**The Neoliberal Globalization King Is Dead! Long Live The Mercantilist Industrial Policy King!**
The Neoliberal Globalization King Is Dead! Long Live The Mercantilist Industrial Policy King!
_By Michael Every of Rabobank_
The coronation of Charles III was a gloriously arcane ceremony that felt like the South Park Royal Wedding (" _The Prince is dipping his arms into the pudding, as is tradition_"); British social media noted the UK’s labor shortage and cost of living crises are so bad that a 74-year old man was forced to take his first real job. Charles III was preceded by the regalia of **US payrolls** **at 253K vs. 185K consensus**, with negative back-revisions, and unemployment at 3.4% vs. 3.6%. Yes, ‘gig’ jobs might now be recorded as real, but if this is full-employment near-feudalism, as under King Charles II, explain how average earnings growth leap to 4.4% y-o-y without saying “ _noblesse oblige”_ or showing knobbly knees in this intellectual beauty contest. Something, apart from wages, is up. Like short bond yields. Or air fares, as passengers’ willingness to pay high prices continues. Or wheat if the Black Sea Grain Deal falls apart, as was being threatened on Friday. And let’s see if US CPI is this week too. Indeed, as we say ‘Long Live the King’, another ‘king’ is dead – _neoliberal financial globalisation._
Adam Tooze says ‘Washington isn’t listening to business on China any more’, and while the US is not “ _eager_” for a war with it, one is perceived to loom in 2025(!), and businesses “ _peace interest_” has disappeared. He says **the only way to avoid war now is a “ _new security order_” for China in Asia, seen as “ _treasonous_” and “ _non-planetary_” in the US**(and much of Asia!); **as such, “ _the era of Davos man is over,_” and multi-billion dollar investments now hang by a thread.**
**The****recent policy speech** (https://pub.raboresearch.rabobank.com/public/r/vUfBkczoPiquRVhzhiLHyw/dbArgAJw216Uk9nkNck1jA/Efcru+1v_cg8rq2UTLNb6w) **by NSA Sullivan backed “** _**modern American industrial strategy**_ **,”** rebutted that free markets allocate capital best, and said geopolitics requires a new policy path to boost “ _specific sectors that are foundational to economic growth, strategic from a national security perspective, and where private industry on its own isn’t poised to make the investments needed to secure our national ambitions_.” As all 50 US states start what the Financial Times calls as ‘arms race’ for new investment under the recently-passed IRA, what Sullivan said is rightly seen as the death of neoliberalism (https://pub.raboresearch.rabobank.com/public/r/BMA4IuYMPY4wIG9wadXK7Q/dbArgAJw216Uk9nkNck1jA/Efcru+1v_cg8rq2UTLNb6w) by some. And the likely 2024 alternative is Trump’s mercantilism.
**Gcaptain (https://pub.raboresearch.rabobank.com/public/r/ygloGwBgzdWQ+i9i2yyQ8Q/dbArgAJw216Uk9nkNck1jA/Efcru+1v_cg8rq2UTLNb6w) notes the $25bn US Shipyard Act just introduced to the Senate** to revitalize US maritime infrastructure to out-pace China, with reforms to accelerate production over bureaucracy. Today, Wall Street won’t lend to the US Maritime Administration due a lack of transparency, and US Navy admirals “ _do not_ _understand Wall Street and are hesitant to learn about new financial engineering tools used by most large infrastructure funds today,”_ while Chinese shipyards can borrow cheaply. The Act aims to repeat the Truman Committee of 1941, which transformed US naval production into a WW2 colossus _._ Gcaptain concludes: “ _The urgency of this moment in history cannot be overstated. As_\[Senator\] _Wicker reminds the nation, we are in our most dangerous national security moment since WW2. He invokes the words of Winston Churchill, who once wrote that “the foundation of all our hopes and dreams was the immense shipbuilding program of the US.””_ This step, with more to come on support vessels and the merchant marine, were flagged as logically inevitable in 2021’s ‘In Deep Ship’.
**Germany is to subsidize up to 80% of energy costs for its industries** after awful March retail sales, import, export, and factory orders data: the cost will be high at present energy levels and extortionate should they rise; it could rip apart the EUs’ internal level playing-field; and may see an ex-EU trade response. This is also the scenario we warned of in ‘Balance of payments --and power-- crises (https://pub.raboresearch.rabobank.com/public/r/CyRXvP9WZGu3VzKMoTuLDg/dbArgAJw216Uk9nkNck1jA/Efcru+1v_cg8rq2UTLNb6w)’ \- and it does not end well for free-trade Europe or the Euro.
**Xi Jinping underlined China’s economic growth must focus on manufacturing (https://pub.raboresearch.rabobank.com/public/r/fJaON9Duz7fYY47NcaB65A/dbArgAJw216Uk9nkNck1jA/Efcru+1v_cg8rq2UTLNb6w)**, the “ _real economy_”, not bubbles in finance and property - Wall Street is not “productive”, as laid out here in…