Monday, April 14, 2025

America Risks 'moron premium' After Trump's Tariffs Chaos

Once seen as the bedrock of the global financial system, America has transformed into an unreliable economic partner under Donald Trump's erratic White House administration. And that comes at a cost, as we saw earlier this week when investors dumped US debt over fears that the president's trade war would trigger a financial crisis. This shows that the "premium on US treasuries remains high", says Garvey, referring to the extra interest investors demand in return for taking the risk to lend over time.

Posted by censored at 07:31 PM | 8 COMMENTS | permalink

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Trump brings the UK's "Moron Premium" to the US Economy:

www.theatlantic.com/economy/arch ... [image or embed]

" orlandovonvegas.bsky.social (@orlandovonvegas.bsky.social) April 12, 2025 at 9:15 AM

Comments

"The US will be seen as an unreliable partner, leading to countries trying to reduce trade ties with the US and increase trade ties with each other. Even on the geopolitical front, Europe will see the US as an unreliable ally, leading to increased focus on self-reliance."

He recommends investors put their money into Europe and Asia instead, indicating that the US will have to pay more interest to attract global investors. This is an expensive proposition given its $36 trillion national debt pile."

#1 | Posted by censored at 2025-04-12 12:36 PM

62% of CEOs now predict a trumpcession.

finance.yahoo.com

#2 | Posted by reinheitsgebot at 2025-04-14 07:56 PM

@#2 ... 62% of CEOs now predict a trumpcession. ...

Yeah I saw that.

I have raised my prediction to an even 50-50 odds, from my earlier 40-60..


Why not higher?

I am hoping that people like Sec Bessent will talk sense to Pres Trump, and Pres Trump will eventually dump the absurd policies of Mr Navarro regarding tariffs.


Peter Navarro
en.wikipedia.org

... Navarro's views on trade are significantly outside the mainstream of economic thought, and are widely considered fringe by other economists.[a] A strong proponent of reducing U.S. trade deficits, Navarro is well known for his hardline views on China, describing the country as an existential threat to the United States. ...


#3 | Posted by LampLighter at 2025-04-14 08:16 PM

"Winning" has a new definition.

#4 | Posted by Angrydad at 2025-04-14 08:29 PM

With (1) the removal of many internal watchdogs at governmental agencies, and (2) last week's demonstration that the Trump White House is willing and able to manipulate the US capital markets, the nascent premium for US Treasury securities will probably get wider. The absolute trust that investors worldwide have placed in US markets has been shaken, so those investors will demand a premium because of the additional risk from the grift which is now taking over in Washington. Of course, this additional premium will only make it more expensive for the US Government to borrow, but that burden falls more and more to the lower economic classes in this country.

As I've written before, until 2016 political risk was not a significant factor in US securities markets. We are now starting to see the cost of that risk, and it ain't negligible...

#5 | Posted by catdog at 2025-04-15 08:15 AM

"The absolute trust that investors worldwide have placed in US markets has been shaken"

Trump is doing that to crypto as well. He axed the crypto regulators, so now crypto is even sketchier than before. There's about two to three trillion dollars in crypto market cap.

Seems like the only value Trump can't destroy is gold.

Actually what's happening to the economy is the best explanation of why gold has any value at all.

A madman can't devalue it.

That's actually economic genius.

#6 | Posted by snoofy at 2025-04-15 08:49 AM

M morons
A are
G governing
A America

#7 | Posted by SomebodyElse at 2025-04-15 11:33 AM

#7 They're not morons. They know exactly what they are doing.

They are manipulating the markets for their rich insider buddies.

The pattern is clear.

1. Short the market.
2. Announce tariffs.
3. Market crashes.
4. Cover the shorts and buy.
5. Pause the tariffs.
6. Repeat.

#8 | Posted by Nixon at 2025-04-15 02:31 PM

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