The press is calling it “the Trump Phenomenon.”
Democrats call it a political circus filled with monkeys destined to screw up the world’s economy. Trump and his disjointed cabinet are in the deglobalization camp, and China and other BRICS nations are in the reglobalization camp. Globalization has brought the world closer in terms of trade and economic reliability, but there are serious issues in the structure globalization. The gap between the rich and the poor continues to increase, and there is a distinct division between capital and labor. The negatives of globalization are being accented by President Trump and his followers. There is a strong movement to deglobalize and let every country stand on their own merits and economic strength. Deglobalization is one school of thought, but other countries like China are pushing for reglobalization. China and other countries agree that globalization is in trouble, and needs repair, but China wants to regroup and solve the issues without tearing down the financial, economic, and social world apart.
Emerging markets like Brazil, Russia, India and South Africa are in agreement with China.
China is a member of the BRICS partnership, and a good example of an economy that continues to hold its ground in spite of the economic pitfalls other countries are experiencing at this point in time. Investors like Jim Dondero, the president, and CEO of Highland Capital Management is a huge BRICS investor. Dondero also has a big stake in Argentina’s economic recovery. According to Dondero and others, China is emerging as the new voice of reason in the world’s economic community. China attended the Davos Economic Summit for the first time in 2017, and China’s presence didn’t go unnoticed. China represents stability and a sense of continuity in global governance. The Chinese are taking a hard stand to solve global economic and financial issues.
The fly in the global ointment, so to speak, is Trump.
If Trump does what he said he would do with border taxes, an increase in internal infrastructure investments, and a tax reduction, the impact on global trade and the global economy will suffer. The questions investors like Dondero are asking is, how much will Trump’s plan impact the globalization, and for how long? The economies of the world are interdependent in terms of financial flows and production, and any type of disruption could blow the system apart. Dondero and his investors will feel the financial impact if Trump’s deglobalization plan is put in place. Proponents of reglobalization believe the current governance system needs tweaking, and Dondero agrees. Even though China is facing massive bank debt and other internal issues, the Chinese still represent a voice of reason in a world full of questions.
Jim Dondero and Mark Okada founded Dallas-based Highland Capital Management in 1993. Jim has more than 30 years of experience in the financial industry. James Dondero graduated from the University of Virginia with finance and accounting degrees. In 1984, he landed his first investment job with Morgan Guaranty. He went to work for American Express, and he worked as a portfolio manager with AmEx for four years. He became Chief Investment Officer for one of Protective Life’s subsidiaries in 1989. Dondero has a proven investment track record. Highland Capital Management has more than $19 billion in assets under management, and Highland’s partners enjoy healthy returns every year.