Monday, July 21, 2025

The Final Tally on Trump's Big Beautiful Bill

Congress’ nonpartisan scorekeeper released its final prediction Monday for how President Donald Trump’s signature legislative achievement will grow the national debt and affect U.S. households.

Over the next decade, the megabill Trump signed on July 4 would increase the federal deficit by $3.4 trillion and cause 10 million people to lose health insurance, the Congressional Budget Office forecasts. While the newly enacted legislation would save more than $1 trillion by cutting federal spending on health care — with the majority coming from Medicaid — CBO predicts that the package’s costs will far outweigh its savings.

The bulk of the red ink from the package comes from the GOP’s permanent extension of Trump’s 2017 tax cuts. The analysis finds that the Senate Finance Committee, which has jurisdiction over tax policy, enacted policies that would decrease the incoming federal cash flow from taxes by a total of $4.5 trillion. That sum includes the cost of tax cuts Republicans added during Senate floor debate of the package.

Read the rest here.

Foreign investors buy nearly 100 billion in euro zone debt

LONDON, July 21 (Reuters) - Euro zone debt saw nearly 100 billion euros ($116 billion) of buying from outside the bloc in May, Citi said citing European Central Bank data, the latest sign that euro assets are benefitting from a shift away from U.S. markets.

The 97 billion euros of net inflows into euro zone debt with maturities longer than one year was the largest on a monthly basis since at least 2014, Citi said, pointing to portfolio flow data from the ECB.

Read the rest here.

Monday, July 14, 2025

The New York Mayoral Election

Ok, we have five guys running. One of the contenders Jim Walden, has no chance of winning, but could collect maybe five percentage points worth of votes. Mamdani has a lock on the progressive vote, but it's unclear what percentage that will translate to in the general election. Then you have Cuomo and Adams, both of whom have tarnished reputations but who are likely to split the bulk of the moderate Democratic vote. And tempting as it might be to overlook them, around 1 in 5 New Yorkers are actually registered Republicans. Their candidate, Curtis Sliwa, actually got ~27% of the vote in the 2021 election. 

Right now, I don't see Cuomo or Adams winning. The former is deeply unpopular and seen as just plain creepy. Adams is tainted by credible allegations of corruption. My guess is that it will come down to how many New Yorkers are prepared to roll the dice on an avowed socialist as mayor of a city that is also the beating heart of global capitalism. And we also need to consider the Jewish vote, which typically breaks heavily Democratic. I just can't see Mamdani carrying anywhere near a majority of the Jewish vote with his pro-Palestine record. In a normal election I'd say Curtis Sliwa's odds of being elected mayor of New York City were slightly worse than winning the Powerball. But in a five way race, if he holds that 27%, he's got an outside shot. In last year's election Donald Trump actually got 30% of the vote in New York City. If Sliwa gets the Trump voters, he goes from long shot to credible candidate. If he can pick up another 5-10% from disaffected Democrats and independents, we could... maybe... just possibly see one of the biggest election upsets in the city's history. 

Sunday, July 13, 2025

The MAGA Civil War Over a Conspiracy Theory

Last week President Trump’s Department of Justice delivered a blow to one of the foundational beliefs of the MAGA movement, one that helped carry him back to the White House.

In an unsigned memorandum, the department declared that there was no evidence that Jeffrey Epstein, the disgraced deceased convicted sexual predator, maintained a client list or that he blackmailed prominent individuals for various misdeeds. The memorandum also declared that Epstein committed suicide.

Most Americans saw this news (if they saw it at all) and barely raised an eyebrow. The Epstein story was part of the past; he died in 2019. But it detonated like a bomb in the MAGA universe. Pro-Trump influencers with vast audiences couldn’t believe what they were reading.

After all, they’d been told for years that there was an Epstein client list. Pam Bondi, Trump’s attorney general, told Fox News in February that the client list was “sitting on my desk right now to review.” (She later claimed that she was referring to the Epstein case file, not a specific client list.)

In October 2024, JD Vance, then a candidate for vice president, said, “Seriously, we need to release the Epstein list. That is an important thing.”

Before he was Trump’s director of the F.B.I., Kash Patel told Glenn Beck, a right-wing radio host, that the F.B.I. had Epstein’s “black book” and that it was “under direct control of the director of the F.B.I.” In 2023, Patel told Benny Johnson, a MAGA podcaster, that members of Congress should “put on your big-boy pants and let us know who the pedophiles are.”

In September 2024, Dan Bongino, now the deputy director of the F.B.I., told his listeners, “Folks, the Epstein client list is a huge deal” that would “rock the Democrat Party.”

Read the rest here.

When you spend years building a cult like mass movement based on fringe conspiracy theories and outright lies, eventually it's going to become difficult to hold it all together. That said, I think predictions of the collapse of the movement are highly premature. One of the traits of cult movements is that the true believers tend to reach a point where they become impervious to facts and reason, dismissing any claims that do not align with their beliefs as false. They typically live within an ideological exclusion zone that rejects and dismisses sources of information that do not reinforce their belief system. In this case many of the faithful would give far more credibility to Tucker Carlson, Glenn Beck and Alex Jones than the New York Times or CNN. Even in the face of glaring inconsistencies or revelations that cannot be simply ignored, members will go to extraordinary lengths to rationalize or explain away those facts and contradictions which do manage to penetrate their information bubble.

See also QAnon

Friday, July 11, 2025

Trump's Witch-hunt at the Federal Reserve

The president is desperately looking for a legal pretext that would allow him to fire Federal Reserve Chair Jerome Powell. Details here.

Thursday, July 03, 2025

Ambrose Evans-Pritchard: Trump has dropped a big, beautiful bomb on America’s economy

China’s leaders must be wondering whether they are hallucinating or whether America’s political class really has lost its mind, committing economic and geopolitical self-harm on a breathtaking scale.

Donald Trump’s “big beautiful bill” marks a wholesale retreat from swaths of advanced manufacturing and energy technology. It abandons a central front of the Sino-American superpower contest without a fight.

“Utterly insane and destructive. The bill will cause immense strategic harm to our country,” said Elon Musk, now the arch-apostate, perhaps soon to be punished, asset-stripped and deported.

The big bill is the latest in a series of Luddite measures that let China run away with the electro-tech revolution and much of the future global market for cars, trucks, short-haul aviation, home heating and cooling, smart grids, power storage and the products that deliver the cheapest energy ever known to man.

The think tank Ember says China is electrifying its economy at a rate of 10 percentage points a decade. It has already surpassed 30pc of final energy, well on its way to becoming the world’s first electro-superpower.

America has been stuck in the low 20s since 2008, lulled into complacency by its fracking boom. Europe has missed the boat too, without the same excuse. It talks big on electrons without delivering much, while clinging to imported molecules for its economic existence, failing to compete successfully on either.

The woke and the anti-woke are still arguing about renewables but we are past that developmental phase. The big trillions are going to be made in the ways we use electricity. The International Energy Agency thinks the vast electro-tech market will be eight times larger than renewables by 2035.

Trump’s America is betting that it can freeze time and stop this, doubling down on fossils and hoping to force others to go with them as a condition for military protection and market access. Trump is linking trade deals with Japan, South Korea and Europe to increased imports of US liquefied natural gas (LNG). He is even demanding that the EU changes its law and embraces the joy of methane emissions.

China is betting that you cannot halt a technological steamroller or force the world to act against its own economic self-interest.

Read the rest here.

Wednesday, July 02, 2025

Did Pope Francis Lie?

Something of a scandal is brewing in Rome. Leaked documents from the Vatican seem to indicate that the late pope misrepresented the results of a survey of Catholic bishops, which he cited as grounds for the severe restrictions he placed on the traditional (pre-Vatican II) liturgical rites. The story has been all over the Catholic press and blogosphere. Now it has been picked up by the Associated Press

Tuesday, July 01, 2025

The Dangerous Mythology of Central Banks (and out of control debt)

...Trump has purged the top echelons of the US military, the CIA, the NSA, the FBI, the justice department and every agency that stands in his way. It would be out of character if he spared the Fed.

His war of words against Powell is in full flight: “Low IQ ... a very stupid person, actually … terrible … a major loser … Mr too late ... a total and complete moron.”

Needless to say, Trump’s determination to get his hands on the machinery of interest rates and bond purchases is an admission that his “big, beautiful bill” is pushing the limits of US debt sustainability.

The Congressional Budget Office (CBO) says the draft will add $3.3 trillion (£2.4 trillion) to deficits by 2034, mostly from rolling over the Trump 1.0 tax cuts that were never affordable in the first place.

The US is in a runaway debt compound trap. The budget deficit is 6.7pc of GDP at full employment. The next recession will push it into double digits.

Interest costs were 1.6pc of GDP in 2018, during those halcyon days of free global money. They are 3.2pc this year and rising fast. “The federal budget has become highly sensitive to interest rate dynamics,” said James Knightley, from ING.

The US is also about to breach the Niall Ferguson rule: that great powers go into terminal decline once interest costs exceed military spending as a share of GDP.

Net public debt was 54pc of GDP at the turn of the century. It is now 121pc, rising by two points a year even in good times, and heading for 140pc in short order.

Read the rest here.

See also...