[quetzalcoatl]

The US has arrived at a kind of historical juncture - the exact nature of which is yet to fully emerge. We are not suffering a Great Depression (yet), nor do the hollow-eyed stand in soup lines. Instead, we are at the dead end of a slow-motion unraveling of the neoliberal paradigm. The Washington Consensus (installed to replace the Great Keynesian triumph of the interwar and immediate postwar era) can no longer be revived; after so many shock treatments its zombified corpse strains to rise one last time.

Rewind half a century: the economics of the Chicago School was seized upon as the ideal instrument to reset American politics, and definitively crush what was seen as the undue economic influence of the working class. Capital, constrained by the New Deal, yearned to be wild and free. Market utopianism aligned with hegemonic globalism. In a perfect storm of creative destruction, this new paradigm was combined with the nascent automation revolution. Presto-chango, the confident working class of Levittown morphed into meth-cooking trailer trash.

Factories closed, and production was offshored or automated. High-paying jobs were replaced by minimum wage service jobs. Demand constraint disinflation gradually overcame the stagflation of the seventies. We hovered at the edge of deflationary collapse for a decade. Having barely avoided it in '08, our nations leaders are eager to finish the job they left unfinished after the Great Crash. The abyss of another Great Depression beckons, and the GOP stares back, unable to look away.

The center can no longer hold. Excuses ring hollow. The usual lies are no longer believed, even by those telling them.

Into this volatile mix walks Donald J. Trump. He presents a simple choice to the disaffected: eat more of the shit sandwich they have been offered for decades, or a new New Deal. It doesn't matter if his 'solutions' make any sense. Nobody else is offering them anything, and at least Trump pointed out the obviousness of the sandwich Hillary was offering.

But there is a Big Fucking Problem. Crises have their own logic, and do not follow the same rules as more placid eras. Having finally run out of patience, the Trump base is loathe to extend dear leader an unlimited amount of credit.

Trump played his hand recklessly, a gambler with nothing to lose. He took no prisoners, and offered no solace to the unconvinced. In practical terms, his base gives him marginal control of the rust belt blue states. But the margin is razor thin, and the clock is ticking.

This means he has a very narrow window in which to consolidate his power. He has to deliver jobs on a mass scale, and deliver them fast. People know if they have a job. They know if they can afford healthcare. They know if Aunt Bessie gets her Medicare cut.

This is how crises work. All the other options have been exhausted, and the BS well has run dry. Time has run out, and crunch time is here, children. Trump must perform in the first 100 days, or see his thin coalition start to dissolve.

The memesters won't be able to help him. Pepe can only shrug his shoulders and say "Hey, I gave you a chance, dude." Vladimir won't be parachuting in to his rescue.

So, no. It won't be enough for him to ravage political correctness, or send Soros back to the chambers. It won't be enough to send the SJWs scurrying for their safe spaces, or whine about the media.

Trump faces an existential crisis and to survive it he must do these three things:
1) Produce 2.5 million NEW jobs a year as promised.
2) Protect Social Security and Medicare.
3) Replace ACA with something at least as good (i.e., not shitty HCAs)

None of these is optional.

To sum it up, he must make the lives of his base a little better in real terms. If he makes the life of his base better, plus a few more, he's golden. If he fails to do this (and do it in short order) he is another kind of golden: toast.

Now, I'm not engaging in mere rhetoric when I describe this as an existential crisis. The GOP establishment is waiting in the wings for Trump to fuck up. They love Pence, and regard Trump as unreliable and emotionally unstable.

Trump, for the moment, is untouchable, but this lasts only as long as he can satisfy his base. At the first sign of weakness, you will see Pence and his cabinet invoke the 25th Amendment. Trump will spend the rest of his one-and-only term held incommunicado in a closely-guarded sanitarium.

Already, the wolves are circling. The media have found his buttons. They are now able to distract him totally, and goad him into obsessively disputing minutiae. Bear-baiting on a grand scale.

Trump could still pull it off. Most of all, he will have to find someone he can listen to, who can keep him focused and on track. That person cannot be Pence.

[One Degree]

Trump could still pull it off. Most of all, he will have to find someone he can listen to, who can keep him focused and on track. That person cannot be Pence.

Insightful post. Protesters and the GOP working together to pull Trump off course is not a good sign. Our reality is determined by our emotions, not by economics or political persuasion. Embracing Trump at this period in history is the best thing all people could do whether you support his policies or not. Creating an emotional climate of defeat and disavowal of an elected president can not and will not result in a positive affect on the country. FDR and Reagan showed us that our emotions will decide if an economy improves. If you advocate failure of our society, then that is what you will get. If you advocate optimism in the future, then that is what you will get. Wall street follows emotions, not the other way around.

[Rich]

Look I could be wrong, but Republicans seem quite smart at the politics game, at least compared to Democrats. Surely they'll get the Democrats to put Pence into power with just enough Republican votes to put them over the top. Don't forget it was the Congress Democrats who bailed out the banks, with the support of some Republicans.

Again I could be wrong, but surely Hilary is not the only Democrat who would happily whore herself out to the Neo Cons.

[One Degree]

Again I could be wrong, but surely Hilary is not the only Democrat who would happily whore herself out to the Neo Cons.

I am sure the back room deals are going at full force. We tend to forget we live in a world where there are people who can offer a $100,000,000 in a bribe and not blink an eye. Of course, it does not require anywhere near that amount in most cases.

[Atlantis]

The problem is that he can't do the only thing that'll solve the problem, at least in the long term. The only thing that'll solve the problem is a social market economy that'll reduce income inequality and provide welfare for those at the bottom of the social hierarchy.

His solution is to blame foreigners and to give more money to the rich in believe that it'll trickle down eventually. That's old wine in new skins.

Taxing imports will increase inflation and reduce buying power. Pumping even more money into the economy will make the dollar more expensive and reduce the competitiveness of domestic industries.

[Prosthetic Conscience]

Trump faces an existential crisis and to survive it he must do these three things:
1) Produce 2.5 million NEW jobs a year as promised.
2) Protect Social Security and Medicare.
3) Replace ACA with something at least as good (i.e., not shitty HCAs)
...
Trump could still pull it off. Most of all, he will have to find someone he can listen to, who can keep him focused and on track. That person cannot be Pence.

No, what Trump needs to find is people who know how to achieve your 3 points, especially at the same time. I'm not sure if anyone can do that, but the Republicans that Trump has access to certainly can't, and they have never shown any sign of interest in doing so either. Trump needs more than focus; he needs ideas. He doesn't know how to run a country (though he does know enough to achieve #2 - ie don't touch them).

But the 'existential crisis' Trump faces is only his career as a 'politician'. Yes, he's going to fail at that, but it's not as if he hasn't made sure he'll still have lots of money. It only has to last him a few more years.

[MistyTiger]

Trump faces an existential crisis and to survive it he must do these three things:
1) Produce 2.5 million NEW jobs a year as promised.[

Doubtful that he can do that. He would love to take credit though and offer alternative facts that he did do that when only 1,000 or so jobs are created.

2) Protect Social Security and Medicare.

He thinks those programs are useless or outdated. Why should he protect them if he does not believe in them and he does not think that he needs them?

3) Replace ACA with something at least as good (i.e., not shitty HCAs)

Nope. He and his cronies cannot come up with anything better and I suspect that they do not want to force their healthcare buddies to lose money just to help to population of average/poor people. He loves the idea of HSAs.

...
Trump could still pull it off. Most of all, he will have to find someone he can listen to, who can keep him focused and on track. That person cannot be Pence.

It is highly doubtful, in my view, that he can or will pull it off. He has someone that he trusts though, Jared Kushner or his daughter Ivanka. I think he trusts them more than he trusts Pence or any of his cabinet or WH advisers.

[quetzalcoatl]

@MistyTiger
Narrow is the way, few be that find it. I'm not saying that Trump will do these things, just that they are not technically impossible. They are not even technically difficult, but the cognitive gulf that stands in the way of doing what he needs to do is vast. He has to be able to battle his own party to achieve them.

Why should he protect them if he does not believe in them and he does not think that he needs them?

1) Political survival. SS and Medicare are functional cogs in the extended families of his supporters. They will feel these cuts immediately. Trump's coalition is already razor thin.
2) Economic survival. Cutting SS and Medicare, because of the size and breadth of these programs, will be contractionary in the extreme. You can't fill the swimming pool and drain it at the same time. He would literally be sabotaging his own plans for a massive infrastructure stimulus.
@One Degree
Emotions certainly play a part, especially when it comes to things like market turnarounds. Keynes wrote of the importance of 'animal spirits.' But emotions cannot substitute for getting the mechanics right. A particular danger that everyone seems to ignore is just how close we came to a deflationary collapse in 2008, and how incredibly lucky we were to avert it. Speaking of emotions, this is by far the greatest potential impact. Once deflationary psychology takes hold of a population, it takes a full generation to work out of it. In the case of the Great Depression, it took the shock of world wide conflict to counter that ingrained deflationary psychology. (Deflationary psychology = money hoarding by consumers and businesses, forming a positive feedback loop)

Are you confident that the shock from another crash could be successfully contained? I'm not.

[MistyTiger]

@quetzalcoatl

1) Political survival. SS and Medicare are functional cogs in the extended families of his supporters. They will feel these cuts immediately. Trump's coalition is already razor thin.

He has shown himself to be shortsighted. He feels like he has to fight against his opposition so more opposers...is he even counting? We already know that Spicer cannot count. His attitude seems to be, "You can hate me or stand with me, pick your stance and so be it!" He is not trying to please anyone but himself. He has this idea of how he thinks things should be, much like a dictator.

2) Economic survival. Cutting SS and Medicare, because of the size and breadth of these programs, will be contractionary in the extreme. You can't fill the swimming pool and drain it at the same time. He would literally be sabotaging his own plans for a massive infrastructure stimulus.

He has drained several companies before, and he owned them. To him, being the president is like owning a large business. He is not looking for anyone's approval. His plans are probably poorly constructed anyway. He is shortsighted so he cannot take his head away from his own ass long enough to form a clever, well thought out plan to rebuild America's infrastructure. He is probably too busy thinking about sex anyhow.

[quetzalcoatl]

He has drained several companies before, and he owned them. To him, being the president is like owning a large business.

We have been told forever that government should be run more like a business. It's only fitting then, that we take this to its logical conclusion: government is literally a business, run as a profit-center for the CEO-in-chief.

This seems attractive on the surface. However, this option only works for somebody like Putin, who is able to maintain his oligarchic control over an extended time frame. Trump will expose himself to a lot of negative consequences, if things go south.

[blackjack21]

The US has arrived at a kind of historical juncture - the exact nature of which is yet to fully emerge. We are not suffering a Great Depression (yet), nor do the hollow-eyed stand in soup lines. Instead, we are at the dead end of a slow-motion unraveling of the neoliberal paradigm. The Washington Consensus (installed to replace the Great Keynesian triumph of the interwar and immediate postwar era) can no longer be revived; after so many shock treatments its zombified corpse strains to rise one last time.

I don't think this is just the US. It's also the EU. Brexit is effectively a fait accompli, and we see Marine Le Pen ahead in France. The neoliberal paradigm blew up when it decided that open borders was a good idea. It has crashed and burned both in the EU and in the United States. With Europe, it portends the end of the EU.

Into this volatile mix walks Donald J. Trump. He presents a simple choice to the disaffected: eat more of the shit sandwich they have been offered for decades, or a new New Deal. It doesn't matter if his 'solutions' make any sense. Nobody else is offering them anything, and at least Trump pointed out the obviousness of the sandwich Hillary was offering.

The US has reached the extent of what it can outsource (jobs) and insource (cheap immigrant labor) without major political consequences. Trump saw right through the establishment's game and was able to defeat it with a fraction of the resources they had.

Trump played his hand recklessly, a gambler with nothing to lose. He took no prisoners, and offered no solace to the unconvinced. In practical terms, his base gives him marginal control of the rust belt blue states. But the margin is razor thin, and the clock is ticking.

This means he has a very narrow window in which to consolidate his power. He has to deliver jobs on a mass scale, and deliver them fast. People know if they have a job. They know if they can afford healthcare. They know if Aunt Bessie gets her Medicare cut.

I think Trump understand this better than anyone thinks. I have been railing for years about how 8 graders in the 1930s could build the world's longest bridges in 3-4 years, and today's generation can't replace half their length in 25 years. It's too obvious that government is the problem.

Today, Trump not only put the Keystone XL pipeline and the Dakota Access pipeline into motion, but he also signed an order mandating (with exceptions) the use of American-made piping.

Trump faces an existential crisis and to survive it he must do these three things:
1) Produce 2.5 million NEW jobs a year as promised.
2) Protect Social Security and Medicare.
3) Replace ACA with something at least as good (i.e., not shitty HCAs)

I think he's aiming to do just that.

The problem is that he can't do the only thing that'll solve the problem, at least in the long term. The only thing that'll solve the problem is a social market economy that'll reduce income inequality and provide welfare for those at the bottom of the social hierarchy.

That's a lot of what he's building by taking on the trade deals. Already, he has cancelled TPP. The labor unions are very happy about this.

His solution is to blame foreigners and to give more money to the rich in believe that it'll trickle down eventually. That's old wine in new skins.

Trump's corporate tax cut is designed to bring several trillions banked overseas back to the US. Taking the trade pressure of jobs and wages will help the working class.

Taxing imports will increase inflation and reduce buying power.

Inflation isn't a problem in a deflationary world.

[MistyTiger]

Inflation isn't a problem in a deflationary world.

Tell that to the people who do not get pay raises or they get insignificant raises of a few cents a year while the price of food and transportation goes up before their very eyes.

[quetzalcoatl]

Tell that to the people who do not get pay raises or they get insignificant raises of a few cents a year while the price of food and transportation goes up before their very eyes.

Disinflation is the prequel to deflation, but not the same as deflation itself. Eating mounds of sugar is not diabetic, but it can get you there.

The US Fed, and most other CBs, have deliberately pursued disinflationary policies. They have some very specific reasons for this, which (fortunately, in their eyes) almost no one understands. Through the agency of QE, the Fed supports the value of financial assets. In their worldview, increasing asset prices are not inflationary - bankers work for bankers, not for you. The one variable that sets them off is wage inflation. If rises in wages start rising at a faster rate than price inflation, this is when they will slam on the brakes. They have done this for decades, and it's the reason you experience inflation the way you do. it's not the inflation you experience, but the lack of pay raises.

This is literally a deliberate policy to create wage stagnation, capice? It's stealth policy that no one quite gets, which makes it the perfect tool for this purpose. Disinflation benefits debt holders, i.e. the people who earn rent from money. Anyone can in theory rent out money (if they have some extra), but in practice the overwhelming majority of debt holders are the hyper-rich. This performs a dual purpose. Not only does it supply steady income to the financial elite, but over time this rental economy transfers wealth in a cumulative fashion from the debtor class (workers) to the rentier class, and concentrates it in their hands.

This is sometimes called the debt ratchet. It is a one way money pump that transfers wealth upward. Literally it is a trickle-up effect.

[quetzalcoatl]

Quetzalcoatl wrote:
"Trump faces an existential crisis and to survive it he must do these three things:
1) Produce 2.5 million NEW jobs a year as promised.
2) Protect Social Security and Medicare.
3) Replace ACA with something at least as good (i.e., not shitty HSAs)"

I think he's aiming to do just that.

So, here's the problem. Nobody knows what Trump will actually do. It could change tomorrow. The words of DJT are at best cryptic signals from another reality.

I would love for you to be right about Trump, but who am I supposed to believe? You, or his new budget director?

Trump's budget nominee defends support for cuts to Social Security, Medicare

Mulvaney, in his testimony, supported cuts in Social Security and Medicare. He wants to raise the retirement age to 70 and means-test Medicare. Future retirees would see their benefits reduced sharply, by as much as 40%. If you are in your early 60's or late 50's, this could very well be time to hit the panic button - most of the middle class will be dependent on Social Security for a substantial portion of their retirement income.

[One Degree]

Mulvaney, in his testimony, supported cuts in Social Security and Medicare. He wants to raise the retirement age to 70 and means-test Medicare. Future retirees would see their benefits reduced sharply, by as much as 40%. If you are in your early 60's or late 50's, this could very well be time to hit the panic button - most of the middle class will be dependent on Social Security for a substantial portion of their retirement income.

This is simply more disinformation from both sides. The last I read Social Security is good until 2035. That means it is in a better position than I remember being told 50 years ago, when we young baby boomers were told we would not have it. This is a very old political punching bag that has never been shown to be credible.

[quetzalcoatl]

This is simply more disinformation from both sides. The last I read Social Security is good until 2035. That means it is in a better position than I remember being told 50 years ago, when we young baby boomers were told we would not have it. This is a very old political punching bag that has never been shown to be credible.

I couldn't agree with you more. The Social Security 'crisis' has been fake from day one. Just as the deficit 'crisis' has been fake from day one. But the questions raised by Trump's own budget director remain unresolved. What is Trump actually going to do with SS and Medicare? Why would he appoint someone to budget so opposed to his own views?

Trump will have to literally stand in the way of the House GOP, if he wants to prevent them from carrying through with this plan. They are strongly committed to this path.

[One Degree]

What is Trump actually going to do with SS and Medicare? Why would he appoint someone to budget so opposed to his own views?

Good questions to which I have no answers. I seem to just get more confused each day.

[Know It All]

From the outside looking in I have no idea why ANY American can be anti Trump. Unlike the idiot before him he wants what is best for the country, and NOT the rest of the world. If that stupid woman had been voted in nothing would ever have changed, and to be honest for the next 4 years the USA would probably have forgotten she existed. Trump has already pledged to deport all the illegal immigrants. What a brilliant start. Thousands upon thousands of people not putting into the economy, and quite often contributing towards the black market and the criminal world. Illegal immigrants are human sewer rats, and should be treated as such.

I so wish Trump was in charge of the UK

[quetzalcoatl]

The deflationary undertow continues to undermine US industrial jobs faster than Trump can act.

January 20 was the last day of work for 1,202 hourly workers and 43 salaried employees at the General Motors Lordstown Assembly Plant in Ohio. The workers who lost their jobs were among 2,000 GM workers laid off in Ohio and Lansing, Michigan on the same day that Donald Trump delivered his Inaugural Address.

Another 1,300 GM workers at the Detroit-Hamtramck assembly plant face the loss of their jobs when GM phases out the second shift at its only remaining Detroit plant between March 6 and 19. The layoffs, the first by GM in six years, are an ominous sign that the boom in auto sales that followed the 2008 crash and 2009 bankruptcy restructuring of GM and Chrysler is coming to an end.

The window of opportunity for Trump continues to recede. He must act fast and act decisively on the jobs front. Hit and miss actions of the Carrier model are fine for short-term propaganda, but he must now act on a mass-effect jobs scale.

Trump must recognize the urgency of his position. The slow sucking decline of the Obama years has phase-shifted into a more rapid crumbling. A financial crash now will almost certainly morph into a deflationary holocaust (depression).

Trump will not have the luxury of inaction that the previous President was afforded. In some sense, he seems to realize this, but it is not clear he understands the sheer magnitude of the mountain in front of him.