Feb
2025
I’m So Bored With the USA: New Dawn Fades
DIY Investor
28 February 2025
“Different colours, different shades
Over each mistakes were made”
As the dust settles on last weekend’s German election, aside from the question of whether the victorious CDU/CSU alliance can successfully form a coalition that excludes the Alternative für Deutschland (AfD), there are issues that need to be considered
On the upside, nearly 80% of Germans didn’t entertain voting for the AfD. However, this needs to be balanced by the realisation that C.20% voted hard-right for the first time since WW2.
Clearly, with a 4:1 ratio, the hard-right, despite the machinations of Messrs Trump and Musk are in the minority. The gains made by the AfD came almost exclusively at the expense of Olaf Scholz’s Social Democratic party (+/-9%).
What we did see what the now to be expected handing over power to each other, in what one commentator referred to as “a kind of disillusionment relay.”
What we appear to be seeing in similar democracies is left and right are having versions of the same argument: does “electable” mean centrist or radical? In effect, will voters return to a late-20th-century status quo choosing between “me too” parties, or have they reached a point of starting to realise that the status quo doesn’t deliver the requisite solutions?
What is clear, is that the hard-right are more “together”; better organised, better able to recognise and deal with the new world of social media and influencers, and better at delivering the scapegoats that disillusioned voters seek solace in.
The left still seems immersed in doing what it does best, falling out with each other. The left seems slow to identify the real cause of voter disillusionment, which is out-dated economic thinking that leaves so many struggling financially.
Inflation was a key factor in Trump defeating Harris in the US. You would think that, after the chaos of post the Wall St crash inflation and unemployment which lead directly to rise of the Nazi party, that German politicians would have their eyes more open?
‘The left seems slow to identify the real cause of voter disillusionment, which is out-dated economic thinking that leaves so many struggling financially’
Germany, along with France and the UK needs to be at the forefront of a stronger, free, democratic and Ukraine-supporting Europe against the current policy of the US. The most staggering moment of Sunday’s election evening was when the lifelong Atlanticist Merz declared that Europe must “really achieve independence from the US”.
Trump’s presidency is changing the shape of global politics. For example, over the last decade the UN security council has been nullified due to the split between the five permanent members – Russia and China on one side; the US, France and Britain on the other.
Now it’s all change; this week, when the US brought a resolution calling for an end to the war in Ukraine on the third anniversary of Russia’s invasion, it did not criticise Moscow, demand its withdrawal or back Ukraine’s sovereignty and territorial integrity. The result was that China and Russia backed the resolution – while the UK and France, having failed to temper it, abstained.
Earlier, even Beijing had chosen to abstain rather than reject a UN general assembly resolution condemning Moscow as the aggressor in Ukraine. Although the resolution passed, backed by 93 states, the US joined Russia in voting against it. They were joined by Belarus, North Korea, Syria and a handful of others. In response, the Republican senator John Curtis wrote: “These are not our friends.”
In truth, I can’t say I see America as a friend, or as a protector of the good guy against the bad guy. Trump even went so far as to blame Ukraine for being invaded, and any future support comes at a considerable cost. Washington has been pressuring to sign a deal worth more than $500bn (£395bn) over Ukrainian resources, including oil and gas as well as critical minerals, that their president said would force 10 generations of his people to pay it back. A new agreement seen as more accommodating for Kyiv was drafted. It is understood that the new terms do not include these demand.
Critical minerals are the metals and other raw materials needed for the production of hi-tech products, particularly those associated with the green energy transition, but also consumer electronics, artificial intelligence infrastructure, and weapons.
‘Trump’s presidency is changing the shape of global politics’
Tackling climate change and moving away from fossil fuels has triggered a scramble for energy transition minerals such as cobalt, copper, lithium and nickel, which are useful for the electrification of transport and the construction of wind turbines. The same minerals and others are also used for the manufacture of mobile phones, AI datacentres and military assets such as F-35 fighter aircraft, placing them in high demand.
All of this has seen prices rocket. In 2023, the International Energy Agency (IEA) estimated that the market for energy transition minerals had reached £320bn in 2022, double its value five years earlier. And if countries fully implement their clean energy and climate pledges, demand is expected to more than double by 2030 and triple by 2040, the agency says.
With Russia currently controlling C.20% of Ukraine’s, a Ukrainian thinktanks cited by Reuters, estimated that up to 40% of their metal resources are in land under occupation. Russian troops also hold at least two of Ukraine’s lithium deposits, one in Donetsk and another in Zaporizhzhia.
Trump’s driver for this asset grab is China, which, as the world’s factory , means that, wherever in the world critical minerals are mined, it remains a crucial staging point on the supply chain.
In addition, the3 IEA estimates that China’s share of refining for critical minerals is about 35% for nickel, 50-70% for lithium and cobalt, and nearly 90% for Rare Earth Elements (“REE”). Its dominance in the latter, especially, is overwhelming. According to USGS data, in 2024 China accounted for almost half the world’s REE reserves.
With a trade war between the US and China seeming almost inevitable, US access to critical minerals is potentially under threat. With demand for these minerals at an all-time high and growing, this is another threat to US hegemony.
Another critical part of any deal between the US and Ukraine, is the need for long-term US security guarantees to protect against future Russian attacks. “This agreement could be part of future security guarantees … an agreement is an agreement, but we need to understand the broader vision,” Zelenskyy said
That still seems to be uncertain as, prior to meeting with PM Starmer, Trump, in a televised cabinet meeting said: “I’m not going to make security guarantees beyond very much. We’re going to have Europe do that.”
This is all part of the new dynamic that Europe’s leaders need to understand and act upon.
The Europe created post – WW2 is threatened by an anti-liberal, populist nationalism that is gaining increasing traction. As the AfD leader, Alice Weidel, said, the mere fact that her party attracted 20% of the overall vote, was the clear winner in eastern Germany, and is now the second-largest party in the new Bundestag, is a “historic success”. Worse still, is the support they received from the US, not just from Elon Musk, but from vice-president JD Vance. No wonder that, Merz said that Wahington’s interventions were “no less dramatic than those from Moscow.”
‘The Europe created post – WW2 is threatened by an anti-liberal, populist nationalism that is gaining increasing traction’
Europe’s mainstream parties have a considerable to do list: save Ukraine, build a much stronger common European defence, restore economic dynamism, without reversing the green transition, address socioeconomic and geographical inequality, control irregular migration and successfully integrate existing immigrants to address demographic issues.
Despite these considerable challenges, I do feel that the majority of the electorate are already becoming scared of populism, as they view the madness of Trump, et al. The next electoral test will be the French presidential election in 2027. In the UK, it might be that Reform overtakes the Conservatives, but that says as much about the mess they are in than Reform’s ascent.
The big question for all countries, is how do we fund what is needed?
Germany has the added restriction of the balanced budget amendment, often referred to as the debt brake (“Schuldenbremse”); a fiscal rule enacted in 2009 by the First Merkel cabinet. designed to restrict structural budget deficits at the federal level and limit the issuance of government debt. The rule restricts annual structural deficits to 0.35% of GDP.
The debt brake is controversial among economists, and in 2024, amid a stagnating German economy, Bundesbank president Joachim Nagel called on the German government to reform the debt brake in order to finance structural investments in the German economy. With the added pressure of additional defence spending, it will be interesting to see how the new coalition deals with the conundrum. Also, given the scale involved in areas such as defence, energy, the green transition and AI, Europe needs to be joined-up, which is why I see the UK naturally reintegrating. Whilst those on the fringes will cry foul and see this as the end of their precious Brexit, the situation is now very different, and reintegrating doesn’t necessarily mean rejoining the EU.
Interestingly, Trump’s behaviour has also forced Kemi Badenoch and the Tory party to support Starmer’s more Europe-oriented response. Having backed Ukraine so passionately under Boris Johnson from 2022, anything else would be a major own-goal, although given Johnson’s previous outspoken support for Ukraine the party has been conspicuously quiet. Farage has found himself walking a tightrope, trying to balance the publics support for Ukraine with his acquiescence to anything Trump says or does.
‘given the scale involved in areas such as defence, energy, the green transition and AI, Europe needs to be joined-up, which is why I see the UK naturally reintegrating’
Everyone needs to accept that the old order, established post-WW2, is over. Europe now needs to stand together to defend its interests; “united we stand, divided we fall.”
For the populists budget problems will be overcome by shrinking the state still further slashing jobs and resources from federal government agencies. Their role model in this supposed solution is Elon Musk and his so-called “department of government efficiency” (“Doge”).
But, all is not well in Doge, more than 20 staffers stepped down this week, saying in a joint letter they refused to use their expertise to “dismantle critical public services”.
They further warned that many of those enlisted by Musk to help him slash the size of the federal government were political ideologues who did not have the necessary skills or experience for the task ahead of them.
This is the latest rebuke to Musk’s hard-handed approach, which as seen him demand that federal workers email his office with five things they did the week prior to justify their positions.
Donald Trump defended Musk from a mounting backlash in his own administration after some cabinet members – including the FBI director, Kash Patel, and Tulsi Gabbard, the national intelligence director – told their employees to ignore the demand and refrain from emailing a response
In addition, a review has found that almost 40% of the federal contracts scrapped so far won’t save the American taxpayer a penny.
As the song said:
“But if this ever-changing world in which we’re livin’
Makes you give in and cry”
‘No matter how bored I get with the USA they still dominate the narrative.
I still think Trump is another example of “the emperor’s new clothes”. His ideas, like most ideas, are great in theory, but not so clever when put into practice. Primarily, because the reactions and actions of others are difficult to gauge and model.
This is the overriding issue with populism. It is best suited to opposition because it is based on negativity rather than solutions. When there are solutions, they are always sweeping, life-changing, such as Musk and his Doge. It’s nothing new, both Reagan and Thatcher tried – the results are there for all to see!
In his case, he seems to be falling foul of the collective US ego trip based on their own superiority and invulnerability.
Other countries aren’t laying down for them; Canada, Europe and China may not welcome a trade war with the US but they won’t roll over. Instead, they recognise that an isolated America isn’t the threat Trump thinks it is.
Equally, his imperial and foreign policy ideas just smack of an arrogant bully. His desperation to divide and rule Europe through a “network” of hard-right bullies, has had the opposite effect. Europe seems to be becoming more aligned, and, whichever of his bullies might be in-power, they are facing an electorate where the majority don’t want US hegemony.
What Americans collectively miss is that many people in Canada, Europe and China don’t actually like them, and are quite happy to see them fall on their face
Best news piece of the week goes to Apple, who have promised to fix a bug in its iPhone automatic dictation tool after some users reported it had suggested to them “Trump” when they said the word “racist”. Strange that!!??
Lyrically, we start with Joy Division and “New Dawn Fades”, and finish with “Live and Let Die”. The latter, as a live cover by Guns n Roses, shows how stadium rock, when done well, needn’t be a pretentious bore.
Much to enjoy!
Philip. ‘
@coldwarsteve
Philip Gilbert is a city-based corporate financier, and former investment banker.
Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s
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