You see when I say that Trump tries to run the economy like a company, I can show you why that seems so.
So say we have a highly indebted company with a strong business reputation and products but have had been mismanaged, so a new management comes in to undo the decay and reset to re-establish the company on a firmer footing.
The company was overspending, and now faced with a slower market is under pressure from its over-leveraged position. So the new management undertook a massive cut to its expenditures, seek to secure supplier commitment to reduce their margins to supply them with lower costs, and by doing all things necessary to improve their financial position, hope to secure their bankers to ease financing costs on them and continued backing for their debts that are maturing soon.
Trump comes in to do exactly that, as if the economy is that company.
Except that the economy is not like a company.
1. The expenditures that Trump 2.0 cuts to reduce the bloat involves a cut to consumers who are the US economy's main engine of growth. In fact, as we all understood well, it was the Govt expenditures that averted the US economy from falling into a recession
Many of the Trump 2.0 cuts are now proliferating through the entire private sector supply chain that includes rural farmers, small businesses which lifeline depended upon Govt services contract. In Australia, try removing the NDIS altogether, and you will see a large multiplier contraction across the private services sector.
2. A company under seige could seek its suppliers to provide better commercial terms because the suppliers would not want to see the company go under as it would also hurt them too. So that would be a win-win situation. But as the world's biggest customer, Trump's rent-seeking approach with its tariff policy is not viewed as win-win, it is win-lose and most probably lose-lose, because unlike the company's case, America's suppliers are also America's customers.
3. In the case of the company, doing all the cost reduction and financial improvement would be music to the worried bankers' ears and help secure continued financing commitment, so the company is safe from a loan default. But the approach undertaken by Trump 2.0 in its shock and awe tariff policy comes across as highly antagonistic and coercive to all nations (being targeted) which result in alienation and mistrust, and these nations (like Japan, China, UK, EU etc) are actually the main financiers of US debt.
So as you can see, the company that Trump 2.0 seeks to re-balance is not the same as the economy that it is steering.
Trump 2.0 is not helping to undo Biden's mismanagement by taking the 'wrong' turn with the 'wrong' approach even with the best of intentions (and I am being generous here at best), instead its policies seek to hurt the Consumer, hurt domestic and global Trade, alienate its Financiers/Financial Backers.
And in the company, you can see all the worms in the balance sheet. In the economy and markets, it is not as transparent. There remains a bigger pool of 'weapons of mass destruction' derivatives and house of financial cards/instruments waiting to implode when the economy and market crashes from Trump 2.0 policies and the way or manner in which they are being executed.
Trump's attempt to engineer a Reset may well deliver a bigger economic carnage than he was prepared for, and once the avalanche begins there is no stopping it.
The financial people who had supported him will continue to convey the message of bravery to do the right thing to undo years of Biden's folly, corruption and mismanagement until the day of reckoning arrives so great to bring the entire shambolic house of cards that they themselves shamelessly and hypocritically helped to bring about that had so enriched them in those prior years of administration.
