"Common Sense"

In the protests around the nation yesterday, there was a lot of rhetoric about the Constitution and the Declaration of Independence, with regards to Trump and Musk's many violations of those principles. Richardson notes that 

In San Francisco, where Buddy and I joined a protest, what jumped out to me was how many of the signs in the crowd called for the protection of the U.S. Constitution, our institutions, and the government agencies that keep us safe.

Scholars often note that the American Revolution of 250 years ago was a movement not to change the status quo but to protect it. The colonists who became revolutionaries sought to make sure that patterns of self-government established over generations could not be overturned by officials seeking to seize power.

We seem to be at it again….

In the lead up to the revolution, a critical moment was the publication of Thomas Paine's Common Sense, which argued for independence on the grounds of America's preference for a republican form of government and the illogical nature of imperial control. Since that Paine's argument is another foundational document, many Americans have become infatuated with the idea of "common sense" as an American strength. Arguably America's only original contribution to philosophy is the school of late 19th century thinkers who came up with pragmatism as a philosophy. 

This focus on "common sense" obviously has a strong overlap with populism. America's sense of itself as just being a salt-of-the-earth, middle class or farming country is really deep in our cultural DNA. It's bullshit, as those regions of the country that are most in love with the idea of their rugged individualism are those regions most reliant on federal aid, but whatever. 

This brings us, of course, as everything does, to Donald Fucking Trump. His trade war is a classic example of "common sense" being just spectacularly wrong. His common sense is nonsense. Paul Krugman lays out the various rationales for a trade war. Trade wars are almost always bad, but there might be some instances where they might make sense, which is why America structured global trade to reduce things - like special interest pleading - that might tempt a country to raise tariffs.

As he concludes

Trump’s world view is based on crude mercantilism. Any economist who has tried to talk about international trade with non-economists knows that crude mercantilism has a lot of gut appeal. The idea that we win when foreigners buy our stuff and lose when we buy their stuff seems like common sense to many people. So does the idea that the reason for our trade deficits must be that other countries aren’t playing fair, that they are somehow taking advantage of our naïve commitment to free trade.

This is why some Republican elites, including the Wall Street Journal, have come out against this lunacy. It IS lunacy, but the wrongness of his ideas is not apparent to his cult, who share his fetishization of "common sense" over study, expertise and wisdom.

Populism was always somewhat destructive, but we have built a world on expertise that is the wealthiest the world has ever seen. Trump asks, "What if we destroyed that?" And his minions cheer him on.

Cracks

 Economic nationalism was always going to be at the heart of Trump's second presidency. "Economic nationalism" is a broad enough concept that it can cover a multitude of positions. The idea of renegotiating trade terms with certain countries is perhaps not unwarranted, though any effort to do so would necessarily have trade offs for a limited amount of gain for the US. 

Trump's Liberation Day is so far and above any reasonable effort to rebalance trade, that any common ground with mere free trade skeptics (as opposed to those who share Trump's pathological anger at other countries) has eroded so fast it's dizzying. 

Yes, lots of people talked themselves into the idea that Trump 2.0 would track with Trump 1.0, and you can both understand but not condone that reasoning. Trump is so bonkers and erratic on any given subject at any given time that you could convince yourself that he wouldn't REALLY do what he was saying he was going to do. However, and we are seeing this in so many areas, why in the fuck would you take that chance? Trump says he wants to "be a dictator in day one," and some people took it as a metaphor. It wasn't, but maybe it wasn't worth risking everything?

What we are seeing are markets responding to these events while still thinking that he will back down. Project 2025 talks about rebalancing trade, but the mechanisms to do so look nothing like the chaotic and illogical actions we saw on Wednesday. 

The NASDAQ in particular is getting hammered, as it is off 25% from high of 20,204. That's the primary exchange for tech stocks, companies that have grown up entirely in the world of integrated global trade.

Meanwhile, Elon Musk has come out in favor of basically free trade between the US and the EU. I'm guessing there are a lot of conservative figures who thought Trump would force countries to lower their tariffs. But if you look at he crazy chart, he's not trying to reduce other countries tariffs; he's looking to reduce the trade deficit with that country.

And that's insane and, you know, bad. Americans are not clamoring to go back to the textile mills of their great grandparents, nor are Americans interested in paying the premium for those American made goods. Some conservative commentators seem to share that sentiment. Ben Shapiro, Ben Domenech and the editorial page of the Wall Street Journal have all come out against these tariffs. Former Republican politicians who no longer feel the need to kiss Trump's ring have said they are nuts.

The Wingnut Wurlitzer is still trying to crank out a happy tune, but if we really do tip over into an honest to Dog recession, all bets are off.

Around 2007, the signs of the housing bubble were becoming apparent. In March, Bear Stearns would collapse. The Iraq war had become, pick your metaphor, a quagmire or a millstone. What happened, as Bush receded into his lame duck period and eventually a sort of hermetic post-presidency, was that Dubya was memory-holed. As the blogger Digby put it at the time, "Conservatism can never fail, it can only BE failed." Bush failed, giving us Obama. If Trump really does crater the economy, Republicans should get wiped out in 2026. 

Trump cannot run again. His blathering on the possibility that he will are partly his monumental ego and partly his hope to keep nervous Republicans in line.

If we tip into a recession - and the lights are blinking red - then at some point, those cracks become fissures and those fissures canyons.

The Mad King

 We keep wondering WTF is Trump's rationale for these destructive tariffs. As Chait mentions, his entire strategy is full of holes. If you're going to negotiate tariff reductions, you have to present the face of someone who is not going to negotiate a reduction in tariffs. Trump HAS signaled that he will negotiate. Given how aggressively destructive these tariffs are, why would anyone negotiate with him in good faith?

We also have Richardson sourcing this quote from the WSJ:

The reporters note that Trump didn’t land on a plan until less than three hours before he announced it, and made his choice with little input from business or foreign leaders. Neither Republican lawmakers nor the president’s team knew what Trump would do. “He’s at the peak of just not giving a f*ck anymore,” a White House official told the reporters. “Bad news stories? Doesn’t give a f*ck. He’s going to do what he’s going to do. He’s going to do what he promised to do on the campaign trail.”

So...that's not great. Trump exploded a massive bomb in the middle of global trade, and he then went to Florida for a gold tournament sponsored by the blood thirsty Saudi oligarchs. Meanwhile, the remains for four US servicemen are being returned to Dover AFB today.

Trump has clearly decided that he will never have to answer to voters again. The obvious reason is that he is a lame duck, not that he is going to try and violate the Constitution and try to run. Also, he's pretty dumb. 

The argument that he simply wants to punish America for 2020 doesn't feel so far fetched anymore.

As Usual, Listen to Josh Marshall

 This feels like the most comprehensive explanation of why we are suddenly in a trade war.

TL;DR: Coerce countries into making "deals" with us that benefit us (and hurt them). They peg their currency to the dollar, the dollar falls in value, American exports become attractive, America reindustrializes. It's a dumb plan, but it IS a plan.

Then there is the reality that this is Trump we are dealing with here. There can be no mutually beneficial trade deals. America HAS TO WIN. Which means large entities like Europe and East Asia are simply not going to give him what he wants. This isn't stiffing a contractor and threatening to tie him up in lawsuits. These are sovereign nations.

UPDATE: Derek Thompson seems to land in the same spot.

Is There Actually A Plan, Part II

 Yesterday, I asked if there was a plan undergirding Trump's declaration of economic warfare. Maybe it's Trump being a dumb donkey, surrounded by dumb donkeys who cannot stray one millimeter from Trump Thought. Trump wants tariffs, so we get tariffs. The stupidity and economic illiteracy of the whole project including tariffs on penguins is simply a byproduct of Trump's war on elites (people who can think good). Meanwhile, I also quoted Chris Murphy who thinks this is part of his authoritarian power grab. Companies and countries will have to kiss his ass to get tariff relief.

Richardson today quotes Eric Trump (Jeebus, that's nuts) who suggests that countries better quickly lineup to give Trump what he wants. This is a variation of Trump's war on states, law firms and universities. This, perhaps, mistakes how sovereign countries operate, though. We have Canadian Prime Minister Mark Carney accurately saying that "American leadership is over." This is Trump acting, as Richardson notes, as a mob boss extorting concessions from neighborhood businesses. 

Paul Campos argues, on the other hand, that there is no plan. Again, this is completely plausible. Trump seems to REALLY REALLY like tariffs for reasons that people can't quite understand. In his post, he relates someone from the financial world making the case that crashing the economy has to do with resetting the bond markets or some shit. Meanwhile, I got an email from my financial advisors. Let me quote:

Today’s equity market selloff and the accompanying rally in bonds is clearly a reaction to President Trump’s reciprocal tariff policy announced last night from the White House Rose Garden. The tariff program is wide and far reaching, which has caused much uncertainty with investors. Prior to the announcement, investors hoped for a more nuanced and tactical approach with more exceptions possibly.

However, we expect the tariff rate structure announced yesterday is merely a baseline for further negotiation, and that ultimately a more strategic and beneficial policy will evolve.

As it stands, there is a gap between higher costs and consumer prices, which will be incurred immediately, and any future benefits from the onshoring of factory production. And in the interim, without tariff relief, there will be pressure on both sales and input factor costs, which will shrink corporate profit margins and lower earnings per share.
...

With mid-term elections seemingly always around the corner, it will be incumbent on the Trump administration to demonstrate economic progress in the not-too-distant future. This makes us optimistic that tariff policy will necessarily evolve in a way that is pro-growth and supportive of US based companies in the longer-run, and that will become more obvious with refinements to policy.

They also make a point that the market was overvalued and some sort of correction was inevitable and why not have tariffs be the reason the market corrects. Ok...

The bolded parts are just another version of Campos' finance guy saying this is about resetting bond rates. It's all trying to sanewash Trump's insistent demand for tariffs. They treat Trump's actions as that of a "normal" politician operating under normal political impulses. Any normal politician would, in fact, want to make policy that is good for as many voters as possible. 

Here's the crux of the matter: We really don't know which it is. It could be that Trump simply loves loves loves tariffs. He's fixated on it as a way to return America to the McKinley administration. If and when he does negotiate tariff reductions, it will be because the markets are kicking the shit out of America, and he will declare victory. The manic instability of his actions are unlikely to placate nervous markets.

Or maybe he will try and leverage tariff reductions for certain policy demands, like he's doing with law firms. If the EU pressures Denmark to give us Greenland, we will drop tariffs on the EU. That's...insane, but it's not implausible that he thinks it will work. So he could have a plan, but's a really, really dumb one.

Or maybe he will have various companies come to him, pay him actual bribes and he will relent on tariffs that impact those companies. Again, completely plausible.

Krugman seems to fall on the Mad King side of the debate, and his arguments are persuasive. There is no deeper meaning to these tariffs, as the method underlying them is just incoherent nonsense. If you proceed from that starting point - the ridiculous formula they used to create other countries "tariffs", the last minute formulation of the whole thing - then ascribing to Trump some sort of 6 dimensional chess seems ridiculous. 

This, though, seems undeniable. The market has lost trillions of dollars of wealth in the past two days. What's more, Musk is out there firing Federal workers by the thousands and cutting off grants and funding that prop up all sorts of economic activities. The Atlanta Fed is predicting that we are effectively already in a recession, but since conservative ideology says that government jobs aren't real jobs, everything's cool? 

What's more, the dollar is falling in value. That's the opposite of what tariffs should do to the strength of the dollar. The reason it's falling is that Trump is a chaos monkey, flinging poo around the global financial system.

My financial advisors suggest that Trump will respond to negative feedback and correct course. My gut says that Trump feels he's a very stable genius who knows that a few months of pain will be worth it in the long run and fuck the little people anyways.

Is There Actually A Plan?

 During the first sojourn in Trumpistan, Josh Marshall and John Scalzi posited something called Trump's Razor. The basic formulation is:

According to Trump’s Razor: “ascertain the stupidest possible scenario that can be reconciled with the available facts” and that answer is likely correct.

So if we look at the absolute brain damaged nonsense of Trump's tariffs yesterday, Trump's Razor suggests that Trump has a naïve and deeply wrong idea about trade and trade deficits; he feels he was thwarted from instituting his tariffs during the first administration; he is now unbound; he has declared war on global trade.

As an explanation, that really does fit the available facts. 

However, Richardson picks up on something Senator Chris Murphy has suggested. I'll just quote from her:

Senator Chris Murphy (D-CT) noted tonight that the tariffs make no economic sense because “[t]hey aren’t designed as economic policy. The tariffs are simply a new, super dangerous political tool.” Murphy suggests they are a way to make private industry dependent on the president the same way he has tried to make law firms and universities dependent on him. Industries and companies “will need to pledge loyalty to Trump in order to get sanctions relief.”

Murphy warns that “[t]he tariffs are DESIGNED to create economic hardship…[s]o that Trump has a straight face rationale for releasing them, business by business or industry by industry. As he adjusts or grants relief, it’s a win-win: the economy improves and dissent disappears.”

This is also plausible. Trump is using every lever - constitutional or otherwise, legal or not - to consolidate power in the White House. This is because his basic impulse is dictatorial. Using tariffs to crush the economy and in particular force major industries to bow to his fetid will could very well be the point of all this.

I am a bit skeptical, simply because Trump is not a man of subtle plans and long term stratagems. As Krugman notes, the bizarro formula they used to calculate "tariffs" (really just a weird version of the trade deficit in manufactured goods) may have simply been fed into Grok, Elon Musk's AI program. Krugman then goes on to say that these laughable numbers are yet another dominance display. Trump will make Republicans defend his absolute nonsense. 

Yesterday, before Trump's declaration of economic warfare, four Republican Senators voted to revoke Trump's tariffs on Canada, with Mitch McConnell and Rand Paul joining Murkowski and Collins to provide the 51 votes (it's likely DOA in the House). They did this because Canada launched targeted tariffs on bourbon. 

Here's where we come to the intersection of stupid or fascist. 

Canada knew how to target their response to the appropriate Senators. The EU, China, Japan, hell the rest of the world have people in decision making positions who are smart and respond to actual facts. Trump's forcing supporters to defend the rank lunacy of his tariffs is about dominance and about the fact that Trump is always right. Maybe he really IS going to use tariffs to try and force American industry to comply with his every whim. 

It doesn't mean he will succeed. 

The US markets are open. The NASDAQ is already down over 4%, the S&P down 3%. Consumer confidence is collapsing. The Atlanta Fed is predicting we are already in an overall contraction in the economy before he created his insane clown tariffs. 

As Jon Chait notes, dictators arise when what they do is popular. Putin took on the oligarchs and corruption (eventually replacing them with his own oligarchs and corruption). Orban tapped into Hungarian anger over migration. Erdogan, too, was popular at first.

I'll give Chait the last word:

Dictators such as Vladimir Putin and Hugo Chávez have shown that power grabs are easier to pull off when the public is behind your agenda. Trump’s support, however, is already teetering. The more unpopular he becomes, the less his allies and his targets believe he will keep his boot on the opposition’s neck forever, and the less likely they will be to comply with his demands.

The Republican Party’s descent into an authoritarian personality cult poses a mortal threat to American democracy. But it is also the thing that might save it.

Chef's Kiss

 So much of Trump 2.0 can be ascribed to venomous hatred of anything that even has a whiff of non-Republicanness to it with a healthy dash of just rank stupidity thrown in.

Now we have Liberation Day which is proving to be both a repudiation of 80 years of largely consensual opinion on trade (because it's Democratic?) and it couldn't be any more stupider. I mean aside from the whole idea of a trade war in 2025. That's pretty stupid, too. So right off the bat? Really stupid.

When you get into the weeds, it just gets stupider and stupider.

Trump had a chart at his declaration of war on the global economy today. The chart was - wait for it - stupid as fuck. Let's start with the first thing people noticed. Trump's chart had one column which was what other countries' charged us in tariffs, the second was his new tariffs. The tariffs ostensibly levied against the US are complete and utter nonsense. Just absolute fabrications. No one could figure out how he arrived at the EU having a 39% tariff on US good. It's just wildly, wildly wrong (it's closer to 3%).

It seems that what he did was to simply calculate the trade deficit with that country and make it a percentage and call that a tariff. Is it a tariff? No it is not. It's not even close to being a tariff. And trade deficits are stupid, too. As someone put it, you run a "trade deficit" with the grocery store. You give them money and they give you stuff. You both do well by the arrangement. (Unless you shop at Whole Foods.)

Finally, the chart revealed just how fucking stupid the stupid people working for the stupid man really are. One of the countries running the mythical 10% trade surplus with us is apparently the Heard and McDonald Islands. They are uninhabited. He levied a 58% tariff on Norfolk Island. They have $2million in TOTAL exports. 

The people who made this chart for him are either brain damaged or they refuse to point out that the emperor is naked. What's more everything we know about this bloated sack of used hamburgers is that - having made these ridiculous statements - he simply will not admit that he is wrong. He cannot back down.

This, of course, is also really, really stupid. The sort of stupid shit stupid people do to cover up the fact that they just did something stupid. Trump was joking a few months ago about taking over Canada, and now there are gremlins in DC somewhere cooking up invasion plans. 

As of now the S&P 500 and NASDAQ futures are off 4% in futures trading. Shit is going to be ugly tomorrow.

Last year, the wife and I did some retirement planning. We are in great shape, they said, as long as there isn't a major depression right before you retire.  

Heh heh. Heh heh.

Green Sprouts

 The news wasn't earth shaking, but there were a few things yesterday that could give one hope. The encouraging but not wonderful news were the special elections results in Florida. Democrats were not able to win either seat, but they significantly increased their vote share in deeply Republican districts. If that trend simply stays the same, they will easily win control of the House and maybe even the Senate in 2026.

A caveat. Let's look at Florida 1. In November, Serial Sexual Predator Matt Gaetz won 274,000 votes compared to Gay Valimont's 140,000. That's 66% v 34%. Valimont ran again in the Special last night. She increased her share of the vote to 42%, but her actual vote total fell to 72,000. That's the problem comparing a special election in April to a general election in a presidential year. 

We see the same dynamic in Florida 6. In November, Mike Waltz won 66% of the vote with 284,000 votes. Fellow Republican Randy Fine saw his share of the vote decline to 56%. That's a pretty big movement, but Josh Weil, his Democratic challenger, actually got 60,000 fewer votes than the Democrat who ran against Waltz, James Stockton.

The margins got better, but these elections are not necessarily predictive of what will happen in November 2026. On the other hand, there is ample evidence that Trumpist voters don't show up when he's not on the ballot. That might not flip a deeply Red House seat in Florida, but a swing district in NY or Pennsylvania sure looks more achievable. 

If we look at the better news from Wisconsin, we see something more encouraging. In November, Trump won Wisconsin with 49.71% of the vote and 1,697,000 votes. Susan Crawford, the Democrat, won election to the Wisconsin Supreme Court with 55% of the vote and 1,301,000 votes. There about a 1,000,000 fewer votes than in November, but that's a far more robust voter turnout than we saw in the Florida elections.

Put another way, the actual swing state swung towards Democrats, and they did so despite Elon Musk trying his damnedest to buy that Supreme Court seat.

The other green sprout occurred in, of all places, the floor of the Senate. Cory Booker conducted the longest filibuster in history, erasing segregationist Strom Thurmond from the top spot. Yes, it was performative. No, it did nothing to erase the Republican advantage in either chamber. Still, Democratic rank and file voters are looking for something, anything that demonstrates some fight.

Democrats have been moribund, with a few exceptions. Booker's speech went viral. His hoarse voice at the end pleading for Americans and his colleagues to be equal to the challenge was really impressive.

Democrats need victories, however small, however symbolic. Wisconsin and Booker gave them two. Florida promised some hope. 

More Sanewashing

 The Times reported on a trade war game conducted by trade experts and economists. It starts with:

Last month, two dozen trade experts from the United States and other countries gathered at a Washington think tank to try to simulate what could happen if Mr. Trump moves ahead with his plan to impose punishing tariffs on America’s biggest trading partners.

OK. How did it go?

Just before lunch, the picture did not look good. The board held a sea of red cubes, indicating that the tariffs were escalating international tensions, destroying jobs and pushing up inflation.

But what happened next was surprising and, according to the participants, a hopeful sign.

Guess what. The people at the simulation reached trade deals that reduced barriers again.

Emily Kilcrease, a senior fellow at the think tank who played the part of Mr. Trump, said the game suggested that “there is a path to victory for a U.S. tariff-first policy.” She cautioned this would be true only if the United States focused on reaching bilateral trade agreements, a strategy she called “viable” but “high risk.”

Here's the thing. As Paul Krugman notes, there is no method to his madness. Trump is enraptured with this trade war, he thinks the experts are all wrong and he is right. We might very well climb down from the coming trade war, but it will come at a huge economic price.

The Stupidity Inside The Stupidity

 We may or may not start a trade war tomorrow. We shall see whichever way the wind blows between Trump's ears. His ostensible reason for launching this trade war and why it's at least somewhat popular among people who don't really understand how international trade works (which, to be fair, is really complicated) is that we need more manufacturing jobs in the US.

As Paul Krugman explains, manufacturing jobs have been declining for reasons that have only partly to do with things like the lack of tariffs or the strength of the dollar. As industries become more technologically advanced, fewer workers produce more goods. He makes the apt comparison to farming. We have a tiny fraction of the workforce in agriculture, but we still produce a lot of food. 

It would be nice if journalists stopped trying to sanewash this nonsense and realize that Trump wants a trade war because he's a belligerent asshole, not because he wants to "make America great again."