Tag: Economy
Failure and disgrace in 100 days
As they Trump Administration approaches its 100th day April 30, the failures are glaring.
Failures
The most obvious failures are in negotiations. Trump himself laid out the agenda. He wanted:
- The Canal back from Panama.
- To buy Greenland from Denmark.
- Canada as the 51st state.
- Gaza voluntarily emptied and redeveloped as a resort.
- The Ukraine war ended.
- A better nuclear deal with Iran.
- Trade deals that would “correct” bilateral imbalances.
None of this is happening. The first three items are fool’s errands hardly worth discussing. The four later ones are more serious propositions.
Even winning would be losing
The Gaza-a-Lago proposition was a green light for war crimes. The Israelis are trying to force Palestinians out of Gaza. They are failing so far, but they will no doubt persist. This is egregious even from a religious perspective: Biblical Jews did not live in Gaza. No religion, certainly not mine, can approve displacing two million people to please a real estate developer.
Trump is proposing to end the Ukraine war on terms favorable to Russia. Why is not clear, but Moscow would keep the territory it has taken, including Crimea. Kyiv would have to recognize Russia’s annexation of the peninsula. Ukraine would get no security guarantee from the US, which would gain privileged access to its minerals. This is a bad deal, one that that will not end the war, even if Kyiv and Moscow sign on. At best, it will pause the hostilities.
The better nuclear deal with Iran is a possibility. That’s because Trump is prepared to lift many if not all the sanctions. Biden refused to do that, because Washington imposed some of them for human rights violations. The Trump Administration doesn’t care about those. So a better nuclear deal for Trump means American endorsement of the Islamic Republic’s oppression. Not sure that is what Americans really want.
The Administration claims to be negotiating tariff deals with 90 countries. Unless they lower tariffs relative to the previous Administration, they will raise costs for American consumers. The most important of the negotiations is with China. That will end with higher tariffs both on Chinese imports to the US and on American exports to China. Yes, the US government will gain some revenue, though nowhere near as much as the Administration claims. And most of that revenue will come from Americans. Inflation will accelerate. Recession looms.
The disgraces
Trump supports Israeli war crimes in Gaza, Russian victory in Ukraine, endorsement of Islamic Republic human rights abuses, and trade deals that raise prices and slow growth for Americans. Add that to attacking American universities, arbitrary arrest, imprisonment, and deportation of immigrants, and canceling of vital scientific research.
The Administration is weakening the United States. That is the only thing at which it is succeeding in its disgraceful first 100 days.
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The damage is vast and continuing
I’ve been at a workshop in Boston for these last few chaotic days. On the perhaps mistaken theory that President Trump will stick with the current tariffs, where do things stand?
The ugly
The losses on the stock market still amount to more than 10% of its value and trillions of dollars. If your timing was bad, you sold just before Trump suspended tariffs on most countries yesterday, causing a bump upwards. Odds are Trump, his family, and advisers did not make that mistake. Even if they didn’t use insider information to trade, they no doubt used it to desist from trading.
Trump’s on again, off again tariff decisions have done serious damage not only to the stock market. The bond market fall was a decisive factor in his “off” switch. That suggested strong inflation and rising interest rates, which would kill the Biden expansion Trump inherited. Stagflation is still a serious possibility.
With stocks and bonds collapsing, it would be surprising if Americans were to stay confident in the markets. The same is true for foreigners. The cash flow into the US that enables the trade deficit Trump wants to get rid of is in danger. Among the big buyers of US government bonds are the Chinese. Are they going to continue to buy, or even hold, those?
Markets rely on confidence. Trump has done everything possible since his inauguration to undermine it. Consumer confidence is declining sharply towards the relatively low level it hit during the COVID19 epidemic:
The bad
Trump’s tariffs are still there. The Economist estimates we’ve gone from an average effective tariff level of 3% to 25%. That is a giant increase that will hurt the American economy in many different ways. Because of our dependence on Chinese products, America is going to lose the trade war with China. Tariffs are still raising American costs, and Chinese retaliation is hurting US exports.
The automobile sector will be hard hit. American manufacturers, and foreign producers who manufacture in the US, are going to face sharply high costs. The capacity to ramp up domestic production of parts is limited. While the United Auto Workers union is applauding, few new jobs will result in the near term. Many more will be lost to the impending slowdown in the economy.
The good
If there is a silver lining, it is in national consciousness. Americans are becoming aware of their connections to the rest of the world. No one can ignore the damage that an incompetent and capricious president can do. Trade and alliances count. A Federal government that can think clearly and act sensibly is indispensable.
Some of this consciousness will help people understand the damage that cutting the Federal work force and budget will do. The so-called Department of Government Effectiveness has already demonstrated its vast incompetence. It is also hurting states and cities all over the country. The $2 trillion cut the House is asking for will cut deep into Medicaid and likely Medicare as well. Social Security is also at risk.
The simple fact is we were better off on January 19 than we are today. If Trump keeps this up, he will rank as a disastrous president.
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People are not pleased but it will get worse
Hard to picture a worse reception than President Trump got for his latest tariffs. American consumers are recognizing that they are inflationary, the stock market tanked, and the rest of the world gasped. That presumably includes the penguins on Heard Island, one of at least two places subject to Trump’s tariffs where no people live.
Not good for Americans
Trump’s minions are out trying to convince Americans the tariffs will not increase prices. But they will. Domestic producers will raise their prices, because they can once the competition raises its prices. The tariffs will act as a tax on consumption, reducing disposable income and slowing the economy.
The protection for domestic producers is badly targeted from a labor perspective. Americans don’t want to work in tee shirt factories that can compete with Vietnam’s. Nor do most Americans want to pick peaches. The US is a developed country that has moved up the value chain.
The re-shoring of manufacturing jobs to America will be slow. It takes years to build serious factories. What investor, seeing how capriciously Trump behaves, would lay out a few billion just because he has announced a 10% tariff? That could disappear tomorrow. Under Biden, the American economy had already created a record number of manufacturing jobs. Manufacturing in Trump’s first term lost jobs, partly due to the COVID-19 epidemic he mismanaged.
Eighty per cent of our jobs are in services. Retaliation will hit those hard and fast.
The economy
So inflation will be up, jobs will be down. The odds of a recession are way up. The firing of tens of thousands of government workers will hit communities all across the country, not just in Washington DC.
Wait until those who own stock have a hard look at their portfolios. They will cut back on spending. This “wealth” effect will be particularly pronounced for retired people, who are required to take amounts fixed on December 31 from their retirement accounts. Unless they anticipated the downturn in the market, they’ll have to raise those amounts by selling stock worth much less than it did a few months ago.
Meanwhile the Fed will have to do what it can to moderate prices. Its only real tool is to raise interest rates, which will pinch consumers even more. Trump will rail against the Fed, but it will have to hold the line.
The rest of the world
Trump is telling people the tariffs are not a negotiating ploy. He wants them to stay for years, which is the only way they can boost domestic production. This means America’s trading partners will be retaliating hard and fast, while turning to increased trade with each other. That will give them the competition they need to enhance productivity, while American industry grows fat and lazy behind high tariff walls.
The consequences will be felt in many ways. Innovation will lag. Trump has already done enormous damage to America’s research universities and government research institutions. His erratic enforcement of immigration laws is also actively discouraging foreigners from coming to the US. Young scientists and engineers will be going for advanced education to universities in Europe, Latin America, Australia, India, and China rather than the US. It’s not only the tourism industry that will suffer from their absence. Immigrant entrepreneurs are a far higher percentage of the total than immigrants are in the population.
Is it all purposeful?
It is tempting to suggest that all this is not an accident. Trump has repeatedly shown an inclination to weaken the United States, especially in Europe. Is that the real purpose?
But I’m afraid that would give him too much credit. The tariffs and immigration policy are just dumb. He is a profoundly uneducated mercantilist and racist. But I wouldn’t say the same about the attack on the universities and research institutions. That is an effort to rid the country of people who would dare to challenge him on factual and rational grounds. He wants an America swollen with racial prejudice and isolated from the world. Half the country supported that objective in last November’s election.
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America made a giant mistake
The Signal chat is now the talk of DC. On it, Secretary of Defense Hegseth shared information that could have given an adversary opportunity to kill American service people. That’s all you really need to know. But it turns out that information came from an Israeli clandestine source, which compounds to damage. Signal is a commercial system not authorized for classified information. Hegseth denies it, to his discredit, but the operational information he shared was unquestionably classified.
Dumb and dumber
National Security Advisor Walz and Director of National Intelligence Gabbard compounded the sin. They lied to Congress about the contents of the chat, which has now been published by The Atlantic. Vice President Vance and President Trump claim they and their underlings did nothing wrong. These are stupid denials. Any lower-ranking official who did what Hegseth did would be courtmartialed or fired. The US Government would never again hire someone who did what he did. No one who did it would ever be hired by the US Government again. We are talking gross malfeasance here, not nuance. If he doesn’t resign, Hegseth should be fired.
Now Trump is trying to distract attention. He has announced 25% tariffs on cars. Tomorrow it will be something else. He is determined to create turmoil. It shifts the ground under his critics’ feet and prevents accountability. Almost no one has noticed Trump’s Executive Order on elections, which is intended to severely curtail voting by poor people and minorities. That’s a big win for him.
Dumbest
But the dumbest thing is the supposed ceasefire agreements in Ukraine. There Trump has promised Putin sanctions relief in exchange for an end to fighting in the Black Sea. That disadvantages the Ukrainians in two different ways. The Russians were no longer fighting in the Black Sea, as Ukrainian naval drones had chased their warships into port. Relieving them of financial sanctions is a big reward for nothing.
Trump has already given Moscow a bar on Ukrainian NATO membership and permission to hold on to occupied territory. Sanctions relief is a hat trick for Putin. He is laughing at Trump, who is playing the fool. I shouldn’t say playing. He is a fool.
The world already knows what Americans need to realize
This Administration is dumb and ill-intentioned. It is literally knocking on doors in Greenland looking for people who want to meet the Vice President and his wife. Everyone is saying a polite “no.” Denmarkers wouldn’t be so polite. In fact, it is now hard to imagine any European country that would be pleased with a high level visit from the US, other than Viktor Orban’s autocratic Hungary.
The situation isn’t much better in the Middle East. Only Israeli Prime Minister Netanyahu would welcome Trump with open arms. Kurkiye’s President Erdogan might like a visit, but only because it would give him the chance to roll Trump again, as he has repeatedly done in the past. Even his friendship with the Saudis has cooled. No more sword dancing. Not to mention Canada, where Trump’s offensive behavior has infuriated a normally equilibrated citizenry.
It will take more time for Americans to fathom the mistake they have made. But buyers’ remorse will set in. Unfortunately, it will only be after tens of thousands have lost their jobs, many farmers have lost their farms, inflation has ravaged the country again, leading scientists have fled for greener pastures, untold numbers have lost their livelihood and lives, and the world has lost confidence in American leadership.
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Neither nothingburger nor whopper
The 30-day fighting pause agreed today between Ukraine and the US is not a nothingburger. But it isn’t a whopper either. More like a quarter-burger.
No pause is a pause until both warring parties have agreed. I imagine the Americans have good reason to hope the Russians will sign on. But it isn’t a real agreement until they do.
What else did they say?
The Ukrainians offered fulsome gratitude to President Trump, the US Congress, and Americans for their assistance. Trump and Vance had complained they hadn’t thanked the US enough.
The US says it is lifting the pause on intelligence sharing and military assistance. Administration officials are claiming neither entirely stopped.
Some Ukrainian humanitarian priorities are cited: exchange of prisoners, release of civilians, and return of forcibly displaced Ukrainian children. These are not new items, and there has been sporadic progress in the past. But for Kyiv they are important.
The Americans and Ukrainians agreed to name negotiating teams for discussions aimed at an enduring peace and Ukrainian long-term security. The Ukrainians want the Europeans involved in the negotiations.
Presidents Trump and Zelensky agreed to conclude a comprehensive critical minerals agreement. This is presumably like the one they didn’t sign at the White House 10 days ago. It is supposed to expand Ukraine’s economy and “guarantee Ukraine’s long-term prosperity and security.”
What’s missing?
I don’t see anything objectionable in this statement. But it leaves out a lot. It makes no mention of Russia’s continuing occupation of Ukrainian territory. It neglects the need for security guarantees beyond the minerals agreement, which is insufficient. The statement says nothing about Russian aggression and responsibility for compensation. It does not assert American support for Ukrainian sovereignty and territorial integrity. It leaves the Americans free to continue excluding the Europeans from the negotiations.
Of course the parties can cover all these issues in the future. But their neglect here tells you how far the US has gone in tilting towards support for Moscow. Nothing in this statement should cause any concern there. If Putin rejects the ceasefire offer, it will betray his lack of interest, not anything in this document.
What next?
If Moscow agrees, we’ll get a 30-day pause. Both sides will try to rearm, consolidate, redeploy, resupply, and prepare for more. I imagine it will be done initially without the trappings of a real ceasefire. It can be built out in subsequent iterations if both sides agree.
The critical question is whether the Americans are really going to continue intel sharing and military assistance. They may start using them to force the Ukrainians’ hand, switching on and off on a daily or weekly basis. The Russians would no doubt take advantage of that on the battlefield, as they have in recent days.
If Trump really wants success, he’ll use any Russian hesitation to tighten the sanctions on Moscow. The Russian economy is in deep difficulty.
Tightening sanctions might have a salutary effect on Putin’s willingness to deal. But Putin has weathered them so far. And Trump shows no signs of taking advantage of the opportunity, even though he has mentioned it in public.
This agreement between the US and Ukraine may not stop the war between Russia and Ukraine. But let’s hope it stops the war between Washington and Kyiv.
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All that glitters is not gold
President Trump is promising a golden era. Let’s have a look.
What’s he doing now?
Tariffs, immigration restrictions, refusal to help democracies in Europe: this reminds me of the 1930s. So too does withdrawal from international institutions and stock market jitters. We know how that ended. Will it be better this time?
The campaign against woke as well as diversity, equity, inclusion is racial and gender prejudice incognito. Racism without the white sheet and pointy hat.
Firing of government workers and canceling of government grants and contracts is how both Trump and Elon Musk conduct business. These are the people you never want to do business with. They don’t keep commitments. They lie about accomplishments. The savings are going to be minimal. Firing all government employees would save 4% of the Federal budget. Firing IRS agents is going to increase the deficit.
The dismantling of USAID is already killing non-Americans who suffer from HIV, malaria, and other diseases. It is also hurting American agriculture and the American contractors who implement most of the work done abroad. At less than .5% of the budget, the savings are minimal. Once the court cases clear, I doubt there will be any savings at all.
What’s he aiming for?
Trump isn’t hiding his goals. He wants to extend a tax cut from his first term that will cost the US government $4.5 trillion. We know what that did the first time around: it was expensive and skewed to the rich. It did not deliver promised benefits. There is no way to compensate for the full $4.5 trillion, but the Republican House proposal is to take $880 million from Medicaid, depriving one-fifth of Americans of health insurance:
Trump will claim the savings come from waste, fraud, and mismanagement (WFM), but that is flim flam. There isn’t anywhere near enough WFM.
Trump has already suspended military aid and intelligence sharing with Ukraine, while asking nothing of Russia. Moscow continues its bombardment of civilians and its push for more territory. Trump’s goal is to get Ukraine to agree to give up land in exchange for Russian security guarantees. Putin has repeatedly proved those worthless. Trump expects the Europeans to provide peacekeepers, but that is entirely dependent on US backup through NATO’s Article 5. Trump is saying he won’t commit to that. The push to end the war in Ukraine is again flim flam. Dangerous flim flam as it is encouraging Putin to do whatever he feels like doing.
In the Middle East, Trump is still bragging on Gaza-lago, his scheme for rebuilding Gaza into a Mediterranean resort. No one things that is happening. If he were successful at moving the Palestinians out, it would make Americans targets of terrorism worldwide.
Dross is what you get
I underestimated Trump. To me, he is an obvious fraud. But he fools a lot of Americans. They think Musk is doing something that will balance the budget. They believe Trump will somehow make peace in Ukraine. His supporters don’t care that his Gaza ideas are bogus. It’s not just that all that glitters is not gold. It’s that anything Trump touches turns to dross.
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