Reflections on Sunday April 13th 2025 about the Trump chaos

 April 13th 2025

I have not posted for the last few days, I have been under the weather.  It is not COVID, I tested for that.

The biggest thing is that Trump is all over the place and has caved again. Various electronics will no longer be subject to tariffs. Even before anyone can adjust to a new tariff things change, yet again.

At this point, I think everyone will assume that the US will drop any tariffs when American businesses squawk loud enough.  Trump has caused a lot of damage to the economy and further inconsistency only means business and consumers will think very hard before spending money.

There is an irrational optimism among American investors.  They are still not noting how bad the damage to the American economy is already.

Trump's actions have caused nations around the world to look for ways not to deal with the US.  Sales of American products are down all over the world.  Tourism to the US is down as well.  American treasury bonds are losing popularity.  These things will continue on till Trump is no longer a president.

Trump is very well known as a person who never stands by his word and will even disavow agreements the US has signed.  It would be a foolish government to believe an equitable agreement is possible.

The global boycott of the US is not being led by government or industry; it is being led by the people.  No one is telling people they should not buy American.  Governments are going to be able to get people to buy American products.

Even as trade with the US falls, the trade deficit will get much larger.  How will Trump react when he finds out that his trade deficit with Canada has massively increased?  I assume anger followed by a desire to punish Canada for not buying American.  

This is enough for today.  I have other things I need to work on.

Another day and it is not getting better - April 8th, 2025

 April 8^th, 2025

The decline continues today after a rally at the start of the day.  In my opinion this is people buying in because they saw a chance to make a buck.  Having multiple days of large declines is not normal for American markets but the situation is also not normal.  Having an American president accidently starting a recession is something we can not plan for or understand the impacts of it.

With the 104% tariffs being levied on American businesses that buy products from China is going to really mess the American retail sector.  I am not sure how a company like Walmart, or Michaels, or Apple, or any one of a number of companies, will manage to deal with this huge cost increase for them.  Changing to different supplies will take a long time.  There is little choice but to sell the items from China. 

Right now we see the US stock markets reacting.  The people that drive the stock market are by nature centre right pro-business.  They are looking for reasons to be opotmistic about the markets.   This happened yesterday when the markets flew up after a rumour of a pause in the tariffs was going to be announced.  The market makers tend to lean into optimism and that makes what has happened in the markets look worse.  Bu the markets are not the economy.

It takes time for a really stupid policy decision to work its way through to the economy.   It is all about stock on hand.   Retails sales for the last few weeks are likely to be up because the public is forward loading their purchasing because of the fear of the tariffs.  We should then see a lag of a month to three months before retailers need to bring in new stock.  It is in early July the scope and scale of the decline will become public.  Then the Q2 earnings calls from companies will be coming in and there will be some bad ones, really bad ones.

In May and June we will start to hear about layoffs and this will increase each and every week for the rest of the year.  I am not sure how 2026 will look, and I doubt anyone can with any accuracy, but I am leaning towards apocalyptic. 

At what point will Dumpster Don accept he fucked up more than any other American president?  How will he back down?  How will he react when after he backs down things do not get better?

The negotiations Trump speaks of in relation to the tariffs are unlikely to lead anywhere much.  It does mean that he is signalling the tariffs are not intended to last at all, and this flys in the face of using the tariffs to increase manufacturing in the United States.  You can not have both.

How does Dumpster Don negotiate in any case?  The tariff rates that did exist are much smaller than what the Americans have imposed.  In his first term he negotiated NAFTA to create CUSMA.  His negotiation skills did little to make an serious changes to NAFTA in the process.  How does a country like South Korea negotiate with the US?

South Korea and the US have a free trade agreement in place and not most of Suth of Korea’s economy is open to American products.  This was renegoatied by Trump in 2018.  

That did the tough negotiator get in 2018?  Not a lot.  A few more cars.  For a deal Trump said  "It's a horrible deal, and we are going to renegotiate that deal or terminate it.", the results do not reflect the fantasy words as spoken by him.

What is there that South Korea could negotiate away to get Trump to drop his outrageous tariff against a free trade partner?  It is not like Trump even demand South Korea pay for the costs of the American military there because they already do so.

Anyone negotiating with the US is going to want to see this moronic and illegal tariffs to be removed.  They are not going to accept them continuing.  To get deals the US will have to give up their tariffs they announced on April 2^nd, recession day.

Trump has very little to offer.  To get deals he is going to have to remove the tariffs in return for minor concessions.

All that said, I think Trump has no interest in dropping the tariffs because he wants the money to allow for the Oligarchs’ tax break.  I do believe this is all about getting new revenues for the American government more than anything else. 

Something like $10,000,000,000,000 of American wealth is gone.  It is likely that over the next two weeks that this will rise to $20,000,000,000,000 to $50,000,000,000,000.  At this scale of a loss, it will take the American economy 20 to 30 years to make up this lost wealth through growth in the economy. 

•        The world is headed towards a really bad recession

•        Americans have a very large new tax to pay

•        Americans are losing huge amounts of wealth

•        Trump is unlikely to be able to negotiate any sort of a meaningful agreement with any country

•        Recovery will take up to a decade

The Day Before - Sunday April 6th 2025 Entry. What will happen to the markets tomorrow? More fall out from Recession Day

The Era Trump is taking the US to

April 6th 2025 

Tomorrow morning we will see what the markets will do. I have no way to know what will happen but here are some scenarios:

1. Trump removes all the tariffs and amidts he was wrong. I think this is highly unlikely but would be best thing Donald Trump could do to stop the economic melt down in the United States. 
2. The market holds for Monday because of value investors buying into the market. This might be possible but I do not think it will happen because there are not enough people willing to do this. The scale of the losses are higher than could be counteracted by some contrarian investors. You would need to mobilize multi trillions of dollars to have this happen. 
3. The sell-off continues and we see another 10% to 15% drop in the markets on Monday. I think this is most likely. Where will the sell-off end? That is a very good question and no one knows the answer to that. Imagine the Big Three and Walmart going bankrupt, what will that do to the American economy and the markets? 
4. The sell off is so bad that trading is halted on American exchanges. A halt would spook the shit out of the markets and when they reopened they would crash harder. I think this is the second most likely outcome. 
5. The Republicans grow a backbone and stop Trump - I think this is highly unlikely. Even if Trump were to take all the tariffs off and apologize for his extreme blunder things will not return back to normal. It will just not get as bad. 

I do not see a path in which the United States does not avoid a bad recession. I do not see how they avoid 10% to 15% unemployment. I do not see how they avoid high inflation for the next year or more. 

The crazy part is that the US is putting tariffs on things the US can not produce. Bananas, chocolate, and coffee are all being tariffed. It means the prices for all of these things will rise 10% or more in the next MONTH, not year or decade, MONTH. 

 The only saving grace for the Americans is that new tariffs on Canada and Mexico were not introduced on Recession Day. Still, the impact on the American car industry is catastrophic and will likely lead to a 30% to 50% drop in car sales in the US in the next year.

Enough for today.

Trying to Enjoy My Weekend - April 5th 2025

April 5th I am wrting these posts mainly for me to look back on ho wthings went day by day. I did not do this in 1989-1992, when I should have. It woudl have been good to do this with the pandemic as well as the Russian invasion. I am going to do it this time documenting how this Trump sit plays out over time. I need to not be thinking about this stuff everyday and all the time, but it is hard not to. When I go out I see the world as it is right now, which is not yet a dramatic change from where it has been for the last four years but I know dramtic change is coming. My own life will be in a relatively good place. If I was just thinking about myself this chaos does not impact me directly. But I do not think like that. I am always think about the bigger picture and how others will suffer. I can see so much suffereing coming. Needless suffering, and that is what bothers me more than anything is that all the coming economic depression was entirely the creation of one human being. I am not going to wrote anything more for today. Tomorrow there will be more. Look after yourselves, be safe.

Trump Stock Market Crash - April 4th 2025

 

View of the BC Legislature from in front
of my office building

April 4th 2025

The American markets have dropped about 10% in the last two days.  That last time there was a drop like this was during the pandemic, and that was unexpected and surprising and no one knew how it would play out.

This is market crash is the first time it was caused by a single dumbass mistake.   This crash was 100% unnecessary and only exists because Donald Trump decided to engineer it. Everyone who understands economics pointed out this would happen.

The US imposed massive tariffs on all the world except for a few exceptions.  Israel and Australia did not have tariffs on American products, still they were hit with tariffs.

Canada and Mexico got no new ones, but the cars and car parts tariff along with the steel and aluminum tariff were quite specifically aimed towards Canada and Mexico.  

Remember store shelves during COVID?

Russia was not tariffed because Donald Trump is under the control of Putin and is going to have a lot more trade with Russia as soon as Trump can get away with it.  At the same time Ukraine was remtariffed!?!?!?!?!?!!!!???

Things are going to get really bad.  Everything the economy goes downhill the one single constant is that everyone underestimates how bad it will get.  Everyone in the media talks about how it will be bad but not that bad.  The American March jobs report come in positive but that is a really bad thing to happen right now.

This market crash and economic depression is completely and totally created through incompetence.  This makes it hard to understand how bad it will get bad but I am certain it is going to be a lot worse than anyone expects.

This is no longer the 1990s when the US was globally dominant in a way that was unbelievable.  China was not a factor yet, the Soviet Union and Eastern Bloc were gone, Japan was no longer the economic super power, and so on and so on.  The Us is big but no longer the only axis the world's economy needs to operate on.

There are two countries that are still very tied to the American economy, Canada and Mexico.  I am not sure what is going on in Mexico but here in Canada there is a strong appetite to end the relationship with the US. OK, not end, but accept the US walked away from Canada.   Canada is not going to beg for the US to come back.  Instead Canadian PM Carney is talking about Canada taking the mantle of the US as leader of the free world.   

Let me say that again.  Mark Carney has stated Canada is ready and willing to step to be the leader of the free world.   Wow!  Canada has a very long history of acting like it is a small country like the Netherlands or Denmark when it comes to global affairs, and not act like it is one of the biggest economies on earth and part of the G7.   Will Canada now be a major global player?  

How far will the markets fall?   That is a very good question and I have no clear sense of where it will all end.  I suspect retailers and manufactures that rely on China may go bankrupt in the next six months and their stocks will collapse.  American Big Three auto makers could very well go bankrupt given that this will be worse than 2008/09.  Do not forget that Canada and Ontario did a lot to bail out GM, much more than the Canadian share of the industry would warrant.  The Big Three stocks could go way down.

To reiterate, this will be worse than 2008/09 and COVID combined.  50% to 70% fall in markets is not unrealistic but no one wants to think about that happening so they ignore the possibility of it.  

Time to stop writing because my blood is boiling and I need to calm down.

Welcome to the Recession, will it be a Depression? Entry for April 3rd 2025

 April 3rd 2025

This was public sentiment in Canada in mid March

Where does one even start when the most powerful man on earth decides that starting a bad recession is the right thing to do?

It is not just one thing but a multitude of things Trump is doing that causing a recession:

• The dramatic rise in taxes on Americans will drop the growth in their economy
• Ongoing uncertainty on what the American Administration will do, about anything
• Incompetence in the senior staff of the administration
• A fall is US exports
• A dramatic drop in tourism 
• More inflation - the huge tariffs on China will raise the prices of everyday goods in places like WalMart buy 30% to 50%
• Layoffs - they are already happening today and will increase a lot among car manufacturers.  This will lead to rising unemployment
• Loss of arms sales
• Falling oil prices
• Flight of capital - investors are moving their money out of the US because they are not sure what will happen next
• The flight of highly educated people to other countries
• Global shift away from dealing with the US
• Lower consumer spending
• Higher taxes on the bottom 95% of the population

Each of the items above could put a weak economy into a recession.  Two or three of them would put an okay economy.  With all of these things happening at once, the US economy will be determined to be in a recession now in the fall when the data is in.  

In 2008/09, the US caused a global recession because of its badly managed housing mortgage system. This recession is going to be many times worse.  

With a recession started, we will see:

• Rising unemployment
• A fall in capital for projects
• Mortgage foreclosures
• Business bankruptcies
• Personal bankruptcies
• A fall in government revenues
• Falling exports
• Rising interest rates due to inflation
• Falling housing prices making people feel much poorer
• Falling stock prices making people feel poorer and causing problems with retirement

These factors will all make the recession a much worse one.  So how bad?

This is a very hard thing to estimate because we have never seen the President of the United States deliberately cause an economic meltdown. Here aser my estimates through to the end of 2025:

•  US unemployment 11% to 15% this is based on the early 80s recession, 2008/09 and COVID.  
• Fall in the US GDP between 5% and 10%

OK, this is officially very depressing for me, time to stop writing for today. There are more things that will happen with a bad US recession.

I only added this pic of Bernie because
dogs make things better

April 1st Entry, the day before Trump Unleashes Chaos

 
April 1^st 2025

I can't think of a written prank for today.  The world is much too fucked up for me to do this.

At the moment, I am hoping Trump will cave in and issue tariffs of one to five percent tomorrow.  I am amazed at how hope rises within me even when there is no reason to have any hop, at all. 

I am feeling hopeful from my gut, but my brain knows things are bad.  This ongoing cognitive dissonance will kill my soul over time. I am not sure how others are doing with this though I suspect a lot of people are just going about their day to day lives trying not to think of the coming depression.

Trump is an evil man and clearly wants to introduce the tariffs to cause maximum pain for Americans and destroy the global system of rules related to commerce.  I know some of you are thinking “Maybe Trump thinks his approach is a good idea.”  No he does not.  Every one that knows anything about business has pointed out to Trump that this is a really bad idea.  There are no voices in his ear that have any argument for the tariffs.  Trump is doing this knowing he is going to cause the worst economic disaster in the US since the early 1930s. 

So why is he doing it?  First, he hates the world.  Second, he hates democracy.  Third, he has an abiding and total hatred of American people.  Four, he wants to use it to annex Canada. Fifth, Trump is pushing the Republicans to back policies that are anti-Reagan and thereby show their loyalty to Trump.

Trump has no good reasons for the tariffs.  He is happily bringing about global chaos.

I have to remember these things because rationality keeps rearing its head.  No rational actor would do this.

I have completely ignored all the DOGE stuff because I do not know what the outcome will be of that.  They are not going to be able to fire close to enough people to have any significant impact on the budget.  The only part of the budget the US could actually save some money would be the military.  All I will say about DOGE is that it is being run with the height of incompetence.  DOGE is costing more money than the US needs to spend to reduce the size of government.

Since I am at DOGE lets go to Tesla.  The stock price of Tesla was about $275 today.  This is down from the peak but much higher than what the company is actually worth.  If one applies the same economic logic for investing in a manufacturer you would want to see a price earnings ratio of around 10.  Right now it is 130.  Tesla stock is wildly overvalued. 

What is a realistic stock price?  About $21, this is a 92% drop in value of the stock.  I would argue that given the way Tesla’s stock of cars is becoming the oldest one on the market.  Their one new vehicle, the Cybertruck, has been complete failure. A more realistic stock price is ,ore like $10 a share.  This is a 96.4% drop in the stock price. This is assuming the company does not go bankrupt and that is now a real possibility.

Today is the day before the storm of the tariffs.  What I will be looking for:

•        Tariffs on Canada and Mexico – will they be much lower than 25%?

•        Scale of tariffs on the democracies and the tariff rate.  20% has been out there as a number

•        Scale of tariffs on the dictatorships – will he favour the autocrats?

•        How will he justify the tariffs?  In the case of Canada the trade between the two countries is actually skewed in favour of the Americans.  The only real trade issue is the continuation of supply management in Canada for some areas of agriculture.

•        Will there be Republican leadersjip in the US that will stand up and oppose these tariffs?

I think this is enough for today.