Trump Threatens Stability That Allows US Business To Thrive

I'm guessing some of Trump's and Republicans' enablers in the business community are getting a little bit nervous and we are less than two weeks into this shambolic administration. Needless to say, the tech gurus are already up in arms about the Muslim ban as they rely on foreign talent for their business. Business and finance leaders are beginning to realize that Trump/Bannon's priorities don't really align with theirs, despite their unfounded belief during the campaign. At least they still have the GOP Congress in their pocket.

Matt Levine over at Bloomberg has a story that describes how reality is starting to dawn on business leaders about the real direction of the Trump/Bannon administration. During the campaign, the renegade billionaire Silicon Valley exec and current holder of New Zealand citizenship which required him to take an oath to "be faithful and bear true allegiance to Her Majesty, Queen Elizabeth the Second, Queen of New Zealand", said during the campaign that Trump should be taken "seriously but not literally". As Levine notes, "Everything Trump literally said is coming literally true; everything the serious people heard remains an unserious hope. Businesses may eventually get the tax and regulatory reform they wanted, but it’s not a priority. The technology industry, the financial industry, and some others are beginning to figure this out".

Levine also make the critical point that Trump's illegal executive orders threaten the very foundation of American business. The reason the US markets are so popular and respected around the world is because investors feel safe that the rule of law will be enforced. Their business interests in the US will not be nationalized or forced to be turned over to cronies of the President. That faith is currently being tested. Says Levine, "If the president can, without consulting the courts or Congress, banish U.S. lawful permanent residents, then he can do anything. If there’s no rule of law for some people, there’s no rule of law for anyone. Business leaders are waking up to that reality".

Meanwhile, business and finance leaders also need to be prepared for harmful policies for the fringe element of the Republican Congress, especially the House. We all know the Wall Street billionaire's club that is more than adequately represented in Trump's cabinet wants to roll back the increased capital requirements imposed by Basel III and Dodd-Frank. But I'm not sure that attacking the Federal Reserve and basically telling that agency to no longer engage in discussions and negotiations with the Financial Stability Board in the UK and the Basel Committee on Banking and Supervision is the way to go about it, as chief deputy whip in the House, Patrick McHenry, has ordered the Fed to do in this letter. In fact, it might be the quickest way to have the EU limit access to that single market for US banks as they are already planning to do to the UK banks under Brexit. Nothing would surprise me, but I think you have to be a little more subtle and leave room for negotiation than McHenry did. After this salvo on the Fed, I'm also pretty sure that extremist Republicans in the House and the Senate will start rumbling about "auditing the Fed". All of this is going to make central bankers and the banking system around the world even more jittery and add to the global instability the Trump administration is already creating.

In addition, the rollback of the Resource Extraction Rule which would essentially allow US companies to bribe foreign officials by removing oversight may actually create a backlash that some companies may not be prepared for. As the article points out, "if Congress does indeed apply CRA and overturn the SEC’s ill-fated resource extraction issuers' disclosure rules, less information will be available about energy and other companies in extractive industries subject to the SEC’s disclosure regime compared to those companies that must follow regulations set by the EU, Canada, or the UK." Of course, the oil and mining companies will love this and so will Putin and other kleptocratic dictators around the world. But I'm not so sure this will provide the competitive advantage for US companies that the House Majority Leader believes. 

As the Levine's article notes, "The reason the U.S. is a good place to do business is that, for the past two centuries, it’s built a firm foundation on the rule of law. President Trump almost undid that in a weekend. That’s bad for business". And it's only week two. I'm pretty sure business leaders are already longing for the good old ways when Obama's "uncertainty" was making it impossible to do business.

An additional complication is the fact that Trump will individually target their business if they oppose or confront him. Again Levine, "Many grouse in private about the impact of Trump’s actions but are afraid to speak out publicly. 'They are scared out of their minds about being attacked,' wrote Andrew Ross Sorkin of the New York Times, 'and what that’s going to do for their business'. When the president can damage your business with a tweet—and will, if you disagree with him publicly—then dissent is more difficult."