Just don't see how this materializes in any meaningful timeframe in the United States — if it's even doable at all.
It also ignores the fact that since the 1970s the United States has transitioned more and more to information and services jobs.
The only plausible way out I see in the near term is a bunch of carve outs and one-off deals that allows the U.S. government to say, "our bluff worked."
But long term, automation is going to be taking more and more of these jobs and I just don't see how you justify sneakers costing what it will cost to pay American workers enough to prosper.
Personally from an environmental standpoint I've questioned for a couple of decades now whether we can ever slow down and try and buy more sustainable goods even if they cost more. But this way of trying to get there feels like medieval medicine.
According to insiders in the white house the tariffs came about from a 3 hour meeting, there's nobody willing say no to the old man who can't keep his thoughts or words together sometimes ... and regarding environmental problems IIRC he has already expressed "I'll be dead by then". I wonder if that is his approach to everything?
In some ways this feels like the country has been brought along on some senile old man's suicide pact.
https://en.wikipedia.org/wiki/Cultural_Revolution https://en.wikipedia.org/wiki/Great_Leap_Forward
In 1967, emboldened radicals began seizing power from local governments and party branches, establishing new revolutionary committees in their place while smashing public security, procuratorate and judicial systems.
Mao ambitiously sought an increase in rural grain production and an increase in industrial activity. Mao was dismissive of technical experts and basic economic principles, which meant that industrialization of the countryside would solely be dependent on the peasants. Output from the industrial activities such as steel was also supposed to be used for urban growth. Local officials were fearful of the so-called "Anti-Right Deviation Struggle" and they competed to fulfill or over-fulfill quotas which were based on Mao's exaggerated claims, collecting non-existent "surpluses" and leaving farmers to starve to death. Higher officials did not dare to report the economic disaster which was being caused by these policies, and national officials, blaming bad weather for the decline in food output, took little or no action.
Acknowledging responsibilities for the Great Leap Forward, Mao did not retreat from his policies; instead, he blamed problems on bad implementation and "rightists" who opposed him.
There is a reason historians are already fleeing the country: https://www.vanityfair.com/news/story/the-fascism-expert-at-...
If we wait too long to act, there's a good chance it will be too late or cost much much more.
The problem is unchecked power. You can't expect those in power to check themselves. When there is no forceful resistance at all to obviously insane completely radical policy that experts are "confused" by, we should all be very very worried.
The Republican Party cannot pass significantly polarizing legislation since it can't overcome a filibuster.
The Republican Party does not have the senatorial votes to impeach and remove any federal judges.
On top of that, the US system divides power in a way that gives states and localities a lot of control where the federal government has no say. Almost all police by quantity of officers are operated by local municipalities who don't take orders from the federal government. The fact that cannabis was able to be legalized while being federally illegal shows how that works very well: without state and local police to enforce those laws, there is nobody to arrest you for violating federal law.
Of course these things would be "illegal" but reaching court decisions can take years and in the meantime a locality might be starved out and give in to pressure.
Especially wrt how you suggested "polarizing" legislation will just get filibustered, as polarizing doesn't cut it, and the democrats in congress somehow have this magical ability to mostly do nothing and yet be terrified of doing nothing. Besides, if they do nothing, the republicans still essentially act with impunity. They're already dipping their toes in dark waters by ignoring some court orders and rulings. All while following the playbook of accusing others of what they do far more/worse, but never allowing even a drop of guilt to weigh on them.
Perhaps this is all to say that congressional gridlock hardly fixes any of the damage, can be exploited politically, and won't undo the sort of damage that be done even just in the remaining ~2 years before midterms. And at this point people are getting seriously afraid about what'll happen if they don't like the outcome of those midterms, let alone the next presidential election.
I agree greatly though about what you note with states' separation of powers meaning particularly bold governors+legislature can resist a lot of federal authority.
It's the one solid fallback, but even then it's got some limitations. Look at a state like California that subsidizes conservative states by paying more in taxes to the federal government than it receives in funding.
How long until people from outside the Trump bloc start questioning why they're stuck saddled with their baggage, which produces next to no value for them but is impairing their political freedom, and which extracts tax money to be spent against their political and popular interests?
How long until federal interests might simply decide to retaliate against those states' attempts to bypass and ignore them? Especially if they start making accusations of rebellion, secessionism, "radical leftism" or some other senile babble.
I disagree with your point about the filibuster. Talk of filibuster is important because of Mr Smith goes to Washington and its social history. It is symbolic only. As a tool of checking power it has no teeth other than to manage political spectacle and be a talking point in public opinion. I think it's main purpose is to support people's denial about power dynamics. They don't want to look as powerless as they are so they must reference a "weapon" they never intend to use. It is bluster. It is clear democrats are all bark and no bite and using it as a theoretical weapon. If they used it but failed to achieve a meaningful outcome, that would break people's denial and likely be the cause of civil unrest because everyone else will come to the conclusion that the DNC will absolutely not save them and we are on our own to fight or run. Jon Stewart's rebuke of Schumer says everything that needs to be said about that, IMHO.
I will give you the senatorial votes for removing judges. That is at least a meaningful check on power. I can't deny that, and it does invalidate my absolutist statement. I would caution that positions of enforcement are being replaced by loyalists, and as that happens congress and the judicial branch will have less and less power. I am also not sold the the judiciary is functioning. The administration is claiming individual judges are trying to stop actions, when those judges are ruling that it is not them but the law that is stopping those actions. The fact that the GOP can get a message about activist judges out, but the DNC can't meaningfully "convince mom and dad," that law is under threat, that means that there is much much more to party power than what is on paper alone.
I also accept that state power does invalidate my absolutist statement, to a degree. Universities are cowing to the federal government and states are unable to protect them. Structurally AFAIK, taxes are taken directly from citizens rather than paid by the citizens through the state which means that the states ability to check federal power is structurally quite weak. States also generally do not have strong political power, as in the type that flows from the barrel of a gun, due to unified federal military. Police forces have been a target for right wing infiltration for a long time. That thin blue line flag is nearly synonymous with conservatism and unchecked power, I would almost call it a paramilitary symbol, it clearly represents an insular exclusionary culture and seems to represent an anti-regulation, but pro-power standpoint, that flag represents that police are an "us" in an "us vs them" situation. Time and time again has proven that police's primary purpose is to protect the aristocracy and their assets anyway.
I also think there is a meaningful and relevant distinction between non-enforcement of federal law, and enforcement of law, federal or state. Fighting corruption requires active enforcement mechanisms, it's not enough to not enforce.
In an extreme case, in the tax example, which represents real actual physical power, if states went to ADP and said you will stop withholding federal income taxes/send federal income tax to the state, you potentially have a police/police or police/military face-off.
I agree that it's much more grey here than the black and white I presented, but I think if you modeled us as a one party state, I don't think you'd find yourself having to explain too many actions taken in physical reality that contradict that assessment, although you clearly did label some that were anomalous to that assessment. I think we will see fewer and fewer anomalies as power is consolidated.
The only thing that's made me hopeful in terms of checks on the power that is consolidating is Newsom's threat to unilaterally exempt California from the tariffs. That type of action shows a state potentially wielding real dissenting power and does give me some hope.
Russia has elections too and you should probably think about how they are different and why they are different, and how that relates to rule of law.
We definitely should think about how Russian elections are different and why they're different.
For one thing, in the US the executive branch and federal government has very little control over elections by design. The current administration can say whatever it wants about elections, it has no power to stop a disaster for them in 2026 if the pendulum swings enough.
It is extremely hard to change the constitution like was done in Turkey or Hungary. It is extremely hard to remove lifetime appointment judges from the opposition administration. Executive orders are easily reversed and laws must be repealed to undo them. If laws were easy to undo the ACA would be gone by now.
Just because the current administration is acting like it completed a successful coup doesn't mean that it actually has in reality. Don't take what they say to be truth, because they constantly lie. The would love for the opposition party to think that they have taken over and that there is no hope. All they've done is won one single election by very slim margins and tossed out a bunch of executive orders.
The current administration loves tariffs simply because it's the most impactful lever the president can use without congressional approval besides commanding troops. The current administration literally cannot do much else in terms of lasting policy and they are too lazy and incompetent to approach congress with any actual ideas (something that the Obama and Biden administrations excelled at, e.g. the ACA and Bipartisan Infrastructure bill).
The US constitutional system has survived authoritarian-minded presidents before. And of course, that's not to say the US system is perfect or even an especially fair and representative system. But it has very strong protections against permanent dictatorship or an outright coup.
The president of the Heritage Foundation said “we are in the process of the second American Revolution, which will remain bloodless if the left allows it to be.” https://archive.is/Ku2KG -- https://www.washingtonpost.com/politics/2024/07/03/heritage-...
This is a direct quote from a major institution behind the current administration that is well known to be a major force for choosing judicial candidates for the GOP. I understand it feels like hyperbole, but that's not because it's hyperbolic, it's because it's hard to accept. Accepting it would cause a lot of grief and grief is disabling. Accepting it creates a sense of responsibility or a sense of helplessness, neither of which feel good. Accepting it means that we aren't just in a bad situation, we are in a literal emergency. It means action is necessary now.
A secretary of defense and a chairman of the joint chiefs of staff have said he is a threat to the constitution and the country: https://www.politico.com/news/2023/09/29/milley-farewell-spe... https://www.theatlantic.com/politics/archive/2020/06/james-m...
4 prominent republicans have Sieg Heiled including musk and bannon: https://www.youtube.com/watch?v=7E9pXCuJnbc&t=10s https://www.youtube.com/watch?v=-VfYjPzj1Xw&t=18s
Here's the head of the OMB saying he wants to put government workers in trauma: https://www.youtube.com/watch?v=oBH9TmeJN_M&t=6s https://www.propublica.org/article/video-donald-trump-russ-v...
These are primary sources... This isn't hyperbole.
> We can't assume the worst-case outcome despite the serious danger of that outcome should it occur.
We don't have to assume the scenario to ask if it is possible. What prevents that scenario? That is the real problem. Without rule of law, there is nothing that stops it. The problem isn't that one particular story will come true, it's that there is nothing preventing any of the atrocities we have seen authoritarian regimes commit from happening because there is no red line, and no un-corrupted enforcement authority, and there is no substantive resistance. Nobody is even treating the end of rule of law as the emergency it is because it's not observable until the lack of law is abused, for example to send people to El Salvador without due process. Without due process, it could be you going to El Salvador. There have been no consequences for this. This is an emergency. We can't know for sure, but if the atrocities do start, this will have been the proof of concept.
> It is extremely hard to change the constitution.
I don't know how it was done in Turkey or Hungary, but I strongly disagree that it is hard to change it. It has been ruled that the constitution is not a document to be interpreted by you and me, but by the supreme court authoritatively, and only by his DOJ authoritatively (even against the supreme court) for the executive branch.
Law is just paper unless enforced. China called the agreement with the UK "was a historical document that no longer had any practical significance." That type of thing can just be declared when you have the power to do so. Who will stop you? The enforcers on your payroll?
If the supreme court rules the text on paper means something different, how is that meaningfully different than changing the words on the paper except in how tortured the justifications are?
> It is extremely hard to remove lifetime appointment judges from the opposition administration.
I really think you think you are standing on rock, when you are standing on sand. That intellectual sand you are standing on is the assumption of using rule of law to justify why you have rule of law, which is the thing in question. Without rule of law these statements which might have once been true become hurdles not limits. Maybe you can't dismiss a judge, but you can control which cases go to what judges and constructively dismiss them. Your budget of bad behavior is limited only by the consequences you experience...
You have to have an answer for who enforces the law as it was understood and with the intent it was written.
> Executive orders are easily reversed and laws must be repealed to undo them.
Are you seriously asserting that this tariffs and their consequences will easily be undone? I'm not trying to attack, I am just shocked that you would say this. Will trees in national parks get un-chopped down? Will trails rebuild themselves? Will government workers, like those in the USDS, come back? Will oil go back in the ground? Will rivers de-pollute themselves? Will oil execs get less rich? Will government functions be un-privatized? Will mom get her retirement money back? Will those dying people on medicaid get their life or their family's money back? Will children receiving survivors benefits get the childhood years spent more stressed than they needed to be back?
I get what you're saying in the literal sense, but I also think it is very wrong to talk about executive orders with this little weight.
> Just because the current administration is acting like it completed a successful coup doesn't mean that it actually has in reality. Don't take what they say to be truth, because they constantly lie. The would love for the opposition party to think that they have taken over and that there is no hope. All they've done is won one single election by very slim margins and tossed out a bunch of executive orders.
They are literally going through positions of authority and replacing them with loyalists. That is a coup. Here is a historian telling you that not only is it a coup, but if this happened in a foreign country you would recognize it as one: https://archive.is/fNpSS -- https://snyder.substack.com/p/of-course-its-a-coup
> The current administration loves tariffs simply because it's the most impactful lever the president can use without congressional approval besides commanding troops. The current administration literally cannot do much else in terms of lasting policy and they are too lazy and incompetent to approach congress with any actual ideas (something that the Obama and Biden administrations excelled at, e.g. the ACA and Bipartisan Infrastructure bill).
This is ignoring what is happening in the bureaucracy. They tried to just not give states money, which in defense of your previous points, is currently a check on power, but doesn't have to remain so.
> The US constitutional system has survived authoritarian-minded presidents before. And of course, that's not to say the US system is perfect or even an especially fair and representative system. But it has very strong protections against permanent dictatorship or an outright coup.
Denial happens when the consequences of understanding reality causes negative emotions, so rather than accepting those negative emotions, you reject reality until reality asserts itself in to your life.
Timothy Snyder would call what you said the politics of inevitability: Politics of Inevitability, Politics of Eternity (12m) -- Timothy Snyder https://www.youtube.com/watch?v=Eghl19elKk8
It is very worth a watch, and it was recorded in 2018.
Complacency is a problem. If nobody thinks they have to do something, then nothing gets done, and what we once thought was inevitable, is proven not to be, someone should have acted, but by the time we realize that someone is us, enough power may have been consolidated to make the cost too high.
2026 is a loong way off considering the pace that Trump is setting the place on fire.
Yet he still has time to play golf. https://www.thedailybeast.com/trump-has-another-miracle-golf...
I think it's wrong to view the GOP as a party of elected officials.
The GOP has elected officials, but Fox news/Rogan/etc, the Heritage Foundation, project 2025, the NRA, palantir, cambridge analyitica, twitter, Zuckerberg, bezos, and many other funded and powerful institutions are behind every individual congressperson. So you're not talking about a decision that is made individually. Republicans for all of their flaws, act with a great amount of solidarity, which is what makes them powerful, they are able to punish anyone that breaks that solidarity, and for many GOP people who are also criminals protected by their position, the punishments could even be quite severe if they forgo the protection of party by dissenting.
The only meaningful act of dissent that even comes to mind was John McCain who was dying.
There’s no such thing as the broader Republican Party. It’s just Trump now. It’s like when a CEO packs a board with his friends and family, you don’t expect that board to keep the CEO in check.
In addition, Trump is a cult-like leader. His supporters will never, ever, ever break from him. They could lose every last penny, it wouldn’t matter. They’d blame the democrats. Trump is infallible and to question that is to attack them personally, they are unable to separate themselves from him at this point.
This is not hyperbole, it is an observation of fact for the last 8 years. He has never lost supporters. Everyone that has bet on him losing support from congress or his base, has been hilariously and spectacularly wrong, every single time. (Including me… I used to be pretty hooked on Trump news in his first presidency, thinking “this will surely sink him” after every single scandal. I still want to believe it’ll happen. But I know now it never will. You can only be wrong so many times before you realize it’ll never happen.)
The only realistic path to checking Trump is a massive blue wave in 2026 from pissed off (non-Trump-base) voters. But that’s 2 years away.
Even in the early days of Trumps first term they struggled for weeks to shutdown Obamacare and … just gave up as they couldn’t legislate.
It’s a party that by design is missing leadership.
In the Angloamerican West people always bring up the Cultural Revolution as a cautionary tale, but the Cultural Revolution removed the influence and power of the old Chinese elite from the society and established the dominance of people's congresses unshakably. Despite the undesirable happenings around it, it changed China's culture fundamentally. Even the father of the current president of China was purged from power during that revolution, leading to Xi being raised as a normal person and rising to the top from the village level, like almost all of the Chinese governing cadres - ending up with the ordinary people dominating the establishment.
That is why China has a lot of street sweepers, garbage men, electricians etc in their people's congress while you won't see one single person with such a job in the US Congress or even a few in the major European countries' parliaments. They are dominated by the elites from the same social circles, or in the case of various European parliaments, by hundreds of years old aristocratic families and their relatives with similar surnames.
So using the Cultural Revolution as a cautionary tale for the Trump administration not only does not make sense because it's not an accurate comparison, but also the assumptions behind the usage of it as such an example are misplaced from the start.
Education is far from elite making, maybe elite in a global sense, but not elite by American standards. Being elected to a position also makes the social circle. It might surprise you that many American politicians are real people with real non aristocracy backgrounds.
In physics your selection of point of origin determines your ease of calculation. You selected some kind of aristocracy/dynastic rule vs the people origin, which gives you a warped analysis because you are unable to find the root cause.
If you instead choose authoritarianism and unchecked power as your point of origin, the comparison to the cultural revolution is very apt. "Ignoring experts," is also directly applicable.
> In the Angloamerican West people always bring up the Cultural Revolution as a cautionary tale,
Perhaps that's a lot of indication that many people see it is a relevant cautionary tail based on their own judgement.
One populist man with unchecked power caused one of the worlds worst famines by denying experts and reality. That is applicable.
Unfortunately, that is statistically and historically not the case:
https://whorulesamerica.ucsc.edu/power/class_domination.html
All the important positions are filtered. You are either born into the network or marry into it if you can.
He's owned by Putin, and a few billionaires that are willing to play along a la Project 2025.
How is this even a discussion at this point? Literally the only country that didn't get tariffs is Russia.
Devaluation means a decrease in the value of the currency, making imports more expensive, not cheaper. That your source can make such a fundamental mistake should give a good idea of how little credence it deserves.
You've pulled the rug out from consumers' pocketbooks, your stock price is in the toilet, and there's no idea what will come tomorrow, next week, or next year from this group. How do you raise money and plan to onshore your manufacturing in an environment like that? You're better off hunkering down and doing nothing.
> If rolled into 10-yr bonds, every 1 basis point drop in rates saves approx $1B/year; so a 0.5% drop would save $500B over a decade.
It would be $50B on this math. Also, and I am an econ idiot here, how does the $9.2T refinancing work? Who is the US negotiating with to do this, itself?
> Lower yields free up fiscal room—without them, core spending gets crowded out.
What does this sentence mean? Fiscal room relative to what, to do what?
> But cheap refinancing isn’t enough on its own. Even at lower rates, the debt remains enormous.
Especially when Congress is about to vote on a bill to explode the debt again. Like, refinancing at $50B/year for savings isn't going to mean a thing compared to extending the tax cuts.
> Don’t forget: tariffs also bring in revenue. Estimates suggest they could raise over $700 million within the first year. That’s not a game-changer on its own, but it gives the Treasury a bit more room to maneuver—especially if paired with deficit cuts.
Again, that's 1.4% of the $50B. Literally a rounding error. No room is given to do anything. Also, what is a deficit cut, do you mean spending cuts (genuine question)? The only real spending cuts we can do to anything are, what, ~1/6th of the budget?
> Still, this approach isn’t without risks. If domestic supply chains can’t catch up, or if global retaliation kicks in, inflation could rise again. And if that happens, the Fed may be forced to raise rates—which would blow a hole in the low-yield plan. That’s the tightrope.
This was written on Apr 3. So, it seems that the tightrope that Ratna talks about has failed, the plan is over.
Look, the thread was an attempt at sanewashing the policy, it lasted about a day. Obviously, there is no plan.
* tariffs are taxes paid by the buyer
* sales tax is state and lower level and keeps states themselves afloat.
"End of year taxes"? Getting another $200/mo in wages isn't going to even be seen as a wage increase when you go to the store and everyday items are 30% more expensive.
(Not that I'm saying this crazy sudden tariff mechanism is a good way to get that to happen; heck even if you wanted to do it, you wouldn't have to dump the entire lot on everyone in one day)
with a _huge_ amount of government "push", made possible because it wasn't a free market economy (and still is only partially so)
Other than that it is very hard to tax profits generated in another country.
But it's easy to tax personal wealth. It's new and different to tax wealth instead of income but it's not totally unreasonable IMO.
EDIT: also, the highest income tax rate in the US has dropped significantly since the 1950s. Maybe that was what made America great then?
No, it just means personal wealth moves abroad.
And maybe a mutual taxation reciprocity agreement with other like minded countries could defeat those games?
It was a loud and varied contingent around 2000.
https://en.m.wikipedia.org/wiki/1999_Seattle_WTO_protests#Or...
It'll make America richer. It'll encourage world peace. (It's hard to go to war with a country you trade with a lot)
The disadvantages of this were that high labour manufacturing left America and the poor had less jobs, and most of the wealth went to the elites and blue states. Funnily enough the politics of the red states was what prevented the (from free trade, in total greater) wealth from being spread around because it's apparently communism.
Many people, especially successful business people, believe this. And this both saddens me and puzzles me. I'm not sure if people still remember, China was dirt poor even in the 1990s. America's manufacturing prowess was the envy of the entire nation. They produced mostly low-end crappy stuff even in the early 2000s. They didn't have "talent density". Instead, their media kept telling people how professional and efficient the American workers were and how efficient the American systems were. I still remember people widely criticized the Chinese government for imposing too many regulations (too many stamps in local terms). By the way, I think that's the right attitude: acknowledge the problems and seek solutions, but that's a different topic. It was Japanese, Taiwanese, Hongkong people, and westerners who brought in investment, talent, and know-hows to China to bootstrap their now-great manufacturing industry. That took only 20 years or less. And now we as Americans have to accept that we can never bring out manufacturing back? What kind of defeatism is that?
Now let's say that Americans and systems are indeed inferior to China's (I really don't believe that), what would happen? We keep deindustrializing the nation? Then what if a war breaks out? Who's going to produce all the weapons and cars and battleships and what not? China? And if we don't produce anything, why in the world would other countries use our services? Are they that stupid that they don't want to climb up the value chain? Case in point, we had this $20K toilet for our air force not because of corruption but because we had to manufacture them in the US! Our cost of manufacturing artillery shell is 10X of that by Russia. Russia! One of the most corrupted countries in the world, yet we still can't be cheaper than them?? It would cost us billions to make a battleship when it would cost China at most hundreds of millions because even a customized screw can be 10X or 100X more expensive if we don't use China's output. Oh, did I mention that our killer drones cost $90K a piece while Chinese drone of better spec would cost only a few thousands?
So, what I really don't get is, how can we believe that we can be prosperous and secure without a robust manufacturing sector. Note I'm not saying that the US must have everything. We can certainly share the supply chains with our allies, but Europe has even worse deindustrialization than us.
It's not a bluff. This is Idiocracy in action. They have no idea how to fix "the starving bullshit, dust storms, French fries and burrito coverings." It turns out governance requires collaboration and compromise, and some measure of trust. Without that, the executive can only press the buttons given by the legislature.
people who think america will indefinitely have tech supremacy are unbelievably delusional. once tech is lost, america has what exactly (it’ll be like the UK - rich, but a shell of its former self)? look at SPY gains since year 2000. almost all of it has been due to tech. trump is one of the dumbest famous people of all time, but this was going to happen one way or another. better it happen sooner.
This is an economically illiterate argument - it ignores the fact that new jobs are created precisely when old ones become redundant. It's like saying that China and India "have nothing" because first-world countries have figured out everything already. It's good for a country when others become better at what they're doing - that's what enables broader supply chains, bigger markets and ultimately a higher variety of products and services.
That did not happen after the electronics revolution changed manufacturing starting in the 1970s. Factories that needed thousands of workers to manufacture a certain car model for large regions started to be run with only a few hundred workers. Same for other manufacturing fields.
The Western countries directed all the resulting excess workforce to sectors like finance, law, tech and services, but with AI and the zero interest economy ending all of those sectors are also coming crashing down.
So no, technological advancement and automation really reduced the workforce need and did not replace it with new jobs.
The US failed by not using the huge prosperity it gained to put the social programs in place to help those people pushed out of manufacturing.
Not only that, but foreign capital also flows to the U.S. for higher returns. This is why all the scare-mongering about the trade deficit is yet more economic illiteracy. Every trade deficit is really an investment surplus, and the kind of investment surplus the U.S. is running can be surprisingly beneficial in the longer run.
We’re also not big on defeatism.
Perhaps this was done deliberately by Trump to weaken CA's economy and shift more power to his supporting states? CA benefits greatly from exporting information and digital services around the world, most of which do not pay taxes to those countries. If the EU (and other economies) now add tariffs on social media, Apple, Google services, etc., it will hit CA hard.
Even that would have been better. The reality is that since the 70s the brainpower of the US has been pushed to finance, law and tech. US finance has become detached from ties to the real economy and became a sector that created imaginary wealth out of thin air, law remained a sector that complicates everything for a chance at political careers, and much of the brainpower sucked into tech was used to generate bloated valuations/stock returns for the investors by producing mostly marginally useful things.
Tech did succeed in producing the most tangible results, but it failed to impact the physical world much. After all, it wasn't possible to get a big stock value bump at having farming automatized instead of making the next social/publishing/streaming/gaming/subscription/whatever app for X and shaking the investors off of their money. But now that the zero interest economy ended, that business model is dead and tech is dumping the brainpower it sucked. Like how finance did circa 2008. Multiple generations of top-tier brainpower and all the years of education they received and the experience they have are going to sh*t...
Which isn't to say there aren't some parts of the financial industry that produce little real value.
But is to say that the competitiveness, ease, and attractive terms of standard 30-yr-fixed-rate US mortgages don't spring out of thin air.
Couple that with the amount of countries that were hit at the same time that all want to talk to the Mafia boss NOW to get it sorted out and get their tariffs lifted. There are literally too many nations trying to reach the President at the same time.
"Bill Ackman warns Trump to call a timeout on trade war: ‘This is not what we voted for’" - https://thehill.com/homenews/administration/5235232-ackman-w...
Anyone saying, "Wait a minute, I didn't vote for this!" is either lying or stupid. They quite literally, in the actual, literal definition of "literally," spelled out every single thing they are currently doing, prior to the election. Zero people should be surprised by anything they are doing.
People believe what they want to believe, right up until the leopard eats their faces.
I'm actually more worried about the small businesses that say have a container full of whatever product somewhere in the middle of the Pacific that will have to pay the tariffs upfront out of pocket with a disappearing consumer on the other end of the pipe.
Or are they just an other herd following others...
Huh? The Biden administration kept all of Trump's tariffs and most of his policies. You people don't seem to know that the US establishment is one single party with slightly different factions...
In completely unrelated news, a good friend of POTUS runs a struggling American car manufacturer. I think it’s called Tesla or some such?
In either case it’s really dumb but hey it’s not like we all didn’t at some point ruin an economy or two.
It would have been better if Trump gave advance notice before shaking everything up on a dime. I predict he'll reverse some terrifs without warning, thus creating another insider trade opportunity.
Of course, he's wrong, but nobody with the power to stop him is willing to call him out on it yet. It will probably take a lot of pain before they do (they being Congress).
I think I get that DJT wants to do (I live in the EU so I didn't vote for neither). Stocks are going down? VOO/VOOG/etc. going down? Good! My (small) monthly investment will buy 'so much' more. And when 'that thing' rebounds then even better.
In cases like that I feel sorry for the people who have to 'close'/sell their assets because they want to buy a house (why do people put it in the markets if they want their money out in less than 1-2 years?), or are retiring (no need to sell everything, sell small and slowly - it will rebound) and drops like this, or the COVID-time drops mess their plans.
There is no master plan other than "Trump likes tariffs".
That's it. That's all it is.
He's been talking about tariffs for decades, it's a thing that he likes, and he now has unchecked power. Hence, tariffs.
The tariffs he put in place don't even make sense. They're a Thanos snap on every country, and makes about as much logical sense as that fictional character's evil master plan did! I.e., none.
I seriously doubt Elon likes that Europe will enact retaliatory tariffs on Tesla car imports, halving his market overnight. "Yay! Less sales! Crashing stocks! Woo!"
I very seriously doubt that other billionaires -- who's net worth is tied up in stocks and bonds -- are ecstatic that these are plummeting in value. All of the Reddit memes of "they just want to buy the dip" presupposes that these billionaires all "got out of the market", converted their stocks to something like gold or Bitcoin, and will then buy back in at a multi-trillion-dollar scale. Other than Warren Buffet, nobody has done this. The market would have crashed months ago if they had all sold off simultaneously!
This is WallStreetBets nonsense.
Berkshire's had $334 billion cash at the end of 2024, double the previous year. This is still only 30 percent of their total assets (see link). So while there were some preparations for a major decline (perhaps more so than most companies), they are still very exposed to the market turbulence.
https://www.investmentnews.com/rias/berkshire-hathaway-is-pi...
Elon is so blasted on drugs and his own fawning internet echo-chamber maga apologists I don't think he's capable of thinking that far.
What a moron for backing these people…
Also because whatever Fox News says is truth to these people. They could tell people it’s raining on a sunny day and they will carry and umbrella and call people without one sheep
I honestly think he is dumb and the people he has surrounded himself with are also dumb. It’s just hard to believe that someone this dumb is the POTUS so we have to make up conspiracy theories to reason with it.
It's pretty easy to think of how they could take more effective action against Trump if they were more against Trump than they currently are.
The US government bought a lot of equities? If yes, isn't crashing the stock market bad for the government?
If no, then what does that mean, exactly? The government spends a lot of money buying stuff from companies in the S&P 500? Enough to send their prices sky high? How does crashing the stock market fix that?
In the type of consumer economy I saw "recover" after the Nixon Recession did its permanent damage, it became possible for the Feds to juice the economy more than ever (after stability was finally achieved), by adjusting interest rates and increasing spending in the right areas it would be amplified and they effectively gained more and more control of overall prosperity, more than any other one entity.
This couldn't have happened earlier until the wealth held by the government was beyond a certain ratio to that held by the combined population. In simplest terms disregarding important things like liquidity or absolute net worth. It wouldn't have been so bad except people got a lot poorer and vast opportunities were lost forever in a few short years. Government money had a much stronger seeding effect after that which was then relied on heavily ever since, but gradually squeezing the whole time.
Biden unleashed a bit of this and it still worked to some degree, just not enough people ended up feeling more prosperous before it was too late. Really helps the economy most if the ultimate beneficiaries are ordinary working people and are widely dispersed, but a lot of it does not come back to the Treasury and builds up as debt.
In a less-stable environment, increased government spending is less likely to hit its intended target, plus a great abundance of consumers have been tapped out and don't have the resources to amplify it and collectively bail out anything this time, which was the leverage that worked in the past.
1) Debt isn't bad in itself, running a deficit isn't bad in itself. (though they can be bad in some situations!)
2) The US is in the position to "fix" the debt problem in a lot of creative ways (I mean, some pro-tariff are arguing this too, right? just that the creative way is tariffs).
There was an analysis a month ago where someone had the idea to look at total US energy consumption as a proxy variable for total economic productivity. To me that makes a lot of sense. Energy is the capacity for work.
https://www.eia.gov/energyexplained/us-energy-facts/
It appears we peaked in energy consumption in 2007 before the great recession at which point energy usage has been in slow decline. We decided that in response to the recession that the best way to handle it was to completely deregulate wall-street and tell them they are above the law because they are so big, that creating consequences for their actions that hurt Americans is too costly to do. They promised severe punishment for regulation, and reward for letting wall street continue to be consequence free. Citizens united was ruled on in 2010 to cement the authority of those with money over the US government in an act that should be considered a proper coup against the constitution, and was by some.
If you take energy consumption as a proxy for real actual productivity, that implies a bottom of 22,000 for DOW (inflation adjusted value of dow ~2007), and that's not including damage done to ability to import or America not looking appealing for investment because we are almost certainly heading towards civil unrest and there is a very real threat of trade not being conducted in USD.
It's easy to imagine a company that owns property, an asset that has no meaningful economic output, increasing in value which could be seen as economic growth, but is very much not that.
I'd certainly love to hear why this is absolutely ignorant because I am not an economist, nor am I in finance.
Using energy consumption as a momentum indicator still works when accounting for that, but it potentially breaks comparisons across longer spans of time.
e.g. Half of the energy spent by homes is an heating/cooling, and with technology that exists today (heat pumps, better insulation, smarter home design and ventilation, etc.) you could probably reduce the total energy used there by close to an order of magnitude if it was applied everywhere.
I don’t think many people expect the current tariff absurdity to hold as-is. The problem is that nobody knows if he’s going to wake up and roll it back one day or if he’ll decide to make the tariffs higher to try to prove a point.
Or he could launch a real war as a distraction.
It wasn’t a secret that Trump didn’t understand economic policy, but the assumption was that he wasn’t going to actually do anything different than his first term. Instead he came out with the most unbelievably bad tariff gambit beyond what anyone could have imagined, and now everyone is resetting assumptions.
Knowing that there is potentially no basis for half of the country's retirement wealth is important because it means it could disappear over night.
As of 6:41pm EDT on Sunday:
* S&P futures: -4.13%
* NASDAQ futures: -4.89%
* DOW futures: -3.72%
>Good? Things were getting a little boring anyways.
I would rather that checking my bank balance, 401k, and whether or not I can afford to buy food and make my mortgage payment not be "exciting" thank-you very much.
I have a price target for the S&P 500 that I would be very surprised if it stayed lower because the last time the markets were at the price point the economy was worse. All I want to say is there might be another 10% drop before it gets any better.
For what?
And they can't pay with their own currencies? If they import from other countries, that is?
> Europe also imports large amounts of electronics and machinery
From the US? Would their other vendors terribly mind taking Euros instead?
If they EU push hard for it, they may get someone like Norway to accept Euros.
However, there are energy contracts locked into dollar-based pricing and many exporters need dollars because they hold dollar-based debt, buy goods in dollars or have a currency peg.
For them to accept the relatively unappealing Euros they might ask for a premium to offset conversion costs or risks.
But that would be a monumental shift and the path to that goal is a nightmare with all kinds of challenges.
Rewiring the entire system would take a decade or more.
That's how buying things works.
We are currently still above that.
MAGA represents a smaller proportion of eligible voters that cannot win elections without the broader support they somehow garnered.
I don't know what the bigger half is capable of learning, some of them probably learned a lot already if they are a shareholder of any kind, and it would not make very much sense for it to remain the bigger half by now. It really was the non-voters that consistently failed to send Trump and his people packing though.
Sickening as it can be sometimes, hindsight is 20/20 and just a short number of weeks ago it would have made more sense for the shareholders of the USA to just cough the money up front and pay him $1Trillion to go away and never come back, taking his kind with him.
Even worse, a year ago his price would have surely been lower, probably one of the biggest lost opportunities some of these shareholders will ever see.
Eventually some Trump voters will notice on their own stock market fluctuations, which of those, what percentage will learn that it is actually Trump's decisions that caused it?
young malcontents voting antiwoke, rich people with more than enough, seniors counting down to social security, feds who are vested in gov pension plans, genuine have nots.
none of this matters to them in any material way.
What?? They gutting SS’s ability to service accounts. Their offices are impossible to contact and the website keeps crashing (story is on the front page now).
Trump's "emergency powers" to declare tariffs are already being challenged in court. And there's also growing support in the Senate and House to change tariff policy too. (So if the stock market keeps dropping, I just don't see Congress refusing to act.)
Plus, I just assumed the whole "liberation day" was Trump's way of striking an aggressive pose as a starting point, hoping subsequent negotiations would then end up someplace more advantageous. (Maybe the "tell" there is the way the White House keeps saying "There will be no negotiations." Because their current position is so wildly untenable -- it has to be a pose.)
The Liz Truss moment truly arrived to the USA and the world. We'll see what happen s when an idiot gets to rule a big country like a king.
I think if this continues the most likely thing is that the US Dollar will soon no longer be the world's reserve country. I'm surprised other countries haven't hedged this way already given what happened the last time this administration was in charge, but I would sure be looking for a way out of the US dollar if I was a non-US-country right now.
If the tariffs hold, I would be looking to cut out US-dollars from my transactions as quickly and aggressively as possible. Feels like a couple of cinder-blocks attached to my parachute at the moment, I might not know how to untangle them, but surely it can't be worse than the state I'm in right now.
In the US, I shudder to think what would happen if the economy got this derailed, and everyone's doing everything they can to untangle from it. I would kind of expect China or Europe's stable economies to be a sudden draw that the rest of the world adjust to. And I would be starting to look at what things I can get from the rest of the world as an alternative to the US.
When I voted against this outcome I knew that I voted against the rest of the policy changes from this regime (Encroachment on 1st amendment, General Oligarchy, etc.), but I didn't know I was also voting against a pseudo-scorched-earth economic policy intended to destroy the US. There are real ways in which I hope they are too stupid to know what they're doing because they're digging their own grave. I just also fear the number of people who are going to be in that grave with them.
People are hunkering down. Cutting spending, staying put, watching for their jobs. Moving is expensive so it’s likely to be delayed.
If consumers are less confident about borrowing large amounts, or if banks stop lending freely, then house prices will drop.
Why not?
In a "real" parliamentary system, Trump already would have gotten a no-confidence vote.
Compared to if Liz Truss had been voted in by the public TWICE?
In Australia the Liberal Party in changed the rules to require a 2/3 majority to remove a PM. In America blocking Trump's tariffs or removing him would require less than 1/3 of his party to vote with the opposition. They fear voters would punish them. How many Australian politicians voted for these party room coups knowing it would end their political careers?
Bessent, the only sane member of Trump's cabinet, sounded really worried and stressed last days. This kind of damage, cannot be undone just by saying 'Hey, it was art of the deal'. Confidence in US government is destroyed. Sure there will announcements about 100s or 1000s of Billions that will be invested, but it's just words. Just like DOGE saved how much already ? 1 Trillion $ ? And still not a single person was charged with fraud...
S&P is down 2.5% on 1Y, and up 80% on 5Y, and valuations are at insane, Dot-com bubble levels. If he keeps the tariffs though, the damage can become much much more substantial that this relatively small decline in the markets.
"When a clown moves into a palace, he doesn't become a king, the palace becomes a circus" Turkish Proverb.
Acting like investors won’t reprice treasures as “not the risk free rate” if it’s being transparently manipulated by the government is bad analysis.
That has long been a Republican goal. They want to tear it apart and sell the pieces.
Trade policy is being set by Trump, Navarro (you know, the guy who made up a trade expert to launder his own idiotic ideas) and that vile goblin Stephen Miller. An idiot council.
Last time he was on the other side of the Atlantic. It must be easier if he’s on the same continent, right?
It’s really infuriating.
if you’re so confident there will be a recession let’s do 1000 to 1 odds for next 12 months. bitcoin. ya?
The real impact will be felt by the people on the lowest end of the financial wealth scale.
If the price of food, energy, clothing, housing, appliances, etc goes up - that means a lot more to those with the lowest wealth. The more wealthy you are, the less that is going to have a direct impact on you.
If this were "eating the rich" then we'd see direct taxation or asset seizing from the wealthy, not raising of tariffs.
If you mean, decline in net worth and or income, sure, the rich
If you mean standard of living, disposable income and general economic stability, then for sure the poor are more impacted
If you go from 100mil in assets to 10m, you’re fine. If you go from 100k to 10k, you’re not.
Per Wikipedia for his campaign https://en.m.wikipedia.org/wiki/Donald_Trump_2024_presidenti...
Doesn't sound much different than what's happening
Market fluctuations are temporary and benefit the wealthiest who are able to balance their asset allocation, shifting stable or growing assets to buy other assets with depressed prices.
The wealth will get richer, while the poor will literally not eat, whether due to poor economic conditions, or because of a massive attack on social safety nets, or a combination of those things.
In the United States, stock market wealth is highly concentrated, with the wealthiest 10% owning a record 93% of all stock market wealth, while the bottom 50% owns just 1%.
OP isn't wrong.
On a personal quality of life basis the middle class will get hit the hardest. It will impact retirement timelines, vacations, home renovations, car purchases, etc. seeing their 401k go down will make them feel poorer and want to save more and thus reduce their discretionary spending and reducing the amount of fun and entertainment they enjoy.
Anyone doing 60/40 isn't doing all that bad right now anyway. And this "market crash" (haha compare to '00 or '08) is on top of massive gains in the past few years.
The "middle class" or what's left it (see techies and their RSUs) are the ones who actually care about the stock market in the short/medium term because all their money is tied up in it, and their lucky bets are all that stand between them and being working class.
The working class has been screwed six ways to sunday, so they don't really care except insofar as it might mean we're doing stupid stuff like getting in more wars, or making it impossible to pay rent.
Bullshit. Many Walmart floor associates have 401ks and many of them are on food stamps.
So if it did crash to 2018 levels, you’d get some cheap stocks but the world would be on fire. The companies would be cheap because their future would be bleak. Under extreme tariff regimes, their competition would come from companies outside the country.
Elect trump -> his crazy ideas work -> stonks go up -> get rich
Elect trump -> his crazy ideas destroy USA -> USD collapses -> BTC goes to infinity -> get rich
Gold is a significantly better, safer purchase.
Whether or not these Big Brain ideas bear fruit remains to be seen.
> @elonmusk & @DOGE are cutting $4B per day. At that pace, they’d shave off $1 trillion by end of Sep 25 (if not May).
Actual economists (of any political persuasion) are not giving Trump the benefit of the doubt, only grifters like this "thought leader".