Latest news with #AdamTooze
Zawya
01-08-2025
- Business
- Zawya
'America First' agenda could leave US dollar behind: Pelosky
(The views expressed here are those of the author, the Founder and Global Strategist at TPW Advisory) NEW YORK - Europe and Asia could leverage U.S. President Donald Trump's "America First" strategy for their own benefit, eventually spurring the development of regional tripolar FX blocs that could erode the dominance of the U.S. dollar and reshape global markets. The dollar has struggled this year, especially since Trump's April 2 tariff announcement. While the currency is on pace for one of its strongest weeks this year after jumping around 1% on Monday following the announcement of U.S.-EU trade deal, this short-term move doesn't change the long-term trends that could undermine the greenback's position. MOVING IN REVERSE Economic dominance in the future could largely depend on access to affordable, efficient energy to power artificial intelligence technologies. And in the race to dominate the industries of the future, the U.S. is arguably going in reverse. It's retreating from the renewables space, as seen in the administration's recent move to eliminate many clean energy subsidies. The president appears to be making the bet that the U.S. can maintain energy dominance indefinitely by relying on its own fossil fuel resources. This could ultimately result in uncompetitive power costs in the future, especially given that China is already dominating in clean energy technologies like solar and electric vehicles. As historian Adam Tooze argues, "for the first time in two centuries the West is no longer the leader in future technologies but the follower." TWIN DEFICITS While Trump may be seeking to enhance American self-sufficiency, the administration's policies may actually be increasing the country's dependency on foreign capital. Trump's recently passed budget bill – which looks pretty ugly to fiscal watchdogs despite its name – could cement the U.S.'s position as the world's biggest capital importer by adding an expected $3.4 trillion to the U.S. deficit over the next decade, according to estimates by the nonpartisan Congressional Budget Office, potentially locking in 6% to 7% budget deficits for years. Importantly, the U.S. has also been running current account deficits of roughly 4% over the past several years, and this widened to 6% of GDP in Q1 2025, according to the U.S. Bureau of Economic Analysis. By spending beyond its means and running these twin deficits, the U.S. will continue to require large amounts of foreign capital inflows. But unfortunately for Washington, this capital may soon be harder to come by, if both Europe and Asia seek to keep more of it closer to home. Europe is pushing for increased defense spending, as seen in its new goal to spend 5% of GDP on defense in the coming decade. While the bloc has agreed to increase U.S. energy purchases through the recently announced U.S. trade deal, much of that agreement remains up in the air and the volumes suggested are pretty unrealistic. Meanwhile, Asia has begun to trade more internally, as China has been focusing on export diversification. TRI-POLAR FX BLOCS A growing regionalization of supply chains began during the pandemic and appears to be accelerating as Trump seeks to drive production back to the U.S. and all major global powers focus on securing regional raw material access (e.g., rare earths and other critical minerals) for national security purposes. This shift could eventually create the foundation for true regional FX blocs across Asia, Europe and the Americas. This development would have a major impact on the global economy, currency values and capital markets, arguably providing a more balanced global economy with three poles of supply and demand, each attuned to their own regional dynamics rather than the current set-up whereby the global economy responds primarily to the Federal Reserve and U.S. internal dynamics. Recently, European policymakers have discussed what ECB President Christine Lagarde has termed a 'Global Euro' moment, one built upon a European Savings and Investment Union designed to foster both a European safe-haven asset that could eventually compete with U.S. Treasuries and deeper, more liquid European capital markets to fund European infrastructure and innovation. Of course, this won't be an overnight shift. The dollar remains the world's dominant reserve currency, and the U.S. debt market is estimated to be more than three times the size of Europe's, according to the World Economic Forum. But simply having a larger percentage of European capital stay at home could make a huge difference. Europe's current account surplus has averaged roughly $400 billion over the past few years, and Europe invests roughly $300 billion per year in offshore financial assets, according to the New York Times. Within Asia, Pan Gongsheng, Governor of the People's Bank of China, has recently highlighted China's interest in having the yuan play a larger role in a multi-polar currency world. Other officials soon followed, discussing how China plans to improve home market access for foreign capital while expanding opportunities for the Chinese to invest abroad. While China's capital account remains closed, Asian currencies already primarily trade off the yuan rather than the U.S. dollar. Even though China faces challenges, such as its fight against deflation, its efforts on this front – namely, boosting consumption and reining in excess supply, especially in the renewable energy space across solar, wind and batteries – could ultimately help attract more foreign capital by boosting China's growth profile and corporate earnings. There is obviously no guarantee that these measures will be successful, but the government's intense focus on achieving these goals is evident. The recent decision to provide $12.4 billion in childcare subsidies suggests a potential policy Rubicon has been crossed, as China has typically resisted these types of direct fiscal stimulus measures in the past. In a world of currency blocs, both Europe and Asia could emerge as potential winners, as they erode the U.S.'s position as the world's financial powerhouse. So while many investors may get lost in the short-term currency noise, it might be wise to instead focus on the long-term signal. (The views expressed here are those of Jay Pelosky, the Founder and Global Strategist at TPW Advisory, a NYC-based investment advisory firm. You can follow Jay on Substack at The Tri Polar World). Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI, can help you keep up. Follow ROI on LinkedIn, and X. (Writing by Jay Pelosky; Editing by Anna Szymanski and Jamie Freed)
Reuters
31-07-2025
- Business
- Reuters
‘America First' agenda could leave USD behind
NEW YORK, July 31 (Reuters) - Europe and Asia could leverage U.S. President Donald Trump's "America First" strategy for their own benefit, eventually spurring the development of regional tripolar FX blocs that could erode the dominance of the U.S. dollar and reshape global markets. The dollar has struggled this year, especially since Trump's April 2 tariff announcement. While the currency is on pace for one of its strongest weeks this year after jumping around 1% on Monday following the announcement of U.S.-EU trade deal, this short-term move doesn't change the long-term trends that could undermine the greenback's position. Economic dominance in the future could largely depend on access to affordable, efficient energy to power artificial intelligence technologies. And in the race to dominate the industries of the future, the U.S. is arguably going in reverse. It's retreating from the renewables space, as seen in the administration's recent move to eliminate many clean energy subsidies, opens new tab. The president appears to be making the bet that the U.S. can maintain energy dominance indefinitely by relying on its own fossil fuel resources. This could ultimately result in uncompetitive power costs in the future, especially given that China is already dominating in clean energy technologies like solar and electric vehicles. As historian Adam Tooze argues, "for the first time in two centuries the West is no longer the leader in future technologies but the follower." While Trump may be seeking to enhance American self-sufficiency, the administration's policies may actually be increasing the country's dependency on foreign capital. Trump's recently passed budget bill – which looks pretty ugly to fiscal watchdogs despite its name – could cement the U.S.'s position as the world's biggest capital importer by adding an expected $3.4 trillion to the U.S. deficit over the next decade, according to estimates by the nonpartisan Congressional Budget Office, potentially locking in 6% to 7% budget deficits for years. Importantly, the U.S. has also been running current account deficits of roughly 4% over the past several years, and this widened to 6% of GDP in Q1 2025, according to the U.S. Bureau of Economic Analysis. By spending beyond its means and running these twin deficits, the U.S. will continue to require large amounts of foreign capital inflows. But unfortunately for Washington, this capital may soon be harder to come by, if both Europe and Asia seek to keep more of it closer to home. Europe is pushing for increased defense spending, as seen in its new goal to spend 5% of GDP on defense in the coming decade. While the bloc has agreed to increase U.S. energy purchases through the recently announced U.S. trade deal, much of that agreement remains up in the air and the volumes suggested are pretty unrealistic. Meanwhile, Asia has begun to trade more internally, as China has been focusing on export diversification. A growing regionalization of supply chains began during the pandemic and appears to be accelerating as Trump seeks to drive production back to the U.S. and all major global powers focus on securing regional raw material access (e.g., rare earths and other critical minerals) for national security purposes. This shift could eventually create the foundation for true regional FX blocs across Asia, Europe and the Americas. This development would have a major impact on the global economy, currency values and capital markets, arguably providing a more balanced global economy with three poles of supply and demand, each attuned to their own regional dynamics rather than the current set-up whereby the global economy responds primarily to the Federal Reserve and U.S. internal dynamics. Recently, European policymakers have discussed what ECB President Christine Lagarde has termed a 'Global Euro' moment, one built upon a European Savings and Investment Union designed to foster both a European safe-haven asset that could eventually compete with U.S. Treasuries and deeper, more liquid European capital markets to fund European infrastructure and innovation. Of course, this won't be an overnight shift. The dollar remains the world's dominant reserve currency, and the U.S. debt market is estimated to be more than three times the size of Europe's, according to the World Economic Forum. But simply having a larger percentage of European capital stay at home could make a huge difference. Europe's current account surplus has averaged roughly $400 billion over the past few years, and Europe invests roughly $300 billion per year in offshore financial assets, according to the New York Times. Within Asia, Pan Gongsheng, Governor of the People's Bank of China, has recently highlighted China's interest in having the yuan play a larger role in a multi-polar currency world. Other officials soon followed, discussing how China plans to improve home market access for foreign capital while expanding opportunities for the Chinese to invest abroad. While China's capital account remains closed, Asian currencies already primarily trade off the yuan rather than the U.S. dollar. Even though China faces challenges, such as its fight against deflation, its efforts on this front – namely, boosting consumption and reining in excess supply, especially in the renewable energy space across solar, wind and batteries – could ultimately help attract more foreign capital by boosting China's growth profile and corporate earnings. There is obviously no guarantee that these measures will be successful, but the government's intense focus on achieving these goals is evident. The recent decision to provide $12.4 billion in childcare subsidies suggests a potential policy Rubicon has been crossed, as China has typically resisted these types of direct fiscal stimulus measures in the past. In a world of currency blocs, both Europe and Asia could emerge as potential winners, as they erode the U.S.'s position as the world's financial powerhouse. So while many investors may get lost in the short-term currency noise, it might be wise to instead focus on the long-term signal. (The views expressed here are those of Jay Pelosky, the Founder and Global Strategist at TPW Advisory, a NYC-based investment advisory firm. You can follow Jay on Substack at The Tri Polar World, opens new tab). Enjoying this column? Check out Reuters Open Interest (ROI),, opens new tab your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI,, opens new tab can help you keep up. Follow ROI on LinkedIn,, opens new tab and X., opens new tab
IOL News
27-06-2025
- Business
- IOL News
G20 faces a generational test amid geopolitical challenges
Delegates to the U20 African Mayors Assembly at the Union Buildings, Pretoria on June 17, 2025. Image: DIRCO Alvin Botes Since December 1 last year until the Leaders' Summit in November 2025, South Africa chairs the world's most influential economic forum, that is the G20, under the theme: 'Solidarity, Equality, Sustainability'. The theme signals our determination to put people — not profits — at the centre of global decision-making. Our high-level priorities are clear and interlinked. Firstly, inclusive economic growth, industrialisation, employment and the reduction of inequality. Secondly, food security in an era of climate disruption. Thirdly, harnessing artificial intelligence and broader technological innovation for sustainable development. Complementing these three priorities is our drive for disaster-risk resilience and fair debt-relief architecture so that climate-vulnerable and heavily indebted countries are not forced to choose between servicing loans and saving lives. The stakes could not be higher. The International Labour Organisation (ILO) reports that global unemployment is hovering near a historic low of five per cent, yet globally the average for young people remains stubbornly high — about 13 per cent worldwide, and more than double that in many developing economies. Here at home, 4.8 million South Africans aged 15–34 are unemployed; 58 per cent of them have never had a single day of paid work, and our youth unemployment rate climbed to 46.1 per cent in the first quarter of this year. Beyond the headline numbers lurk deeper structural hazards: one in five young Africans is classified as NEET—'not in employment, education or training'—and those already in work face a future in which artificial intelligence-driven automation could render up to 40 per cent of entry-level jobs obsolete by 2035, according to the World Economic Forum's Global Risks Report. Compounding that uncertainty are intersecting crises of mental-health fragility, climate anxiety, escalating conflict-driven displacement, and the rising cost of living that now consumes, on average, 38 per cent of a young person's monthly income across the G20. Add to that what the economist Adam Tooze calls a global 'poly-crisis' which includes, amongst others, geopolitical polarisation, climate-related disasters, food-price shocks and widening digital divides. And it becomes clear why the South African presidency has framed 2025 as a make-or-break moment for multilateral cooperation. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Geopolitically, the world is also experiencing what some economists such as Mark Blyth, Mohamed El-Erian and Michael Spence call a 'perma-crisis': the United States and China are locked in an uneasy dance of de-risking, Russia-Ukraine war continues to reshape energy and grain markets, and simmering conflicts from the Red Sea to the Sahel threaten already fragile supply chains. At the same time, global public debt has surpassed US $100 trillion, forcing developing nations to divert scarce resources away from youth programmes toward interest payments. In the Employment Working Group of the Sherpa Track, we are negotiating a compact on youth employment and skills, building on the Antalya Goals (which were agreed to during Türkiye's presidency of the G20) but adding targets for digital-economy apprenticeships, recognition of micro-credentials and mutual portability of qualifications across G20 members. If endorsed by leaders, the compact will potentially translate into an estimated 10 million paid internship placements over five years, with a gender-parity clause and an annual public scorecard so you can hold the G20 accountable. In the Finance Track, we are advancing an 'Innovation & Inclusion Facility' financed through blended public-private instruments to support start-ups led by women and young people in frontier technologies and green manufacturing. Its first-phase endowment of US $3 billion will be disbursed via challenge funds that prioritise township and rural enterprises, with a target of 150,000 sustainable jobs by 2027. In the Agriculture Working Group and the Environment and Climate Sustainability Working Group, we are championing a Just Agri-Transition Facility that links smallholder farmers, including youth, to climate-smart finance and regional value chains. Beyond financing climate-resilient seed and drip-irrigation systems, the facility will underwrite a Pan-African farmers marketplace app that is targeted at youth and guarantees offtake agreements with regional supermarket chains. Finally, our AI priority aims to deliver a 'Pan-G20 Youth Digital Corps,' a volunteer-to-employment pipeline that pairs South African coders with continental and global partners to solve public-sector data challenges. The G20 was born out of the 1997 Asian financial meltdown and re-energised amid the 2008 crash. It now faces a generation-defining test: can it propel the global economy so that young people inherit not debts and droughts but opportunity and hope? South Africa believes it can—if the world finally listens to its largest demographic - the youth. * Alvin Botes is Deputy Minister of International Relations and Cooperation. ** The views expressed do not necessarily reflect the views of IOL, Independent Media or The African.
