The next recession’s cure might be worse than the disease

Let's say you're sick and your doctor tells you you need two kinds of medicine — and you can totally afford both medicines, lucky you — but instead of doing what the doctor says, you say, "I don't think so, Fancy Doctor Lady," and take only one of the medicines because you have some kind of goofy superstition about the other one. And you just keep getting sicker and sicker, but you keep not taking that medicine because you think you know better than Fancy Doctor Lady. 

That would be pretty dumb, right? But that is what our august world leaders are doing to the global economy, basically. Some Fancy Economist Ladies and Gentlemen are gathered in Washington this week for meetings of the International Monetary Fund and World Bank, at a time when the global economy is teetering on the edge of a serious downturn. These economic brainiacs will spend the confab talking about how fiscal policy needs to start pulling its weight after nearly a decade of central banks doing all the work, writes Mohamed El-Erian. Unfortunately, political resistance means that probably won't happen until things get much, much worse.

They aren't completely dire yet, Dan Moss notes: Monetary policy is so far working in sync to support the economy. But the large and growing rift between the US and China makes a mistake more likely. 

And, again, monetary policy alone can't fix what ails the global economy, writes Ferdinando Giugliano. In fact, the more easy money is pumped into the system, the more investors and businesses take ever-bigger risks, raising the chances it all goes kablooey when growth slows. The cure could soon be worse than the illness.

Trump Solves Another Crisis He Created

Good news: Vice President Mike Pence has talked Turkey into stopping its invasion of Kurdish Syria for five days. That is about half the number of days it has been since Pence's boss, President Donald Trump, told Turkey he was cool with it invading Kurdish Syria. Confused yet? So, apparently, is Trump, who even as he sent Pence to Turkey to ask for a cease-fire, claimed he didn't much care what happened to the Kurds, who very recently helped America bottle up ISIS terrorists. Trump's flailings amount to a complete abdication of American leadership, writes Eli Lake, an embrace of what could be called American unexceptionalism. Cease-fire or no, the chaos Trump has created and the damage he has done to America's global influence will linger.

The bipartisan rage over Trump's betrayal of the Kurds reached a fever pitch yesterday, producing "meltdown" accusations and one immediately iconic photo. Into the fray, Trump also released a shockingly amateurish letter he claims to have sent Erdogan warning him not to invade Syria. Erdogan reportedly threw the letter in the trash. Trump thought it made him look great, when in fact it made him look ridiculous and weak, writes Jonathan Bernstein. This is a pattern with Trump; he never seems to realize when he is losing or making himself look bad. It's costing him his presidency. 

Time for Some Brexit Game Theory

Speaking of self-inflicted crises: Brexit. UK Prime Minister Boris Johnson last night managed to strike a new deal with the EU. But Northern Ireland's Democratic Unionist Party has already declared it DOA, and Johnson needs the DUP to get his deal through Parliament. Ah, but parliamentary defeat may not bother Johnson much, writes Therese Raphael. The deal alone may help his case in a general election.

Then again, as Johnson should well know, UK elections are unpredictable. What he surrendered to win this deal will cost him in Parliament, Lionel Laurent writes, and he may not be able to avoid all the blame for that.

California's Renaissance Could End Quickly

If California were an independent nation, it would have the world's fifth-largest economy, thanks to a recent surge of breakneck growth. But a reckoning is coming. The state's electrical utility, PG&E Corp., this month cut power to millions of Californians to avoid another year of the devastating wildfires that have it in Chapter 11 bankruptcy. Rents are soaring, along with a homelessness crisis. Solving these problems will be expensive and will take political will, but California's weird system is holding it back, writes Noah Smith. Without some drastic reforms, any Calexit may involve the failed state Californians feared 15 years ago.

Telltale Charts

Netflix Inc.'s growth rate is slowing as competition and prices bite — not what you want to see when it's still setting mountains of cash on fire, writes Shira Ovide. 

Less than half of all active managers beat the market last year, according to data from a firm urging faith in active managers, writes Mark Gilbert. Perhaps you see the problem.