Warning that Americans should brace themselves for an economic “period of transition,” President Donald Trump told reporters Monday that a recession would be an unfortunate but necessary step on the way to all-out depression.
That was from The Onion. That should be obvious, but it is a sign of the crazy times we live in that I would have to specify that!
In the real world, the markets are not happy:
Tesla stock was at 479 in December, is now at 222. It dropped from a market capitalization of about 1.5 trillion to .7 – a loss of nearly a trillion dollars in value.
The NASDAQ index ended Monday down 13.4% from its record finish on Dec. 16.
There are some who believe that Trump is deliberately trying to destroy the U.S economy on behalf of a number of billionaires (especially Elon Musk) for reasons that may be to do with Elon Musk and these other billionaires (especially those in the tech sector) following a weird philosophy known as transhumanism. This is related to the idea that humans will all become cyborgs with unlimited life spans so that humanity will have to colonize the universe, or at least the solar system.
I’m not sure how the need for a recession/depression yet alone destroying the economy fits into this. I think the most likely is more prosiac: Donald Trump genuinely believes in tariffs and he genuinely believes in making money for himself so his seemingly erratic behavior is to engage in market manipulation.
Of course, given that this is Donald Trump, I also think that some of this is genuinely erratic behavior.
Institute a government wide initiative with a goal of bringing about Transhumanism? From the guy who bankrupted multiple casinos? I dunno, this looks like a pretty clear-cut case of Hanlon’s razor to me…
Or it could just be that our elected representatives are either dumb-asses or cowards (or both).
Also, on the matter of WIlliam Shatner, rarelust just uploaded the open-matte version of the Esperanto film Incubus. There are other DVD extras of the film available for download as well.
Or Trump’s just a farkin’ moron. Either or.
Believing in tariffs is pretty moronic. There are a couple points here:
1.Believing in tariffs is consistent with many authoritarian strong men. There is Juan Peron in Argentina, but even mroe so there is Francisco Franco in Spain. Franco from World War II up until 1959 attempted to implement an economic system known as Autarky, or economic self sufficiency. Franco believed that Autarky showed manliness while relying in imports showed weakness.
Franco was also known to invite public policy experts like economists for discussions and then deliver them a monologue that could last for hours in which he’d explain why he understood things like economics better than they did.
2.When it comes to the tariffs however, some of these things can be overstated as well. The reality is that the U.S has by far the largest internal economy of any advanced economy with imports just 13.9% (in 2023) as relative to total GDP. In most advanced economies, this is around 30%
So, if anything the bigger factor to hurt the U.S economy will be the DOGE mass firings of all these civil servants. Many people like to criticize ‘bureaucrats’ but the reality is that they provide a very important function of providing support to the private sector economy.
It may be appropriate to trim a high percentage of the Federal work force, but the way to do that is with systematic study, to determine which jobs are really necessary to the functioning of society, not with mass indiscriminate layoffs that often have to be rescinded.
Some of the original cuts have been utterly nuts.
And the hypocrisy of the cuts is evident. Is it really to reduce the deficit? Then why are they making cuts to the IRS, the one federal agency that turns each additional dollar spent on it into more than a dollar? Cutbacks at IRS add to the deficit, rather than reducing it.
There’s just no thought behind the staff reductions.
All federal workers are less than 5% of the total budget. People seem to forget that all federal money is being spent almost 100% in the US. Payments to individuals and contracts to private companies. The DOGE fiasco will have huge effects beyond the federal workers. Already many companies that use federal dollars will have layoffs.
People I know in the sciences are worried because lab workers and equipment is shared by both govt and non-govt funded research. Those non-directly funded supports will also have to cut down.
It is like when a major company in a town shuts down. The groceries and drug stores and tire dealers and repair people etc all lose income. Not just the fired employees..
The current deficit is 1.7 T. If you cut all spending 100% except social security, Medicare, Medicaid and Defense, the deficit would be 700B. Cut all defense (800Bl and you would reach 100B surplus. Of course, the House passed a tax cut that costs 280B per year so we would be back at a deficit of 150B+.
Fact is nobody wants to admit that we need to raise revenue even more than reduce spending. Remove the FICA cap and soc security is solvent for 50+ years. Our health care system has so much profit baked in for a few private companies that drive up the costs of Medicare and Medicaid. Our defense spending is a giant upper middle class subsidy.
Bottom line, 95% are working to fund 5%. It is a modern version of Animal Farm.
There are several other things here.
1.I forgot to mention that after Franco backed off of autarky in 1959 due to economic collapse and embraced international trade and foreign investment, Spain experienced what became known as the ‘Spanish Miracle.’
2.There are other longer term impacts that would lead to U.S economic collapse
A.Modern free trade agreements haven’t really been about tariffs but about investor and corporate protections, including for such things as copyrights and patents.
For instance, I just found out yesterday, that only American made bourbon can be called ‘bourbon’ at least in any nation that is a member of the WTO. Any other countries’ bourbon has to be referred to as ‘corn whiskey.’
So, for instance, if Canadian distilleries start calling their products ‘bourbon’ what’s Trump going to do: impose tariffs? Part of the purpose of tariffs is the leverage they provide in trade disputes. Once the tariff is imposed, there is likely a significantly decreasing return on any increase in the tariff.
The bigger thing here besides bourbon which is fairly small overall, are the copyrights (and patents?) to the Magnificent 7 U.S companies that have been fuelling a great deal of growth for the United States in the last few years, but at the expense to consumers the world over that these companies all have effective monopolies thanks to their copyright protections.
I believe I’ve mentioned this before here of Canadians simply starting up businesses that violate these copyright protections since NAFTA 2.0 is defacto abrogated and since Trump is defacto violating WTO trade rules. Apparently this possibility has gotten significant discussion at the WTO as what’s referred to as a ‘non tariff response.’ (Or non retaliatory tariff response.)
So, if say a German company decides to make and sell the Pear YouPad, again, what’s Trump going to do? Increase tariffs on Europe?
The thing here is not just the decline/collapse in foreign markets of sales of the products and services of The Magnificent 7 American companies, it’s that the defacto monopolies of these products hurt further American innovation.
An open platform for these products on the world market would likely result in other nations moving ahead of the U.S technologically.
3.As I’ve mentioned several times before though, the biggest longer term threat to the U.S economy, is still the U.S $ losing world reserve/petrodollar status. The U.S has a more than $36 trillion debt and even though this debt is still mostly held by Americans, the U.S losing this status will result in a significantly declined $ (which, ironically would be good for U.S exports) and higher interest rates, likely much higher interest rates.
To be the world reserve currency, a currency needs to be liquid meaning it needs to be traded and used to facilitate trade. It’s hard to see how this can happen with the U.S shutting itself off from most imports and then likely most exports.
I think there would have been a good case for putting tariffs on Chinese goods 40-odd years ago. Free trade with China was not fair trade because the low standards of health, safety, bargaining rights, and just plain freedom of speech of Chinese workers. And the relative lack of pollution controls on Chinese industry.
I don’t think this would have prevented the mass exodus of US manufacturing jobs to China. It might have slowed it, and it could have provided the US government with more revenue to deal with the impacts of the exodus.
Of course, it would have made Chinese goods more expensive and increased the cost of living in the US. But we effectively made a choice between cheap stuff from China and jobs in America without even talking about it.
The original linked story is a joke from THE ONION, but yet still completely plausible.
Where’s Steverino when we need to ridicule him?
Came here for that as well. Disappointing. 🙂
… And Tesla is still overvalued.
The demented orange egoist autocrat-wannabe and the ketamine-addled sociopathic man-child. What a team! What could go wrong?
This, however, is NOT from the Onion:
This is from someone who appears to be trying to gaslight Trump’s bullshit (to be fair, he may just be trying to put himself in the place of Trump’s defenders, I can’t tell and it doesn’t really matter).
To wit,
1. The important thing for economics is not inflation, it’s “families and communities”. Whatever that means. Inflation seemed pretty fucking important to conservatives until January 2025.
2. We’re just going to have to accept that higher prices, lower profits, and slower growth may be good for us in the long run. Okay, where was this truth four months ago you hypocritical assholes?
No matter which way the economy goes, the one thing we can all be guaranteed of is that Trump and his oligarch buddies will be stuffing their pockets. Trump has once again been handed a booming economy and he’s going to gouge it like all of his previous properties.
LBJ had it eternally correct: “If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.”
1.I was going to respond to Roger with this, but it fits here as well. Although there are some economists who disagree and there was a fairly influential paper on this that changed some minds, I think that broadly most economists agree that manufacturing jobs declined in the U.S largely as a result of technology and not as a result of China or other foreign competition. This may have changed more recently due to China ‘moving up the value added chain’ to high skilled manufacturing, but for a long time, China provided lower skilled manufacturing and assembly that, were it done in the United States, would have employed very few people and likely at minimum wage. This notion that manufacturing jobs are all high paying is a fiction.
2.In fact, it is simply not true that manufacturing has left the U.S. If you google ‘American made products online retail stores’ you’ll find at least a dozen sites with everyday used products including at least one that sells 150,000 products. What does tend to be the case is that these products are niche varieties, higher end varieties of everyday products. Practically every product is still made in the United States.
3.’Families and communities’ does have a meaning. It refers to the hollowing out of small and single industry towns and the deaths in those towns due to fentanyl and general despair. Will tariffs help save these people? I have no idea but I think Roger might have been correct that it might have helped 40 years ago. to show the contradictions on the right, it also contradicts with what J.D Vance said, which is that small towns declined due to laziness and not due to despair. In Europe, virtually all parties support ‘families and communities’ but in the United States, it’s associated only with left wing politicians like Bernie Sanders.
4.Free trade is sacrosanct here in Canada which fits (except ironically for interprovincial trade.). So, when then Conservative leader Erin O’Toole ran on a pro private sector worker/union platform in 2021 there was never any question that he’d continue to support free trade. So, tariffs are far from the only way to try to help small towns. You can google the MacLeans Magazine article “Erin O’Toole, socialist crusader, Federal Election 2021 for details on what Erin O’Toole proposed. As far as I’m concerned, until Republican politicians support unionization en masse, nobody should believe that they support ‘families and communities.’
5.Americans, especially the Republicans, are opposed to welfare, but make up for this by supporting welfare for (some) working people. To be sure they’ve declined a lot, but farm subsidies were popular for a long time, and even more so, a great deal of military spending is much more to do with jobs in Congressional districts than anything to do with meeting military needs. This form of welfare is far more expensive and less efficient than regular ‘welfare’ and tariffs fit right into this.
5.You are correct. If you haven’t already, you should read the book The Man Who Broke Capitalism: How Jack Welch gutted the heartland and crushed the soul or corporate America. It goes into both the Powell Memo that gave corporations powers at the expense of everybody else when largely enacted under President Reagan, and the Friedman Doctrine, that was accepted as legal doctrine by the Supreme Court around the same time Reagan was elected, that mandated that publicly traded corporations have a sole fiduciary responsibility to their shareholders in the form of maximizing profits, and this later became maximizing quarterly profits.
As long as the legal policies from the Powell Memo and the Friedman Doctrine remain in place, there is no question that just as nearly all the gains from free trade went to the wealthiest elites, that the gains from protectionism will also go nearly entirely to the wealthiest elites.
6.Yes as well. While European parties on the far right support welfare, they do so only for ‘old stock’ citizens of their country. I have no doubt that the perception anyway that people in small towns are mostly white and the perception that manufacturing workers are largely perceived as white males, that this is a major reason why we are now seeing Republicans embrace protectionism.
Thank Baby Jeebus for The Onion in these dark days. Still my fave headline, right after 9/11 – “Trade Center Bombers Unexpectedly Find Selves in Hell”.
Some interesting and articulate discussion of economics here by Adam and others. Thanks. (It feels a bit like the old days when guys would say that they read Playboy ‘strictly for the articles.’ :))
Something tells me the media isn’t going to helpfully redefine the word “recession” this time.
There was a guy at the VA making 56000 his job was to water 8 potted plants
sez who?
DOGE
Anyone credible?
No. He said DOGE, didn’t he? That’s how you know it’s a lie.
So far, many of the DOGE claims have turned out to be wild exaggerations, or claims filled with misinformation like misplaced decimal points. This is no exception:
(1) It wasn’t an employee. It was a contract with an outside service.
(2) It wasn’t $56,000 per year. It was $11,200 per year for five years. More accurately, it is for three years, with an option for two more.
(3) It wasn’t for simply watering, and the idea that it was 8 plants seems to be completely fictional. The contract was for creating and servicing all the landscaping for the interiors of the VA buildings. That may be eight plants, or it may be a thousand. The number of plants and the number of buildings are not specified in the deal. Even the DOGE post itself shows 15 TYPES of plants covered by the contract, which implies that there is a shitload of plants.
Thanks Uncle Scoopy, for doing the homework. I just start from the approximation that anything DOUCHE says is bullshit, with the specifics being less important. (Unless a real source corroborates.)
You can prove anything when you’re just making it up.
Just gonna leave this here…
Suuuuuure
Things sure are looking up eh? True genius at work from his golf course as of now. What’s the newest spin from the cult today?