tariff has been imposed on a country’s exports, it is in that country’s best interest to retaliate, and when it does, both countries end up worse off,” IMF economists wrote.

It is not just angst over Mr Trump. There are similar concerns over Brexit and the rise of populist parties elsewhere in Europe. All present their own threats to the advance of the US-led path of economic liberalisation pursued since Keynes and his peers gathered at Bretton Woods in 1944.

“In my lifetime I cannot remember anything like the scepticism about these values that we see today,” said Suma Chakrabarti, president of the European Bank for Reconstruction and Development.

There was much discussion this week about the underlying causes of that scepticism — low growth, stagnant wages and other scars of the 2008 global financial crisis — together with calls for governments to do more to ensure the benefits of globalisation are distributed more widely.

Lou Jiwei, China’s finance minister, told reporters on Friday, the current “political risks” would in the immediate future lead only to “superficial changes” for the global economy. But underlying them was a deeper trend of “deglobalisation”.

Some were blunt in their warnings. Protectionism was simply the “wrong medicine” for economies struggling with slow growth, cautioned Roberto Azevêdo, the head of the World Trade Organisation, in an impassioned defence of globalisation. “That is the type of medicine that is going to hurt the patient,” he said.

He also outlined his own plans for a facts and figures campaign in defence of globalisation and its benefits in what felt like a thinly-veiled retort to Mr Trump.

“You can’t fight irrationality with irrationality,” the Brazilian said. “The way you fight irrationality is with rationality.”

https://www.ft.com/content/e4743282-8ca … ada1d123b1

A snapshot of the female Trump vote:

Possibly the most ridiculous "scandal" in history. It would be funny to watch all the "outrage" if it wasn't so sad.

This kind of stuff is exactly why Trump is 30 days away from the White House.

It's just more hot air. Everybody and his grandmother have been denouncing Trump for a year now. His support is as strong as ever. It's the only game they have and it's not very effective. Corrupt evangelical leaders are not going to have any more effect than corrupt GOP leaders.