The Vote Of No Confidence the Ape *resident Hath Wrought

All bets are off—not just with respect to Trump but with respect to the American people. That’s the message global markets sent this week when they continued canceling their bets on U.S. securities even after the “Liberation Day” tariffs were paused. Markets have lost confidence that our country, from top to bottom, is capable of behaving sensibly. They’re right to do so. Frankly, it’s overdue.

Most of the commentary criticizing Trump’s trade idiocy and the damage it’s caused has dwelled on the fact that the crisis is self-inflicted. That’s not the most salient fact about it, but it’s certainly true.

To see just how true, have a gawk at this chart tracking the U.S. Economic Policy Uncertainty Index since 2005. A once-in-a-lifetime catastrophe like the COVID pandemic, in which global commerce shut down entirely, caused considerably less economic uncertainty than two-and-a-half months of American populist rule-by-whim has.

Some investors aren’t sticking around to see how much more unpredictable things might get.

What convinced Trump that it was time for a trade war “pause,” reportedly, was the chaos in bond markets overnight on Tuesday that caused yields on U.S. treasuries to rise. Yields don’t typically climb when equities are being routed; in a crisis, nervous investors tend to start buying up treasuries, viewing them as the ultimate financial safe haven. The unexpected rise in yields on Tuesday indicated that treasuries—a lot of them—were being sold. That was a potential financial crisis in the making.

So the president blinked, pausing his tariffs on everyone except China. Except that treasury yields … kept rising. The dollar has weakened too, creating an extra hidden “tax” for Americans on certain foreign imports as investors turned to gold and Swiss francs instead. According to the investment bank Evercore, only four times in the past 30 years has the dollar dropped by more than 1.5 percent while the yield on 30-year treasuries has risen by at least 10 basis points. Typically, that sort of crunch is only seen in emerging markets. This week it happened to us.

In Evercore’s words, the trends reflect “evaporating U.S. growth exceptionalism and the reduced attraction at the margin of dollar assets for reserve purposes amid erratic U.S. decision-making.” Or, in plain English from the analysts at ING: “(The) more troubling narrative of late is the notion of what we call a ‘sell America Inc.’ risk. … (The) here and now is painting treasuries as a tainted product, and that’s not comfortable territory.”

Investors are “selling America” because America is no longer a stable investment. Anything can happen. All bets are off. We chose to behave like a third-world country when we reelected Trump, so that’s how markets have begun to treat us. The bill is coming due.

I suspect treasury yields will remain elevated even if he abandons his trade war entirely because the risk of “erratic U.S. decision-making” will remain so long as he’s president. No one would be surprised, for instance, if the president turned around tomorrow and fired Federal Reserve Chairman Jerome Powell in a fit of pique because Powell isn’t lowering interest rates fast enough for the White House’s liking. Nor would anyone be shocked if Trump announced he’s raising tariffs on China to 500 percent because he simply must win his staring contest with Xi Jinping, never mind what that would mean for American consumers or for American companies that rely on Chinese components for their manufacturing.

Dumb as the president’s trade war might be in principle, there would be some reason for investors to feel confident in him if he were waging it skillfully, at least. He isn’t. Trump admitted to reporters that he paused his tariff scheme because markets were getting “yippy,” not because (as so many of his aides pretended) it was all part of some master plan. No one seems to understand what the endgame is of his escalating tariff tit-for-tat with China, but as rates rise, it’s going to compel a sudden, total, wrenching decoupling of our two countries’ economies.

That is going to be catastrophic. The world is recalibrating alliances around us. They’re looking out for number one. Trump is alienating allies and the allies are talking to each other and a lot of them are talking to China, too. The U.S. can’t match China’s manufacturing capacity alone; it needs partners, “and might have had them if Trump hadn’t needlessly picked a fight with them. Instead, Xi is capitalizing on Trump’s stupidity by inviting European leaders to join him in resisting Trump’s “bullying,” and the European Union is sufficiently interested to have begun planning a summit with the Chinese leader in July.”

There is no Make America Great Again. MAGA stands for Morons Are Governing America and that is the long and the short of it. We don’t know at this juncture the nature and extent of the damage that Trump will wreak on America when all is said and done. The arrogance and downright intractable imbecility of this administration is something to behold. Now the DOJ is arguing with the Supreme Court and a district court judge on the difference between the word “facilitate” and “effectuate” according to Karoline Leavitt. Nothing is done nowadays in Washington unless is comes wrapped in bad faith, a commodity in Trump world which stinks like fish in the sun for three days.

We comfort ourselves with the fact that Trump only won by 1.5%. And that is some cold comfort. But the fact that somebody of his caliber was even on the ticket again tells you everything you need to know about America’s rot being soul deep.

My purpose is not to depress anybody here. I believe that we can, and shall, overcome. My purpose is simply to state what is really going on. 2024 was an existential election, as advertised. And we failed the test as a country. And we are going to have to pay for that miscalculation for many many years to come. The rest of the world is fully awake and they see who we are. Hopefully they also see that a great many of us are still good, decent people and not in the thrall of this madman.

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Friends, if you’re able to help the cause we would appreciate it. This is not an easy business to be in nowadays with half of America depressed and tuning out from politics. Thank you. Ursula