Krugman notes that the recent "deal" with Japan is actually really bad news for the economy. One thing that struck me was a common thread I've heard from various media sources. Because TACO, most businesses have assumed that Trump will bluster a bit on tariffs, get some symbolic concession and then return to lower if not low tariffs. Instead, we have bizarre tariffs that actually seem to make things like Japanese cars more affordable than American cars, because of the way the steel and aluminum tariffs work.
While many expected to see empty shelves by now, we haven't seen even a massive inflationary shock. What's happened is that American retailers - operating on the TACO principle - assume that they can carry losses in the short run rather than lose market share.
What Krugman doesn't say, but worries me, is that American companies are eating through cash reserves and lowering profits to smooth the jagged edges off Trump's tariffs. Why this worries me is that a recession seems inevitable at some point. There are just a lot of blinking yellow lights. Plus, fraud is almost always a bad business practice and the Trump regime is riddled with fraud. At some point, the ability of the fraudulent to keep spinning plates ends and it all comes crashing down.
What happens if and when that happens and large numbers of corporations are cash poor? How will they be able to cushion the blow, especially since we've gutted the social safety net?
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