What Comes Next, Economically

It’s probably no surprise that so many people are playing Chicken Little, screaming that the sky is falling as they focus on the $5.4 billion worth of goods and services traded between the US and European Union every day.

Okay, I know Mr. Trump touts the $371 billion in tariffs that have come in so far and conveniently ignores the fact that 96% of that has been paid by American businesses and consumers. And for the moment he’s walked back the threat to impose extra tariffs on eight European nations to force the sale of Greenland to Jared Kushner. And isn’t it convenient that the Epstein files are barely even mentioned anymore?

International leaders are undoubtedly using the turmoil leading up to and at Davos as a clarifying moment. But what I can’t figure out is why nobody’s discussing the looming crisis that’ll come when foreign leaders, seeking a way to demonstrate they still hold leverage over the American economy, conclude they no longer want to hold American debt.

According to the US Debt Clock, America is currently almost $40 trillion in the hole. That number rose $2,240,136 in 60 seconds while I wrote this sentence. Our debt is equal to $124.3% of our nation’s gross domestic product, and we’re paying almost $1 trillion in interest on our debt.

Layer on top of that Mr. Trump’s disregard for NATO or anyone else and you’ll come to one question: why should NATO feel any obligation to support us? Especially when you add in the tariffs screwing up the global economy and workforce.

Of course, not all that debt is held by foreigners. Social Security trust funds, US investors and the Federal Reserve own roughly 3/4 of it, meaning we’re effectively borrowing money from ourselves.

Even so, with 25% of our debt - $10 trillion - held by foreign investors or other countries, just threatening to dump it onto the market and refusing to buy any more makes our economy EXTREMELY vulnerable. Here are some rough numbers I’ve dug up from NASDAQ and elsewhere of who holds how much American debt. These numbers are listed in billions of dollars.

Japan        United Kingdom   China                                  Cayman Islands           Canada                         Luxembourg                Belgium                       France                          Ireland                          Switzerland                  *foreign investors park investments here

$1,130 $810 $760 $450* $420 $410 $410 $360 $340 $310*

Added together, these 10 countries hold $5 trillion of American debt. Throw in Taiwan ($300); Singapore ($250); India ($230); Brazil ($212); Norway ($200); Saudi Arabia ($130); and South Korea ($120) and you’re up to $6.5 trillion.

This means these (and other) countries buy our bonds, and we – the American taxpayer – pay them interest so we can borrow money (which is now being given to American billionaires…a subject for another column).

Consider Canadian Prime Minister Mark Carney’s powerful speech in Davos this past Tuesday, in which he urged middle powers to band together. Recognize the strategic partnerships Canada just signed with China and Qatar. Observe the landmark trade deal signed between the EU and the Mercosur bloc in South America.

Now examine the reactions to Trump everywhere he goes, anywhere on the planet. He’s trying to set himself up as emperor of the world, and everyone except his base is tired of his whining and his lies. This helps explain the latest NY Times/Sienna Poll showing him with low approval ratings and many in the Trump 2024 coalition saying he’s focused on the wrong priorities.

I dunno – Randy Newman’s 1972 song Political Science just seems to resonate today. Is it just me who sees parallels when he sings: 

No one likes us, I don't know why

We may not be perfect, but heaven knows we try

And all around, even our old friends put us down

Let's drop the big one and see what happens

We give them money, but are they grateful?

No, they're spiteful and they're hateful

They don't respect us, so let's surprise them

We'll drop the big one and pulverize them

Here’s the bottom line: even if you don’t think we need NATO militarily or strategically, we need them economically. Because I don’t see Uncle Vladimir buying our bonds when he can’t even get his own economy out of the toilet.

All that he and his acolyte (Little Donnie, or as they used to call him at SPY Magazine – the short-fingered vulgarian) are setting us up for is to burn the entire US economy to the ground.

Hard times are coming, folks. Donald Trump is here to make it happen, and my crystal ball says it’s a sure thing at this rate.

Meaning it’s time to get out there and actively resist in any way we can.

See you at the ballot box!

Rob