Trumponomics - Passing the buck
Only 1,365 days to go...
Yet another week of Trumponomics!
Create chaos… tank the markets… regroup. Business as usual.
The Federal Reserve is the U.S. central bank, created by the Federal Reserve Act of 1913 to establish a monetary system that could respond effectively to stresses in the banking system. (source: The Fed Explained)
It’s pretty obvious what the current source of the stress is on our banking system. His name is Donald John Trump. Trump edges closer to crossing the market's reddest line
The mere possibility that Trump could erode the Federal Reserve's independence has been enough to unnerve investors and tank the stock market. Trump risks plunging the global financial system into crisis if that threat becomes a reality and he attempts to remove Fed chair Jerome Powell or undermine his authority.
Once again, Donald Trump — the one man, who was so inept at business that he actually managed to bankrupt casinos — has shown his utter incompetency in matters of money. Per usual and unlike Harry Truman (see I’m Just Wild About Harry), Trump passes the buck.
“Jerome Powell, come on down!
It’s time to play Trump’s favorite game. The one where he royally screws up and everybody calls him out for being an idiot, but quickly finds somebody to throw under the bus. This time, it’s Jerome Powell, chair of the Federal Reserve that Trump appointed back in 2018.
Does him being blamed make any sense?
Powell didn’t start a trade war.
Powell didn’t tank the stock market.
Powell didn’t raise the price of literally everything.
Powell didn’t bring Elon into the White House and give him permission to fire thousands of workers.
Powell didn’t destroy a booming economy for no reason.
Donald Trump did. There’s only one man to blame.” (source: The Lincoln Project)
Trump Says He Has No Plans to Fire Powell
Mr. Trump’s advisers have repeatedly told him that firing Mr. Powell is legally and financially fraught — and that the uncertainty could cause a significant downturn in financial markets. Mr. Trump, at least for the moment, has appeared persuaded.
Alas, another week of economic uncertainty thanks to our Felon in Chief….
Thought for the day in honor of his birthday…
“That which isn’t good for the hive, isn’t good for the bee.”
~ Marcus Aurelius
Must Read Articles
Trump's latest threat could throw the world economy into upheaval
Even Trump's mere consideration of asserting more influence at the Fed may already be hurting the economy. The dollar is weakening, gold is surging to record highs and the yield on the 10-year Treasury note is rising — all signs that investors are getting nervous about the fundamentals of the American economy.
Economists already figured out the problem with Trump's view nearly a century ago: The White House should not have control over the central bank…
Trump's desire for total control over every aspect of the government has already damaged American democracy. But if he gains power over the Federal Reserve, it would damage the U.S. economy, too.
Stagflation: stagnation plus inflation. Until recently, it seemed a relic of the disco era, but the economic chaos of Donald Trump’s second presidency has resurfaced the old word. Stock markets are warning of a recession. Bond markets are anticipating inflation. Perhaps one market is wrong, or the other, or both. More likely, they portend the return of a half-forgotten nightmare….
In January, President Trump inherited an economy that was growing strongly. Unemployment was low. Inflation had been restrained below 3 percent. If the new Trump administration had just left well enough alone, his second presidency could have coasted to economic success.
Instead, Trump single-handedly plunged the economy into chaos.
Quote of the day…
“There’s no ‘there’ there, to be quite honest about it. If they want to spend money, they’re going to end up putting it on the debt… This DOGE group is throwing up a lot of smoke but is basically doing it with a small candle. They’re going after marginal discretionary events, which basically generate very small savings. So they’re not going to get it out of the discretionary accounts. They’ll get some, but it’s not going to be big.”
~ Former Rep. Sen. Judd Gregg (N.H.)
What I’m reading….
The Market Is Discovering Trump May Be Crazy
Markets seem to be slowly discovering what close Trump watchers have known for years: An errant, insane Trump thought may emerge in the form of a single tweet—rattling the news cycle and then vanishing without a trace—but if that idea reemerges on multiple occasions, it quickly threatens to jump into official administration policy. That’s what’s happening now. Investors are starting to brace for the startling possibility that “Let’s Just Fire Jay Powell And Be Legends, Man” may be just around the corner….So Trump wants to fire Powell and thinks he should be able to fire Powell, and the Supreme Court may be poised to sweep aside what legal protections Powell still theoretically enjoys. At that point, the only other thing backstopping the Fed chair’s job is the knowledge that markets would react to his firing the same way they’ve reacted to his threatened firing: with panic.
Markets Slide as Trump Renews Attacks on Fed Chair
Stocks slumped, bonds sold off and the U.S. dollar continued to lose ground on as President Trump renewed his attacks on Jerome H. Powell, the chair of the Federal Reserve, unnerving already-anxious investors who see the independence of the central bank as critical to the health of the American economy… Mr. Trump targeted Mr. Powell in a social media post, calling him “a major loser” and urging the Fed to cut interest rates. Mr. Trump also suggested that an economic slowdown would be Mr. Powell’s fault.
Majority of Americans pessimistic about their personal finances, Gallup poll finds
American economic sentiment fell in a recent Gallup survey, with some metrics faltering significantly. The survey, published April 21, found that 53% of Americans believe that their personal financial situation is getting worse.
Trump softens tariff tone amid empty shelves warning, market slump
For the first time since he entered political life, polls show most voters disapprove of Trump's handling of the economy.
Inflation — which he claims is nonexistent — is still a little hot, growth is slowing, and manufacturers are losing confidence.
Recession isn't inevitable, but it looks a lot more likely now than it did even a couple of months ago.
Around the world, the "sell America" trade is taking hold, as investors start to realize decades of orthodoxy about U.S. assets as safe havens may no longer be the case.
Floundering Trump Meets Walmart CEO Over Self-Inflicted Tariff Crisis
Walmart Chief Financial Officer John David Rainey told investors earlier this month that more than two-thirds of the company’s products in the U.S. are made, grown, or assembled domestically. One-third come from all over the globe, mainly from China and Mexico. Executives of the world’s largest retailer vowed to keep prices low even amid tariff uncertainty.
‘You Think We’re Afraid of America?’
In some ways, Trump’s tariffs might already be helping China. Many Chinese businesses are applying lessons learned from the previous trade war. (Toward the end of Trump’s first term, American tariffs on Chinese goods reached about 20 percent, on average.) David Xu works for an auto-parts company based in Shanghai that used to export mainly to the Los Angeles area. Over the past three years, he told me, he’s dropped his U.S. exports by 40 percent and replaced them with a roster of Latin American clients. “China isn’t afraid of tariffs anymore,” Xu said. His fellow exporters have “gone global,” doing business in the Middle East, South America, and Eastern Europe. China was once the factory of the world. Gradually, it has become the factory of the developing world.
12 States Sue Trump Over His Tariffs
A dozen states sued President Trump over his tariffs, arguing that he has no power to “arbitrarily impose tariffs as he has done here.”
Contending that only Congress has the power to legislate tariffs, the states are asking the court to block the Trump administration from enforcing what they said were unlawful tariffs. “These edicts reflect a national trade policy that now hinges on the president’s whims rather than the sound exercise of his lawful authority,” said the lawsuit, filed by the states’ attorneys general in the U.S. Court of International Trade.
The states, including New York, Illinois and Oregon, are the latest parties to take the Trump administration to court over the tariffs. Their case comes after California filed its own lawsuit last week, in which Gov. Gavin Newsom and the state attorney general accused the administration of escalating a trade war that has caused “immediate and irreparable harm” to that state’s economy.
“When a president pushes an unlawful policy that drives up prices at the grocery store and spikes utility bills, we don’t have the luxury of standing by,” said Dan Rayfield, Oregon’s attorney general, in a statement. “These tariffs hit every corner of our lives — from the checkout line to the doctor’s office — and we have a responsibility to push back.”
China Warns Countries Not to Team Up With U.S. Against It on Trade
The Chinese Ministry of Commerce said it was responding to foreign media reports that President Trump’s administration was trying to pressure other countries on their trade with China as a negotiating tactic.
“Appeasement will not bring peace, and compromise will not earn respect,” the ministry said in a statement. “Seeking so-called exemptions by harming the interests of others for one’s own selfish and shortsighted gains is like negotiating with a tiger for its skin. In the end, it will only lead to a lose-lose situation.”
China “firmly opposes any party reaching a deal at the expense of China’s interests,” it said, adding that China would “resolutely take countermeasures.”
What If China Wins the Trade War?
If Donald Trump were trying to lose his trade war with China, it’s hard to see what he would be doing differently. The president’s gambit is likely to strengthen China’s geopolitical position, embolden Beijing militarily, and diminish both the United States’ global standing and its economy. The Trump administration believes that it has the upper hand in this fight. “We export one-fifth to them of what they export to us,” Treasury Secretary Scott Bessent recently remarked, “so that is a losing hand for them.” That view has things backwards. The fact that the American economy is hooked on Chinese goods is a massive weakness for the U.S., not an advantage. For many categories of goods, China is not only America’s top supplier but also the world’s dominant supplier, meaning that the U.S. can’t simply get them from other countries.
…although the average voter may not have cared about the details of the Hitler economy, the markets did. The initial surge in stocks that greeted Hitler’s appointment halted then dipped and flattened amid the political and economic uncertainty of Hitler’s chaotic first weeks as chancellor. The German Industry and Trade Association issued a public warning on tariffs….Hitler’s trade war with his neighbors would prove to be but a prelude to his shooting war with the world.
Mattel Laying Off 120 Workers As Part Of Cost-Cutting Push As Toymaker Also Reckons With Tariffs
Mattel CFO Anthony DiSilvestro has reminded investors in recent weeks that the company has worked for several years to diversify its manufacturing process to change where it manufactures its toys. He has also said pricing changes could be an option in light of the tariffs. China, which generally represents about 80% of global production for the toy business, will account for less than 40% of Mattel’s total output in 2025, DiSilvestro said on the company’s fourth-quarter earnings call last month.
The secession of the billionaire class
To be fabulously wealthy today means not having to come across anyone who isn’t. It therefore means having not a clue about how average working people live or what they worry about it. The billionaire class doesn’t care if producers raise their prices, because prices mean almost nothing to them. They aren’t concerned about retirement savings, because they don’t have to prepare for retirement.
GOP lawmakers running out of options to pay for Trump’s costly agenda
Budget experts say the proposed discretionary spending cuts recommended by Elon Musk’s Department of Government Efficiency (DOGE), which would still need to be approved through a vote by Congress, will end up saving relatively little money over the long term compared to the huge projected cost of Trump’s agenda.
Strollers and other baby products will get more expensive – and harder to find – with tariffs
An estimated 90% of the core baby care products and the parts that go into making baby paraphernalia – from bottles and diaper pails to strollers and car seats – are made in Asia, according to the Juvenile Products Manufacturers Association, a U.S. trade group. The vast majority come from China.
Actually, Wall Street (Kinda) Is Main Street
Publicly traded companies, big and small, employ millions of Americans and operate in practically every corner of the U.S. economy. When their stocks crater, it affects not only the firms at issue, but the tens of millions of other Americans whose livelihoods and futures depend, at least in part, on “Wall Street” doing well. And that cratering, along with similar currency or bond moves, can both reflect—and sometimes harm—economic conditions in the real world, including for Americans without any direct market exposure… millions of people, including the folks paid big bucks to dig through troves of information and try to estimate the nation’s future economic health, think the tariffs and related chaos will be bad for many real American companies, their workers and customers, and the U.S. economy more broadly. It’s therefore nonsense to claim that the last two months of market trouble—and the trillions in wealth that went poof in the process—doesn’t matter.
Elon Musk Warns Rare Earth Magnet Shortage May Delay Tesla’s Robots
China this month suspended exports to any country of so-called heavy rare earth metals and magnets made from them, as part of its retaliation for President Trump’s increases in tariffs on U.S. imports of Chinese goods. The Chinese government has stopped allowing shipments until it can devise an export license system.
China produces the entire world’s supply of heavy rare earth metals, from ore mined in China and Myanmar, and 90 percent of magnets made with these metals. Japan produces the rest of the magnets, but uses raw materials from China.
Beggar thy neighbor, harm thyself: Tariffs like Trump’s come with pitfalls, history shows
The proposed tariffs were pitched as a way to revive U.S. manufacturing, reclaim jobs and counter what Trump considers unfair trade practices. But they immediately rattled the financial markets and raised alarms among economists and America’s global partners. Critics across the political spectrum revived a familiar warning: “beggar-thy-neighbor.”
…Rather than resorting to beggar-thy-neighbor tactics, the U.S. could secure its future by investing in what truly drives long-term strength: smart workforce development, breakthrough innovation and savvy partnerships with allies. This approach would tackle trade imbalances through skillful diplomacy instead of brute force, while building resilience at home by equipping American workers and companies to thrive – not by scapegoating others.
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.
IMF slashes UK’s growth forecast, points to U.S. tariffs and borrowing costs
The International Monetary Fund downgraded the U.K.’s 2025 growth forecast in its latest economic outlook released on Tuesday, warning that U.S. President Donald Trump’s trade tariffs, higher borrowing costs and increased energy prices will dent output this year.
Trump store sells hats teasing third term in 2028
The Trump Organization is encouraging supporters to "make a statement" with a "Trump 2028" hat, now available on the official Trump Store.
What I’m watching…
What I’m listening to…
What I read every day…
https://www.theatlantic.com/magazine/archive/2020/07/trumps-collaborators/612250/?utm_source=copy-link&utm_medium=social&utm_campaign=share
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