While looking for something else I ran into an old interview with Rex Tillerson, Trump’s first Secretary of State. This is from the Houston Chronicle, December 2018, after Tillerson had been fired from the SecState job.
When asked if he believes that Russia interfered in the presidential elections, Tillerson replied “there’s no question” and that it was well-documented by intelligence agencies.
“What Russia wants to do is undermine our confidence and undermine the world’s confidence in us,” Tillerson said.
Describing Russian President Vladimir Putin as a “very calculating” and “very opportunistic” leader, Tillerson said Putin’s strategy is to undermine the U.S. influence around the globe.
That mission is pretty much accomplished, huh? From what I’ve read in the British press, Europe may be getting serious about retooling the global trade order and leaving out the U.S. See, for example, Donald Trump is now badly wounded. Europe and the UK can seize an advantage by Will Hutton in The Guardian. Whatever happens from here out, it looks like the damage Trump inflicted on the U.S. economy will be very long term and possibly permanent. When we’re finally done with Trump, the U.S. is not going to snap back to leading the financial world.
Last week was a scary time in U.S. financial markets, and the danger may not be over.
I’m not talking about stocks, whose fluctuations often tell us nothing at all. What had me and others rattled were developments in bond and currency markets. Interest rates on long-term government debt rose sharply even as the perceived risk of a recession, which normally pushes rates down, rose. And the dollar went down against other currencies even though interest rates went up.
These moves weren’t normal for an advanced country like the United States. However, the combination of rising interest rates and a falling currency as the economy slumps is something often seen in emerging markets facing a financial crisis.
He’s not absolutely predicting a financial crisis, but he and a lot of other economists are saying the signs are all there. But if U.S. Treasury bonds lose their long-held status as the rock-solid safe investment of global finance, our nation will be a lot poorer, and a lot less influential, going forward.
Do read this piece at The Atlantic by Franklin Foer, Trump Has Found His Class Enemy (gift article). Foer says Trump is carrying out a Marxist-style suppression of knowledge workers, as a class. “Knowledge workers” include scientists, universities, law firms, journalists, etc., sometimes called the professional managerial class, or the PMC.
In a way, Trump is practicing his very own form of Maoism, a cultural revolution against the intelligentsia—what the Communist Party of China memorably deemed the “stinking ninth” class. Although Trump’s purges have been tame by comparison, there are parallels. Like Trump, Mao wanted to create manufacturing jobs in the homeland. Defying expert opinion and shunning economic common sense, Mao launched his Great Leap Forward—a disastrously unsuccessful policy of rapid industrialization—in the late ’50s. During that period and the subsequent Cultural Revolution, he resorted to scapegoating his own PMC, especially the professoriate and other cultural elites. (“Better red than expert” was a rallying cry.) His minions subjected its members to public humiliation and horrifying violence; the state exiled members of the urban bourgeoisie to the countryside for reeducation.
It’s a stretch to imagine such a scenario unfolding on American soil. But voices in MAGA are floating versions of these ideas. Treasury Secretary Scott Bessent recently told Tucker Carlson that fired federal workers could supply “the labor we need for new manufacturing.” That is reeducation, Trump-style.
The comparison to the Great Leap Forward rings true for me. It was a nightmare time in China that brought about the deaths of an estimated 20 million Chinese, mostly by starvation. And it came about because Mao Zedong had absolute power and didn’t know what he was doing. Trump is being allowed to exercise absolute power, and he sure as hell doesn’t know what he is doing.
See Krugman again, The Trump Tariffs Just Got Even Worse. Late Friday night Trump abruptly rescinded the “reciprocal tariffs” on smartphones, computers and other electronics. My impression is he was trying to do a favor for big tech companies like Apple that manufacture in China. And this is what Krugman is complaining about when he said it just made the tariffs even worse.
For electronics, at least, we’re now putting much higher tariffs on intermediate goods used in manufacturing than on final goods,” Krugman writes. “This actually discourages manufacturing in the United States.” This may be why Commerce Secretary Lutnick said today the tariff exemptions are temporary. And he also said they’d be subject to “semiconductor tariffs” expected to start in a month or two. (Update: Apparently Lutnick wasn’t supposed to talk about the semiconductor tariffs.)
Which takes us to Krugman’s next point, “Uncertainty created by ever-changing tariff plans is arguably a bigger problem than the tariffs themselves.” Businesses can’t plan ahead if they don’t know what the policy will be next week.
And, finally,
The stench of corruption around these policies keeps getting stronger. There’s a lot of circumstantial evidence for massive insider trading around last week’s tariff announcement; the big beneficiaries from the latest move are companies that made big donations to Trump. Investing in plant and equipment looks like a bad idea given the uncertainty, but investing in bribes for the ruling family clearly yields excellent returns.
This is how Trump always has done business, like a mob boss, and he can’t imagine any other way to do things. He’s too stupid to learn. And even though he won’t be around forever, the rest of the world can’t trust U.S. voters to not elect another monster again.
O/T…But sad sad news. The commenter we all knew as Gregor Sansa has died in a climbing accident. Post from over at LG&M.
https://www.lawyersgunsmoneyblog.com/2025/04/jameson-quinn
It is so cute that Foer thinks this is something new. Intellectuals were Joe McCarthy's class enemy, for God's sake, then Reagan's.
True enough. And Richard Hofstadter explained it all in his book Anti-intellectualism in American Life, published in 1963. Trump does seem to be taking it to a new level, though.
Grandad had a poster on wall of his shop on his farm. It depicted two cows with differing isms of the day with a short statement. As I recall the capitalist sold one cow and bought a bull. The fascist shot both cows.
Russia could never out-farm the US. We are losing because of tariffs and lack of hegemony. It is a forced defeat handed out by our own government. Yes, Putin found his useful idiots, who continue to hand him win after win. We are managing to ignore what we do with success and render it to a losing situation. Grabbing a loss out of the hands of victory. What a plan.
"the rest of the world can’t trust U.S. voters to not elect another monster again"
Yes it is as you said on election day "the nation just committed suicide", we are dead to the rest of the world except Russia. Stump is working for Putin.
I agree with Krugman, and worse: the unexpected drop in US Treasury prices ( = rise in Rates) – accompanied by a drop in the relative value of the US$ – will be viewed by economic historians as the beginning of the end of the US Dollar as the [only] Global Currency.
(Note: "Treasuries" are Bonds, so their "Prices" and "Rates" move in opposite directions, by definition; so when Krugman says "Treasury rates went up", that inherently means "Treasury Prices went down")
Usually, when the Stock Market goes down far & fast, the price of Treasury Bonds goes up – people and organizations who sell [lotsa!] Stocks generally just shift their huge piles of money into T-Bills.
When Trump announced his Tariffs, Stocks dropped like a rock. T-Bill Prices started to rise (as expected), but then turned around and rolled downhill. This implies that big holders pulled a Zillion Dollars out of *both* US Stocks and US Bonds; so, where did they put all that money?
Apparently, a lot of them exchanged Dollars for other currencies – driving down the value of the US$.
The major overseas holders of US Treasuries are Japan, Europe, and China, each of which held about 10% of all [foreign-owned?] T-Bills. I watched a [long, boring, but seemingly legit] YouTube vid yesterday showing that all three currencies (Yen, Euro & Yuan) went up following sales of US Treasuries.
The logical conclusion is that the Governments of Japan, Europe, and China *all* sold US Treasuries, then exchanged $ for their own currencies. Interestingly, all of those moves seemed to start around 16:30 PST on Wednesday; this may have been coincidental, but it raises the possibility those Governments *intentionally coordinated* their sales, presumably to send a message to Trump.
The message got through. Trump's advisors shat bricks (BRICS?!), and he actually listened, quickly announcing that his Big Beautiful Tariffs were 'paused' – except for China's which where doubled (or such).
And that's where the second Krugman article comes in. Apparently, Trump's new 'friends' (Zillionaire Donors aren't really anybody's 'friend') twisted his ears and arms until he announced the exemptions for Chinese Electronics. Sure, this is nice for Apple, etc, but it actually undermines Biden's efforts to re-shore Chip production.
Frankly, I kinda hope that Europe and Japan worked with China to send that message. It must be painfully obvious to the rest of the world that we cannot be trusted with the power – financial and military – that we have accumulated. The problem for them now is how to manage our decline without triggering WWIII.
I expect other countries to start selling their US bonds. It's our Achilles heel. The budget passed by the GOP isn't about fiscal solvency (stop running up more debt), it's about giveaways, eventually crashing the government. The pain is about to begin…