Thank you, Canada

[ex-khobar Andy]

https://deanblundell.substack.com/p/car ... adas-quiet

The long and short of this story is that Canada, under their new PM Mark Carney, is the one playing chess while Trump is playing (and losing at) Go Fish. Carney, having on his CV stints as the boss at the Bank of Canada and the Bank of England, is a PhD (Oxford) economist. While Trump was raging and faffing about (no news there) Carney was talking to EU, Japanese and UK leaders and quietly buying more US debt aka Treasury bonds. Canada now has about $350 billion of US debt and the world outside US has about $8,500 billion of Treasury bonds.

And the threat to the US is that if Trump steps too far over the mark with his threatened tariffs, Canada will start to unload these bonds as will others. They all talked about it this week. And they wouldn't do it all at once thereby crashing the price and not getting what they were owed for what they had loaned in the first place. No, they'd do it in dribs and drabs. (I am not entirely sure what the technical difference is between a drib and a drab. But I never went to Oxford; or maybe I was sick the day we did those.). And as they hit the market, the bond price goes down (greater supply = price decrease) and interest rates go up. Canada started this ball rolling and the EU and Japan signed on.

Borrowing becomes more expensive and US debt increases and the value of the dollar goes down. The US economy swirls further and further down the toilet. And some of Trump's advisers who actually understand this stuff beyond a Grade 6 level tell their boss he'd better think again. (That sentence implies that there was an element of thought in the first place. Sorry about that.)

Earlier this week Carney called Trump. And explained basic economic theory to Trump. And Trump blinked. Thank you Canada.

[Big RR]

What happened to all those world leaders kissing his ass?

[BoSoxGal]

This interview of Nobel laureate economist Paul Krugman by Ari Melber last night on MSNBC left me feeling very uneasy: https://www.msnbc.com/the-beat-with-ari ... 7086277796

[Burning Petard]

Big RR, I think most of those leaders recognized Trump's short-term memory problems. He seems to only remember the most resent person to do it. So it doesn't pay to get in line. Conventional wisdom has the stock market and the bond market on a teeter-totter. If one goes up, the other goes down. Those talking head experts that explain wall street to us peasants have been scratching their heads lately as both go down.

snailgate.

[Big RR]

BP--I doubt they also wanted to kiss his ass. They weren't going to be stupid about it, like him, but they weren't going to cave either. Luckily, someone who knew something yanked Trump's leash this time.

As for the bond market collapse, as I understand it, the problem is that it is creating a perception of economic problems in the US, perhaps even fearing a default with an ass like Trump saying we won't pay foreigners a penny. So current bonds are worth less and future bods may have to have higher interest rates to compensate for the perceived risk. Of course it gives Trump et al. another excuse why we won't get our Musk $5000 check, as if they were really going to pay anything, but those holding Trump's leash will still do well.

[Burning Petard]

What happened to all those world leaders kissing his ass? Looks like after a few more days to think about it, the rest of the world says If America wants to renege (sorry, the Trump pc is 're-negotiate) on every long-standing trade agreement, good bye, we will see you around somewhere, sometime, maybe. Meanwhile, the big Putin fan meets with the coolest dictator to figure out how to deport US citizens, At least when the CIA was rendering prisoners all over the world they tried to hide it.

https://www.yahoo.com/news/white-house- ... 25985.html

Also now some are starting to do the numbers on the big drop in tourism by visitors to America; even Jim Beam and boutique wineries here in USofA are seeing sales to Canada and Europe cancelled.

snailgate