inequality“Let me ask you one question
Is your money that good?” 

 

Trump and his cohorts are bullies. They are no different to Putin’s Russia, only we are used to America being the good guys

 
 
Having considered the US over the weekend, I have concluded there is nothing to be afraid of. 

Militarily, they might rock buzz cuts and Raybans, but there is no substance. They either turn-up late (WW1 and 2), not at all (Suez), or they lose (Nam). 

Economically, the statistics mask the structural failings I will discuss later.  

Russia is little different, they have struggled badly in Ukraine, were worse in Afghanistan, and their economy is always a house of cards.  
 

‘they might rock buzz cuts and Raybans, but there is no substance’

 
Looking at the US it reminds me of the fall of the Roman empire, ruled over by an geriatric megalomaniac in a baseball cap, acting as the mouthpiece for a bunch of tech geeks who have watched too much Star Wars. 

They might never be truly insignificant, but the time as being #1 is coming to an end. 

During Trump’s first term in office, he added $8tn (£6.3tn) to the national debt – all previous presidents combined had accumulated $20tn – despite having promised to run budget surpluses that would eliminate the national debt within two terms. 

During campaigning for last year’s election, he vowed to cut taxes for seemingly everyone he met. According to the Committee for a Responsible Federal Budget’s central estimate, Trump’s tax proposals imply $10tn in forgone revenue over the next 10-years. 

Adding an extra $1tn in interest accrued on the national debt, the losses far exceed the $3tn in added revenue that might come from the tariffs Trump is imposing.  

To fund this, they will need to sell a lot of bonds which could keep their price low and interest rates high. To that, you can add: who will buy them? 

Japan is the largest foreign holder of public U.S. government debt, owning $1.09 tn in debt, with China ranking second with $860bn, collectively C.20% of the outstanding notional.  

With Trump currently cruising around upsetting all and sundry you can easily see people looking elsewhere. 

Their balance of payments looks even bleaker. Statistics from the U.S. Bureau of Economic Analysis, showed their current-account deficit widened by $35.9 billion, or 13.1 percent, to $310.9 billion in the third quarter of 2024. 

Two of the largest trade deficits are with China $353.5bn, and the EU $166.9 bn. In terms  of exports to China the figure is $143.5bn, and $369bn. 

Counterintuitively, US trade deficits have been crucial to how the global economic model operates. Big exporting countries such as China had a trade surplus with the US which they used to buy US assets such as shares, bonds and property, which underpinned the dollar, enabling it to maintain its role as the world’s reserve currency. 

It isn’t difficult to conclude that whilst Trump might want to fix both the budget and trade deficits he is going about it the wrong way. Confrontation and bullying only work until your bluff is called. What Tump, and many Americans fail to understand, is that people don’t like them. They are, at best, tolerated. 
 

‘Confrontation and bullying only work until your bluff is called’

 
Clearly, Tump intends to wage a trade war against China. This won’t restore US economic dominance. If anything, it symbolises how much the US is terrified by China’s economic ascent. 

Free market economists believe that countries should accept Trump’s tariffs as being part of his might is right strategy. What the UK might do is open to debate, but others are more countries are likely to be take the eye for an eye and a tooth for a tooth approach. Both Emmanuel Macron and Xi Jinping have both made it clear they are unwilling to be pushed around by Trump. 

US deindustrialisation has driven the economic discontent of the majority. In 1953, 32% of the workforce was employed in manufacturing, today it is C. 8%. The decline of US manufacturing has occurred at the same time that China has emerged as a global manufacturing powerhouse, “China’s gains equate to the US’s – and its workers’ – losses.” 

Tariffs, like many things, work well in theory, helping to boost domestic manufacturing by subsidising the domestic producers of goods that Americans consume or trade abroad. In order for tariffs to boost manufacturing, corporations have to profit from them, and increase investment to expand production. If this doesn’t happen, what you are left with is rising inflation and rising interest rates, which becomes a regressive tax on middle and working-class people.  
 

‘what you are left with is rising inflation and rising interest rates, which becomes a regressive tax on middle and working-class people’

 
Trump’s tariffs on Chinese imports, together with the expected tax cuts, will probably do the opposite of boosting the US manufacturing sector, by strengthening the dollar thus cheapening imports and make US exports more expensive and less competitive. 

One thing that does look certain is increasing inequality, which will be at the expense of the majority of his MAGA supporters. 

To keep his MAGA supporters fired-up, Trump needs to deliver, to walk the walk, rather than just talking big.  

In the last 10-days we have seen Trump trying to reshape the globe to his own liking, creating a club of dictators who get to decide. 

In the Middle East, he is aligning with Natanyahu’s Israel to expel Palestinians from Gaza and create a holiday resort. 

In Europe, he has cuddled up to Putin, and they are busy dividing up Ukraine to their liking. The US defence secretary, Pete Hegseth, has been in Brussels dictating the effective terms of Ukraine’s surrender, over Ukrainian heads. 

Presumably, these two tinpot dictators will be equally supportive of Trump’s own landgrabs. 
 

it appears that Trump is happy to concede to Putin’s demands’

 
America’s preoccupation with China and with patrolling its own borders overcoming the need to be “primarily focused” on Europe. In summary, the war will have to end, and what happens next is mostly Europe’s problem. There is no intent, that Ukraine, as a sovereign nation will be able to negotiate its own future, as it appears that Trump is happy to concede to Putin’s demandswhich includes allowing Russia to keep some of the territory it forcibly seized, and not allowing Ukraine to join Nato. Although, if the US quit NATO their influence over who else joins is greatly dissipated. Trump’s appeasement seems to have a degree of self-interest, as he seems keen on a deal to extract rare earth minerals needed by hi-tech US industries from whatever is left of Ukraine. 

In response, and following a meeting in Paris, seven European countries (France, Britain, Germany, Poland, Italy, Spain, Ukraine) and the European Commission said in a joint statement: “Our shared objectives should be to put Ukraine in a position of strength. Ukraine and Europe must be part of any negotiations,”  

“Ukraine should be provided with strong security guarantees. A just and lasting peace in Ukraine is a necessary condition for a strong transatlantic security,” the statement added that the European powers were looking forward to discussing the way ahead with their American allies. 

The US position was summed up by Hesgeth, who said that a return to Ukraine’s pre-2014 borders was unrealistic and the US did not see Nato membership for Kyiv as part of a solution to the war: “Chasing this illusory goal will only prolong the war and cause more suffering”. 

Trump is neither the great negotiator or strongman he thinks he is. Acceding to Russian demands before even reaching the negotiating table isn’t dealmaking it’s surrender.  

Trump’s action have made Putin look like a world leader. Excluding Ukraine from any negotiations has given Putin what he always wanted. Trump has further sidelined, Ukraine’s president, Volodymyr Zelenskyy , by pushing Russia’s narrative that elections are needed. 
 

‘Trump’s action have made Putin look like a world leader’

 
The difference between former president Biden and Trump is enormous; Biden called the Russian president a murderous dictator, whereas Trump praised Mr Putin’s mounting aggression towards Ukraine as “genius”, days before the full-scale invasion of 2022. 

Trump had already aired the notion that Ukraine “may be Russian some day”, and seems to be firm in his belief that when the US turns off the tap, Ukraine and Europe will be forced to acquiesce to whatever he and Putin have decide. Ukraine’s president, has said that “security guarantees without America are not real security guarantees”.  

Putin now has time on his side. He won’t want Nato members’ forces on the ground in Ukraine, and by dragging out talks Kyiv funding might dry up and domestic grumbling in Ukraine to morph into political instability, while Russia makes further battlefield advances. 

Whatever the outcome, Trump will paint it as a triumph. 

Europe and the UK are right to insist that they, like Ukraine, must be part of any negotiations, to state their commitment to its sovereignty and territorial integrity, and to stress their willingness to enhance support. Mr Trump might be abandoning Ukraine but for Europe to do so would be both wrong and reckless. 

This whole saga will be an interesting test of PM Starmer. Only last month, on a visit to Kyiv, the PM echoed the western mantra about backing the resistance to Russian tyranny “for as long as it takes” for Ukraine to become “free and thriving once again”. If he was to backdown now, he would, in my eyes, have no credibility left. He would simply be a spineless American lackey. 
 

‘If he was to backdown now, he would, in my eyes, have no credibility left’

 
To date, the behaviour of the US has been one of total contempt for its traditional allies. They should, in turn, be treated with total contempt, just another rogue nation destabilising the world. 

We should be mindful of appeasing dictators, they only stop when someone stops them. Trump’s appeasement of Putin opens up the Baltic states as a potential reward for Russian’s predatory aggression, as does Trump’s suggestion that Putin be invited to rejoin the G7. Will all the war crimes perpetrated by the Russians will forgotten, too? 

Whilst Europeans are right to be angry with Trump, we need to look at ourselves. It has been too cosy relying on the US, and, as a result, we have left ourselves at the behest of events. Trump does have a point when he describes Uncle Sam as being treated like Uncle Sucker, and he isn’t the first US president to tell Europe to take more responsibility for its security. His predecessors were just more subtle. The suddenness of US actions has caught everyone by surprise, and created a panicky scramble, with consequences for which collectively Europe is ill-prepared. 

At the heart of US actions is a bet on the likely success of Europe’s far-right parties. 

Mini Me VP Vance, speaking at a conference of Europe’s leaders in Munich on Friday, delivered what amounted to a campaign speech against Germany’s government just one week before an election in which the anti-immigrant, anti-Muslim AfD is set to take second place. 

Vance accused foreign leaders of suppressing free speech, failing to halt illegal migration and running in fear from voters’. After the speech, he met with Alice Weidel, the leader of the AfD, breaking a taboo in German politics called the “firewall against the far-right”, meant to kept the anti-immigrant party with ties to extremists out of the mainstream and of any ruling coalition. 

It is expected that despite the backing of Vance and Elon Musk, who recently gave a video address at an AfD party summit, that this will impact the result of Germany’s elections, and it’s unlikely to browbeat the ruling Christian Democratic Union, which should win next week’s vote, into allowing AfD to enter any coalition. 

However, the US seems set on a broader transformation in Europe: the rise of populist parties that share an anti-immigration and isolationist worldview and will join the US in its assault on globalism and liberal values. They see those leaders in Viktor Orbán in Hungary, Giorgia Meloni in Italy, as well as the UK’s Reform party and Marine Le Pen in France. 
 

‘the US seems set on a broader transformation in Europe: the rise of populist parties that share an anti-immigration and isolationist worldview’

 
Vance seemed set on antagonising Europe’s leaders on Friday, refusing to meet with Germany’s Chancellor,  Olaf Scholz. A former US official told Politico of the Vance team’s approach: “We don’t need to see him, he won’t be chancellor long.”  

Perhaps the Trump administration’s thinks that voters abroad will handle what his negotiations and alliances cannot? As Vance told the European elite on Friday, “if you’re running in fear of your own voters, there is nothing America can do for you”. 

“You need democratic mandates to accomplish anything of value in the coming years.”  

This seems to endorse what Trumps seems to be Zelenskyy’s position and agreeing a deal: “He’s going to have to do what he has to do. But, you know, his poll numbers aren’t particularly great.”   

Domestically, the coming three months will tell us much of what we need to know about the leader of the 3-main parties. Will they stand-up for us or kowtow to the US? 

Labour: difficult to call, expect some sort of half-hearted compromise. 
 

‘“We don’t need to see him, he won’t be chancellor long.”’

 
Conservative: Will Badenoch be the appeasing Chamberlain or the bull-dog that was Churchill? I suspect the former, this current lots are pretty spineless. 

Reform: Farage is the great British nationalist, wrapped in the flag and entering to the Dambusters March. He will roll-over for Trump. 

 

 

“Well, maybe I’m the faggot, America
I’m not a part of a redneck agenda
Now everybody, do the propaganda
And sing along to the age of paranoia” 

 

‘Events of the last week have done nothing to change my opinion on either America or the majority of Americans.

Loudmouth, empty vessels, devoid of culture, and imbued with an overbearing sense of their own self-importance.

We have deluded ourselves for years that we have a special relationship with them, when it’s nothing of the sort. We are just their bitch. Their attitude to us was summed up in “Love Actually”:  “I’ll give you anything you ask for – as long as it’s not something I don’t want to give”.

I think the US is a bust flush, not now, but maybe in 10-yrs. Tariffs will make matters worse, and countries such as China and Canada will stand up to them.

For us, this is a golden opportunity to realign with Europe. Whether Starmer can see that, or if he does, will he do it is open to debate.

Tweedle Dee and Tweedle Dum(b), Badenoch and Farage, will, despite their pretence of being great Britain’s, be nothing of the sort.

Lyrically, we start with “Masters of War” by Bob Dylan, and end with “American Idiot” by Green Day. There are millions of those!

Хай живе Україна!”

 
‘Philipq’
 
@coldwarsteve
 

 


 

 

Philip Gilbert 2Philip 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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