The case for bitter sweet cautious optimism

The danger remains evident, but the cracks are beginning to show as Trump's grip on the GOP loosens. The bigger threat, though, comes from economic collapse.

Yesterday was a clear demonstration of Trump’s transactional nature. He rolled out the red carpet for Saudi Crown Prince Mohammed bin Salman, a guy whom the CIA concluded had ordered an operation that saw US-based dissident Washington Post journalist, Jamal Khashoggi, murdered and dismembered in the Saudi consulate in Istanbul. Mary Bruce of ABC News asked MBS about the murder of Khashoggi, and Trump jumped straight in to berate her for the question, “You don’t have to embarrass our guest by asking a question like that”. He later referred to her totally legitimate question as “a horrible, insubordinate, and just a terrible question.”

“Things happen”, he said in response to Khashoggi being chopped up into disposable pieces. Just as in Helsinki in 2018, when Putin denied election meddling and Trump said, “President Putin says it’s not Russia. I don’t see any reason why it would be.” This was just another example of siding with a foreign actor against his own security services. When money is on the table, he’s happy to pimp out America to the highest bidder, regardless of human rights.

Trump and his family are huge beneficiaries of Saudi and Middle Eastern money. This state visit was just an opportunity to build personal leverage on the taxpayers’ dime for when he either leaves office or is forced to flee the country. MBS must be sitting this morning thinking it could not have gone better as he places Trump in his back pocket at the expense of Israel, who are now apoplectic about the sale of F-35s, which undermines their top dog position in the Middle East.

Nothing could please me more than for Israel to get a bloody nose, but the Middle East is one of the most volatile places on earth, yet it appears all MBS has to do is promise enough cash, click his fingers, and Trump delivers. As a result of the trip, the parties signed a ‘strategic defence deal’, and Trump announced he had decided to designate Saudi Arabia as a major non-NATO ally, which clears the way for closer military co-operation. The telling moment was when Trump was asked by a journalist what Israel thought of the deals, and he glibly stated that Israel would be fine with it.

Trump’s obsession with wealth renders him unable to view foreign actors through any lens other than self-enrichment. His foreign policy instincts are nonexistent; his sole worldview is based on befriending the rich and powerful, with no regard for foreign policy or national security considerations. Let’s not forget that fifteen of the nineteen 19 9/11 bombers were Saudi citizens. Trump acted like a fawning fanboy desperate to impress yet another autocrat with a lavish, no-expense-spared state visit and banquet.

Image - Bloomberg

Mohammed bin Salman is a smart guy and certainly not the kind of man to cross if you want to hang onto your arms and legs. On the one hand (no pun intended), MBS has China as Saudi Oil’s largest customer. He’s also keen not to rule them out of the AI race, given their shift to domestic chip development and production. Although listed as a BRICS member, Saudi Arabia has apparently not formally joined the bloc, mainly because of the critical balancing act MBS is attempting with the US over military cooperation, which obviously took a big step forward on his current visit. Rest assured, though, he’s going to keep a foot in each camp.

There is no question that Trump views the world through the eyes of an emperor, where he makes a proclamation, and everyone falls into line. He decides who lives and dies; he decides who gets food, in a world where the gift of a gold bar Rolex clock can see your tariff rate drop from 39% to 15%. It’s a simple fact that none of the so-called ‘trade deals’ negotiated by Trump and his elves are anything other than ‘handshake deals’ around what they like to describe as ‘frameworks’. Proper trade deals take years to finalise, and Trump has the attention span of a two-year-old. He prefers deals that can be easily broken if he wakes up in a bad mood and wants to punish someone. His deals are the global trade equivalent of a disposable razor.

His trade policy, like everything else, is built on sand that can crumble in an instant. A fundamental tenet of his administration is opacity. Transparency is the enemy, and as a result, none of Trump’s ludicrous claims of inward investment can be verified because he has dispensed with the ability to check his numbers or look under the hood. There’s no better example of opacity than his press secretary’s claims that the economy is flying blind because of the ‘Democrat shutdown’. He knows the BLS numbers on jobs and inflation, but revealing them would ring alarm bells as questions of affordability grow louder.

Trump lives in a world where nobody is allowed to question or challenge him, creating an environment where it’s becoming impossible to see the true performance of the economy. We have the bizarre situation where he and his acolytes claim tariffs have no impact on inflation or rising costs. Then he announces he’s cutting tariffs to address affordability. He’s like America’s crazy grandpa, who is noted for making stuff up, as he moves into life’s departure lounge. Some highly qualified people must be looking at the US economy and breaking out in a cold sweat. Yet, they remain largely silent at the back of the room as Trump sets fire to the futures of everyday Americans with gay abandon.

If anyone believes that allowing the top 90% to evade a trillion dollars in tax each year, while taking trillions more in tax breaks, is a bigger problem than spending money on access to affordable healthcare, feeding hungry children and seniors, there’s clearly a serious issue. Bear in mind that 25% of SNAP recipients are employed. Perhaps the answer to the problem is to force employers to pay a living wage rather than claiming the corporate welfare passed on to their workers, who can’t afford to eat on the wages they are being paid. The same workers then falsely accused by politicians of being ‘lazy’. Because don’t forget in Trump’s world, poverty is a lifestyle choice.

Putting tax breaks aside for a moment, if the rich just paid the taxes they owed by law, the US could eradicate homelessness and food insecurity, and the change would replenish the $800 billion cut from Medicaid, returning access to their stolen healthcare. This is the reality of robbing the poor to feed the rich. It’s not a liberal talking point or hyperbole; it’s just the reality of the world that greedy corporations, aided by bought and paid for politicians, have created.

Trump has sold people a fantasy economy in which EVERY American, regardless of income, is now taxed an additional average of up to 18% (disguised as a tariff) on every imported product they buy. All evidence shows that little to no part of the tariff is being eaten by ANY foreign exporter. US importers and/or consumers are paying all the costs directly to the US Treasury. At the same time, Trump tells those being taxed that America is getting richer, without admitting they are providing the money. To wrap some context around this, the Yale Budget Lab tariff report for October shows:

Current Tariff Rate: Consumers face an overall average effective tariff rate of 18.0%, the highest since 1934. After consumption shifts, the average tariff rate will be 17.0%, the highest since 1936.

…The price level from all 2025 tariffs rises by 1.3% in the short run, equivalent to an average per-household income loss of $1,800 in 2025.

The full report is well worth a moment of your time. As with all fantasies, they’re great until you wake up and the truth comes knocking at the door. Trump has delivered this whole fairytale on the back of a Stock Market that appears to be on crack cocaine. The Markets are totally disconnected from the real world. The likes of savvy investors like Peter Thiel and SoftBank have already offloaded their entire positions in NVIDIA, and that’s just a couple of the many examples I could quote.

The US is in a perilous position, with the market propped up by a handful of companies passing money around amongst themselves in some fantasy investment game reminiscent of the subprime mortgage Ponzi scheme. The financial instruments in play become so complex that the truth is buried way out of sight. The reality is, Trump has bet America’s entire future on a technology that, although revolutionary, is far from mature and faces a real threat from Chinese rapid technological advancement in the same space, despite every effort by the US to slow them down.

What people must wake up to goes way beyond the core technology. While US infrastructure is crumbling from decades of underinvestment, China has brand-new infrastructure that, in some cases, is a decade ahead of the US. But it’s much more than that; Trump struggles to plan a day ahead, Xi plans 15 years ahead. China’s energy mix delivers capacity that Trump’s regressive, fossil-fuel dead end can’t begin to compete with. The failure of the US education system becomes more evident every year as the Chinese pump out hundreds of thousands of highly skilled and educated young workers into a finely tuned industrial and technological behemoth ready to march to economic and industrial dominance.

We are approaching a fork in the road, and alarms should be sounding everywhere. But still, Trump spews out a litany of lies daily. I have now concluded that the man is mentally ill. Because anyone who believes what he’s saying should be checking into a mental health facility. So where does my optimism come from? I remember when Liz Truss became Prime Minister here in the UK, and she attempted to implement an unfunded tax bonanza after taking policy advice from the hard right in the US. The outcome was swift and brutal; she lasted less time than it took a lettuce to rot. She was placed in a political straitjacket and unceremoniously removed from office.

When the US economic collapse, which is already underway, begins to impact those invested in this dangerous experiment, and they see their golden goose disappearing, someone WILL step in (maybe the bond markets), to put Trump out of his misery. I have no idea what shape that will take, but anyone thinking it will come from the Democratic Party is desperately misguided; they will be the beneficiaries of Trump’s demise as public confidence in the Republican Party collapses. Then we return full circle to the fact that, unless there’s a revolution in the Democratic Party before the collapse occurs, America will be reborn as Republican Lite, as corporate America seamlessly switch sides to control a new government in a blue suit.

This IS going to end. I firmly believe Trump is done; it’s just a matter of time and how much more damage he causes before it happens. This is the time during which Democrats must deliver a new, bold vision for a better tomorrow. You’ll excuse me if that’s where my optimism dims somewhat.

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