On His Way Out, Paul Krugman Warns About The Kakistocracy
I don’t know anyone looking forward to Trump’s second term with anything but dread and trepidation. Do you? In his final column for the NY Times on Monday, Paul Krugman noted that in the 25 years he’s been writing for them, the country’s mood has gone from optimism to “anger and resentment… we’ve had a collapse of trust in elites: The public no longer has faith that the people running things know what they’re doing, or that we can assume that they’re being honest… So is there a way out of the grim place we’re in? What I believe is that while resentment can put bad people in power, in the long run it can’t keep them there. At some point the public will realize that most politicians railing against elites actually are elites in every sense that matters and start to hold them accountable for their failure to deliver on their promises. And at that point the public may be willing to listen to people who don’t try to argue from authority, don’t make false promises, but do try to tell the truth as best they can. We may never recover the kind of faith in our leaders— belief that people in power generally tell the truth and know what they’re doing— that we used to have. Nor should we. But if we stand up to the kakistocracy— rule by the worst— that’s emerging as we speak, we may eventually find our way back to a better world.”
And speaking on the kakistocracy, in the last couple of days, Trump appointed Trump Jr’s discarded fiancée ambassador to Greece, a billionaire crony Tom Barrack— last in the news for having been caught selling access to Trump to the United Arab Emirates— as ambassador to Turkey (for centuries one of the most corrupt places on the face of the earth) and electorally defeated North Carolina MAGAt, Rep Dan Bishop as deputy budget chief. (While Trump won North Carolina 2,898,428 (51.0%) to 2,715,380 (47.8%), his endorsed candidate for attorney general lost to Democrat Jeff Jackson 2,875,273 (51.4%) to 2,715,796 (48.6%), In other words, almost 183,000 Trump votes refused to cast their ballots for Bishop. But I’m sure Bishop, Barrack, Guilfoyle and all the others carefully chosen to be part of the kakistocracy are looking forward to opportunities for corruption being part of the Trump regime signifies.
Mitch McConnell, who admits he voted for Trump last month, warned Alex Rogers “We’re in a very, very dangerous world right now, reminiscent of before World War Two. Even the slogan is the same. ‘America First.’ That was what they said in the ’30s.”
Molly Jong-Fast chimed in on Tuesday that it feels like the country is standing “on the precipice, just six weeks away from swearing in, for the second time, a wannabe ‘dictator’ with ambitions to wildly reshape our democracy. There is a desire to tune out. I get it. And while, as a member of the media, I feel a little sheepish making the case to keep reading columns (like this one!), watching the news, and listening to podcasts, it’s a perilous moment for America, and it only serves Donald Trump and his allies to look the other way… [There’s been no shortage of developments the past few weeks as Trump has started assembling a potential Cabinet featuring… norms-crushers, such as FBI director nominee Kash Patel… and defense secretary candidate Pete Hegseth.” At this point, the list of “norm-crushers” is too big to include everyone, or even just the worst dozen who Jong-Fast left out:
Tulsi Gabbard
Elon Musk-Vivek Ramaswamy
Russ Vought
Stephen Miller
David Sacks
Pam Bondi
RFK Jr (with Dr, Oz, Jay Bhattacharya and Marty Makary)
Tom Homan
Linda McMahon
Charles Kushner
“Trump,” warned Jong-Fast, “is still heading into the White House emboldened. He wants to do a lot, much of which is completely without historical precedent. On Sunday, he told NBC’s Kristen Welker that ‘we have to end’ birthright citizenship, despite that right being enshrined in our Constitution. He called the first section of the 14th Amendment ‘ridiculous.’ No one is surprised that the guy who is musing about pardoning the January 6 rioters is now toying with editing the Constitution, but it further shows how incredibly dangerous this moment is.”
She concluded by asking how “we best protect the norms and institutions so that they can survive after Trump’s second term?” But not everyone is so glum. The crypto-cartel and the AIPAC-led genocide coalition— on both sides of the aisle— are flying high. And yesterday, Rob Copeland reported that Wall Street’s titans can’t hardly wait. When I pointed out the myriad risk of a second Trump term to my financial advisor, she discouraged my instincts to switch from equities to bonds and tried to reassure me that everything would be ok. I sold a significant amount of stocks that day. But, pointed out Copeland, Jamie Dimon, CEO of JP Morgan Chase, a Kamala supporter, said “his industry was ‘dancing in the street’ over Trump’s win and incoming Republican majorities in the House of Representatives and Senate. These days, it seems that everyone who is anybody on Wall Street— to say nothing of a whole lot of nobodies— is amped up for Trump’s return to the Oval Office. In interviews, bankers, lawyers, investors and corporate executives with a wide range of political views said that despite mixed opinions on Trump’s proposed policies overall, they see in his administration the greatest possibility for a boon to the business world in a generation or more… Notably, the rosy outlook sidesteps some of the nonconformist economic ideas— namely tariffs on all imports to the United States— that Trump has pledged.” Not to mention mass deportations that could spark mass inflation and a recession.
For now, those risks are taking second place to cold, hard opportunity. One prominent investment banker asking for anonymity because he’s not authorized to speak publicly on the matter, pointed out that amid Trump’s posturing, there is profit to be made: His bank was seeing an uptick in interest from corporate clients looking to purchase expensive, complicated financial instruments that reduce the risk from changes in the price of currencies.
The client receives financial stability, while the investment bank generates fees.
With Trump 2.0, there does seem to be something for everyone in the financial arena: For bankers like Dimon, high on the wish list is the loosening of looming capital requirements, known as the “Basel III endgame,” that they say would reduce the amount of money they have available to lend, and ultimately profit. International regulators have argued the proposed rules are needed to prevent another financial crisis.
Chief executives with big pay packages contingent on rising stock prices are heartened that Trump, as he did in his first administration, is again agitating for lower interest rates, which generally propel financial markets higher by incentivizing risk-taking.
…Lower rates would also be a boon for mergers and acquisitions, initial public offerings and other cogs in the Wall Street moneymaking machine, which were jammed up during the past four years in the aftermath of the pandemic and under a Biden administration that had attempted to clamp down on big companies trying to get bigger. When Trump appointed a former technology lobbyist, Gail Slater, to lead the Justice Department’s antitrust division, he said he expected her to “facilitate, rather than stifle,” the corporate world, language that would not have been out of place in the Reagan deregulation movement.
And perhaps no one is more elated than cryptocurrency investors and venture capitalists, who embraced the once-Bitcoin-skeptic president-elect and are hoping to be permitted to register and market new coins to ordinary investors. The price of Bitcoin, a proxy for the hopes of the industry at large, recently touched $100,000 and has shot up nearly 40 percent since the election. The S&P 500 is up 6 percent since then.
As ever with Trump, whose decision making can be tough to predict, handicapping the chance of a long-term financial windfall from his time in office can be similar to reading a Rorschach test in which the same image can seem different depending on the viewer.
It’s easy enough to craft an argument for why financial optimism may be misplaced: Trump has talked up spending plans that would balloon the national debt and the imposition of tariffs and a renewal of tax cuts that could exacerbate inflation. A tightening of the labor market caused by mass deportations of immigrants could also cause a spike in wages as companies are forced to compete aggressively for workers.
And heady times for Wall Street are often followed by economic troubles. The financial services industry has traditionally thrived right up to the brink of collapse, such as ahead of the bursting of the internet bubble in 2000 and the mortgage market in 2007.
Few expect such calamity in the short-term, but Wall Street’s track record on economic projections is famously spotty, and executives like Dimon have said they are girding for all possibilities. Last week, Bank of America’s chief executive, Brian Moynihan, expressed skepticism that Trump’s so-called Department of Government Efficiency, to be co-led by Elon Musk, with an aim of slashing federal spending, would make much of a dent in anything.
Analysts at the bank Standard Chartered similarly this month flagged “unusual uncertainty on the potential policies of the incoming U.S. administration, and on their timing and their impact.”
There was also widespread exasperation among the finance set late last month when Trump threatened to impose a 25 percent tariff on goods from Mexico and Canada. Wall Street hates uncertainty and a bubbling trade war between two of America’s largest trading partners would bring that in droves.
And yet not long after that threat, many financiers reached deep for a reason to focus on the positive by passing between one another a letter from January to investors from Trump’s Treasury secretary pick, Scott Bessent, that described tariffs as less important than they may seem because they would be “on the table but rarely discharged.”
The titans all think Trump and his team are bluffing. Let’s hope they’re right. Because if they’re not… we’re all cooked.
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