The whim of a madman!
I don’t care which side of the aisle you vote on – you must understand that making drastic changes to foreign policy on a daily basis is NOT A GOOD IDEA! Students of history might remember that, historically, this is how wars start:
Kaiser Wilhelm II threw two international crises over Morocco (1905, 1911) because France didn’t “consult” Germany before making deals there. Germany sent warships, demanded conferences, and used warlike rhetoric as diplomatic ploy. The result? France and Britain formed military alliance, Germany isolated with a heightened sense of frustration and readiness for war. Five years later: World War I!
The Fatal Flaw: Historian Heather Jones notes Germany “dangerously played up the threat of war” thinking it would force respect, but instead created “failure, frustration, and readiness for war” that “spread beyond political elite to much of the press“. Sound familiar?
Hoover (and the Hoover Institute still advises Trump to this day) passed 20,000 tariffs on imported goods in 1930 to “protect American jobs” – against the advice of 1,000 leading Economists. That resulted in 25 countries retaliating with their own tariffs, collapsing US Exports by 61%, leading to a 66% reduction in World Trade, driving Unemployment in the US to 25%, which led to the Great Depression and the rise of Fascism that led to World War II – which many people agree was horrible.
This is the pattern Trump is repeating RIGHT NOW!
-
- Erratic, emotional decisions (canceling trade talks over a TV ad)
- No consultation with allies (Carney’s office blindsided)
- Escalating rhetoric for domestic consumption (calling Reagan ad “FAKE,” “egregious behavior“)
- Pushing allies toward rivals (Canada now closer to China — Carney meeting Xi next week)
- Creating “no exit” traps (Canada can’t un-run the ad, Trump can’t back down without looking weak)
When Kaiser Wilhelm canceled diplomatic talks over perceived slights he also used inflammatory rhetoric to satisfy domestic audiences and he isolated his country through unpredictable tantrums. Within a decade, 20 million people were dead.
Trump just terminated trade talks with America’s second-largest trading partner over a TV commercial while Canadian PM Carney prepares to meet China’s Xi next week. History doesn’t repeat, but it sure as hell rhymes!
Here’s the add that Trump used as an excuse to cut trade ties with our strongest ally:
Here’s the actual, full speech the ad is edited from. Trump claims the editing is “evil” and “deceptive” and “misleading” and indicates that this is some sort of crime but is sure seems like a fair summation of the speech to me…
“When someone says, ‘Let’s impose tariffs on foreign imports,’ it looks like they’re doing the patriotic thing by protecting American products and jobs. And sometimes for a short while it works, but only for a short time. But over the long run, such trade barriers hurt every American worker and consumer. High tariffs inevitably lead to retaliation by foreign countries and the triggering of fierce trade wars. Then the worst happens. Markets shrink and collapse. Businesses and industries shut down and millions of people lose their jobs.” – Ronald Reagan
The Trump Administration is saying “The ad misrepresents the Presidential Radio Address… used selective audio” for omitting the opening, where Reagan imposed tariffs on Japan over semiconductors but, in this very address, Reagan explicitly said:
“I am loath to take such steps… We were just trying to deal with a particular problem, not begin a trade war… I’ll be giving Prime Minister Nakasone this message: We want very much to lift these trade restrictions as soon as evidence permits.”
Far from misrepresenting, the theme in Reagan’s speech was:
-
- Free trade = prosperity (“the way to prosperity for all nations is rejecting protectionist legislation”)
- Smoot-Hawley = catastrophe (“greatly deepened the depression and prevented economic recovery”)
- Tariffs look patriotic but destroy jobs (exact quote the ad uses)
- Trade wars shrink markets (“Markets shrink and collapse; businesses and industries shut down; millions lose jobs”)
The ad’s thesis: Reagan believed tariffs hurt Americans, trigger trade wars, and destroy jobs. That’s not “selective editing,” that’s the ENTIRE POINT of Reagan’s speech. Reagan was trying to EDUCATE his fellow Americans (a phrase Trump never uses) as to why he felt he HAD to do something, even for a short time, that VIOLATED his beliefs – that’s not really the vibe we get from our current President, is it?
Trump posted on Truth Social:
“Canada has fraudulently used an advertisement, which is FAKE, featuring Ronald Reagan speaking negatively about Tariffs… They only did this to interfere with the decision of the U.S. Supreme Court”
-
-
-
- It’s not fake — every word is Reagan’s actual speech
- It’s not fraudulent — editing for length ≠ fraud (every political ad does this)
- Trump also claimed ad cost “$75,000” when it’s actually a $75 million campaign but, to be fair, 1,000x factual misstatements are pretty much the norm for him and his people.
-
-
“There are sound historical reasons for [free trade]. For those of us who lived through the Great Depression, the memory of the suffering it caused is deep and searing. And today many economic analysts and historians argue that high tariff legislation passed back in that period called the Smoot-Hawley tariff greatly deepened the depression and prevented economic recovery.
High tariffs inevitably lead to retaliation by foreign countries and the triggering of fierce trade wars. The result is more and more tariffs, higher and higher trade barriers, and less and less competition. So, soon, because of the prices made artificially high by tariffs that subsidize inefficiency and poor management, people stop buying. Then the worst happens: Markets shrink and collapse; businesses and industries shut down; and millions of people lose their jobs.” – Ronald Reagan (same speech)
Reagan is warning against EXACTLY what Trump is doing and what he’s doing (like ignoring Covid in 2020) cannot easily be undone by the next President – the damage the nation suffers will affect us for many years to come (like his Kennedy Health Care disaster).
Even worse for America, cancelling Trade Negotiations because he was contradicted is what a Dictator does (as is knocking down the White House to build a ball room – a thing for Kings – not Presidents!).
Well, it’s 8:30 and Trump’s new and APPROVED Bureau of Labor Statistics has released (despite the shutdown that has halted all other reports) the critical CPI Report and it shows – surprise, Surprise, SURPRISE! – LOWER inflation for September of 0.3% on the headline (down from 0.4%) and 0.2% at the core. I know we’ve all been noticing how cheap things have gotten, right?
BLS employees were furloughed on Oct 1st and a “select group” was called back just to release this report at the behest of the President, which was originally due on Oct 15th. As noted by CNBC, there are “a variety of doubts about the data” – I love the way we all have to tiptoe around our Dictator now – Canada already learned their lesson the hard way…
Gasoline weight in CPI: ~3.5% of total basket
Math check:
-
-
-
- 4.1% increase × 3.5% weight = 0.14% contribution to headline
- If gasoline was the “largest factor” and contributed 0.14%, how did everything else only add 0.16%?
-
-
Something’s not adding up — either food/shelter magically deflated (they didn’t), or the seasonal adjustments got very creative.
-
-
-
- Explanation offered: “Housing expenses moderated“
- Reality check: Shelter rose 0.4% in August, supposedly “moderated” in September — but rents are rising per private data (Zillow, Apartment List).
-
-
The BLS RARELY beats consensus on BOTH headline and core simultaneously and certainly the Core CPI doesn’t surprising fall 33% in a month – EVER. As it stands now, this is more of an indication of a Recession than slowing inflation but, since the numbers are obviously bullshit propaganda – what’s the difference?
The Futures are happy to swallow whatever the Government feeds them and we’re up about half a point with the Russell up 1.38% at 2,527 while the Nasdaq is at another record-high 25,470, S&P 6,815 and Dow 47,123 (Nikkei 49,590 as we wait for 50,000) – so let them have their fun – I think we’ll be pressing our hedges into the weekend – just in case this all falls apart on Trump’s next tweet…
Have a great weekend,
— Phil
