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Sunday, May 4, 2025

2025-05-04

***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:

His tariffs, tax cuts and deregulation efforts make up a coherent strategy to benefit Main Street


Tariff Front-Running is Already Showing Up as Reductions in US GDP Growth

................ Computers & pharmaceuticals were the two sectors behind the vast majority of that record import surge—outside those industries, the jump in imports was noticeable but not record-breaking.

.............. Outside of the rapid shifts in trade itself, consumption growth also changed considerably at the start of this year.

................. Yet it’s also important to say that the costs and uncertainty of trade policy chaos can have real negative growth effects. If a construction company rushed to buy a bunch of wood from Canada ahead of tariffs, that would show up as an increase in imports and an increase in inventories which cancel each other out. But if that company slowed down construction so it could afford to stockpile inputs, that would show up as a hidden drag on GDP in the form of lower investment. In other words, tariff front-running can indirectly slow the economy, and that’s exactly what we saw at the start of this year


Admittedly, given the varying rates at which the impact of Trump economic policies, particularly tariffs but also DOGE and immigration crackdowns are progressing, it’s hard to have a good picture of where things stand in in the US and where the bottom might be. That is not merely the result of information being retrospective in what looks to be a rapidly accelerating downswing, but also small businesses and/or intermediate goods producers taking the biggest hits, and they are generally not well studied.

But based on the tone of the press, discussions with people in the US, and a very recent and short trip to New York City,1 much, and arguably too much, of the US seems to be in summer of 1914 mode: cheerfully living in a sense of normalcy that is about to vanish permanently. To put it another way, if there was a sufficiently widespread appreciation of what was looming over the horizon, May 1 would have seen the launch of open-ended general strikes.

Trump really is well on his way to implementing a reactionary restructuring of the US and international economy. “The end of globalization” is too bloodless a formula to convey the severity of the dislocations that have only started to arrive. 

Even in the vanishingly unlikely scenario that Trump were to abandon his tariff policies in the next week, the confusion and interruption of supplies will still have done considerable harm. The longer they remain in place, the more that damage, particularly small business closures and downsizings at small and bigger enterprises, will become permanent.

Optimists take undue solace at the idea that Trump will roll back the tariffs as he wrests concessions from other countries. First, as far as the mother of all tariff blowback is concerned, optimistic press noises about China being willing to talk are misleading. Yes, Chinese official media has acknowledged Trump Administration outreach efforts and signaled a willingness to negotiate. But China has also made clear that it is still sticking to its guns: the US must drop (which may translate into “substantially reduce”) its tariffs first. ...............

Now admittedly, Trump may be forced to blink soon in his China staredown due to the US need for rare earths on which China has imposed export restrictions.2 But given Trump’s massive ego, even if he were to cut China tariffs to try to get negotiations going, it seems unlikely he’d roll them back far enough in his first go to satisfy the Chinese. And if Trump eventually climbs down far enough to placate the Chinese, the Trump Administration also seems out of touch as to how long treaty and trade negotiations normally take. Given the US being famously not agreement capable and the Trump Administration not signaling an intent to retreat from its goal of diminishing China geostrategically (which may include military action), there is no reason for China to be accommodating as far as the process of reaching an agreement or its form is concerned. ............

And the reason investors, businesspeople, and consumers ought to be at DefCon 1 alarm levels and aren’t? The best guess is that they assume that this Administration, like every one since the Great Depression, will saddle up and intervene to try to prevent worst outcomes.

But the Trump Team has openly and repeatedly expressed its Mellonite goals. It fully intends to tear down big swathes of the American economy, out of their cultish belief that new enterprises will quickly spring up to replace them.

But tons of commercial and investor behaviors are based on the assumption of a rescue, such as buying dips. If worst comes to worst, there will always be the Greenspan/Bernanke/Yellen put. Similarly headlines like the Guardian’s Trump’s tariffs: ‘It feels like Covid 2.0. So many things are getting disrupted’ give an unduly optimistic picture by suggesting that a Covid rerun is as bad as conditions might get.

Listen up: if Trump does not radically change course, what is coming will be much worse than Covid. Then, the US ramped up emergency programs, such as the Payroll Protection Plan and extended unemployment benefits, to preserve jobs and spending.

By contrast, Trump fully expects consumers to suffer considerably and is clearly unconcerned: ........

Because Trump is particularly attached to his America circa 1890 idealism and has surrounded himself with like-minded ideologues, he can’t be expected to reverse course on his tariffs, except at the margin, and then slowly. .........

We have not even factored in the impact of DOGE, which does not simply cut government jobs but far more important, guts programs and cashiers seasoned employees who could play essential roles in what would amount to economic relief efforts.

Satyajit Das, in his important two part series (see here and here) set forth other reasons why the coming crisis may prove to be intractable. ...........

In other words, the downside risk of Trump’s demolition project is far greater than anyone seems willing to admit. Too many people are operating on the optimistic assumption that somehow that can’t or won’t happen. Tinkerbell thinking didn’t have much success in the runup to the 2008 crisis. It is unlikely to fare better now.




BNP: Equities: 100 years of crashes - Tariff watch (via the Bond Beat)

Tariff crash: Market crashes that occur without a significant economic downturn can be large and volatile but tend to be relatively brief. Price action for equities this year is so far consistent with prior non-recessionary crashes. However, we think the rally off the lows is more a function of position capitulation than an ‘all clear’ signal for risk. Mega-cap Tech earnings have also helped. Our base case is that a combination of earnings downgrades and PE compression could see equities retest YTD lows.



US stocks are in for another drop that will eventually lead to a bear market in the coming months, according to veteran technical strategist Tom DeMark, who accurately called this year’s top in February and subsequent April low.

DeMark — a closely-followed analyst who’s advised billionaire investors including Paul Tudor Jones, Leon Cooperman and Steve Cohen — uses a system for predicting where markets will move, divined from a half century of chart gazing that’s based on mathematical relationships. He focuses on trend exhaustion, with his mantra being markets top on good news and bottom on bad news.

A confluence of technical indicators, sentiment shifts and cyclical timing models are flashing caution signs, suggesting a drop in the S&P 500 below 4,835, this year’s intraday low in early April. That would represent a more than 20% drop from the gauge’s February peak, pushing the index into a bear market.

“A top is imminent. Too much technical damage has been done,” DeMark said by phone. “Stocks are vulnerable right now and can easily get hit pretty badly if anything quickly changes on the global trade outlook.”

DeMark’s warning comes amid a stock-market rebound that’s put the S&P 500 Index on track to erase all of its losses suffered after President Donald Trump’s tariff announcement last month. The gauge is up for a ninth straight day Friday, which would mark its longest winning streak since 2004.  ............


Oaktree Co-CEO Sees Private Credit Trades as Low as 50 Cents

Private credit fund investors are offloading stakes at significant discounts ahead of more potential pain for the US economy, Oaktree Capital Management Co-Chief Executive Officer Robert O’Leary said. Oaktree sees more chances to buy marked-down assets. ..............

 O’Leary said this week that investors have not opened up to idea that we might be facing a recession or are already in one. 

O’Leary said a downturn could be as serious as the dot-com bubble. ‘That was traumatic, that was pretty V-shaped, so we came out of it pretty quickly… The problem here is you’re starting to put in place barriers that will shape the behavior of our counterparties.’



Tweets of the Week:
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Charts:
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(not just) for the ESG crowd:



The Climate Paradox: Why We Need to Reset Action on Climate Change

People know that the current state of debate over climate change is riven with irrationality. As a result, though most people will accept that climate change is a reality caused by human activity, they’re turning away from the politics of the issue because they believe the proposed solutions are not founded on good policy.

So, in developed countries, voters feel they’re being asked to make financial sacrifices and changes in lifestyle when they know that their impact on global emissions is minimal. Whatever the historical responsibility of the developed world for climate change, those with even a cursory knowledge of the facts understand that in the future the major sources of pollution will come principally from the developing world.

But for that developing world, there is an equal resentment when they’re told the investment is not available for the energy necessary for their development because it is not “green”. They believe, correctly, that they have a right to develop and that those who have already developed using fossil fuels do not have the right to inhibit them from whatever is the most effective way of developing.  ....................................................



U.S. Empire Fare:

With the U.S. on the decline and China on the rise, is a conflict imminent?

We are witnessing tectonic shifts in geopolitics and economics. The five-hundred-year period of Western world dominance is in the process of coming to an end; with or without the rise of rivals. Even as western capitalism turns on itself, ending the global system it built for centuries, can it still stop the rise of China? Or does this even matter…? High-tech modernity around the world is at a point of existential crisis, to which great power rivalry is but a symptom.

First, we must understand the nature of western economic decline. As American and European capitalist countries turned towards financialization after the oil-shock of the 1970’s and 80's— i.e.: as financial markets, institutions, and transactions gained an overwhelming prominence — the real economy of goods and services began to decline, and with it the living standards of the „bottom” 90% of the population. This, in combination with the loss of the economically viable half of those nations’ natural resources, led to deindustrialization, the loss of scientific and technological innovation, together with the concentration of power in the hands of the wealthy few (the top .1%). The average citizen, as a result, got poorer (much poorer) in the past quarter of a century — eventually giving up on their hopes of a better future — while the S&P 500 just kept rising and rising. Let’s review some key statistics to see why businesses in the real economy and citizens alike struggle to remain on the surface despite ever growing stock market valuations and claims of miraculous productivity growth. .................................................................................................

................................... As a result certain products will only be developed for the still relatively fast growing Chinese and Asian market, and not for the West which is already in a steep economic and technological decline (especially it’s European half.)

Tariffs and sanctions will make this rift even wider. By forcing China to sell their ever more advanced and competitive products in Asian markets, European and American exporters will find it harder and harder to sell their old and expensive technologies in the Asia-Pacific region. The world market, as a result, might all too easily be torn into two halves: a still developing East and South, and an ever faster declining West. The limitation on rare earth minerals export from China (which still dominates the market), only adds to this problem, making high-tech devices not only costly to develop for a shrinking western market, but also hard and costly to manufacture. .....................



A good way to think about human history is that it has two distinct scales. On the small scale we have the churn of daily events — the stuff of endless individual exploits. And on the large scale, we have the long-term evolution of human societies — a scale so sweeping that the actions of individuals are as insignificant as the shifting grains of desert sand. The task of social science is to somehow connect these two scales — to show how the characters of history act on a stage that they do not fully control.

Looking at the present political spectacle, it’s clear that the world order is changing. In a matter of months, Donald Trump has taken a wrecking ball to the US-led regime that reigned since the end World War II. But here is an interesting question: if Trump had not been re-elected, to what extent would things be different?

The answer depends on our choice of scale. In a world without Trump, the eddies of small-scale history would surely be altered. There would be no ‘department of government efficiency’, for example. Nor would their likely be an unfolding US-led trade war. But on the scale of long-term history, many tides would remain the same. Chief among them would be the inexorable decline of US empire. To put things bluntly, the ‘American century’ is over and will never return. ......................
............ Turning to the US imperial half life, it lasted for about 120 years, from 1889 to 2008. As such, virtually every US politician who is now in power was born and raised during the period of US dominance — an era when America was ‘exceptional’. But that era has now passed; the ‘American century’ is dead. Hence the widespread confusion among US elites, who still think in terms of US supremacy, but cannot fathom that America’s halcyon days are gone and will never return.

........... By definition, the full pulse of imperial power is visible only in hindsight, once the pinnacle of dominance is a distant memory. As such, we can say little about the imperial future, other than that the next century will likely be dominated by China. Indeed, the era of Chinese supremacy has already begun.

It happened with little fanfare in 2009. (See Figure 5.) In that year, China’s share of world energy consumption first surpassed that of the US. Intriguingly, it was also in 2009 that the US exited its imperial half life, consuming (for the first time since 1889) less than half its peak share of world energy use. Since then, the tide of US power has continued to ebb, undeterred by the minutia of partisan politics. And the tide of Chinese power has continued to rise. Within a few years, China will consume double the energy of the United States.

.......... It’s surely for this reason that China has responded to US tariffs with a nonchalant shrug. China holds all the cards, and Beijing leaders know it. In Washington, American elites still strut like Roman generals. But to the rest of the world, they look increasingly like senile peacocks.\



...................... State media and propaganda outlets have seized the moment, portraying the US as an external enemy and rallying nationalist sentiment. There’s growing pride in standing up instead of giving in.



The tit-for-tat trade escalation between the United States and China has dominated news cycles. In the backdrop of rising U.S.-China tensions is another—and potentially just as profound—change occurring in the U.S.-EU relationship. The Europeans may increasingly distrust U.S. technology and may focus on “de-risking” not just from China but from the United States as well.

The Trump administration’s aggressive attacks on European technology regulations and the cutoff of intelligence-sharing and weapons deliveries to Ukraine have led to fears in Europe that the United States could do something similar to it. Europe has suddenly become full of rumors that the United States could invoke a “kill switch” that would disable core military systems ...............


Geopolitical Fare:

Gaza sets a terrifying precedent: the radical reinterpretation of the laws of war is bound to have serious consequences on the destructiveness of future conflicts — including a US-China war


Traumatized and weary, journalists in Gaza file stories between airstrikes, capturing what remains of lives and landscapes before they, too, are erased.


As satellite images reveal China's ambitious construction of the world's largest underground military command center near Beijing, global tensions escalate, prompting experts to scrutinize the implications of this unprecedented development for international security dynamics.


Tariq Ali: On the Brink?

India and Pakistan are preparing for war. The casus belli is, once again, occupied Kashmir. Control over this disputed region has since 1947 been the main obstacle to normalising relations between the two states.


Antonio Turiel: "Europe could implode"
“In reality, the war effort, with the 800,000 million euros committed to it, may involve such an excessive effort and such losses in the already relatively tenuous state of welfare that Europe could implode, collapse socially, like those people of a certain age who insist on making efforts that decades ago they could do with ease and that today could kill them. It is something repeated throughout the history of humanity: great empires that, in a time of deep crisis, decide to try to recover the military glory of the past and succumb to the weight of military spending and the accumulation of internal problems.”
A spectre is haunting Europe. After decades of placidity (or so the media would have us believe), we have entered a state of panic, frightened (or so we are told) by an imminent invasion from Russia ...................

.......................... Europe wants to move quickly towards rearmament because, apparently, Russian troops are already appearing in Helsinki, Prague, Budapest and Warsaw. Hurry, hurry, hurry... Don't they see the existential risk for Europe?

Obviously, there is no such thing as the Russian threat. Russia is not going to set out to conquer Europe and risk triggering a response from the United States. Moreover, two European countries possess nuclear weapons (France and the United Kingdom), which is an excessive risk. And finally, there is a problem of population arithmetic: although Russia is huge, it has only 140 million inhabitants, while the EU has 450 million. In fact, it would be a logistical challenge for Russia to try to occupy Ukraine, with its almost 40 million inhabitants, on a permanent basis - it is very different to defend your territory than to occupy someone else's.

That doesn't mean that Russia is a lamb, but obviously the scenario that is being proposed to us has no semblance of reality whatsoever. A confrontation with Russia would be exhausting and extremely costly for the Slavs, even if it did not involve the occupation of territory. And, after all, why would Russia want to do that? Even today, after the fanciful European sanctions, Europe is Russia's main buyer of raw materials. And there are many people, not only in Moscow but also in Frankfurt and Paris, who are hoping that the talks between Putin and Trump on Ukraine will come to a successful conclusion (without taking into account the opinion of the Ukrainians, of course) in order to re-establish the flow of raw materials at a good price to which Russia has accustomed us.

No. The European rearmament and militarist movement has another objective and another reason, and it must be understood in the context of the rest of the decrees and directives that have been signed in Brussels in recent weeks, as a desperate response to the telluric geopolitical changes brought about by Trump's Second Coming. We already commented in the previous post about the Omnibus legislation and its consequences on the environmental level. But the European legislative machine does not stop, and so a few days ago we learned that the EU has classified as strategic, and therefore eligible for subsidies, 47 projects for the extraction of critical materials, 7 of them in Spain (led by large companies, many with environmental lawsuits). In most cases we are talking about either small deposits with little production potential or deposits that are very harmful to the environment. If Europe is rushing to accelerate these projects it is because it perceives a desperate need to accelerate. The fact is that the energy and resources crisis is advancing inexorably. .........................

At the same time, the problems that the shortage is causing in areas critical to the supply of certain materials mean that the supply chain problems of a few years ago could be a joke compared to what is coming now

Europe needs energy, it needs materials, and it needs them now. The much-vaunted renewable transition, has failed and is collapsing, and Europe does not have great natural resources. Where will we get the energy we need? The answer can be found in the first of the three questions we asked nine years ago.

Europe is going to invade North Africa.

Or, at least, this is the unconfessed intention of our leaders (and applauded by companies like Volkswagen, which sees not only cheap raw materials but also the possibility of converting to the military industry). That is why they want weapons, that is why they want to militarize consciences, that is why they need to silence critical discourse until it is too late. ...............


Vladimir Putin is the luckiest of leaders. He is engaged in a civilizational war with countries led by men or women who are either morons, delusional, or simply incompetent.

He can count on them to make one mistake after another, which has made all the difference to Russia's amazing development economically, industrially, socially – and in all respects as a nation.

Evolution, as you know, depends on two things: challenge and competition, usually in the form of conflict. The West has challenged Russia, not only competing but trying to destroy it.

The West has no plan – only a sense of entitlement. Worse, it is not led by the best and brightest – but by the worst and dimmest.

Zelensky is a good example. He's a weak, vain moron – greedy and shortsighted.

Biden is another example — a dim bulb, who could barely remember his name.

Now we have Trump who calls himself a "stable genius"-- which means he's the smartest donkey in the barn. He only opens his mouth to shit. He doesn't read. He doesn't think. He will never get dementia – because he just doesn't have enough brain cells.

Then we have people like Starmer. He needs remedial education; if not toilet training but that would impede the progress of the kids in the classes who want to get ahead.

In any case, he cannot be remediated. Nor redeemed.

Add to this Macron and a host of Europeans. I think they're all on drugs. Is China supplying them with fentanyl ? If it isn’t, it should.

What this means is that Putin can take his time.

Just sit back and wait for the enemy to commit collective suicide.

The alternative would be a conventional Western style assault with several hundred thousand troops, and massive bombing—”shock and awe”—and taking a lot of casualties, unless you could just wipe everyone out from the air.

As it is, the Russians are killing 10 Ukrainian soldiers for every one of their own in the slo-mo SMO while the Kiev regime discredits itself and its people stop believing in it.

It will take time, of course. But Russia has lots of that, although the declining Western Empire does not ..................



Media Fare:

The media's role is to disorientate us, so we disbelieve what we can see with our own eyes: that there is a genocide going on, and our own leaders are actively assisting it



..................... The undoing of American journalism began in “J-schools,” where young reporters were taught that the touchstones of neutrality and objectivity were no longer viable. At schools like the University of Texas, students are told that it is time to “leave neutrality behind.” Stanford journalism professor, Ted Glasser, has insisted that “journalists need to be overt and candid advocates for social justice, and it’s hard to do that under the constraints of objectivity.”

Editors soon picked up on the change and declared that “Objectivity has got to go” in hiring reporters committed to what I have called “advocacy journalism.”

The result has been a transformation of American journalism into a type of echo chamber that amplifies liberal and often partisan Democratic talking points. That includes framing the news in overtly biased ways  ..............



Other Fare:

It Helps to Ask

In each of the last six years, the Danish NGO AoD (Alliance of Democracies) has compiled and published the Democracy Perception Index, an international survey of national sentiments regarding democracy. What sets the survey apart is the inclusion of economic reasons as threats to democracy. So, instead of having American politicians psychologize economic dysfunction as ‘anxiety,’ survey respondents are able to answer the questions themselves.

Surprise, the survey responses have nothing to do with anxiety. They reference the distribution of economic power. In descending order, the threats to democracy are 1) concentrated income and wealth, 2) corruption, and 3) corporate control over politics. And preceding Donald Trump’s first term was the conclusion by a near-majority of Americans that the US is not ‘a democracy.’ A far larger percentage of Chinese believe China to be democratic than Americans believe the US to be. ..............

For the young, the young at heart, and those averse to learning from history, the purpose of ‘Trump!’ in 2025 is to give American-style capitalism one more try. Missed in the prior iteration were impurities in execution according the Trump & co., and not the conceptual flaws of capitalism. From Ronald Reagan to Bill Clinton to George W. Bush to Barack Obama, capitalism would have worked as advertised if only capitalism’s executors had been homicidal enough.

The immediately prior version (of capitalism) had it that abandoning industrial policy, deindustrializing the US, sending sensitive national production (e.g. defense, critical minerals, agriculture) abroad and handing national decision making to self-interested corporate hacks and inheritance wastrels was the necessary curative. The resulting rolling crises of capitalism were explained as temporary disruptions, as bugs, not features, to the point when the economic, and with it social, decline of the US became an embarrassment to our overlords. .............

Recall, at the start of this epoch the banks were heavily regulated to prevent crises before they occurred. That system worked. Then Jimmy Carter, Ronald Reagan, Bill Clinton and George W. Bush deregulated. Question: how is Mr. Trump a radical departure from this history?

While the US has spent the last century declaring Russia to be authoritarian, only a slightly smaller proportion of Russians believe that Russia is democratic than Americans believe the US to be. What happened was that Cold War animosities were revived with Russiagate, and the light-thinkers who found it convincing are stuck with the residual remembrance of Cold War cliches filtered through news content intended to sell breakfast cereal. The challenge, again, is that the 0.01% richest, the oligarchs, plus the next richest 9.99%, the PMC, only total to 10% of the US population.

But what does this actually mean? In the most basic sense, it means that the priorities of the leaders of the world differ from those of its citizens. The citizens want greater control over the political decisions being made than they currently have. For a nation like the US that uses the fiction of citizen control for authoritarian purposes, it means that the hold of the uniparty is waning.  ...........


“The masses have never thirsted after truth. They turn aside from evidence that is not to their taste, preferring to deify error, if error seduce them. Whoever can supply them with illusions is easily their master; whoever attempts to destroy their illusions is always their victim.”
—Gustav Le Bon
................. In four generations, children have gone from roaming up to six miles from home to an average of just 300 yards. One result is to shrink their hippocampi—the seahorse-shaped parts of the brain near our ears that drive our spatial awareness and orientation. Children in the overdeveloped world now spend less time outdoors than prison inmates. They can’t tell East from West. It has led to a 50 percent rise in agoraphobia—fear of leaving home—and also biophobia--fear of the natural world. Jerry Brotton, author of Four Points of the Compass: The Unexpected History of Direction, wrote:

In my lifetime we have gone from looking up, aspiring to a shared global village inspired by NASA’s blue marble photograph, to looking down, glued to the blue dot on our phones as our hippocampi shrink and many of us withdraw from nature. It probably isn’t the end of civilization. After all, maps and compasses are cognitive artifacts, like the internet, and we’ve been using them for millennia.

............... In The Rape of the Mind, Joost Meerloo wrote: “Logic can be met with logic, while illogic cannot — it confuses those who think straight. The Big Lie and monotonously repeated nonsense have more emotional appeal.” Meerloo says that mass psychosis has been induced many times throughout history because “It is simply a question of reorganizing and manipulating collective feelings in the proper way.”



The illegal, unprovoked, full-scale US-UK invasion and occupation of Iraq in 2003 wrecked the country at the cost of at least one million Iraqi lives. It was waged on the basis of a supposed threat from ‘weapons of mass destruction’ that did not exist. Less well-known is the fact that everyone at the pinnacle of power knew they did not exist. The whole focus on Iraq as some kind of menace was an audacious fabrication. But ‘we’ got the oil. ...............

............... ‘Mainstream’ politicians and press have been resisting the ‘Evil’ of various Official Enemies – the Soviets, the Vietnamese, the Chinese, Milosevic, Saddam Hussein, Bin Laden, Gaddafi, Assad, Putin… on and on. We are always Colonel Heffner and Reverend Collins facing an alien threat, and we are always told we have a choice to make between deluded, suicidal appeasement and ultra-violence; between fantasy and reality. Meanwhile, the progressive left has been resisting capitalism, corporate psychopathy, state warmongering for resources, and so on…

Even in our private lives, we know that millions of Reverend Collinses and Colonel Heffners are sitting beside millions of mini-me Hitlers on sofas (quite a threesome!). Here, also, we can choose idealistic, happy-clappy appeasement; or we can resist injustice and tyrannical abuse. 

............... And yet, and yet… despite all of this endlessly principled resistance, the world is full…. nay, flooded, with what looks an awful lot like ‘Evil’.

Everywhere we turn: ludicrously unsustainable over-consumption as if the next year and the next generation didn’t matter a damn; a factory farming system creating hell on earth for animals; a seething mass of military-industrial complexity gorged on war; manifestly fake political choices that are no-choice serving the same money-grubbing interests; fossil fuel fanaticism subordinating literally everyone – even, ultimately, the CEOs and their own families – to short-term profit; levers of power controlling economics and war absolutely cordoned off from public participation. Oh, we can talk the talk on social media all we like, but don’t even think about laying a finger on the levers of power. It’s a complicated game, and that outcome is not in the rules.

Noam Chomsky commented that he could not find a word to describe the climate-trashing fossil fuel interests willing to sacrifice the literal existence of organised human life for the sake of a few dollars more:

‘The word “evil” doesn’t begin to approach it.’

And… it feels almost incredible even to write it… almost no-one is doing anything meaningful about it!

The irony is exquisite – after decades, centuries, millennia of focusing on the need to resist ‘Evil’, almost nobody – certainly nobody with power – is seriously trying to resist the ultimate ‘Evil’ of human self-extinction. We are trapped in an airliner heading straight for a mountain and there is no-one in the cockpit who cares. ..................


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Thursday, May 1, 2025

2025-05-01

***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:


........... Though not yet fully realized, it is also increasingly being realized that the United States' role as the world's biggest consumer of manufactured goods and greatest producer of debt assets to finance its over-consumption is unsustainable, so assuming that one can sell and lend to the U.S. and get paid back with hard (i.e. not devalued) dollars on their U.S. debt holdings is naive thinking, so other plans have to be made. 

Said more simply, enormous trade and capital imbalances are creating unsustainable conditions and major risks of being cut off, so they must come down -i.e., excessive imbalances + deglobalization = smaller trade and capital imbalances. 

More broadly, what I am saying is that, based on many of my indicators, it appears that:

1) we are on the brink of the monetary order, the domestic political and the international world orders breaking down due to unsustainable, bad fundamentals that can be easily seen and measured, ............


But There’s a Better Way to Fix It Than a Reckless Tariff Regime

The sweeping tariffs announced by U.S. President Donald Trump on April 2, along with the subsequent postponements and retaliations, have unleashed an enormous amount of global uncertainty. Much of the world’s attention is on the chaotic, short-term consequences of these policies: wild stock market fluctuations, concerns about the U.S. bond market, fears of a recession, and speculation about how different countries will negotiate or react.

But whatever happens in the near term, this much is clear: Trump’s policies reflect a transformation of the global trade and capital regime that had already started. One way or another, a dramatic change of some kind was necessary to address imbalances in the global economy that have been decades in the making. Current trade tensions are the result of a disconnect between the needs of individual economies and the needs of the global system. Although the global system benefits from rising wages, which push up demand for producers everywhere, tensions arise when individual countries can grow more quickly by boosting their manufacturing sectors at the expense of wage growth—for example, by directly and indirectly suppressing growth in household income relative to growth in worker productivity. The result is a global trading system in which, to their collective detriment, countries compete by keeping wages down.

The tariff regime Trump announced earlier this month is unlikely to solve this problem. To be effective, American trade policy must either reverse the savings imbalance in the rest of the world, or it must limit Washington’s role in accommodating it. Bilateral tariffs do neither.

But because something must replace the current system, policymakers would be wise to start crafting a sensible alternative. The best outcome would be a new global trade agreement among economies that commit to managing their domestic economic imbalances rather than externalizing them in the form of trade surpluses. The result would be a customs union like the one proposed by the economist John Maynard Keynes at the Bretton Woods conference in 1944. Parties to this agreement would be required to roughly balance their exports and imports while restricting trade surpluses from countries outside the trade agreement. Such a union could gradually expand to the entire world, leading to both higher global wages and better economic growth. ..............


The ‘User’s Guide’ plan from White House chief economist Stephen Miran has taken some big hits.

User’s Guide 2.0
The great boxer Mike Tyson and once said that everyone has a plan until they’re punched in the face. Similarly, the Trump administration had one for rebuilding the world economy with tariffs. It’s been a rough first round.
The plan was Stephen Miran’s A User’s Guide to Restructuring the Global Trading System, which must have been the most-viewed document by the financial world over the last six months. Stunningly ambitious, it helped earn its author a gig as chairman of the president’s Council of Economic Advisers, birthed the concept of the “Mar-a-Lago Accord,” and was widely taken as the road map for Trump 2.0’s bid to reshape the world using tariffs.



It’s hard to think, so most people avoid it.

It’s much easier to grab a stat that confirms your bias, reinforce your confidence, and move on.

Over time, that builds a thick callous toward opposing views, creating a tribal stance on issues and ideas. ..................................

As I’ve written extensively over the past two months:
Market bottoms require two things. Capitulation and Follow-through.

We’ve seen plenty of capitulation.
Follow-through? Until recently, it’s been weak.

This week, though, we got several breadth thrusts.

It’s obviously not bearish to see an acceleration in stocks going up.
BUT — here’s the nuance:

We had breadth thrusts this week that typically show up near or at market bottoms. True.

Breadth is still bad overall, with the majority of stocks below their 50-day and 200-day moving averages. Also true. ............

No need to rush.

Let price and evidence do the talking.


Sustainable adjustments to trade imbalances require supportive monetary and fiscal policies — not just currency intervention







Economics is largely a worthless discipline. Its axioms, like humans being rational utility maximizers, are simply wrong and everything built on top of them is thus flawed. It reminds me of pre-Copernican astronomy, which was based on the idea that the sun and planets revolved around the Earth. The difference is that pre-Copernican astronomy more or less worked and economics mostly doesn’t. ..............

............... If America and the West are ever to be competitive again, we must make markets competitive and where they can’t be, in natural monopolies like energy and water and so on, we must have regulations that directly control prices, as we did in the 50s and 60s, where utilities were basically guaranteed a 5% profit, and forced to reinvest in infrastructure (no California fires because PG&E would rather pay dividends then replace century old power lines and poles).

This isn’t really a hard problem, conceptually. We know how to create competitive markets, and regulate non-competitive markets. We’ve done it before. It is entirely a political issue, because incumbents with tons of money also have tons of political power. ........



Charts:
3: 
4: .



(not just) for the ESG crowd:


The Man Who Cut Through the Noise

In the 14th century, a Franciscan friar named William of Ockham wielded an intellectual tool so sharp it still slices through modern delusions: Ockham’s Razor. His principle—“Entities are not to be multiplied beyond necessity”—was a rebellion against medieval scholasticism’s tangled webs of abstraction. As the Church fractured under rival popes—each justifying their authority with layers of theological jargon—Ockham’s Razor would have cut through the pretense, like so: “If God is truly omnipotent, why does He need your bureaucracy?” (His defiance would cost him; he was excommunicated in 1328, but history would prove his blade sharper than their dogma.) Born during the chaotic aftermath of the Black Death, which wiped out a third of Europe’s population, Ockham developed his philosophy in an era when grand institutions clung to complexity while failing their people. Feudal lords enforced labyrinthine land laws to squeeze starving peasants; Ockham’s insistence on minimal assumptions would have retorted: “When the plague renders your contracts void, what survives but the simplest truth—that men must eat?” Seven centuries later, we face a parallel evasion of reality: as of April 2025, NOAA data reveals atmospheric CO₂ concentrations surged at a record-breaking rate in 2024—3.75 parts per million, the highest annual jump ever recorded. Yet the Trump administration suppressed the findings, burying them in social media posts instead of the agency’s usual press releases. Here, Ockham’s Razor cuts through the noise: the simplest truth—that we are losing the fight against climate collapse—is being obscured by institutional cowardice and bureaucratic sleight-of-hand (Environmental Integrity Project 2025; Friedman 2025).

Our current predicament reveals an even deeper irony: we now spend trillions subsidizing fossil fuels while pouring billions into “high-tech renewables” that, according to J.P. Morgan’s Heliocentrism report, have increased global solar capacity without displacing fossil fuel dependence. The renewable energy revolution has become its own kind of scholasticism—a complex theology of lithium batteries, rare earth minerals, and solar panels made in coal-fired factories. These technologies, while reducing direct emissions, simply replace one form of extraction with another:
  • Cobalt mines where children work in toxic pits to power electric vehicles
  • Lithium extraction that drains Andean groundwater for grid-scale batteries
  • “Green” hydrogen projects that consume more electricity than they produce
Ockham would see this as the same old pattern: multiplying entities (new mines, new supply chains, new waste streams) rather than addressing the root problem—our refusal to reduce consumption. The J.P. Morgan report confirms this: despite $9 trillion spent on renewables since 2010, the renewable share of final energy consumption crawls forward at 0.3%-0.6% annually, while fossil fuels still power 80%-85% of industrial production (Cembalest 2025). The razor’s judgment is clear: no technology can sustain infinite growth on a finite planet.

The Jevons Paradox: Efficiency as a Trojan Horse

The report’s data exposes a brutal truth: the Jevons Paradox is alive and well. As solar and wind become cheaper, energy demand grows, swallowing efficiency gains. For example:
  • Solar capacity doubled from 2021–2024, yet fossil fuel consumption rose in absolute terms.
  • Battery storage additions (38 GW by 2027 in the U.S.) are outpaced by data center and AI energy demand, forcing utilities to add more natural gas capacity (Cembalest 2025).
This paradox undermines the core promise of renewables: that they will replace fossil fuels. Instead, they enable greater energy use, reinforcing the status quo. Ockham’s Razor demands we ask: Why layer complexity (renewables + storage + grid overhauls) when the simplest solution is to consume less?  .........



I have been promising/threatening for a while to cover degrowth, and thanks to a United States Society for Ecological Economics book club, now I will. In Less is More, economic anthropologist Jason Hickel identifies capitalism as the cause of our problems—the sort of criticism that makes many people really uncomfortable. Fortunately, he is an eloquent and charismatic spokesman who patiently but firmly walks you through the history of capitalism, exposes flaws of proposed fixes, and then lays out a litany of sensible solutions. It quickly confirms that sinking feeling most of us will have: that the economy is not working for us. What is perhaps eye-opening is that this is not by accident, but by design. ..............



Before Pope Francis, climate change was seen primarily as either a political or a scientific issue. His encyclical reframed it as a spiritual issue. As the spiritual leader of 1.4 billion Catholics around the world, Pope Francis presented climate activism as a moral and spiritual duty for true believers, and he made climate one of the defining issues of his papacy.

Over his 12 years as head of the Catholic Church, Francis repeatedly raised concerns about human-caused global warming resulting from the burning of fossil fuels. He urged people—including world leaders—to take meaningful action.

When Argentina’s Jorge Mario Bergoglio was elected pope in 2013, his vision for human justice and equality was so closely linked to nature that he chose the papal name Francis, honoring the patron saint of ecology. That belief, and the passion with which he advocated for it, helped influence the direction of global climate and energy policy—most notably the 2015 Paris Agreement.

Francis’s 2015 papal letter, or encyclical, Laudato Si’ (“Praise Be to You”), was the first devoted entirely to the issue of global warming. It wove together climate science, wealth inequality, overconsumption (which he criticized as part of a “throwaway culture”), and the ethical use of technology in a 40,000-word message addressed to more than 1 billion Catholics around the world. ............


The international expansion of Chinese electric vehicles


The Great Insect Apocalypse: Why Are Bugs Vanishing?
A new paper highlights over 500 interconnected factors contributing to the global decline of insect populations.




Five months ago I would have said, and did say, that the Conservatives would form the next government, with Poilievre (a Trump figure) as Prime Minister.

Fortunately, Trump truly is a Christ-like figure, and raised the Liberal party from the dead. Poilievre mishandled Trump’s threats, saying that Trump had a point and so on. Living in an right wing echo chamber he thought that Canadians aren’t patriotic, and most are. This was an unforced error. Ontario Premier Ford did the opposite: he ran against Trump, called a surprise election and won handily. I despise Ford, but he’s a smart politician. Poilievre, on the other hand, is just an attack dog, and a true believer in Trumpist style right wing politics.

This isn’t to say I like the Liberals or Carney. Carney was has the dubious honor of being in charge of Canada and Britain’s central bank, and is the only central banker to blow housing bubbles in two countries. As for the Liberals, they were a terrible government and the only good things they did were forced on them by the NDP, whose support they needed to stay in government.

Trudeau’s liberals let in record numbers of immigrants and the result was massive increases in rent and a smother of wage gains.

The mistake that Canadian Conservative voters made, which Trump saved Canada from, was the assumption that Poilievre would be better. He would have been far, far worse. There was even talk of creating a Canadian “DOGE.”

Canada, much like America, needs a proportional vote system, so that the two and a half party monopoly can be broken up and a Trump-like figure locked out of government unless they can achieve a genuine majority.

... We’ll see how Carney does. Though I don’t like his record, he has said some very sensible things about re-industrialization in Canada, including proper vertical integration. There’s almost no mineral resource Canada doesn’t have, if we want we can easily re-industrialize. He’s also talked some sense about the housing market.

Whether he carries thru remains to be seen. He won’t be fantastically successful, he’s still a neoliberal and committed to policies like low taxes on the rich, but as neoliberals go, he may turn out not too bad.

Fingers crossed.



.......... Now as Canada’s future: it’s going to depend on whether Carney can actually deliver. If he can make Canadians better off and win another election, Poilievre is toast and Trump style conservatism will be discredited in Canada. If he doesn’t deliver: if effective wages don’t rise and if rent and housing prices don’t go down, then Poilievre’s Conservative party WILL win the next election, just based on disgruntled voters.

Carney’s talked a fair bit of sense: doubling building housing, pivoting to new trade partners and creating vertically integrated industries within Canada. If he can pull it off, he’ll go down as one of Canada’s greatest Prime Ministers. But, at the end of the day, Carney is a neoliberal, and his impulse to always cut taxes on the rich and so on is going to hold him back.

He also needs a full term to pull it off. A lot of pain is coming down the pike and the next couple years will be ugly. ...........



Geopolitical Fare:


In my trade I have long grown used to the way governments lie and get others to lie for them. 
It is what they do.
But I have seldom seen such a cloud of lies as we face now. Hardly anyone in this country knows the truth about Ukraine.
There has been nothing like it since we were all lied to about the Iraq invasion, with bilge about fictional ‘Weapons of Mass Destruction’. The liars were caught out. 
And they learned from it. They learned to lie more skillfully.
Meanwhile, many of those in our society who knew how to challenge such lies died off or retired and were not replaced. ............



The main reason more people don’t just go all in with opposing the US empire and rejecting all its propaganda about enemy states is because they can’t handle working through the heavy cognitive dissonance which comes with recognizing that everything you’ve been taught is a lie.

Most people recognize to some extent that the US and its allies do bad things, but those who take it all the way into a clear understanding that this power structure is responsible for most of our world’s ills are a small minority in the west. Even the relatively awake ones will try to cling on to this or that imperial propaganda narrative about nations like China, North Korea, Iran and/or Russia. Most try to at least keep a foot in the door of their imperial indoctrination, so they don’t have to experience the psychological discomfort of letting it close completely.

But that’s where the truth is. Coming to a lucid understanding of the world necessarily means abandoning all untruths for truth on every level. If you can work up the courage to really do this, the entire mainstream western worldview gets flushed right down the toilet.



We really need a name for the mental illness that comes with obscene amounts of wealth. ...........

....... As billionaires take more and more control over our world, we are finding ourselves increasingly led by those least qualified to lead us. We are trapped in a dystopia that is ruled by lunatics. We should probably do something about that.

❖

A Palestine supporter witnesses new footage every day of children being mutilated, shredded and burned to death by Israel. An Israel supporter spends every day avoiding looking at that same footage. This one fact tells you very clearly who is on the wrong side of history here.

❖

When you witness an injustice you can either oppose it, look away, or make up some reason why the injustice is okay. Only the first option can lead to the cessation of the injustice. Ignoring the Gaza holocaust looks different from justifying it, but both yield the same result. .........

❖

I keep meaning to mention that watching or listening to Dave DeCamp’s half-hour show for Antiwar News every day is the easiest way to cultivate a lucid understanding of what’s going on in the world. Just put it on over breakfast or on your way to work or whatever and you’ll always understand what the empire is up to from day to day.

Other good resources include: .........



Sci Fare:






Other Fare:

Doctorow: The enshittification of tech jobs



Pics of the Week:


Posted by at No comments:

Saturday, April 19, 2025

2025-04-20

 ***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:


............ Here are some more highlights from the decision:

TARIFFS:
  • The major shift in direction of US trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations. Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally.
  • Expects tariffs and supply chain disruptions to push up some prices.
  • Major shifts in US trade policy have increased uncertainty and cut prospects for growth and raised inflation expectations.

INFLATION:
  • Higher inflation in last couple of months reflects some rebound in goods price inflation and end to temporary suspension of sales tax.
  • Starting in April, inflation will be pulled down for one year by removal of consumer carbon tax; lower oil prices will also dampen inflation.
  • Will continue to assess timing and strength of both downward pressure on inflation from weaker economy and upward pressures from higher costs.
  • Short-term inflation expectations have moved up. as businesses and consumers anticipate higher costs from trade conflict and supply disruptions. Longer term inflation expectations are little changed.

................ “What happens to the Canadian economy and inflation depends critically on US trade policy, which remains highly unpredictable,” Governor Tiff Macklem said in prepared remarks. “Given this uncertainty, point forecasts for economic growth and inflation are of little use as a guide to anything.”



................. When explicitly asked why the Bank chose not to cut, given the depressing economic outlook, Macklem emphasized that the Bank would be cautious in its decisions going forward. The decision to hold was brought up several more times, and it appeared at its core that the Bank, much like seemingly everyone else, is paralyzed by uncertainty.

The decision was also accompanied by a Monetary Policy Statement. However, this statement was not quite like those of the past. For the past few months, the Bank of Canada has highlighted rising uncertainty surrounding how US tariffs would impact the Canadian economy. The following are key issues that complicates the Bank’s outlook.
  • What tariffs will ultimately be imposed
  • The extent of countermeasures from Canada and other countries
  • How long that tariffs will last
  • The outcome of future trade negotiations
Additionally, the Bank noted that there is a second layer of uncertainty, which pertains to “how households, businesses, and governments will react and adapt to tariffs.” In order to address this uncertainty as best it can, the Bank has chosen to explore the following two scenarios:
  1. Scenario 1: Most tariffs imposed since the trade conflict began are negotiated away, but the process is unpredictable. Uncertainty about trade policy continues until the end of 2026.
  2. Scenario 2: The uncertainty and limited tariffs in Scenario 1 persist, and other US tariffs are added. A long-lasting trade war unfolds
 




Powell said: "tariffs are highly likely to generate at least a temporary rise in inflation."

"The inflationary effects could also be more persistent. Avoiding that outcome will depend on the size of the effects, on how long it takes for them to pass through fully to prices, and, ultimately, on keeping longer-term inflation expectations well anchored.

Powell again stressed the central bank's focus on preventing potential tariff-driven price hikes from triggering a more persistent rise in inflation.

“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said.

Powell added that policymakers would balance their dual responsibilities of fostering maximum employment and stable prices, “keeping in mind that, without price stability, we cannot achieve the long periods of strong labor market conditions that benefit all Americans.”

Powell raised the spectre of stagflation:

"We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension. If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close."

This differs from Waller earlier this week: 

Should the Fed face both a rapidly slowing economy and still elevated inflation, “the risk of recession would outweigh the risk of escalating inflation.” ..............


HSBC: The Major bond letter - After the tantrum (via The Bond Beat)

All was well in the USD29trn Treasury bond market, or at least seemed to be. Yields were moving along a downward path through the first three months of the year, in sympathy with the US Treasury Secretary Scott Bessent’s early objective (Bloomberg, 6 February 2025). And then along came the reciprocal tariffs in the second week of April and the bond market had a bit of a tantrum.

In “normal” times, bond yields move with rate expectations, and this is because most of a bond’s yield is explained by the policy rate and the market’s view of where this rate is going. But something strange is afoot. The gap between rate expectations and bond yields has increased quite sharply (see chart), indicating that investors are requiring additional compensation for holding bonds compared with money market rates. 

........... 
Market expectations of where policy rates will be in a year’s time are approximated by the one-year forward (1Y1M). As the chart shows, this red line can move a long way from the policy rate. Ahead of the first rate cut for this cycle (18 September 2024) markets anticipated a total of 250bp easing over the following year. There have since been 100bp of Fed funds cuts and, at 3.64%, today’s 1Y1M implies the equivalent of three more 25bp cuts below the current Fed funds upper bound.

The gap between the two series in the chart captures the additional yield required in compensation for taking duration risk. It is a type of term premium. We once described the theory behind term premium as a “dark art” because it always seemed to be shrouded in mystery and conspiracy (see Dark Art, 21 April 2017) – something that you know lies out there in the shadows, but often can’t quite be seen. Yet, inevitably, when everyone’s talking about term premium (with some even trying to forecast it), you know it is probably on the way to being priced in – and at the point where it starts to fade from view…

Quant assessments of trade war scenarios

Summary
  • The Trump administration wants to remake the US by reshaping the world. This requires a deep correction in global savings and investment imbalances, focusing on China.
  • We explore five different trade war scenarios, ranging from negotiations to full escalation to bifurcation: in short, the harder the US pushes, the bigger the impact on China’s surpluses.
  • While that suggests trade wars ‘work’, they come at a rising cost as they get ‘hotter’.
  • Nonetheless, from an economic statecraft perspective, this still implies the risks of outcomes
  • that markets do not yet fully price for.


Converging Forces
Five pivotal U.S. economic considerations, including tariffs, monetary policy, fiscal policy, debt overhang, and demographics, are aligning to depress economic growth for the balance of this year and into 2026.
• First, the recessionary effects of tariffs, supported by compelling historical evidence and economic theory, will dominate the inflationary ones, potentially leading to a significant reduction in world trade and capital flows.
• Second, the Fed's continued maintenance of a highly restrictive monetary situation is significant and could have severe implications. A significant reversal in Federal Reserve policies this year is necessary for economic acceleration in 2026.
• Third, current federal spending plus the lagged negative multiplier effects from 2021 to 2024 will reduce economic activity this year. Benefits from the presumed tax reductions will impact  2026, but their delay will cause fiscal policy restraint for 2025. .............

........... Basic economic theory was at work. Except for energy products, the demand for nearly all internationally traded goods is price elastic. This price elasticity means, in percentage terms, the fall in demand will be far greater than the associated tariff-caused price increase, resulting in a drop in total revenue. ....................

Since the Fed's first year of operation in 1914, the current four-year percent change for detrended real M2 is in its ninth fall into negative territory (marked as #9 in Chart 1). The second occurrence, marked as #2 Chart 1, is a highly relevant experience for the current situation. Money growth began decelerating sharply in the late 1920s and then turned negative from 1931-35. Then, aggregate demand faltered in response to repeated contractionary BTN measures and the depressive effects of extreme over-indebtedness. However, the Fed did not reverse the monetary contraction, for which it was subsequently excoriated by Nobel Laureate Milton Friedman and former Fed Chair Ben Bernanke.

The lagged monetary restraint from 2022 is confirmed by the movement in the Fed's H.8 line item, Other Deposit Liabilities (ODL). As measured on a real detrended basis for the last four years, ODL, which decelerated before all recessions since 1961, has been negative since 2024 (Chart 2). ..........

In recent times, Fed leaders have reiterated that they are data dependent. The experience of a century ago is that tariffs are recessionary but even more so when real money growth contracts. In such circumstances, the Fed should be preemptive, act before data confirmation .........

The U.S. population increased by 3.3 million or about 1% in 2024, the fastest pace since 2001. Immigration, dominated by illegal entry, accounted for 84% of this increase. Global Economics at Goldman Sachs estimates "net immigration by the end this year will total 500,000" compared with slightly over 2.5 million in 2024. Immigration's recent history of indirectly boosting employment and raising both government and private spending is coming to an abrupt end. .........

The Fed has yet to cushion the economic restraint from current federal spending and adverse multipliers, the lagged effects of prior central bank actions, and the immediate demographic drag. Thus, the five convergent factors mentioned initially suggest that the risk of recession is high, and the transition to meaningful recovery will be fitful, uncertain, and labored. Such an uncertain environment of tepid or negative economic growth will be conducive to a downward trajectory of long-term Treasury rates. ..........


The trade war launched by the Trump administration follows a longer-term pattern of geo-economic fragmentation, but it dwarfs all prior expectations. This column looks beyond the trade war, asking if, in a more fragmented global economy, official investors should continue to hold US federal debt to the same extent as before. The answer is likely no, due to the increasing exchange rate risk on this debt as global trade stalls. Yet this does not imply the demise of the dollar as the global reserve currency, unless economic rationale fails to win precedence over brinkmanship.



References



Dive into how rising government debt and fiscal policies limit central banks' ability to fight inflation

In a world of rising government debt and expansive fiscal policies, fiscal dominance is becoming a key force in shaping monetary policy.
When government debt levels soar, central banks face increasing pressure to keep interest rates low, limiting their ability to fight inflation effectively. ........

What Is Fiscal Dominance?
Fiscal dominance occurs when a government’s fiscal policy-spending and borrowing-overwhelms a central bank’s monetary policy.
In this environment, central banks may be forced to accommodate high levels of debt by keeping interest rates low, even if inflation is rising.
For example, when a country’s debt-to-GDP ratio exceeds 100%, servicing that debt becomes increasingly difficult if interest rates rise sharply.
As a result, central banks may have to tolerate higher inflation to avoid triggering a fiscal crisis.
This dynamic can lead to prolonged periods of loose monetary policy, even when inflationary pressures demand tightening.


While volatility can produce a bounce, it is no sign of strength. History suggests that patient investors will be presented with better opportunities in the days/weeks/months ahead.

Before rolling over this past week, the 200-day average for the S&P 500 had risen continuously since June 2023. At 460 days in a row, it was the 6th longest uninterrupted stretch of strength in the past 35 years. While there is no meaningful difference in the performance of the S&P 500 based on whether the index is above or below the 200-day average, the direction of the 200-day average matters. A lot. All the net gains in the S&P 500 since 1990 have come when the 200-day average has been rising. 

Put another way, the 200-day average has been falling roughly one-quarter of the time in the past 35 years and when that has been the case, the index has not made any upside progress. But it has brought plenty of volatility and stress for investors. Daily market swings (in both directions) tend to be larger when the equity markets are in downtrends. Stepping to the sidelines in this environment is not about the risk of missing the best days in the market, its about the benefit of missing both the best days and the worst days and not taking on unnecessary risk and volatility. 

With the 200-day average for the S&P 500 rolling over, none of the items on our bull market behavior checklist remain positive. As we discuss below in our monthly review of the weight of the evidence, this is an environment in which patience will likely be rewarded. Fools rush in. ...........


What Stock Market Crashes Have Taught Me About Investing: Although Their Duration and Severity Have Varied, the Market Has Always Recovered and Reached New Highs.




Bubble Fare:


I’ve regularly described the period since early 2022 as the extended peak of the third great speculative bubble in U.S. history. As I noted in the April comment, Humpty Dumpty was Pushed, I believe that process is now complete. As discussed in that comment, our Recession Warning Composite also now indicates the likelihood of an oncoming recession in the U.S. economy.

In our day-to-day investment discipline, we’ve had several opportunities to vary the intensity of our defensive investment stance, some informed by the hedging implementation I described last September (for more, see Asking a Better Question, Subsets and Sensibility, and the section titled “The Martian” in The Turtle and the Pendulum), and some in response very short-lived “compression syndromes” that I’ve regularly discussed over the years.

While we remain open to changes in market conditions, as well as periodic “fast, furious, prone-to-failure” advances that can relieve the oversold “compression” produced by market losses, we are presently on high alert for a possibly abrupt and cascading market and economic dislocation in the weeks ahead. 

The trap door swings open
At its core, a market crash is nothing but risk-aversion meeting a market that’s not priced to tolerate risk. We always become concerned about “trap door” outcomes when rich valuations are joined by deterioration in the uniformity of market internals – which is our most reliable gauge of speculation versus risk-aversion among investors.

Our concerns about trap door conditions become even more pointed when investor confidence has been destabilized. Recall that the 1929 and 1987 crashes started after the S&P 500 was already down about 14% from its highs. As a general rule-of-thumb, when investors are jolted by a decline in the S&P 500 of 10% or more from its 10-week high, and Baa corporate yields or credit spreads are widening, “trap door” conditions tend to be resolved by abrupt and often substantial market losses.

The chart below shows what this looks like, in data since 1928. The blue line is the S&P 500 Index (left scale, log). The red bars show instances that are assigned our most negative return/risk classification – based on measurable, observable market conditions such as valuations and market internals – coupled with a loss in the S&P 500 of more than 10% from its 10-week high and deteriorating Baa credit conditions (versus 6 months prior). The green line (right scale, log) is the cumulative return of the S&P 500 in the 65 weeks since 1928 when this particular set of conditions has been in effect. It’s a rare syndrome, but it has regularly occurred at the breakpoint of memorable market collapses, including 1929, 1987, 2000, 2008, and 2020. ..............

One way to understand abrupt market losses is to consider what I’ve often called the “Iron Law of Equilibrium.” Every share of stock that’s been issued must be held by some investor at every point in time. Investors cannot “get out” of stocks, in aggregate, nor can they “get into” stocks, in aggregate. Every dollar a buyer brings “into” the market is taken “out of” the market by a seller. Every dollar a seller wishes to take “out of” the market has to come “into” the market from a buyer.

Consider, for simplicity, two sets of market participants – “trend-following” investors whose demand reflects backward looking market returns, and “value-conscious” investors whose demand reflects the level of market valuations and, by extension, expected future returns.

As I’ve shown in simulations of this kind of equilibrium, when prices are unusually elevated relative to the norm, it’s almost always because trend-followers (and other price-insensitive buyers) are “all in.” Those positions are – and in fact have to be – offset by equal and opposite underweights by value-conscious investors. A sudden decrease in the desired holdings of trend-followers and price-insensitive traders has to be satisfied by inducing a price decline large enough to give value-conscious investors an incentive to buy. 

As always, nothing in our investment discipline relies on forecasts, particularly involving extreme outcomes like those above. Instead, our discipline is to align our investment outlook with prevailing, measurable, observable market conditions, and to change our outlook as those conditions change. Even amid the initial break of what we view as the third great speculative bubble in U.S. history, we’ve had multiple opportunities to vary the intensity of our defensive outlook in response to market behavior, and we continue to watch for “compression syndromes” that can produce “fast, furious, prone-to-failure” market advances to clear oversold conditions.

For now, I would describe present market conditions as a “crash warning” – featuring an environment that includes extreme valuations, broken market internals, and destabilized investor confidence. Nothing in these conditions ensures a market collapse – abrupt crashes are the rarest of events, and investors should approach current risks with that understanding. Still, we should be aware that virtually all market crashes share a common feature – risk-aversion meeting a market that’s not priced to tolerate risk. .............


Quotes of the Week:

Millard: They say there are decades where nothing happens and weeks where decades happen. This sentiment sure rings true these past few weeks.


Vid Fare:

When today's guest was on this program last back in December, he predicted the following:
That a contraction in global liquidity could set the stage for increased market volatility -- check.
That stocks would peak early in 2025, and then experience a 15-20% correction -- check.
That new U.S. trade tariffs could lead to retaliatory measures from trading partners, triggering a global trade conflict -- check, especially in regards to China.
So far, he's 3 for 3.
He also recommended that investors start 2025 defensively, reducing equity exposure, avoiding long-duration bonds, and instead load up on T-bills and gold. Again, this was a winning combination.
So who is this prescient forecaster? None other than Felix Zulauf, Founder and CEO, Zulauf Consulting. ...........






Charts:
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(not just) for the ESG crowd:









The Most Neglected Social Issue of Our Time
Future generations will look back on factory farming as a moral abomination.

Humans are notoriously bad at predicting the future of moral progress. The moral movements of yesteryear that are today viewed as table stakes in a just society — women’s suffrage, the abolition of slavery, gay marriage — were at one point seen as ludicrous. All this to say, one should have humility when considering possible new frontiers of ethical progress. No society to this point has been without ethical blindspots. Why should we assume that ours is the first?

One doesn’t need a philosophy degree to recognize that the way we think about animals is, at best, deeply inconsistent. ...............

................ Humans like to assume that they would have been on the right side of history in the moments that count. Importantly, being on the right side of history has almost never entailed going along with conventional wisdom. Rather, it has required charging against conventional wisdom towards a new moral horizon. Said differently, nobody gets credit for supporting women’s suffrage in 2025, but they certainly did for supporting it in 1825.

We have an opportunity to stand boldly on the right side of history and, in doing so, prevent the suffering of millions, billions, even trillions of individuals. The question is, will we answer that call?


TDS:


In an era of polarized narratives, Donald Trump’s true character is often reduced to soundbites and crafted caricatures. That’s the Donald Trump comedian and political commentator Bill Maher thought he knew. ............



Trump 2.0:


There is a growing chorus about a “new world order,” but much of the language surrounding it is vague and recycled, attempting to impose clarity on a moment defined by fragmentation.

The truth is harder: we are not entering a new order so much as watching the old one unravel. The post-1945 framework—and especially the assumptions forged after 1991—are breaking down. Alliances are shakier, norms increasingly hollow, and power is moving in directions the old system can’t contain. This isn’t a transition; it’s a structural upheaval with no agreed-upon successor. 

Trump’s trade policy exemplifies this rupture. It marks a blunt rejection of the U.S. role as global underwriter—militarily, economically, financially. Allies are being pushed to choose sides or risk losing access to American energy, security guarantees, and the dollar. To some, this feels like a sudden break. To others, it’s just the next chapter in a story that started with the 2008 crash, ran through COVID-19, and deepened with the war in Ukraine. What critics call reckless may, in historical context, look more like a reversion to pre-WWII realpolitik: harder borders, transactional alliances, and every state for itself. ..............

........... Successive shocks—financial, epidemiological, military—have exposed the system’s vulnerabilities. Many see a drift toward a multipolar world where rules matter less, and power, geography, and resource control matter more.

But the truth is more nuanced. What we call the “old order” was not a single unified system, but at least four distinct phases (Figure 1). The first spanned from the end of WWII to the early 1970s, defined by Cold War containment, Bretton Woods monetary stability, U.S. oil dominance, and postwar reconstruction. The second, from 1972 to 1991, featured the collapse of Bretton Woods, the rise of petrodollar diplomacy, oil shocks, and the beginning of global capital mobility. The third phase, from 1992 to 2008, was defined by U.S. unipolarity, NATO expansion, hyper-globalization, and the illusion of liberal inevitability. The fourth phase—from 2009 to the present—has been defined by fragmentation, rising multipolarity, and the return of strategic rivalry.

The 2008 financial crisis was the inflection point. It shattered confidence in Western institutions and marked the beginning of U.S. retrenchment. It was followed by the shale revolution, a spike in commodity prices, and a rising China. As the old frameworks eroded, countries like Russia, China, and Iran began building parallel systems—alternative currencies, supply chains, and security blocs. ............

Physicist David Bohm spoke of this kind of pattern in nature—a tension between what he called order and measure. What we observe often looks fragmented or chaotic only because it’s just a surface-level projection of a deeper, unfolding movement—what he called the implicate order. That lens helps when thinking about geopolitics too. What looks like disorder may actually be the visible tip of a larger transformation we haven’t yet decoded. ................

Thomas Kuhn’s Structure of Scientific Revolutions makes it clear: paradigms don’t shift through orderly progress—they erupt, usually in defiance of the very institutions meant to nurture them. Scientific communities defend the dominant paradigm, ignoring inconvenient data and sidelining dissent. When the old model stops working, crisis sets in. A new paradigm takes over—not because it’s embraced, but because the old one collapses. The shift is messy. Yesterday’s experts become today’s relics, and the cycle begins again under a new orthodoxy. ..............



The Trump administration is losing face and losing leverage. But for those hoping for a trade-war backpedal — don’t hold your breath.

The April 2nd Liberation Day announcement was an intentionally choreographed shock-and-awe affair that worked much better than many admit, at least at first. Swinging aggressively and recklessly, Trump caught everyone — trading partners and market watchers — on the backfoot, commanding global attention. This bad-cop routine also gave room for a good-cop retreat. .............

................. The mojo has run dry. While Trump’s most steadfast followers weave narratives about strategy, most observers recognize dysfunction. If the plan was to encircle China, why alienate everyone else first? The shoot-first paradigm has created a situation where it’s not even clear that US negotiators have a specific objective, let alone a means to achieve it.

But the loss of the leverage does not mean the end of the trade-war.  ............... 



Stop trying to predict and appraise President Trump's tariffs policies based on economic theories or market realities. Tariffs are pure psychology for the president, fused into his brain like no other topic.

Why it matters: Trump's tariff brain is unpredictable to the outside (and to market analysts) but wholly knowable to those who know how his mind works.
  • "There'll be trial and error. There'll be pushing the envelope. There'll be all of that Trumpian stuff," said a top adviser involved in trade discussions.
The big picture: Trump approaches tariffs, the remaking of the U.S. economy and the reshaping of global trade as a continuation of his presidential campaign.
  • He ignored experts and assembled a team dedicated to executing his will and shrugging off the consequences of his unpredictability. He's not changing now — rocky rollout and chaotic financial markets be damned.
  • "Donald Trump works at his own tempo, and he doesn't change the subject until he's sure he's clubbed people into seeing it as he does," the adviser said.
Between the lines: In Trump's first term, free traders such as then-National Economic Council Director Gary Cohn controlled Trump's impulses to impose tariffs the way he has now. Trump's current NEC chief, Kevin Hassett, is pro-tariff.
  • So is the rest of the economic team: Vice President Vance, Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent, White House trade adviser Peter Navarro, Council of Economic Advisers chair Steven Miran, and U.S. Trade Representative Jamieson Greer.
The intrigue: Trump keeps such a huge team of advisers because he invariably solicits conflicting opinions. He often suffers from analysis paralysis and can be particularly influenced by whomever he talks with last.
  • Trump also can be unclear on specifics, resulting in contradictory messages from his advisers, each of whom serves as a TV avatar of his tariff brain. Bessent and Lutnick have been criticized for giving mixed messages.
  • "We saw it in business with Trump," one adviser said. "He would have these meetings and everyone would agree, and then we would just pray that when he left the office and got on the elevator that the doorman wouldn't share his opinion, because there would be a 50/50 chance [Trump] would suddenly side with the doorman."
  • "There are too many people in his ear," the adviser said. "You didn't see this with other presidents. Nixon didn't act as the maître d' of his own supper club, where every millionaire and billionaire who could get to him at dinner could chime in and affect policy."
On political issues: Trump is often more directionally consistent than his critics give him credit for. He's liable to switch up on policy specifics. But the direction is clear: tariffs. The specifics: wide-ranging.
  • "It's about several things," his adviser said. "It's about isolating China. It's about making money for the United States Treasury. It's about settling what Donald Trump believes is a score where, as he says, stupid people allowed countries to take advantage of us and ripping us off."
The backstory: Trump's tariff-based chip-on-the-shoulder "America First" mindset has been part of his political DNA since his first presidential-style campaign visit to New Hampshire in 1987. ................

................................. Animating Trump and his team is the belief, his adviser said, that "in its very most basic form, the patient, which is the United States economy, has been very sick. It's been sick for 40 years, and nobody would say so."

"It took Trump to come in and say, 'Okay, the patient is really sick. It's going to die. So I'm going to put it on life support, and let's all hope and pray and work together to make sure this life support works.' That's really the way we look at it." ......................



My friend CP is angry about the tariffs, which concerns me as a long-term protectionist. Ever since reading Pat Buchanan’s The Great Betrayal in college, I’ve been convinced of the case for tariffs and protecting domestic industries. Buchanan convinced me, against my Jeffersonian biases, that the Yankees were correct and Republican Party policies to build domestic industry during the 1800s were both right and necessary if the United States were to develop into a proper nation with real sovereignty1.

My friend’s primary argument is that Trump’s tariffs seem contradictory in their purposes. If they are opening positions subject to negotiation, then no one will invest in domestic manufacturing, knowing they are likely to be rolled back. If they are meant to be permanent, their broad nature doesn’t seem to make sense. Do we want to have sweatshops making stuffed animals in our advanced economy, or is it better for this to be done in Vietnam?

Thoughts:
  1. I don’t see Trump’s position as necessarily contradictory but rather irrational for a purpose. ........ If the result is a renegotiation of trade agreements to be less punitive to US exporters, this may have something like 25% of the effect of a long-term tariff program, with more immediate benefits and less dislocation in the economy. I suspect this is likely the case given the limits of a democratic society to stick to a long-term strategy. Unlike the Chinese, our democratically elected leaders are renters, not owners, of political power and cannot successfully execute a multi-decade plan to reindustrialize. Since they know that we know this, Trump is most likely doing his crazy act to seem irrationally tied to the proposal no matter the consequences, as documented in his master class in brinksmanship in The Art of the Deal. Since he may have to stick to the crazy act for a time to demonstrate his commitment, it’s smart to do this as early as possible in his term.


Globalization, once hailed as a panacea, has proven to be fundamentally corrupt and needs to be blown to kingdom come

From NPR this morning:

But, by the end of the day, Trump apparently had reached his threshold of market pain. He reversed course, ditching some of the tariffs, because, he said, people “were getting a little bit yippy, a little bit afraid.”

The market rallied Wednesday, but with Trump increasing tariffs to 145% on China, by Thursday, the Dow was down again. And, remember, China has leverage, too, because it buys a lot of U.S. government debt, and they seem to have every intention of using it.

Translation: a serial trade and human rights violator that with the help of decades of corrupt politicians from both parties polluted, price-dumped, and stole its way to a generation of American jobs and revenue, now owns so much of our debt that we must put up with its shit indefinitely. That’s the point of view of our own federal news agency. We have officially cucked ourselves past the point of no return.

Trump or no Trump, the international trade system needs to be blown to hell:

..................... It seemed obvious that NAFTA, the WTO, and the extension of cushy trade arrangements with China and other unfree labor zones were a gigantic end-run around American labor, safety, and environmental laws. It was an asset-stripping scheme, designed to help CEOs boost their share prices by cutting costs of American parts, labor, and regulatory compliance from their bottom lines. There seemed nothing complicated about this, except the marketing challenge. How could corporate management convince Americans, who fought for so long to scrape their way into the middle class, that it was in their interest to compete against countries that didn’t have to follow any of the same rules we did?

.................. Are we supposed to go on like this forever, or do something? Even the biggest bank-sucking spokestools in media recognize the situation is untenable, but cling to the idea that something could be done gradually or “incrementally,” as Joe Kernan tried to frame it in an interview with Peter Navarro on CNBC’s Whore Box the other day. 

Everyone who follows this site knows I’ve always had an uncomfortable relationship with the Trump phenomenon. At the best of times, I find him puzzling and maybe dangerous, even when he’s being funny or taking aim at deserving targets.

Now he’s president and people seem reflexively to want more criticism of him, but on this issue, what choice is there? The global economy created by both parties from the eighties onward was not only designed to be a giant predatory clusterfuck, but nearly impossible to unwind. Forget “incrementally,” it’s got to be exploded. Would more of the same and a slow death be better?



Critics of Trump’s new round of tariffs are making a lot of noise. According to the pundits and legacy media talking heads, these tariffs are going to “hurt the economy,” “drive up prices,” and “alienate allies.” But what they won’t acknowledge or even refuse to address is that the problems they’re suddenly so concerned about have been with us for decades. The economic distortions Trump’s tariffs are trying to correct didn’t begin with tariffs. They began with decades of reckless policy, fantasy economics, and willful denial.

Let’s start with the basics. The American economy today is not grounded in real production or sustainable growth. In truth, it’s been kept afloat on $20 trillion in global stimulus, debt, and fictional accounting. ............................................

.................... None of this is sustainable. And none of it has anything to do with tariffs.

On the international front, our trade deficits have become structural. That wouldn’t be fatal if we were reinvesting foreign capital inflows into high-return domestic projects, like infrastructure, energy, or next-generation manufacturing. But we haven’t done that. Instead, we squandered trillions, outsourced our industrial base, hollowed out the middle class, and borrowed cheap capital to fund consumption and entitlement expansion.

There’s nothing inherently wrong with trade deficits and they can be manageable when they’re cyclical and we have something to show for the money borrowed. But we entered a multi-decade period of permanent, corrosive trade deficits, and we have little to show for these actions other than transient consumer goods from China. .................

So when people claim Trump’s tariffs are the source of our problems, they’re either dishonest or hopelessly uninformed. The tariffs are a symptom of the crisis, not the cause. They are an imperfect but necessary negotiating ploy to begin the long, painful work of rebuilding an economic system that works for everyday Americans again.

We can no longer afford to live in a fantasy economy built on debt, inflation, and illusions of prosperity. We should stop pretending this crisis is new or that it can be blamed on a single policy or politician. The problems were already there, deeply embedded in our economy, ignored by a complacent elite that insisted everything was fine.

Trump’s tariffs didn’t cause this. They are the first honest attempt in generations to deal with a completely broken system.



By the time this is published, everything may have changed, and that is to be expected. Throughout his career, well before and since becoming a politician, Trump has explicitly stated that he does not think it is always a good strategy to be predictable. And while markets love predictability, sometimes markets, and the systems propping them up, need disruption. This is such a moment. ................

And even that devastation was tolerated for decades because its effects were mostly felt in what we now call rust belt states. Our service economy and tech sectors boomed, along with what was left of manufacturing, satiating a majority of the population that loved buying cheaper foreign imports. But this whole scheme could never go on forever. America’s trade deficit in 2024 was up to $918 billion, a new record. .............

Which brings us to the geopolitical reality we must confront: the rise of China. No other nation has done more to finance the rapid industrialization of China than the United States. But now, the United States depends on China for critical minerals, electronic equipment, machinery, iron, steel, medical apparatus, organic chemicals, pharmaceuticals, and much more. Every year, the biggest percentage of our trade deficit is with China, over $300 billion in 2024. ............

The Trump administration recognizes three realities that softer heads and wishful thinkers try to either deny or bury in nuance. 

(1) We are in a cold war with China, and if we don’t step up, we will lose.
(2) We have hollowed out our manufacturing prowess, and that must change. Fast. 
(3) Federal spending is out of control; the trends are unprecedented and must be reversed.

This is the rest of the story. Tariffs are just the beginning salvos in a fight we can’t avoid any longer. ...........


With the rollout of sweeping US tariffs aimed at nations worldwide, economists and geopolitical analysts alike are astounded by what at face value looks like irrational self-sabotage attributed to incompetence within the White House.

In reality, the tariffs are a central pillar of bipartisan foreign, trade, and economic policy implemented first during the previous Trump administration, continued and even expanded upon during the following Biden administration, before being expanded further still under the current Trump administration.

Rather than a random idea that formed within the mind of President Donald Trump himself or among those within his cabinet, sweeping tariffs are the stated policy of unelected corporate-financier interests, articulated in-depth within the pages of special interest-funded think tank documents including Heritage Foundation’s “Project 2025” paper under Chapter 26: Trade Policy.

The policy, far from a sound plan to re-industrialize America or genuinely balance America’s trade deficit, is instead meant to maintain America as “the world’s dominant superpower.”  .........................

The success the US has achieved in undermining and stripping away European industry is almost certainly guiding a much larger and more ambitious policy worldwide, ultimately in regard to China.

Project 2025 lists a number of actions to be taken in regard to China specifically including: .............

Such papers declare China as “a serious existential threat,” not to America as a nation-state or to the American people – both of which would only benefit as the rest of the world has from cooperation with China – but to the deeply entrenched corporate-financier monopolies no longer able to compete with not only Chinese goods and services, but those in nations rising alongside China everywhere from Latin America to Africa and across the whole of Eurasia. ...............

Were the US preparing for the deliberate destruction of the current global economic system, or large-scale war with one or more of its declared “adversaries,” decoupling itself from the global economy first on its own terms ahead of time – especially in terms of America’s dependence on China for supply chains including all throughout its military industrial base, would be a necessary prerequisite. .............

The Obama administration’s “pivot to Asia” began the transformation of America’s military forces from one organized around the decades-long “War on Terror,” to a fighting force tailored for conflict with peer and near-peer competitors. During the first Trump administration, the US withdrew from arms control treaties, allowing for the development and deployment of treaty-violating missiles ranging from anti-ballistic missile defenses to intermediate and long-range missiles now being deployed across the Asia-Pacific.

During the Biden administration, the entire US Marine Corps was transformed from a combined-arms expeditionary fighting force to one custom-tailored specifically for anti-shipping missions in the Asia-Pacific region ...............

While a global tariff policy to wall off the US economy from its own premeditated destruction of the global economy is a drastic policy, the complete reorganization of US military forces specifically for war with China along with the seizure of key maritime choke points worldwide are equally drastic and make sense only as part of a strategy to precipitate that destruction.

Empire in terminal decline throughout human history has suffered from dangerous desperation. In the 21st century, the US represents a modern-day empire in terminal decline – one armed with nuclear weapons, a global-spanning military, and in control of global economic tools capable of destroying the entire global system rather than concede its role placed above it. The goal would be to survive the controlled demolition of the global order it has presided over for decades and emerge the strongest player, best positioned for establishing itself once again as “the world’s dominant superpower.”   ................



Billionaire investor Ray Dalio warned that President Trump’s shifting tariff policy is part of a broader set of economic and geopolitical pressures that could trigger a crisis "worse than a recession." .............

"I've studied history," Dalio adds, noting that "this repeats over and over again."

Dalio explained that the US economy is confronting several overlapping challenges: rising debt, internal political divisions, growing geopolitical tensions, and shifts in global power.

“Such times are very much like the 1930s,” he warned. “If you take tariffs, if you take debt, if you take the rising power challenging the existing power – those changes in the orders, the systems, are very, very disruptive.” ..............

Dalio said history is shaped by five major forces: 
  1. monetary cycles like credit and debt; 
  2. internal political conflict; 
  3. shifting global power dynamics; 
  4. technological change; 
  5. and natural disasters such as pandemics. 
In his view, all five are currently in play.



Yesterday, president Trump laid out the stakes in the ever-escalating trading war between the US and China, in typical laconic fashion: "We may want countries to choose between us and China" ............

The idea, as we laid out in not so many words, is to extract commitments from U.S. trading partners to isolate China’s economy in exchange for reductions in trade and tariff barriers imposed by the White House. US officials plan to use negotiations with more than 70 nations to ask them to disallow China to ship goods through their countries (the so-called "transshipment" loophole), prevent Chinese firms from locating in their territories to avoid U.S. tariffs, and not absorb China’s cheap industrial goods into their economies. ................


Forget tariffs and trade wars – the full-blown decoupling of global finance will touch every aspect of capitalism as we know it

The financial decoupling between the United States and China is no longer a distant threat. It is here, formalized, accelerating, and profoundly disruptive. For investors, understanding this new era is not optional; it’s imperative.

The sweeping tariffs on Chinese imports, now codified into law, mark more than a trade skirmish. They signal a historic reordering of global capital flows, supply chains, and technological ecosystems.

This is not merely about economics. It is about economic power—and control. Investors must now adapt to a world in which the foundational rules of global commerce are being redrawn at speed and under pressure. ............

...................... While the financial divorce is not yet final, the momentum behind it suggests it is becoming irreversible. And as with any messy separation, fortunes will be made not by those who react emotionally but by those who anticipate where assets, influence and opportunities will migrate once the old household is split.

For the discerning investor, the coming decades will not be defined by a return to the familiar but by a mastery of the new.


Trump insider claims demolition plan will necessarily ‘decimate millions of investors’ while reset will bring ‘greatest wealth creation’ ever seen

The press daily reports ever louder shrieks of concern that Trump’s actions – tariffs, deportations, chainsaw destruction of federal agencies by people barely out of their teens – risk causing a worldwide economic crash.

The naïve shriekers Bill Ackman, Larry Fink, Larry Summers and countless others don’t yet realize that there’s no risk: it’s the guaranteed end state of a plan that Trump developed before the election – but has never publicly revealed.

We now know this from a 64-minute “infomercial” released on April 1 by stock promoter Porter Stansberry in the form of a staged interview with well-known Trump insider and investment advisor Brad Thomas. 

His most compelling takeaway: “It’s actually the left-wing media who’ve got the most accurate read on his plans . . . They’re actually right: Trump does want to destroy the economy” (minute 14:30 of the video stream).

Thomas identifies himself as a “dyed in the wool Trump loyalist” and a trusted advisor for many years who has been closely involved with Trump’s real estate interests. He discussed the demolition plan with Trump at Mar-a-Lago.

Basic to the plan he reveals is Trump’s having recognized that correcting America’s impossibly unsustainable finances must produce colossal losses one way or another no matter who is in charge. Trump and his close personal advisors drew two conclusions.

First, it is better to execute “a controlled demolition of the financial markets” comparable to a controlled forest burn to “get rid of dead wood” than to permit a haphazard collapse as in previous depressions. Second, it is better to front-run the inevitable crash so as to place the blame squarely on his predecessor.  .................



In a series of high-level discussions in Rome and Berlin, Thomas Ferguson—a leading authority on money and politics—offered a sweeping analysis of the deeper forces driving President Donald Trump’s tariff agenda. Far from a spur-of-the-moment decision, Trump’s economic moves reflect a broader political realignment and years of behind-the-scenes preparation.

Ferguson, who serves as Director of Research at the Institute for New Economic Thinking, reveals that what is unfolding now is more than just a trade war—it’s the unraveling of a decades-old global order.  ...............

Objections about how the administration arrived at the various tariff levels it proposed miss the key point: the tariffs are really the first stage of a broader realignment of the whole international monetary system. ..............



........... For much of the dispirited left, Trump’s trajectory means a beeline to hell. And yet there is a sizeable gap between what Trump wants to do and what he’ll be able to carry out. State cultures and capacities can be attacked but not so easily recast. Global economic structures are stubborn. International reactions are uncertain. Class contradictions abound. ................ 

............ But it is the economy that will be decisive for his populist base, and on this measure, Trump is very unlikely to succeed. As for the business elite, they have always assumed Trump was not so mad as to start a tariff war that risked undermining the American empire itself. As that danger materializes, business will rebel. The question will then shift from what Trump intends to do to what he will he do as his plans go astray.

Steve Bannon, Trump’s first term whisperer, once described himself as a Leninist because “Lenin … wanted to destroy the state and that’s my goal too. I want to bring everything crashing down, and destroy all of today’s establishment.” Trump was apparently listening and learning. There is method in at least some of the early madness of Trump’s chaotic second term.

The shock and awe unleashed by Trump wasn’t just to concentrate state power in his hands or a vengeful rampage by someone who was rebuffed in 2020. Of greater consequence is the intent to disturb the normal functioning of the “deep state” to neutralize any of its oppositional inclinations and force it on its back foot. This is not about destroying the state; state interventions serving authoritarian ends will no doubt increase. Rather it is the permanent crippling of those aspects of the state that might limit capital and address collective needs. ............

In addressing the Trump phenomenon, it’s common to treat Trumpism as unique. This is an exaggeration. The rise of a far-right preceded Trump and its rise extends far beyond the U.S. Something with a longer historical pedigree than Trump and common structural underpinnings seems at play. In this regard, four interrelated developments have been especially pivotal: the trajectory of neoliberalism, the crisis of legitimacy, the polarization of options, and the rise of nationalism. ........................................



............................. Far more significantly, there are still plenty of things that nations, cultures, and communities can do to shield themselves against some of the impacts of the ongoing decline. Until quite recently, I was fairly sure that none of those would be done on any scale large enough to matter. At the moment, though, it appears as though one of the most important of those steps is being carried out with considerable verve by the government of the United States. Readers who have been with me since the peak oil days will remember when economic relocalization was a major theme of discussion, and dependence on global resources was recognized as a lethal weakness in the face of decline. Now, to my great surprise, here we are: the global economy is being dismantled and economic relocalization pushed by, of all people, Donald Trump.



Yves here. While Tom Neuburger is correct in pointing out that our now worse-than-1788-France-levels of inequality call for a revolution, he skips over the fact that we are in the midst of a revolution, one run by reactionaries trying to cement the advantaged position of the rich and further immiserate the rest of the population. I warned from the outset that the only way to make sense of the Trump policy blitz was that he and his allies intended to created a Russia-in-the-1990s level crisis so as to facilitate elite asset grabs.




Vid:


Geopolitical Fare:


The post-WW2 ‘international rules-based order’ that supposedly underpins global affairs in the interests of peace, democracy and prosperity has always been largely a charade. But Israel’s continuing Gaza genocide, carried out with seeming impunity and with the complicity and even active participation of the US and its allies, has exposed the charade like never before.

Twenty years ago, at the 2005 World Summit, the United Nations General Assembly endorsed the doctrine of the ‘responsibility to protect’ or ‘R2P’. The key concerns were to prevent genocide, war crimes, ethnic cleansing and crimes against humanity. Whenever populations are at risk of such crimes, the international community is supposed to take collective action ‘in a timely and decisive manner’ to prevent mass atrocities from taking place. 

In practice, only some massacres matter, whether threatened or actual: namely, those that can be exploited by Western powers to further their own geostrategic interests (for example, see our media alerts here and here). The Nato-led attack on Libya in 2011 is a textbook example. Western politicians and their cheerleaders across the media ‘spectrum’ declared that the world had to act to prevent a ‘bloodbath’ in Benghazi when Gaddafi’s forces there were allegedly threatening to massacre civilians.

In fact, the public were subjected to a propaganda blitz to promote the Perpetual War that had already wreaked havoc in Iraq, resulting in the deaths of over one million people, the virtual destruction of the Iraqi state and the proliferation of Al-Qaeda and other militia groups.

In 2016, a report from the UK House of Commons Foreign Affairs Committee summarised the destructive consequences of Nato’s 2011 intervention in Libya ...............



Every day the Gaza holocaust continues, the western empire tells the truth about itself.
The US government is telling you the truth about itself.
Israel is telling you the truth about itself.
Their western allies are telling you the truth about themselves.
The western media are telling you the truth about themselves. .....................


As Israeli forces resume and expand their offensive on Gaza, Palestinian lives are once again being systematically destroyed.


With no recourse in US courts or Congress, the Taxpayers Against Genocide movement pivots to UN Human Rights Council.





Bernie Sanders has been repeatedly uttering the phrase “Israel has a right to defend itself” on his “Fighting Oligarchy” tour with Alexandria Ocasio Cortez, which in the year 2025 can only be interpreted as blatant genocide apologia.

Israel does not have “a right to defend itself” against an occupied population in a giant concentration camp. Under international law it has a right to end the occupation, and that’s it. .......................

.................... And it’s just a complete and utter lie. Netanyahu didn’t create Israel’s genocidal tendencies, Israel’s genocidal tendencies created Netanyahu. His entire political career has been made possible by Israel’s collective racism and psychopathy upon which he rode into office.

This is nothing other than the classic Obama-style tactic of using attractive progressivish language to advance the most destructive agendas of the US empire.

In other words, it’s Democrats being Democrats.



.................... The challenge at this point is not so much getting information out about the Gaza holocaust, but getting people to really SEE it. Moving it out of the periphery of their awareness as one more bad thing happening in our world and getting them to viscerally grasp what’s happening.

❖

Same movie, different soundtrack. That’s Gaza under Trump.

The Biden administration backed a genocide while occasionally making noises about humanitarian concerns, and now the Trump administration backs a genocide without making those noises.

All that’s changed is the noise.



I keep seeing headlines about “food insecurity.”

SHUT UP

The word is “starvation”. Starvation. You media weasels. 

Now despite what a lot of people think, starvation isn’t fast, and there were some stores, but those stores have run out.

So Israel is deliberately starving something like 1.7 million people, to death.

Meanwhile the only nation in the world trying to stop this is Ansar-Allah (the Houthis). And what is America doing? Sponsoring a ground invasion by the “official government” of Yemen.

The Houthis had no blockade during the ceasefire. When the Israelis announced they would cut off all aid to Gaza, the Houthis said they’d give them two days, then start up the blockade again. Which they did. (Note also that America offered Ansar-Allah an end to all sanctions, recognition and rolling the official government into them if they’d stop the blockade. So the Houthis are doing this at GREAT cost.)

People roll their eyes when Iranians and whatnot call America “the Great Satan” but… seems pretty accurate to me. Helping a genocide, and attacking the only nation in the world trying to stop the genocide. .............



Like people almost everywhere in NATO-EU Europe, Germans are currently being subjected to a relentless barrage of shameless, often astonishingly crude propaganda. That’s because their political elites and mainstream media are desperately trying to prepare them for war against Russia. And this time, not by proxy, that is, by way of a devastated Ukraine and dead Ukrainians, but directly.

............ Their meaning, too, is elementary: In essence, if your image of reality is delusional, you don’t have sound arguments, and your case is absurd, do not despair. Instead, ceaselessly drum in a few very basic and bogus ideas until the audience is dizzy with repetition (the broken-record principle), while also eliciting frequent consent from it (the litany effect). In short: Keep shouting the same nonsense at them and make them bleat back “yes” regularly.



Israel assassinated a photojournalist in Gaza in an airstrike targeting her family’s home on Wednesday, the day after it was announced that a documentary she appears in would premier in Cannes next month.

Her name was Fatima Hassouna. Nine members of her family were also reportedly killed in the bombing. She was going to get married in a few days.

The documentary is titled Put Your Soul on Your Hand and Walk, and it’s about Israel’s crimes in Gaza. ................

As Ryan Grim observed on Twitter:
“For this to have been a deliberate act — which it plainly was — consider what that means. A person within the IDF saw the news that Fatma’s film was accepted into Cannes. He/she/they then proposed assassinating her. Other people reviewed the suggestion and approved it. Then other people carried it out.”
Israel has been murdering a record-shattering number of journalists in Gaza while simultaneously blocking any foreign press from accessing the enclave because Israel views journalists as its enemy. ...........

Israel and its western backers understand that truth and support for Israel are mutually exclusive. Those who support Israel are not interested in the truth, and those who are interested in the truth don’t support Israel. .................



The Trump administration continues to arrest and deport people for criticizing Israel’s genocidal atrocities in Gaza and the US empire’s support for it — and Trump’s supporters continue to applaud these abuses. To call this hypocritical after the way these people spent years rending their garments about the erosion of the First Amendment would be a massive understatement. ..............

The first and foremost reason free speech is important is because it puts a check on the abuses of the powerful. The First Amendment of the US Constitution isn’t there to ensure US citizens get to feel nice feelings, it’s there to restrict the government’s right to obstruct the free flow of information, thereby enabling the citizenry to effectively organize any necessary opposition to the status quo. At least in theory. ..............

Free speech, if sufficiently realized, could solve all our problems. If information was really flowing freely without being constantly manipulated and obstructed by the rich and powerful, our rulers would no longer be able to manufacture consent for our abusive status quo, because everyone would be aware of how bad things are and how much better they could be. .............

The US government isn’t deporting critics of Israel because it wants them to feel bad feelings, it’s deporting them because it doesn’t want Americans to hear legitimate criticisms of US foreign policy. They aren’t merely violating the rights of the speaker by restricting the flow of this information, they’re violating the rights of anyone else who would hear it. They are doing this to help ensure public consent for a genocidal status quo that a populace with an informed mind and an informed conscience would never consent to.



Sci Fare:

Inside a New Mexico lab, researchers estimate there is five bottle caps worth of plastic in human brains. Now they are trying to find out its effects.


Scientists achieved “a milestone” by charting the activity and structure of 200,000 cells in a mouse brain and their 523 million connections.

The human brain is so complex that scientific brains have a hard time making sense of it. A piece of neural tissue the size of a grain of sand might be packed with hundreds of thousands of cells linked together by miles of wiring. In 1979, Francis Crick, the Nobel-prize-winning scientist, concluded that the anatomy and activity in just a cubic millimeter of brain matter would forever exceed our understanding.

“It is no use asking for the impossible,” Dr. Crick wrote.

Forty-six years later, a team of more than 100 scientists has achieved that impossible, by recording the cellular activity and mapping the structure in a cubic millimeter of a mouse’s brain — less than one percent of its full volume. In accomplishing this feat, they amassed 1.6 petabytes of data — the equivalent of 22 years of nonstop high-definition video.

“This is a milestone,” said Davi Bock, a neuroscientist at the University of Vermont who was not involved in the study, which was published Wednesday in the journal Nature. ...........


Rational Fare:

The danger of groupthink, the failure of leadership, and the price we pay for pretending not to know what everyone knows

I've long been suspicious of people who add pronouns to their bios. This suspicion stems from two simple, if unflattering, possibilities. Either they genuinely believe in gender ideology, which does not speak highly of their reasoning powers, or they do not believe in it and are simply pretending, which does not speak highly of their courage. 

The recent Supreme Court ruling confirmed what any rational person already knew: sex means sex. The Court ruled that The Equality Act 2010 refers to biological sex, not gender identity. In other words, a man cannot be a woman. It is astounding that we needed the highest court in the land to clarify such a basic biological and linguistic truth. 

Can’t we just be nice about it? Can’t we be more inclusive? No. Women cannot be men, and men cannot be women. To function, language must have precision. If a word can mean anything, it means nothing. If both sexes can be 'women', then 'woman' ceases to be a useful or coherent term. 

Sex is a biological reality. Gender, on the other hand, is an idea. Transgenderism is an ideology, a belief system that attempts to redefine or transcend biological sex. But we cannot sacrifice linguistic clarity for the sake of ideology. ............

What happened here is not simply a matter of political misjudgement. It is a textbook case of group psychology, with many fearing the social costs of truth more than they fear being wrong.

Perhaps the gender madness even constituted a ‘psychic epidemic’, as Carl Jung described it. In such climates, irrational beliefs, delusions or behaviours spread through a population like a contagion, affecting individuals’ thoughts and actions without their conscious awareness. ..............

Great thinkers from Tacitus to Hannah Arendt have long considered groupthink and how to overcome it. My co-author and I also did our best to address it in Free Your Mind. Because once you understand this the psychological stuff we are made of, you understand it is a perennial problem. We survive one psychic epidemic only to fall straight into the jaws of another. Make no mistake, free thinking, rather than just free speech, remains the key question for anyone who values liberty and truth. ..............



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