How a Con Man President Is Destroying Confidence
Chaos and incompetence are bad.
Who knew?
Paul does the politics.
There are links in the seed.
S E E D E D C O N T E N T
Normally, I don't believe in confidence.
In the aftermath of the 2008 financial crisis, "confidence" was the first refuge of scoundrels. That is, the supposed need to retain or restore confidence was constantly invoked as a reason to pursue destructive policies. If you argued for adequate stimulus to fight the Great Recession, you were told that this would undermine confidence. If you argued against austerity that would block economic recovery, you were told that slashing spending would actually boost the economy, because it would inspire confidence — a claim I mocked as belief in the "confidence fairy."
The truth is that most of the time you should evaluate economic policies based on what they actually do, not with speculation about how you imagine they will affect confidence.
But this isn't most of the time. This is the third year of the second Trump presidency — OK, it's actually only part way through the third month, but it feels like years. And Trump is in the process of showing that a sufficiently chaotic and incompetent government can, in fact, do enough damage to confidence to inflict serious economic harm.
The most telling indicator here isn't the plunging stock market — Paul Samuelson's old jibe about the market having predicted nine of the last five recessions still applies. It is, instead, the plunging value of the dollar:
Source: xe.com
Standard economic analysis says that tariffs strengthen a nation's currency. If the United States puts taxes on imports, this discourages businesses and consumers from buying foreign goods, which reduces the supply of dollars to the foreign exchange market and should drive the value of the dollar up.
In fact, the normal effect of tariffs on the exchange rate was one of the reasons to doubt that the Trump tariffs would help U.S. manufacturing: A stronger dollar would make U.S. producers less competitive, offsetting the protective effects of the tariffs. And as you can see in the chart above, investors drove the dollar up after Trump's election win, partly because they believed that tariffs would have their usual effect.
But the dollar fell once investors began to see Trump policy in action. Permanent tariffs are bad for the economy, but businesses can, for the most part, find a way to live with them. What business can't deal with is a regime under which trade policy reflects the whims of a mad king, where nobody knows what tariffs will be next week, let alone over the next five years. Are these tariffs going to be permanent? Are they a negotiating ploy? The administration can't even get its talking points straight, with top officials saying that tariffs aren't up for negotiation only to be undercut by Trump a few hours later.
Under these conditions, how is a business supposed to make investments, or any kind of long-term commitment? Everyone is going to sit on their hands, waiting for clarity that may never come.
Wait, it gets worse. You might have expected a lot of careful thought to go into the biggest change in U.S. trade policy since the republic was founded:
But since Trump delivered his Rose Garden remarks, we've had a series of revelations about how slapdash and amateurish an operation this was. Trump declared that he was imposing tariffs on nations "that treat us badly":
[W]e will calculate the combined rate of all their tariffs, non-monetary barriers, and other forms of cheating.
But we soon learned that no such calculation had taken place. Trump's tariffs were, instead, determined by a crude, and, well, stupid formula that made no economic sense. It's still an open question whether that formula was determined by some junior staffer or derived from ChatGPT and Grok.
Maybe the next movie in the Terminator franchise will be "Terminator: Trade War," in which Skynet realizes that it doesn't have to destroy humanity with nuclear bombs, it can accomplish its goals simply by giving bad economic advice.
An aside: Did anyone think about how to enforce wildly different tariffs on different countries, when it would be easy to transship goods? The Republic of Ireland, which is part of the European Union, is supposed to face a 20 percent tariff, while Northern Ireland, part of Britain, faces only a 10 percent rate. So can Irish exporters cut their tariffs in half by shipping goods out of Belfast? Will there be elaborate rules of origin to prevent this? And who will devise and enforce these rules?
Actually, I'm pretty sure I know the answer to my question: No, nobody thought about that, because there wasn't time. The Wall Street Journal reports that the White House didn't even settle on the idea of country-specific tariffs until the day before the big announcement.
Again, the biggest trade policy change in history, hastily and sloppily thrown together at the last minute.
It's no wonder, then, that confidence has taken a big hit. If you ask me, however, I'd say that confidence is still too high: business still hasn't grasped how bad things are. For while tariffs are dominating the news right now, they're part of a broader pattern of malignant stupidity. It may take a while before we see the effects of DOGE's destruction of the government's administrative capacity, or RFK Jr.'s destruction of health policy, but we will see those effects eventually.
And Republicans have just confirmed Dr. Oz to run Medicare and Medicaid. What could go wrong?
Personally, I'm feeling very confident. That is, I have high confidence in predicting that we're heading for multiple policy trade wrecks, inflicting damage like you've never seen before.
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I'm hoping NT's MAGA members will seed articles explaining the Administration's actions.
Malignant, good word for Trump's Trade Policies
Krugman is a good wordsmith.
Lost Enough Yet?
When will Trump supporters wake up and start criticizing this idiot?
When will the GOP members of congress grow a pair and do their constitutional duty of checks on executive power?
I read this morning that Wall Street is starting to turn their backs on him.
In an electrical industry trade magazine this morning I read that his latest round of tariffs could erase the long slow progress the industry has made recovering from the supply chain issues and long delivery issues resulting from the Covid shutdowns. Not good news for my industry.
Even Republicans in Congress are starting to speak up. Finally!
Let's hope the momentum continues against Trump because the damage he is causing grows deeper and more difficult to fix as time passes.
never
Possibly. Sure do not see any signs of Trump supporters breaking free of whatever cultish hold drives them to defend this buffoon no matter what.
Their increasingly feeble arguments are basically nuh-uh and let's just wait and see what happens.
I'm going to continue to invite NT's MAGA members to seed articles explaining and justifying Trump's trade war.
You already have all the seeds or articles you will get.
If you ever read anything from a Trump supporter that is more than 'let's just wait and see' let us all know.
Same with the indictments. Trump supporters first whine about a lack of charges. Then when the indictments appear they ask when a trial when ensues. Even after a trial delivered a verdict they claimed the trial was rigged. At this point, it seems almost certain that they will support and defend Trump no matter what.
Their argument so far has been "Give it time". And when you think about it, eventually the stock market and the economy can only go up. Sure, it has to hit rock bottom first, but the MAGAites are right, given enough time the economy will almost certainly have to start growing again. Of course that likely won't be until the next administration takes over in 2029 unless these dumb fucks give up on their moronic idea of reciprocal tariffs. These tariffs are basically like a company who makes and sells wood coffee tables demanding their lumber supplier buy 20% of their coffee tables, and because the supplier is being forced to buy a product in order to be a supplier, they have to work in the cost of those 20% of tables into their lumber costs sold to the coffee table manufacturer thus increasing the cost of every single coffee table to the American consumer. Now multiply that times the auto industry, solar manufacturing, and every other company that imports materials or manufactured parts to make their products here in the US. It's beyond ludicrous.
Exactly.
And that behavior needs a spotlight.
They have been his captives for quite some time. It's the only thing that really explains their irrational loyalty as they knowingly worship a convicted felon, accused rapist, proven liar and obvious conman.
Perhaps it's not unlike his romantic relationship with Kim Jong Un...
"He wrote me beautiful letters, and they’re great letters,” “We fell in love.” “It is a historic letter. It’s a beautiful piece of art. And I think we’re going to make a deal.” - Donald J Trump
So, this gold-plated billionaire comes in and sweeps up all the toothless grannies in the Okefenokee swamp in his arms and they all fall in love as do all their kin who have been complaining about the "elites" for decades. If all it takes is stripping themselves of all self-respect and abandoning whatever shame they had left to "own the libs", then they signed up because nothing was more important to them than pissing off those who they believe looked down on them. If that means they have to bow to a slimy snake-oil salesman or capitulate to a Russian authoritarian and abandon western democracy in favor of a rightwing religious conservative Reich, then so be it.
Stock market is down more today than yesterday.
The DOW is a poor indicator for the economy in general, but it's a pretty good indicator for "rich people‘s appreciation of the economy". Not good!
Gonna close more than 2300 pts down. Trump will pull back on the tariffs and then claim he did it because he accomplished what he wanted to.
Maybe. Who knows?
If so, that will be the end of another stupid act by Trump but this act just convinces people that there will be more stupid acts to follow. Much damage has already been done.