With clear eyes, hard facts, critical thinking, new political strategy, empathy, and a soupçon of Schadenfreude
Jon Corzine is a former co-CEO of Goldman Sachs, former United States Senator, and former Governor of New Jersey.
Look, especially, around the 13:40 point in the video, where Corzine explains what happens when the dollar is no longer the reserve currency.
Steve Pearlstein (Washington Post), Trump’s tariffs were rash. But the reckoning was inevitable: And delaying that reckoning will only make things worse.
Prof. Pearlstein teaches public and international affairs at George Mason. According to him, that with which we must reckon is that “As a country, we live beyond our means, consuming more than we produce and investing more than we save.”
I urge you to read the article. Much of it, you probably won’t like. But that’s the very reason why you need to read it.
But there is some sweet along with the bitter; you’ll like the multiple reasons why Trump’s tariffs are stupid. After expatiating on the multiple stupidities, Pearlstein ends this way:
That doesn’t mean we couldn’t benefit from raising tariffs on some imports until major trading partners lower tariff and nontariff barriers to American goods or stop subsidizing their exports. The dogmatic free traders were always wrong about that.
But tariffs are unlikely to alter the fundamental reality that, as a country, we collectively buy and invest more than we produce and save, which in broad terms is what the trade deficit represents. A simpler and more effective way to reduce that roughly $1 trillion annual trade deficit is to reduce our government’s $2 trillion annual budget deficit. Unfortunately, Trump is determined to do the opposite. For just as his new tariffs were unveiled, the president and his Republican allies in Congress were pushing through a budget plan to extend and expand tax cuts, increasing future budget deficits by hundreds of billions of dollars each year.
Put another way, by refusing to tax ourselves to pay for all the government services we demand — and borrowing the difference from the rest of the world — we are effectively giving households and businesses the money to buy more of the imports that the president is so determined to reduce.
For the past 50 years, America’s economic fantasy has been that another round of tax cuts or public investments will magically allow us to produce our way out of outsize budget and trade deficits. Instead, the twin deficits rose in tandem. In the real world, the only way to bring things back into balance is to begin living within our means and accept the painful adjustments that it entails. As we learned this week, there are better and worse ways to go about that rebalancing. But delaying that reckoning will only make things worse.
Susman Godfrey is possibly the best litigation law firm in the country. And they are being punished for successfully holding Fox News to account for its election lies.
If anybody can make Trump eat shit, these are the folks to do the job.
We shall see what we shall see. In the meantime, the firm had this to say:
In response to the executive order filed by the administration on April 9th, 2025, Susman Godfrey has issued the following statement:
“Anyone who knows Susman Godfrey knows we believe in the rule of law, and we take seriously our duty to uphold it. This principle guides us now. There is no question that we will fight this unconstitutional order.”
A point of personal privilege: I was among the late Steve Susman’s ten thousand closest friends. (Actually, it could have been more than ten thousand; I don’t rightly know.) And I am damn proud of it, too.
From wherever he is in the bardo, Steve is urging his living partners to hang in—and whispering litigation tricks into their shelflike ears.
Edward Luce (Financial Times), Trump has no idea what he has unleashed
Ed Luce of the Financial Times, acute student of America, and sometime guest on Morning Joe, writes today’s thought piece (particularly choice passages underlined):
We should trust in Donald Trump’s instincts, says Mike Johnson, Speaker of the House of Representatives. Alternatively, Johnson and his caucus should run screaming in the opposite direction. It is too late for Republicans to revert to being a normal party — belief in Trump is their organising principle. But they could play the loyalist by coaxing Trump off the ledge. In addition to their jobs, the future of the global economy, and every American’s retirement fund, depends on it.
Their task is complicated by the fact that Trump still thinks he is on to a winner. Try to stand in his shoes. From his 2011 Obama foreign birth conspiracy to his 2024 conviction as a felon, and so many points in between, Trump has almost annually been left for dead. But his phoenix keeps rising. Trump is a fantasist whose deepest-lodged fantasy — that he is an unstoppable champion — keeps coming true. Why would a little market turmoil stop him?
The starting point is that Trump is a hammer and the rest of the world, as well as half of America, is a nail. Sometimes the hammer can focus on select nails, or soften its blow, but he is always a hammer. That some of Trump’s closest backers, such as the New York hedge fund manager Bill Ackman, are surprised by his global tariff war is a mystery. Trump vowed in almost every single campaign speech to unleash the trade war we are now in.
He has been blaming foreigners for ripping off America since the mid-1980s. Note, his obsession was with Japan, not the Soviet Union. Trump has always been angriest with allies and friends. His deepest contempt is now reserved for Europe and Canada. Psychologists extrapolate from the estate settlement Trump tried to impose on his own siblings. If your instinct is to rip people off, including those closest to you, assume that is everyone’s method.
The mystery is why so many — from Ackman’s fellow billionaires to Florida-based Venezuelans — have bent over backwards to miss who Trump is. A trillion comments have been wasted accusing the wrong people of Trump derangement syndrome. The real TDS afflicts those who keep seeing a rational actor, or an economic chess game, where none exists. The whole market arguably suffers from this syndrome. Shortly after plummeting on Monday morning, a fake news release surfaced that said Trump would announce a pause on his tariffs this week. The markets more than erased their opening losses. All those gains, in turn, were wiped out when the White House issued a denial.
If an online meme can turn a bear market into a bull recovery in the space of a minute, and back again, Trump has the world in his palm. The merest rumour that he might be sane can trigger a buying frenzy. Roman emperors would envy the finger-crooking sway of one man. Yet at some point, possibly imminent, Trump could be forced to pause at least some of his “liberation day” duties. That will trigger a big relief rally. But his pause will be no surer than stray driftwood. The same might apply to his threats of a new 50 per cent tariff escalation on China.
Markets will cheer any hints of bilateral deals Trump plans to strike with more influential demandeurs — Japan, China and India should be closely watched. Investors should also pay heed to the fact that such deals will be struck between foreign governments and Trump personally, not his administration. The departments of Treasury, commerce and the US trade representatives are often out of the loop. Given the lack of boundary between Trump’s public role and private investments, the scope for non-trade-related bartering is great.
The idea that Trump’s impact will be limited to the goods-traded economy is also wishful thinking. Foreigners own a critical share of US Treasury debt. Continued high demand for an asset in whose issuer the world is losing trust is the difference between a Trump recession and a Trump depression. On this, Europe’s governments seem to have better instincts than the equity and fixed-income markets. Rather than escalate the trade war, the EU is mulling only a modest toolkit of retaliations. This is not because Brussels thinks Trump is likely to embrace comity. It is because it fears a tit-for-tat trade spiral will break the global financial system.
Either way, this teachable moment is needlessly belated. Trump’s sane-washers have forfeited their credibility. There is no school of foreign policy realism, or trade mercantilism, that could explain Trump’s actions. If you want to forecast the world, study his psychology. While Trump is in charge, stay short on America.
Complaint in Simplified v. Trump et al. (filed in U.S. District Court for the Northern District of Florida)
Forbes, Lawsuit Could End Trump Tariffs And Stock Market Rout
This follows up on my post yesterday. I have a few more points about this interesting development.
Trump 1.0 saw the appointment of around 250 federal judges. Most were vetted and approved by the Federalist Society. One of the guiding lights of the Federalist Society was and is Leonard Leo, who is also one of the instigators of the litigation under discussion here—litigation premised on the claim that Trump acted lawlessly in imposing his Liberation Day tariffs, the centerpiece of his administration’s economic policy.
Who’s right on the merits may bear some tangential relevance to who is likely actually to win the case.
The central issue is this: Trump relied on the International Emergency Economic Powers Act in decreeing his Liberation Day tariffs. But that act don’t say nothing about no tariffs. Trump was obviously trying to do an end run around a number of other statutes and regulations that do address the imposition of tariffs. So, says the plaintiff, along with Messrs. Koch and Leo, Trump acted lawlessly–outside the scope of his lawful powers.
That central issue raises, in turn, a host of other legal issues, and I am not an expert on any of them. The Forbes article quotes some people who are actually qualified to speak, who say that the case appears to have merit. And that is my untutored view as well.
Plaintiff has not as of yet, and may not, ask for either a temporary restraining order or a preliminary injunction. Plaintiff and her counsel may well think that asking for this preliminary relief could slow things down.
Moreover, the case appears to be almost purely about issues of law, not fact; there would seem to be little need for witness depositions or document review. It could go quickly, if the district court judge and the Eleventh Circuit Court of Appeals choose to move it along.
And why wouldn’t the lower courts move it along? Like everybody else, they’re watching as their stock market investments go glug, glug, glug, down the old shitter.
As the pressure on Trump grows, it’s possible—not likely, in my view, but remotely possible—that he might start looking for a way out of his decision to crash the world economic order. Should he want to take an exit ramp, a decision by the Supreme Court ordering him to drop his tariffs could do the trick.
Finally, if there is any business, anywhere, that is seriously considering building manufacturing capacity in the United States, based on Trump’s Liberation Day tariffs, the pendency of this litigation gives them yet another reason to hesitate. As many have observed, you’re only going to spend the money to build a U.S. plant if you think the tariffs are going to last a long time. The lawsuit is yet one more reason, among many others, to question whether that’s a good bet.
Jonathan Chait (The Atlantic), Trump Has Already Botched His Own Bad Tariff Plan: Once you’ve said you might negotiate, nobody is going to believe you when you change your mmind and say you’ll never negotiate.
To summarize: Trump has two alternative strategies. One is to “reshore” American manufacturing. But that would require, at a minimum, that investors believe that the draconian tariffs are going to last a long time. The other is to negotiate country-by-country deals resulting in more favorable terms for American exporters.
Each strategy is highly problematic in its own right.
But, in addition, the two strategies are mutually inconsistent.
Bottom line: Confusion worse confounded. Idiocy cubed.
Wall Street Journal, China Wanted to Negotiate With Trump. Now It’s Arming for Another Trade War.
The Journal knows a lot of the senior people in China. And it knows even more of the people who know the senior people in China. Long article. Deeply reported.
Bottom line (for me): China expected negotiations, beginning with Trump’s inauguration. China wanted negotiations. China got stiff-armed by the Trump Administration. Xi had no real option but the retaliate. The standoff with China is going to last a long time.
Politico Magazine, Why Trump May Get Away With His Tariff Trauma: Other countries encounter the ‘prisoner’s dilemma’ as they weigh how to respond.
Helpful article. Poor headline. Poor, because the actual topic of the article is why a lot of countries are not immediately retaliating, but are instead about reaching out to Trump to try to negotiate.
There’s no paywall at Politico, so read it for yourself. My own take, for what it’s worth: Yeah, I get the “prisoner’s dilemma” issue. But I also suspect that a lot of foreign leaders are thinking that the tariffs are going to be so hard on American consumers and businesses of all sizes, and hence on Republican politicians, that, over the medium term, the tariffs are going to go away regardless of who does or does not negotiate.
Plus which: most foreign leaders actually studied economics back in college. So they know that imposing tit-for-tat tariffs harms their own economies.
Facing MAGA 