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Trump’s Market Whiplash Continues
Yesterday's piece had warned about the curious drop in Treasurys and rise of interest rates. It was a dire sign that the global economy and markets far beyond Wall Street were going bad.
The Trump administration recognized the danger and, just fifteen minutes after I had published my post, pulled back (archived):
The economic turmoil, particularly a rapid rise in government bond yields, caused Mr. Trump to blink on Wednesday afternoon and pause his “reciprocal” tariffs for most countries for the next 90 days, according to four people with direct knowledge of the president’s decision.
Asked to explain the decision, Mr. Trump told reporters: “Well, I thought that people were jumping a little bit out of line. They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid.”
Behind the scenes, senior members of Mr. Trump’s team had feared a financial panic that could spiral out of control and potentially devastate the economy. Treasury Secretary Scott Bessent and others on the president’s team, including Vice President JD Vance, had been pushing for a more structured approach to the trade conflict that would focus on isolating China as the worst actor while still sending a broader message that Mr. Trump was serious.
This does not mean that the trouble has ended.
Who is going to invest, into what, while any day, at any moment, the most basic economic conditions may change in completely unpredictable directions:
Asked on Wednesday how he would decide on any further exemptions, Mr. Trump said: “Instinctively, more than anything else. I mean, you almost can’t take a pencil to paper. It’s really more of an instinct, I think, than anything else.”
By admitting that Trump acknowledges that he is the real problem.
How can I decide to invest in a new car when by delivery date the tariffs and interests involved might have changed in unforeseeable directions? On what basis can I trust Trump's instincts? I can't and won't. The same will hold for much bigger investment decisions.
For once the Washington Post editorial is getting it right (archived):
The bond markets forced Trump’s hand. By moving their money out of dollars and selling U.S. Treasury bonds, investors told Trump what his closest advisers would not about the perils of starting trade wars with all other countries at once. Trillions in value were wiped out in equity markets, and the financial system blinked red with indicators of contagion.
Finally, bond yields began to forecast calamity — especially the alarming sell-off of 10-year Treasurys. In times of panic, these bonds usually attract investors. Their failure to do so this time reflected declining confidence that the U.S. government would repay its debts.
…
After Trump finally announced the tariff pause, the S&P 500 closed up 9.5 percent and the tech-heavy Nasdaq gained 12 percent. The news is indeed worth rejoicing. But keep in mind that the 90-day pause will last only until July 8, and in the meantime the trade war with China might continue to escalate. In other words, investors, business and consumers will still be living with uncertainty. For the long term, Trump and his team are well advised to come up with a less volatile economic strategy.
Until Trump settles on a predictable course the global carnage will continue.
@ Posted by: All Under Heaven | Apr 11 2025 6:19 utc | 206
Denmark and Sweden have greater percentages of their economy’s dedicated to state-owned enterprises than China with its “socialism with Chinese characteristics,” (i.e., a market economy with private property in which the bourgeoisie are allowed to enrich themselves and exploit the Chinese working class while politically subordinated to the party dictatorship). They also have substantially greater welfare states. Don’t get started on unequal exchange between core and periphery if you’re not gonna bring any empirical facts about it.
Posted by: fnord | Apr 11 2025 17:03 utc | 248
I thought you were a genuine Marxist since you were smart enough to push back against Trump’s assault on DEI and immigrants, unlike some other self-proclaimed “Marxists” on MoA, but it turns out that you’re a just a social democrat, a garden-variety liberal in other words. Only a liberal would hold up Denmark and Sweden as models of socialism. I’m disappointed in myself. That is an error in judgment that I won’t make so easily in the future.
The much touted Nordic model is welfare capitalism. It’s not socialism. Let me repeat that: Welfare capitalism is not socialism!
You wanted empirical evidence? Here’s empirical evidence from a Danish institution-affiliated author talking about Scandinavian imperialism.
Scandinavian Imperialism, Torkil Lauesen, Journal of Labor and Society (2024) 1–45
https://scispace.com/pdf/scandinavian-imperialism-41likbdlnn.pdf
Sweden’s Position in Globalized Capitalism
Swedish capitalism is not an innocent bystander outside of globalized capitalism—it is an active participant. Swedish investments abroad are larger than foreign investments in Sweden. Huge parts of Swedish industrial production have been outsourced. The Swedish company Electrolux, which is one of the world’s leading producers of household appliances and tools, had by 2010 outsourced roughly 70% of its production to low-wage countries. The former important Swedish car industry is an example of how difficult it is to produce cars at Swedish wage levels and make a profit. Saab closed its car production in 2011. Volvo’s passenger cars was sold to the Chinese company Geely. Volvo truck and busses division is still Swedish owned, but mainly produced in low wage countries.
In 2020 the 3833 Swedish transnational companies employed 2.1 million people, 1.47 million abroad and the other 0,68 million at home in Sweden. Outside of Sweden, most employees were located in the USA (214 405), Germany (103 416) and China (90 983) (Statistiska Centralbyrån, 2022: p. 5). There are however, differences in the types of jobs carried out in the Global North and South. In the North, most jobs were in management, branding, sales, and services, while in the South most jobs are in production. Swedish Electrolux products are sold in the EU and the USA, and German Siemens and US Apple products are sold in Sweden; what is important is, that both Electrolux, Siemens, and Apple products are all physically in low-wage countries (Statistiska Centralbyrån, 2022: p. 10).
According to “Statistics Sweden”, approximately 576 000 people living in low wage countries worked for Swedish companies through their subsidiaries in 2020. Of these 244 000 were living in Asia, with 91 000 in China and 50 000 in India. South and Central America had 117 000 workers, with 26 000 in Brazil and 30 000 in Mexico. Africa had 25 000, with 13 000 in South Africa. Eastern Europe had 140 000, with 62 000 in Poland (Statistiska Centralbyrån, 2022: pp. 19–20).
Parallel with outsourcing, the number of industrial workers in Sweden decreased from 370 000 in 1996 to 168 000 in 2020 (Statistiska Centralbyrån, 2022: p. 10). As a result of outsourcing, in China and India alone, the number of workers directly employed by Swedish transnational companies are nearly the same as the number of industrial workers employed by these companies in Sweden.
To the number of workers in low-wage countries working direct for Swedish transnational companies must be added the number of workers in independent local companies in the South to which Swedish companies have outsourced their production. For example, textile companies like Hennes and Mauritz, mq and Dressman, have thousands of textile workers around the world who manufacture their clothes. The same goes for the furniture company ikea. Hundreds of thousands of workers labor for these “fabless” companies.
Here’s what the author thinks of the role the Global South plays in resisting imperialism.
The US/nato proxy war in Ukraine against Russia and the “cold war” against China is an attempt to uphold US supremacy. However, in this process, US policy shatters the world market, on which it has built its power and wealth since the end of the Second World War.
The US, the EU, Japan, New Zealand and Australia are for the time being united in the effort to uphold US hegemony. They constitute one aspect of a new principal contradiction. The other aspect is headed by China in its ambition to build “socialism with Chinese characteristics” and a multipolar world-system. In this effort, China is allied with a conglomerate of states united in the ambition to change the North (core)–South (periphery) structure, which has dominated the world-system for the last two centuries. The new confrontation between “the West and the rest” is indeed an anti-imperialist struggle.
China, India, Russia, Iran, Brazil and South Africa are worlds apart in their political projects, but they all reject US hegemony. So are many other African and South American states. A multipolar world system, and the existence of a major technologically developed state—China—will provide space for social movements and states in the Global South, to move in the direction of socialism.
You can also read up on how the Scandinavian countries are beneficiaries of pre-21st century imperialism despite the lack of overseas colonies over here: https://aeon.co/ideas/the-hitchhiking-scandinavian-way-to-the-imperial-riches
And need I remind you of the present relationship between Denmark and Greenland, the focal point of infighting between the imperialist/Western bloc?
Turns out it doesn’t take much for “Marxists” to expose themselves as liberals.
Posted by: All Under Heaven | Apr 11 2025 21:40 utc | 270
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