Some disparate thoughts on the second day of the financial apocalypse

A few scattered opinions as the world falls down around us...

Photo by Andrew Gook on Unsplash

The stupidity stands fully revealed. There's no hiding what's happened here. The sheer scale of Donald Trump's witlessness is now evident to everyone, with no option for someone to credibly suggest otherwise. The man's mind is like a bag of mice. His administration is a deconstructed jumble of disparate engine parts, which couldn't be assembled into a viable machine even if they were able to put them together, which they never will be.

As is so often the case, it's the combination of small and large details which does the most damage. The reports about the absurd tariff calculations and the targeting of penguins does at least as much damage as the collapse in global stock markets. When the big and the small come into combination like this, it's deadly. The big provides the seriousness but the small details prevent abstraction - they turn it into a funny story, they add a would-you-believe-it human element, the kind of thing someone mentions to their partner over dinner in a non-political household.

The tariffs-on-penguins joke is also effective because it's proof of madness. Without it, we'd see the kind of thing we usually have to ensure on days like this - otherwise sensible journalists trying to find some sense in what Trump has done. Well, they'd say, it is actually true that China operates in the world economy without following its rules. And hey, maybe Trump's real strategy is to trigger a series of bilaterals in which he has leverage. You know this process. You've seen it countless times: the sane-washing of Donald Trump. There are still some people out there trying to do it now, but it simply can't be done and it is an increasingly untenable position to adopt. The idiocy is simply too extravagant.

The pain that is coming in the US will be very bad. I wonder if Trump's most loyal supporters have any idea what's about to hit them as a result of their vote last year. The price of products is going to go up. Inflation is going to spike. Perhaps, if they're lucky, it'll be short term. But there is the danger of it now taking firm long-term hold coming so soon after the inflationary shock of covid and Ukraine. Some people will do OK. Most won't. If you work in US steel, you might be fine. But if you're in one of the countless US firms that uses steel in your production process, you're now going to get hit hard. There are many more people in the latter category than the former. US exporters will also be hit by reciprocal tariffs.

This is the best case scenario. In the worst case scenario we will see a continued decline in confidence in the dollar, which is the true demonstration of American power. This is part of a general turn, a strong herd-like correction where markets come to belatedly realise that the most powerful man in the world is completely insane. It is the end-of-empire metric, the one that takes what we're seeing now and suggests it might be epochal.

It'll ruin him. Trump has found his weakest spot, aimed a gun at it, and fired. Given how rigid and partisan US polling is, it's remarkable when you see any expression of rebellion from Republican voters. But even before the tariffs, 63% of Americans had a negative view of the government's economic policy - the highest level since records began nearly 50 years ago. This includes a full third of Republicans. I can't remember the last time I saw a poll saying a third of Republicans would split from the rest of their group. We can expect these results to become more severe from here.

This generation's Guilty Men should be held to account. We have a lunatic setting fire to the world. Millions of people will suffer. The primary responsibility lies with him, of course, and his uncomprehending reptile-like brain. But he could not have got to where he is without the compliance of people who should have damn well known better. The politicians who betrayed the values they claimed to hold in order to attach themselves to a winning campaign. The journalists who failed to clearly state clearly what his tariffs would do during the election campaign, using the kind of language they seem perfectly capable of deploying now. The right-wing commentators who got so excited by his attack on 'woke' that they couldn't help but support him, and yet now feign regret. The various figures in the market, from bankers to investment advisers, who were repeatedly told by Trump what he was going to do and now act startled that he has indeed done precisely that. To everyone who worked to normalise Trump by adopting the socially-advantageous tone of bemused indifference rather than the sense of shock and outrage the moment truly required. We do not get into situations like this because of one man. We get into them because the information system is broken.

Markets have become our only remaining objective reality. We're seeing the same thing happen today that we saw during the Liz Truss debacle, an edifice of nonsense brought down by the brute reality of scrolling financial ticker tapes on news channels. In the lead up to this moment, populists were able to say all sorts of nonsense and a pliable news media assisted them. Perhaps the people being sent to prisons in Latin America were gang members. Perhaps he had a point about Russia and Nato. Perhaps Canada did have a fentanyl problem. On and on it went: a world where up is down and black is white. In the UK we'd dealt with years of this, through the Brexit process right into the Truss administration.

But then the economy tanks and we're suddenly back in objective reality. The most telling image yesterday was of the disastrous stock market numbers emblazoned on Fox News as they spoke to guests. Even there, in Trump's echo chamber news barricade, there was no escaping from the reality of what was happening. The market is the last bastion of commonly-accepted truth, which all sides accept as empirically real.

Scientific reports can be questioned, institutional papers can be dismissed, press investigations can be ignored. All unhelpful information can be neutralised by the low grade 'woke propaganda mind virus' conspiracy theories the populists deploy against whatever they don’t like. All the normal structures by which we establish reality have been purposefully put to the flame. Now, only the market remains, the little red arrows pointing downwards have become the ultimate arbiters of political fate.

Today, that happens to be working in the direction of truth and sanity. But it is a hopelessly reductionist framework for objective truth. It is a poverty stricken epistemology, a sign of an intellectual culture that has been shaken to its foundation.

This is a useful reminder that free trade can be progressive. The extent of the damage we're going to see now is a demonstration of how powerfully effective free trade has been. The left has never loved it. The right has now dropped its support as well, under the pressure of the populist wave. And there are indeed dangers there - trade agreements which can damage domestic manufacturing unless they're carefully handled and responsibly managed.

But witness the good it can do too. Trump, with his ape-like mind, looks at a trade deficit with south-east Asia and sees American humiliation. In fact, it simply means that countries like Vietnam, Cambodia and Laos make products Americans want to buy, for prices they can afford. That is a good thing. It is good that American families on low wages could readily afford decent products their parents used to scrimp and save for. It is good that producer countries enjoyed decades of poverty reduction. I travelled in Vietnam in 2001, when it was dirt poor and whole communities would rush out to look at Westerners like they were museum exhibits. It is unrecognisable from what it was then. It has become a rapidly growing economy with escalating incomes, through its establishment as a key hub in globalised supply chains, particularly from China.

That arrangement is now facing a severe assault, a concerted attempt to destroy it, basically out of spite. Trump says trade deficits are the "looting, pillaging, raping and plundering" of the US. It was the US which mutilated these countries: bombing them, destabilising them, setting fire to their villages, murdering their people and then flying off home to make films about how traumatising it must have been for the young American men who had to do it. Now the US president talks about America's 'rape' by these nations because they had the temerity of producing goods US consumers wanted to buy. God damn him for saying that, really. If we had any moral judgement left in us, he would be permanently held in contempt for it.

Low income Americans and low income countries are now set to be poorer. The fact this is true points to the things which free trade does right. It has flaws and dangers, but we should recognise its qualities when they are demonstrated to us so clearly.

This obsession with goods is insane. The US is replicating the utterly muddle-headed conversation about goods over services which we had in the UK over Brexit.

That period was simply mad. We're a services economy and yet we seemed incapable of even mentioning that fact during economic debates. In 2022, the UK video games industry was worth £7.49 billion while fishing was worth £1.04 billion, but there is no comparison between their treatment. We've come close to detonating our entire relationship with Europe over fish, but newspapers scoffed when we even mentioned the danger to the games industry from changes in immigration rules.

Instead, we proceeded as if we were still living in the Britain of the pre-war years - cars and fishing seemed the limit of our imagination about our own lives. Now the same process is happening in the US, with Trump fixating on goods exports and behaving as if services do not exist.

What explains this bizarre nostalgia? Are goods just easier to visualise? Is it indicative of Trump's racially-tinged desire to retreat to the 1950s? Or is it something deeper, an unspoken conviction that real work, real proper man work, is about producing things you can hold in your hand - not the effete abstractions of law or architecture or marketing.

We should of course support people working in goods. But it is no bad thing that someone whose grandfather got their hands dirty working in a factory now keeps their hands clean and wears an ironed shirt in an office somewhere. It does not make them less productive, it does not make their work any less meaningful. The sooner we talk about our economies as they really are, rather than how we imagine them to be, the sooner things will improve.

Trump is now a talisman for populist failure. I wrote recently that Trump may, despite his success, turn into the ideal opponent. He is so patently cruel and grotesque that it helps to affirm decent values in opposition to him. We can now add a further element to that assessment: economic incompetence.

This is the most powerful of all the arguments against populism, as we saw during the Truss era. These moments of calamity provide a foundational moment of public understanding, a brief flicker when everyone else pays attention to what political nerds pay attention to every day, a point where we communicate elemental political lessons in bright, primary colours.

That lesson was successful in the UK. I'm not saying it was a permanent victory. Nigel Farage still gets a sympathetic hearing despite his nonsense. But Truss became a shorthand for mortgage costs and bond market chaos. Her maniacal approach to politics was understood for what it was. Starmer self-defined as the studious, cautious, practical alternative and won an election on that ticket.

Now the same thing is happening with Trump. I saw him come out hard for Marine Le Pen this morning. Not long ago I might have felt some dull sense of anxiety about that. Not anymore. Now you just think: That's toxic. That's toxic for her. A few weeks ago, when the coverage of Trump was still celebratory and over-awed, her domestic political opponents might have felt unsettled by his intervention. Today, they will celebrate it. That change in the dynamic tells you a lot.

There is pain here, and much more pain to come, for some of the poorest people on the planet. It is a travesty. But it is also a political opportunity. Even now, at the verge of the abyss, we can show America and the world the cost of populism. We can articulate a better alternative.

Odds and Sods

I did my regular gig on ABC’s Late Night Live this week, laying out the Le Pen trial and the pitiful state of the press coverage, as well as the heavy-handed police raid on a Quaker meeting house to arrest a handful of young climate activists. You can listen here. I also had a couple of pieces in the i paper: One on the British humiliation of dealing with Trump and another, yesterday, on the end of the American empire. The latter one is pretty good I think. I wrote it angry and hungover yesterday morning, which unfortunately is the state in which I do most of my better writing.

This week saw the launch of season seven (!) of Origin Story, which kicked off with a two-parter on Thatcherism. It’s obviously the story of a single-minded woman who changed the face of the country. But that’s not it really. In truth, it’s the origin story of the modern British right.

Her effect on her party was comprehensive and catastrophic. She forced it to adopt a binary black-and-white view of the world. She introduced a poisonous form of euro-phobia, complete with the hysterical language about foreign control and vanquished sovereignty, which would eventually lead to Brexit. And worst of all, she became the vibe they sought to replicate: Macho, proudly ignorant, pig-headed, stubborn, committed to total victory and scornful of compromise.

Origin Story is an absolute time abyss. I sink more time into it than anything else and believe me when I say that it does not make financial sense to do so. But I believe in it very strongly indeed. I know that the basic proposition is that we read the books so you don’t have to. But I think it’s more than that. Our listeners are curious about the world. But they don’t want partisanship or tribalism. They want the truth, even when it's inconvenient. They recognise the jagged unpredictable edges of humanity and do not want them papered over for ideological gain. I am deeply proud of the product we put out and the vibrant little community that has grown up around it. You can listen here. If you read this newsletter, you’ll love it.

See you next week, when I will trade this newsletter for food in our exciting new barter economy.