Ask Archer: Is Baghdad Bob working at the White House?
Ask Archer: Is Baghdad Bob working in the White House?
Archer replies: A week or so ago Treasury Secretary Bessent went on tv to crow about the decline in the price of gas as evidence that everything is just dandy. Of course you could buy an apple for 5 cents on Wall Street in 1930. Possibly Herbert Hoover viewed that as evidence that all was well, too. An apple a day and all that.
In fact, all is not well. The current administration seems determined to achieve a rare trifecta – crashing stocks, bonds, and the dollar simultaneously, to say nothing of the country’s reputation. So far, they’re hitting on all cylinders. The S&P has lost about 9% YTD and flirted with bear market territory earlier this month. Yields on the 10-year treasury have moved higher (and prices lower). And The Wall Street Journal Dollar Index has dropped from 109 at the start of the year to about 99 now.
The only thing that seems to be going up is tariffs. The net is wide – neighbors, allies, rivals, penguins (courtesy of the uninhabited Heard and McDonald Islands). It’s hard to build consensus in the country these days, but there is widespread agreement that this policy is a disaster and unlikely to achieve the advertised result, to wit “Liberation Day.”
It was one-time New York State governor Mario Cuomo whose indecision earned him the sobriquet “Hamlet on the Hudson.” He was said to wander the streets of Albany musing, “I used to be uncertain, but now I’m not so sure.” But Cuomo at least wasn’t erasing trillions of dollars of wealth with his capriciousness.
The last few weeks have seen one of the greatest swings in wealth in the history of mankind – first yo-yoing down trillions of dollars and then bouncing part way back up. Of particular concern to serious individuals has been the behavior of the market for U.S. government debt. In the week past, treasury yields posted their steepest rise since 2013.
The Telegraph, an English newspaper, has suggested the U.S. may be forced to pay what it calls a “moron premium,” such as the one that has afflicted Britain in the wake of Liz Truss’s disastrous two-month stay at 10 Downing Street. (Note that she was quickly dispatched when things went south, a sometime advantage of a parliamentary system.)
A Wall Street Journal editorial suggested that it’s the treasury market, not the currently spavine Congress, that may provide the much needed “checks and balances.” Commenting on a poor note auction, Jon Sindreu wrote that maybe, “U.S. government debt is doing badly because, well, investors don’t want to buy it.”
Oddly, there have been few attempts to challenge this one man wrecking ball in court. In a recent editorial, The Wall Street Journal provided a roadmap for doing just that, but so far the only taker appears to be a small stationery company in Florida (albeit one backed by a Libertarian group funded in part by the Kochs).
Their case is straightforward: Trump has usurped a power relegated by the Constitution to Congress on what amounts to a false pretense. They argue, reasonably, that the International Emergency Economic Powers Act does not gift the executive branch with the discretion to call virtually anything an emergency and then do whatever it wants.
Seems like a case that should not have to be made in a democracy, but there you have it. Others, including the Chamber of Commerce, are said to be noodling a similar legal challenge.
That the fate of the nation should rest with a stationer from Pensacola, Florida is perhaps fitting. After all, printers have stepped up before in our history. And while Emily Ley may be no Ben Franklin, she brings to mind Franklin’s oft-cited remark following the Constitutional Convention of 1787. Asked about the nature of the government that had been decided, Franklin replied, “A republic, Madam, if you can keep it.”
Woof!