The article explores the reasons behind the widespread underestimation of the economic risks associated with Donald Trump's presidency, particularly among Wall Street investors. Many saw a cultural alignment with his anti-woke stance, leading to a willingness to overlook his policies.
Trump's protectionist trade policies, despite being clearly detrimental, were rationalized as a negotiating tactic. This was despite evidence to the contrary, such as Trump's own documented disdain for trade and zero-sum approach to business deals.
The lack of restraint on Trump's policies in his second term, exemplified by the purging of key personnel within the National Security Council and other areas, further exacerbated the situation. The absence of figures willing to challenge his decisions led to a significant degradation of American governance.
The author argues that the market's failure to anticipate these negative consequences stemmed from mistaking Trump's demagogic skills for policy wisdom. The article suggests that damage to investor confidence, the US economy, and the global economy might lead to a recession regardless of future policy changes. Alarming signals within the bond market further amplify concerns about the stability of the US government and the dollar's position as a reserve currency.