ECONOMYNEXT –  Sri Lanka, the world and US and the world is suddenly facing a triple whammy from the nationalist and interventionist actions of President Donald Trump that as well as the effects of the Fed’s inflationism via the excess liquidity driven single policy rate (ample reserves regime).

The Dow Jones index tumbled 1.23-pct (542 points) on Friday as the Trump tariffs went into effect, albeit at a lower than initially expected rate.

The Euro Stoxx 50 Index fell 154 points or 2.9 percent, with the FTSE 100 falling 0.7 percent, and the Nikkei falling 270 points, or 0.66 percent.

Regime Uncertainty

Trump’s actions where the government changes the expected rule of the game is called regime uncertainty.

Regime uncertainty which is an undermining of established rules governing, reduces the confidence of doing business and creates uncertainty and distrust of the system.

The so-called New Deal, where a number of state interventions were made by the Democratic government by mostly Keynesians killed investment and the first recovery from the Great Depression by making the investment environment uncertain.

Among the interventions was the devaluation of the US dollar and banning gold for both private holding and contract writing which led to savers being expropriated.

Sri Lanka has done extremely well to reduce the Trump tariff to 20 percent and ward off the worst effects.

In Sri Lanka President Anura Kumara Dissanayake has been acting carefully not making any sudden decisions giving continuity and policy stability except for one or two incidents.

READ MORE : Regime Uncertainty: Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War

Private citizens and businesses are un-armed and easily spooked, and it matters little to them whether pre-existing rules are de jure or de facto.

Sri Lanka Customs for example has ordered the re-export several hundred cars after suddenly deciding to implement a rule they had been ignoring for years and has signalled as permissible procedure in one intervention.

The Trade Ministry imposed price controls and created problems, but largely Sri Lanka has been a steady ship under the current administration allowing economic agents to work within a known system.

Resisting calls to ‘do something’ and intervene is difficult to resist.

The Disappearing Jobs

The second whammy on Friday was the revised jobs report, showing that new jobs created in May and June (after Trump’s taxes in April) was much, much lower than previously reported.

Predictably Trump killed the messenger by sacking the Erika McEntarfer, the commissioner of the Bureau of Labour Satistics claiming that jobs data “are being produced by Biden appointee”.

“We need accurate Jobs Numbers,” Trump wrote on his Truthsocial.com platform. “She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can’t be manipulated for political purposes.”

https://truthsocial.com/@realDonaldTrump/posts/114954846612623858″
McEntarfer said there were only 73,000 Jobs added (a shock!) but, more importantly, that a major mistake was made by them, 258,000 Jobs downward, in the prior two months,” Trump added.

“Similar things happened in the first part of the year, always to the negative.”

It is normal for jobs to fall when the Fed ends an artificial boom of its own creation, which creates jobs that would not have been there had it been running a more prudent policy.

The Fed had been running a highly inflationist framework called the ample reserves regime, with trillions of excess liquidity, which was started by Bernanke to push up asset prices after the collapse of the housing bubble.

Macro-economists in the Fed, (which then infected the ECB) later ‘normalized’ the abundant reserve regime, adding fuel to the crypto bubble, stocks and also emerging market debt. As the single policy rate hit those countries, they are defaulting.

War Drums Whammy

The third whammy on the triple witching Friday was Trump deploying nuclear subs closer to Russia, after comments by ex-Russian President Dmitry Medvedev.

After years of being what is generally called a ‘Putin Lover’ and peddling his false narrative that Russia attacked Ukraine due to its wish join NATO, Trump has now suddenly fallen out with his friend during visits to Russia as a private investor.

Ukraine gave up nuclear arms and no one was interested in joining NATO until Putin attacked Georgia after cutting its debt with oil profits from the Fed housing bubble and strengthening its economy.

Instead of ignoring Medvedev Trump has now deployed nuclear subs.

Putin is a cool customer who has run one of the largest and most resource rich, and resourceful countries for decades, killing off the democratic opposition and tightening his grip on the system.

Trump is the leader of a democratic nation, who has term limits, a free press and a voting population who are used to kicking out Presidents like empty Coke cans.

While Trump has an advantage in extreme socialist policies of the Democrats and a Fed which is creating inflation and unhappiness after dumping its scarce reserve regime for the single policy rate, the business community which funded him is far from happy.

Is there a ticking bomb in the US?

After years of stimulus advocated by macro-economists, US government finances are in a bad state.

Russia avoided the stimulus and had very strong government finances until the start of the war. However, now the situation is different.

Though the Ruble was successfully floated under a 4 percent inflation target the Bank of Russia has been unable to fully bring down inflation. Russia is also trying to fight war with mercenaries, no conscription and the economy has started to slow down.

The US fiscal bomb, if it goes off however can have devastating consequences, more than other countries, since the entire world is linked to the country.

RELATED : Sri Lanka could get hit from a disorderly US tumble: Bellwether

Due to pressure from the macroeconomists in the Fed and Treasury and mistaken criticism of the Asian savings glut, countries like China and others are no longer firmly pegged to the US dollar and buying Treasuries as they did from 1950 to around 2005.

After 2014 when China and others shifted to more floating regimes, reserve collection has basically stopped. That is an own goal of the macroeconomists who shouted from the rooftop when long term rates did not go up when the Fed hiked rates shortly before the housing bubble broke.

When money was printed to fire the housing bubble by the Fed large volumes went to housing. Now banks are scared of housing and there are actual housing shortages in many countries. Instead money went to government debt for macro-economic policy and stimulus.

Government balance sheets are remarkably bad, compared to the end of the housing bubble and the Great Depression.

In the deflationary late 1990s the US ran budget surpluses for the first time since the collapse of the gold standard. Fed fired the Roaring 20s bubble in the 1920s as Treasury ran budget surpluses.

Macro-economists have hit own goals all over.

The Trump tariffs have brought more revenues to the government, which is good, but it must have come as lost profits (and new jobs it seems) in company balance sheets.

Trump’s expectations of greater investments – the US was a top recipient of FDI and bond investments in the past which created the trade deficit in the first place – due to its stable policies and practices like grandfathering, when rules were changed.  

The biggest problem there seems to be little knowledge of how to fix the system in the US in both major parties.

US downturns tend to have ripple effects across the world and Sri Lanka has to be vigilant and not think that this country can ‘spend its way out of trouble’ as the US did from 2009 cutting rates when private credit is strong or going on capex spree. (Colombo/Aug02/2025)

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Anti-racism demonstrators have turned out in large numbers outside a London hotel where asylum seekers are being housed to counter-protest against those opposed to it being used as Home Office accommodation.

Both groups of protesters gathered near the Thistle City Barbican hotel in Islington, north London.

The Metropolitan police said the anti-hotel protest was organised by a number of people under the banner “Thistle Barbican needs to go – locals say no”, but it has since been endorsed by groups from outside the area. Online groups that have voiced support for the protest include Patriots of Britain and Together for the Children.

One speaker at the anti-hotel protest, which had a turnout of about 100 people, claimed counter-protesters had been paid by “the Labour government and the trade unions” to attend. Some of those who gathered across the road from the hotel wore Mega (Make England great again) hats and one man was heard chanting “Get these scum off our streets” towards the hotel.

Directly outside the hotel, hundreds of people attended a counter-protest organised by Stand Up to Racism and supported by the former Labour party leader Jeremy Corbyn, who is the MP for Islington North, located on the other side of the borough. They far outnumbered the anti-hotel protesters.

Some people in the hotel could be seen watching the demonstration from their windows. Sarah Bailey, 63, who is retired, held a sign that said: “To everyone in the hotel, you are valued, wanted [and] welcome.

“I know somebody that has connections with this hotel. I thought it was so important, because I realised they would be looking out of the windows, that we send a positive sign saying you are all these three things.

“I think it’s so important to show people that have come here seeking safety and protection that they are welcome and to stand up to those who scare and bully them,” she said.

Pat Prendergast, 21, said: “I want people to feel safe. I think the [anti-hotel protesters] over there are making people feel unsafe. I want to stand up in solidarity and say that, you know, we want people here.”

A separate group of masked protesters, dressed in black and chanting “we are anti-fascist”, appeared from a sidestreet and marched towards the anti-hotel demonstration.

The Met said plans were in place to “respond to any protest activity in the vicinity of other hotels in London being used to accommodate asylum seekers”.

A protest and counter-protest was also due in Newcastle outside the New Bridge hotel on Saturday. There were also posts online advertising a “For our children, for our future” protest in Newcastle on Saturday outside the hotel.

A “stop the far right and fascists in Newcastle” counter-protest has been organised by Stand Up to Racism at the nearby Laing art gallery.

On Friday evening, about 100 people attended a protest outside the Stanwell hotel in Spelthorne. Surrey police said a packet of lit firelighters was thrown at officers at the demonstration. The force added that a man was arrested on suspicion of attempted arson and inquiries were continuing to trace another suspect.

Health, wealth and relationships are the three timeless markets, and hospitality touches all of them. The key question is, what does it truly mean to care for the health of a hotel guest? 

This is where wellness (as the offering) and wellbeing (as the outcome) come in. Tracking how guests engage with wellness amenities can shape custom itineraries, increase ancillary revenue and even show tangible health gains over time, such as improving heart rate variability (HRV), a strong indicator of stress and vascular resilience.

You may wonder, “Why focus on wellness data when we’re still cleaning up our core ops?” 

Fair question. But wellness is shaping up to be a trillion-dollar opportunity. Just think back to the last time you were unwell: productivity, plans and responsibilities all took a back seat. Wellness habits like sauna use, healthy eating and supplementation are increasingly seen as preventive health investments, reducing sick days and enhancing overall performance. And once someone experiences those benefits, the loyalty is hard to shake.

Wellness is habitual by nature, which means repeat guests and recurring spend. Travelers are now choosing hotels based on wellness offerings, whether it’s a destination retreat or premium amenities at a city property. That means hotels must identify their wellness-minded guests and tailor messaging, upsells and experiences accordingly. Data helps reveal patterns, inform capital decisions and build campaigns around high-value, health-conscious travelers.

Step one is merchandising wellness consistently throughout the guest journey. That includes marketing, packages, upsells and even group offers. Every digital interaction – from fitness class signups to gym keycard swipes – creates data. This should flow into your warehouse and CRM, where future AI tools will mine it for insight. Painful as integrations can be, tracking what guests book and when can drive improvements in RevPAG and even justify rate premiums.

A powerful real-world example is SHA Wellness Clinic in Spain and Mexico. Their 7 to 14-night programs span diagnostics, fitness, nutrition and hydrotherapy, with all of them being very data-heavy. Recently, they began integrating WHOOP wearables to track metrics like HRV, blood oxygen and recovery. That data feeds into SHA’s systems to adjust guest schedules in real-time. Bad sleep? Move the workout. Slow recovery? Add more protein. It’s dynamic personalization powered by health insights.

Yes, SHA is a specialized player, but it signals what’s coming. As wearable tech and wellness platforms become mainstream, the hotels that adopt early will be best positioned to lead. Don’t wait for perfect infrastructure; start where you are, and let data be the bridge to better service, better outcomes and stronger financials.

Together, Adam and Larry Mogelonsky are the principals at Hotel Mogel Consulting Ltd., an asset management and hotel development consultancy. Their experience encompasses properties around the world, both branded and independent in the luxury and boutique categories. Their writing includes eight books: “Total Hotel Mogel” (2024), “In Vino Veritas: A Guide for Hoteliers and Restaurateurs to Sell More Wine” (2022), “More Hotel Mogel” (2020), “The Hotel Mogel” (2018), “The Llama is Inn” (2017), “Hotel Llama” (2015), “Llamas Rule” (2013) and “Are You an Ostrich or a Llama?” (2012). You can reach them at adam@hotelmogel.com to discuss business challenges or for speaking engagements.

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