Thoughts on Trump's very bad options, the birth of the Petroyuan, the Trump Syndicate's lucky bets, tough times for Europe's MAGA right, and a film to help understand why we are where we are
Thanks for another highly enlightening, if worrying analysis. Let's hope by the time you next write Orban has lost, a US/Iran agreement is reached (unlikely) without leaving the rest of the world to sort without leading to a recession and that UK+EU realise that renewables need big funding..rapido!..All just another lesson as to why global overdependency on one nation...is never good and why the true meaning of hypocrisy needs to be globally learnt
You would think so, but extraordinary there appears to be a loophole in US foreign arms procurement contracts that allows the Pentagon to appropriate funds as it sees fit. I don’t know if it has ever been used before…
I’ve always been gobsmacked at British governments’ (national and local) long term inability to negotiate contracts in the supposed interest of their tax and rate payers. Seems this malaise isn’t just the province of the Brits. There is too much “lunching” and too many “trebles all round,” and not much in the way of proper negotiating skills.
Thanks Spyros - I think you’re way of visualising the trilemma is very helpful. The sad reality is that it still applies even with Trump’s war aims downgraded from regime change to grabbing the uranium or seizing one of the Gulf islands
Absolutely. There is no doubt about this. US rescinds the dollar privilege with Trump. The point with market rates rises is that UST is in the brink of exposing credit risk. The actual detrimental impact in growth and this deficit will likely expose an unsustainable deficit and debt trajectory. It was Bessent himself who said to the Senate Committee before taking FED chairman role, that there wasn’t room for another crisis for the deficit to accommodate. Let aside this double whammy one. Anywhere near 5% in 10y sets risks of a spiraling off dynamic. Recall we depart from a deficit of 6-7% which is likely to need afford at the very least a harsh slowdown if a not recession. That puts the deficit in double digits territory. Imagine Bessent opposing the war explicitly on these terms? Not really. That I thought too. It’s going be much earlier than a slow and protracted transition to a petroyuan regime.
Thanks Fernando for sharing that. I failed to mention in my piece the $200 billion of extra borrowing that Trump is demanding for his war. Bessent’s 3 percent deficit goal has never looked more implausible. GS has a chart last week suggesting there was no change of hitting it this decade. We may be about to find out what it is like to live in a world without safe havens
It seems to me hopeless to expect anything approaching sanity or decency from the Trump regime. Its eagerness, as evinced by visits from Rubio and Vance to Budapest to underpin EU lunatics and criminals demonstrates this along with much else. It seems to me that a major preoccupation now for sane and decent Americans (who are, I am certain, the vast majority) should be to make it clear to the world that the past two years have resulted from a rogue grouping seizing power through lies and corruption. Along with this will have to be a clear determination to prosecute Trump and his enablers as soon and as effectively as possible. I believe there is no law against prosecuting a sitting president. I understand that it is merely a convention. Is that so? The situation is awful but decent America has to distance itself as much as possible from the past two years and make it clear that genuinely effective guardrails are being mounted.
Unfortunately the Supreme Court in its wisdom (or at least conservative majority) voted to give the President wide-ranging immunity for official acts, thereby putting him pretty much above the law. Meanwhile Trump’s extensive use of his pardon power effectively provides immunity to his enablers, beyond that afforded by stuffing the administration with grifters and sycophants. We are discovering one of the weaknesses of a presidential, as opposed to parliamentary, system. The chief executive is for practical purposes answerable to no one and there is very little that decent Americans can do when their system is captured by a rogue.
Of course you are right thst the Supreme Court has made Trump omnipotent at present. However the SCOTUS has the power to revisit a decision and change its decrees. It reversed Wade v Roe. It seems to me far more urgent to arrest the national and international savagery of the Trump regime.
Of course you are right thst the Supreme Court has made Trump omnipotent at present. However the SCOTUS has the power to revisit a decision and change its decrees. It reversed Wade v Roe. It seems to me far more urgent to arrest the national and international savagery of the Trump regime.
Of course you are right thst the Supreme Court has made Trump omnipotent at present. However the SCOTUS has the power to revisit a decision and change its decrees. It reversed Wade v Roe. It seems to me far more urgent to arrest the national and international savagery of the Trump regime.
Of course you are right thst the Supreme Court has made Trump omnipotent at present. However the SCOTUS has the power to revisit a decision and change its decrees. It reversed Wade v Roe. It seems to me far more urgent to arrest the national and international savagery of the Trump regime.
I fail to see how that’s an inherent problem with presidential systems rather than extreme polarization/issues with the US constitution/2 party system that are not unique to a presidential system. If the U.S. was less polarized, the requirement for removal after impeachment was less than 2/3rds, the constitution was easier to amend so the pardon power could be reduced, there was proportional representation in congress, etc. then a lot of these issues could be addressed. I’m not sure a parliamentary system would always be better if the level of polarization was the same.
Are the 800 or so combat Marines, out of each unit of 2,500, going to be bringing Caterpillar excavators with them since allegedly last June Trump buried these facilities under tons of fallen mountain? Seizures of some desolate island is not much better since all the high ground next to them is occupied by the Iranians.
Quite. The WSJ reports suggests they will have to do exactly that - after, of course, they have built an airfield and secured the perimeter while under enemy file. At least Putin had a million men under arms for his special military operation and was attacking a neighbour with whom Russia shares a land border - though fat lot of good that his done him…
Good point! What Bessent calls escalate to escalate is about to happen, but but, the desired objective is no clearer, while King Bibi wages ‘woar’ in every direction (Houthis next).
Regarding the first option (seizing the uranium by force) besides the risks you've pointed out one Iranian missile aimed at a desalination plant will expose the stupidity of what Chump has done.
It may be too much to hope that Epic Fury might lead to regime change in the US
Unfortunately, as in Iran, the regime has strategic depth and it would require many layers of decapitation before one got to anyone sane.
My comment elsewhere was that at least Zelensky may find there are benefits through deals with Gulf States.
Thanks for another highly enlightening, if worrying analysis. Let's hope by the time you next write Orban has lost, a US/Iran agreement is reached (unlikely) without leaving the rest of the world to sort without leading to a recession and that UK+EU realise that renewables need big funding..rapido!..All just another lesson as to why global overdependency on one nation...is never good and why the true meaning of hypocrisy needs to be globally learnt
4. Diverting funds from European governments… Isn’t that theft?
You would think so, but extraordinary there appears to be a loophole in US foreign arms procurement contracts that allows the Pentagon to appropriate funds as it sees fit. I don’t know if it has ever been used before…
I’ve always been gobsmacked at British governments’ (national and local) long term inability to negotiate contracts in the supposed interest of their tax and rate payers. Seems this malaise isn’t just the province of the Brits. There is too much “lunching” and too many “trebles all round,” and not much in the way of proper negotiating skills.
Bad options indeed Simon. The way I would frame it is that he can only attain any two out of three objectives: regime change, no boots on the ground, and no recession: https://thinicemacroeconomics.substack.com/p/iran-trumps-trilemma?r=1oa8fn&utm_medium=ios
Thanks Spyros - I think you’re way of visualising the trilemma is very helpful. The sad reality is that it still applies even with Trump’s war aims downgraded from regime change to grabbing the uranium or seizing one of the Gulf islands
Unfortunately!
It feels like Iran has realised the leverage their control over Hormuz gives them. I fear this won't be easily unwound.
I think they’ve always been aware of the leverage, they just never thought that one day they’d use it.
Absolutely. There is no doubt about this. US rescinds the dollar privilege with Trump. The point with market rates rises is that UST is in the brink of exposing credit risk. The actual detrimental impact in growth and this deficit will likely expose an unsustainable deficit and debt trajectory. It was Bessent himself who said to the Senate Committee before taking FED chairman role, that there wasn’t room for another crisis for the deficit to accommodate. Let aside this double whammy one. Anywhere near 5% in 10y sets risks of a spiraling off dynamic. Recall we depart from a deficit of 6-7% which is likely to need afford at the very least a harsh slowdown if a not recession. That puts the deficit in double digits territory. Imagine Bessent opposing the war explicitly on these terms? Not really. That I thought too. It’s going be much earlier than a slow and protracted transition to a petroyuan regime.
Thanks Fernando for sharing that. I failed to mention in my piece the $200 billion of extra borrowing that Trump is demanding for his war. Bessent’s 3 percent deficit goal has never looked more implausible. GS has a chart last week suggesting there was no change of hitting it this decade. We may be about to find out what it is like to live in a world without safe havens
It seems to me hopeless to expect anything approaching sanity or decency from the Trump regime. Its eagerness, as evinced by visits from Rubio and Vance to Budapest to underpin EU lunatics and criminals demonstrates this along with much else. It seems to me that a major preoccupation now for sane and decent Americans (who are, I am certain, the vast majority) should be to make it clear to the world that the past two years have resulted from a rogue grouping seizing power through lies and corruption. Along with this will have to be a clear determination to prosecute Trump and his enablers as soon and as effectively as possible. I believe there is no law against prosecuting a sitting president. I understand that it is merely a convention. Is that so? The situation is awful but decent America has to distance itself as much as possible from the past two years and make it clear that genuinely effective guardrails are being mounted.
Unfortunately the Supreme Court in its wisdom (or at least conservative majority) voted to give the President wide-ranging immunity for official acts, thereby putting him pretty much above the law. Meanwhile Trump’s extensive use of his pardon power effectively provides immunity to his enablers, beyond that afforded by stuffing the administration with grifters and sycophants. We are discovering one of the weaknesses of a presidential, as opposed to parliamentary, system. The chief executive is for practical purposes answerable to no one and there is very little that decent Americans can do when their system is captured by a rogue.
Of course you are right thst the Supreme Court has made Trump omnipotent at present. However the SCOTUS has the power to revisit a decision and change its decrees. It reversed Wade v Roe. It seems to me far more urgent to arrest the national and international savagery of the Trump regime.
Of course you are right thst the Supreme Court has made Trump omnipotent at present. However the SCOTUS has the power to revisit a decision and change its decrees. It reversed Wade v Roe. It seems to me far more urgent to arrest the national and international savagery of the Trump regime.
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Of course you are right thst the Supreme Court has made Trump omnipotent at present. However the SCOTUS has the power to revisit a decision and change its decrees. It reversed Wade v Roe. It seems to me far more urgent to arrest the national and international savagery of the Trump regime.
Of course you are right thst the Supreme Court has made Trump omnipotent at present. However the SCOTUS has the power to revisit a decision and change its decrees. It reversed Wade v Roe. It seems to me far more urgent to arrest the national and international savagery of the Trump regime.
I fail to see how that’s an inherent problem with presidential systems rather than extreme polarization/issues with the US constitution/2 party system that are not unique to a presidential system. If the U.S. was less polarized, the requirement for removal after impeachment was less than 2/3rds, the constitution was easier to amend so the pardon power could be reduced, there was proportional representation in congress, etc. then a lot of these issues could be addressed. I’m not sure a parliamentary system would always be better if the level of polarization was the same.
Are the 800 or so combat Marines, out of each unit of 2,500, going to be bringing Caterpillar excavators with them since allegedly last June Trump buried these facilities under tons of fallen mountain? Seizures of some desolate island is not much better since all the high ground next to them is occupied by the Iranians.
Quite. The WSJ reports suggests they will have to do exactly that - after, of course, they have built an airfield and secured the perimeter while under enemy file. At least Putin had a million men under arms for his special military operation and was attacking a neighbour with whom Russia shares a land border - though fat lot of good that his done him…
Good point! What Bessent calls escalate to escalate is about to happen, but but, the desired objective is no clearer, while King Bibi wages ‘woar’ in every direction (Houthis next).
Hmmm. You changed genocide to ethnic cleansing. That's just as grim.
Regarding the first option (seizing the uranium by force) besides the risks you've pointed out one Iranian missile aimed at a desalination plant will expose the stupidity of what Chump has done.