President Trump has expressed support for the continuation of the Import/Export bank. This has seemingly shocked a few people from conservative circles because the modern conservative doctrine has been to oppose the I/E bank.

However, Trump’s position hopefully does not come as a surprise to CTH readers because we identified a year ago how President Trump’s economic policies would seek to refocus the original intent of the Import Export Bank.

The key aspect is to return the IE to its “original intent“; not the bastardized Wall Street construct that exists today as a result of corrupt DC economic policies driven by the Wall Street’s legislative priorities purchased by multinational banks and corporations.

For more than three decades Wall Street has corrupted the economic policies emanating from DC. The corrupted economic policy created the two economies previously discussed and the disconnected the engine of Main Street from Wall Street. Yes, we originally shared this discussion in April of 2016, a year ago:

In 2009 the popular conservative opinion was to declare the Supreme Court’s Citizens United decision a win for “our side“. Of course, the decision ultimately opened the floodgates for unlimited corporate spending in elections via the new Super-PAC approach.

In 2016 90% of all American’s polled believe there is too much special interest money in politics, and both political parties no longer need the financial support of the electorate. Corporate lobbyists were always problematic, but now in a post CU world they control almost every aspect of electoral politics – including who wins elections. Citizens United wasn’t a win, its consequence was a major fail.

Within that reality you find one of the synergies between candidate Donald Trump and former candidate Bernie Sanders. The popular insurgencies supporting each candidate rail against the corrupting corporate financial influence. Party leadership? Meh, not-so-much.

Of course it would only take RNC and DNC rules changes, ie. self-regulation, to stop the problem of unlimited corporate funding; but when the political party leadership has that much access to money, well, they have no interest in regulating it away. Ergo, legislation becomes the only option and the legislators would be writing law against their own financial interests…. Yeah, FUBAR.

To wit, one of the shifts amid the “common sense” electorate is the general perception that Citizens United is no longer viewed as a win.

However, with all the discussions on bad Trade Deals there’s also another shift coming into focus, the Import/Export bank.

The traditional “conservative” opinion has been the Import/Export bank is a crony capitalistic tool expending taxpayer money to fund corporate bottom lines. Indeed, there is still a good argument in that perspective.

However, with more and more manufacturing jobs being lost, and with both Sanders and Trump talking about the consequences of the trade deals, the I/E bank’s original purpose deserves a revisit.

If the Vietnamese government wants to increase its manufacturing base they can, and have, subsidized private infrastructure to achieve it.

Meaning the government of Vietnam has given companies free land to build their plants; subsidized the construction of those plants, provided cheap labor and even given free utility improvements (water, electricity) to run those plants. In some countries the companies pay almost nothing for energy use.

All these subsidies lead to a ridiculously low production cost for the goods they manufacture. These goods then hit the global market at a substantially lower cost.

South Korea, Tiawan, Indonesia, India, Japan and China all do the same thing.

In China, the government is so reliant upon GDP growth, they have essentially built entire industrial complexes targeting specific industry. Over time, the operating entities (semi-private companies) pay back the government for the up-front and often continual subsidy. The business model, albeit fraught with corruption and bribery, is a symbiotic relationship between government and business.

This level of government contribution is not even close to “free market” capitalism, but it’s also not socialism – it’s an entirely different type of nationalist economics intended to create a product cost so low a nation can compete, then control, the entire market.

This is what the U.S.A. is competing against. This is also the auspices underlying the argument that the U.S. needs to enter into trade deals like the TPP in order to have some kind of influence at the trade table.

Setting aside the Trade-Deal aspect for a moment, lets just look at the government subsidy part.

How can a U.S. “free market” manufacturer compete against a South Korean manufacturer on the same product if the subsidized Korean enterprise encounters little to no costs in their start-up operations? It would be impossible to compete.

That’s the basic reason for the U.S. to have an import/export bank. The I/E is essentially the offset for the U.S. manufacturer to try and level the playing field.

The U.S. I/E acting as a low interest loan subsidy for the U.S. manufacturer who needs capital (money) to build manufacturing infrastructure, and compete against a subsidized national company in the global market.

There is a very good reason for continued support for the Import Export bank under this framework. However, as critics eloquently outline, some major U.S. manufacturers have become dependent on the I/E low interest loans merely to inflate their profit margins and increase their stock evaluations on Wall Street. Again, this is constructive criticism.

However, elimination of the I/E bank, or a decision to defund the I/E bank completely is a death knell to the original intent. Instead of eliminating the Import Export bank, it needs legislative reform to insure the beneficiaries of the loans which originate from it are being means tested to insure valid use.

The I/E bank should not be exclusively used by big corporations, but should instead be available to smaller start up manufacturing companies who are capable of providing fundamentally sound U.S. jobs while the current U.S. Trade Deals are renegotiated as both Sanders and Trump outlined.

As President Trump now resets the manufacturing base for U.S. industry to revitalize, there is an opportunity for ‘start-up’ manufacturing to increase with new facilities, new infrastructure and new components for a new-era of U.S. modern manufacturing.

Yes, venture capitalistic (VC) enterprise can often provide that funding mechanism for start up costs; however, at their core most VC’s are investment funds within Wall Street financial enterprises or their affiliates. Main Street, in a modern era, needs a solid source of non-Wall Street financing that is more stable and not as subject to being yanked back during financial crisis situations.

Wall Street is inherently tied to global markets, therefore the money Wall Street might loan start-ups is tied to the activity of multinational banks and multinational corporations. This is a cord which needs to be cut in order to have safe, secure and stable financing for small and mid-sized manufacturing entrepreneurs on Main Street.

Just like the awakening with the Citizens United decision, the IE Bank position is where the corruption within the traditionally conservative sales pitch is again noticed.

Common Sense Conservatives (CSC), Trump supporters, are able to see the nuance and not fall into the trappings of a zero-sum game. It’s not either/or any more. It’s now 2016 when the wording “smart trade” replaces the older no longer relevant “free trade”.

International trade (1950-2000) is now global trade (2000 – forward), and with the rising of third-world economies the political economic approaches require paradigm shifts. Conservative political positions of the Reagan-era, need modification in the Trump-era.

Unfortunately, just like Citizens United, Wall Street NOW benefits from a political shift and welcomes the elimination of the U.S. Import Export bank because the global government-subsidized infrastructure is almost fully established.

The fulcrum of balance in U.S. Manufacturing is now is the process of full tilt toward overseas dependency. Through the use of derivative bets on third-world economies, Wall Street now benefits from more globalization, not less. Goldman Sachs is more than willing to replace the Bank of China (in the capital market within China) by loaning money to Chinese manufacturing companies.

Look closely and you’ll see almost all the hedge funds are leveraged (derivative market) against the U.S. positions. Meaning, those hedge funds will do better if the U.S. manufacturing base shrinks, and the global manufacturing (GDP) increases.

Simultaneously there’s a significant uptick in private bond-market defaults. Domestic private bond originators (borrowers) are having a tougher time paying back the bondholders (Wall Street Brokerage Houses / Banks) and many are requesting renegotiated agreements. [Within the private bond market these are the same basic elements that led to the housing crisis via CDO’s (collateralized debt obligations)].

When the best play is to bet against your own country, you can be assured a crisis of intense proportions is about to happen. This is the backdrop for the billionaire class battle playing out behind the scenes at the very highest level of industry and banking.

There are actually Wall Street economic nationalists like billionaire Carl Icahn who are willing to join forces with Main Street billionaires like Donald Trump to fight against the billionaire globalist investors who now dominate on Wall Street.

The globalist perspective is also the broader economic reason behind Wall Street’s opposition to Donald Trump.

[*Insert Little Note* Remember, Trump is Mr. real estate – yet Trump didn’t collapse with the housing market. Why? Because Trump doesn’t play the bond financing game.]

Bottom Line – We cannot afford to see the elimination of the Import Export bank, until we have reestablished our U.S. manufacturing base. Those “conservatives” politicians who would advocate for the elimination of the I/E Bank, are selling out the U.S. on behalf of their Wall Street banking donors.

This Trade and Economics reality is one of many examples why Donald Trump pulled-in almost all of the high-information economic Democrats and beat Hillary Clinton.

This trade and economic reality, nationalist economics, is also why we see billionaire patriots like Wilbur Ross, Carl Ichan, Steve Mnuchin etc. willing to work on Trump’s America First agenda for free.

Patriotic nationalism is also Patriotic Economic Nationalism.

When you allow yourself to remain above the daily media flak and chaff you are able to see how focused the Trump economic policy is. America First might seem complex, but it really isn’t – it’s common sense principles absent of special interest influence.