Saturday, November 7, 2020

The MAGA Kingdom Is Rigged To Explode

Archaeologists will say the MAGA Kingdom was the largest bubble in human history. Inflated by record fiscal and monetary irresponsibility at 30% of GDP, and abetted by four years of incessant bullshit...

Now Trump's signature petulance will pop his epic bubble:

Coming at the very end of the American empire, the MAGA movement was a last ditch attempt to restore greatness by rolling back decades of self-inflicted implosion by doubling down on blind hubris. To this very day, the seeds of self-destruction remain fully evident in the libertarian movement which "won" the ideological economic war in 1980 with the free trade movement: 

"Today the policy of protectionism is again gaining favor in Congress, and in other countries. But it must be fought with all our strength"

Indeed it was. 

From that point forward, the U.S. went from being the largest creditor nation to becoming the world's largest debtor nation, within one Reaganite decade. Any attempt to roll back free trade and re-impose the protections that had created U.S. industry in the first place, would be deemed "socialist". For most of history, the U.S. had retained strong trade protections to fend off foreign dumping. Which used to be considered a major trade violation. All of America's Asian trading partners from Japan, to China, to the Asian Tigers, are mercantilist. Which means they don't believe in free trade.

Otherwise known as "Beggar thy neighbour" policy:

Mercantilism is an economic policy that is designed to maximize the exports and minimize the imports for an economy. It promotes imperialism, tariffs and subsidies on traded goods to achieve that goal. The policy aims to reduce a possible current account deficit or reach a current account surplus, and it includes measures aimed at accumulating monetary reserves by a positive balance of trade, especially of finished goods

Along with the squandered U.S. advantage in manufacturing, and the concomitant loss of intellectual property, outsourcing by definition ballooned the trade deficit and hence the national debt. What a country does not create for itself, must be borrowed from its suppliers. U.S. economists have long turned a blind eye to these ever-growing liabilities that now have doomed the U.S. dollar. The economics profession will very soon lose all credibility. They will be written off as money printing imbeciles. Engineers created U.S. industry, then marketers and financiers gave it all away, because economists knew the cost of everything and the value of nothing. 

To this day, Ron Paul and the NeoCon founders of this entire downfall remain worshipped by libertarian ideologues. Never once questioned nor held accountable. 

Enter Trump, a serial casino bankrupter and reality TV game show host, who was called in to reverse almost four decades of failed trade policy. To close the barn door after the horses are out. After all, what the wise man does at the beginning the fool does at the end; so they decided to begin a trade war with their largest supplier. A country that was now embedded at the heart of the entire U.S. supply chain. 

What it all points to is a group of people who had no clue they were voting for their own self-destruction all along. And when it came time to right the wrongs of the past, they opposed any attempt to rebalance the equation, as "socialist". 

History will say they were the dumbest people in U.S. history.

Nevertheless, being a proud idiot is not a crime. Everyone has a right to their own opinion, but no nuclear superpower has the inherent right to hold the entire world hostage to the vagaries of a feckless dictator. All of the fascist dictators in history have come to an ignominious ending. Trump is no exception. It took every ounce of America's once great democracy to put a stop to his reign of criminality. He left the vaunted American system in shambles. A global laughingstock. The end result of a demagogue running roughshod over the rule of law, encouraged by a venal mob.

The factors and grievances that got Trump elected however are not going to go away. He gave voice to those disenfranchised by Globalization. Had Trump tweaked his schtick only slightly to wrench more stimulus from McConnell or showed a small amount of empathy for those stricken by the Corona plague, he surely would have been easily re-elected. If Trump showed even one hint of compassion or humility he could have had a landslide victory. 

Pollsters appear entirely incapable of locating Nixon's silent majority minority:

"The silent majority minority is an unspecified large group of people in a country or group who do not express their opinions publicly"

Nixon, along with many others, saw this group of Middle Americans as being overshadowed in the media by the more vocal minority"

Trump is now the voice of the silent minority. Which happens to be almost half the country. People who have tremendous grievances against the status quo and yet to this day constantly vote for policies that make their own economic lot in life worse. How sorry can you feel for these people, when in every way possible, they are their own worst enemy? Voting against public healthcare during a pandemic amid mass layoffs and companies dropping healthcare coverage by the millions. Trump supporters are the least healthy people in the country:

"Because most U.S. workers rely on their employer or a family member's employer for health insurance, the shock of the coronavirus has cost millions of Americans their jobs and their access to health care in the midst of a public health catastrophe,"

In the final analysis, Trump is going to get millions of his own true believers killed. Be that through direct COVID infection, or through economic decimation. He was an opportunistic con man dispensing Kool-Aid at a lethal time. Trump is the Jim Jones of presidents.

And what about China? What will they gain from this Trumptopian downfall? This past week, EVERYTHING China went parabolic, as fund managers reluctant to gain exposure to China finally went ALL IN.

However, China resembles Japan circa thirty years ago. Back then Japan had won the Pyrrhic victory of the mercantilist exports, but that was their pinnacle, after that peak their model imploded. It was not based upon sustainable growth.

Ironically, this week we were told that Japanese stocks reached a 29 year high. Below we see what happens to countries that cling to the past and never face reality: