by JayasankaranKK on April 12, 2025
“All the lights on the world’s economic system are flashing yellow.” – Paul Krugman, Nobel Prize-winning economist
It is said that a little knowledge is a dangerous thing, but a lot of ignorance is much worse.
There is a guy in the White House who’s convinced, for example, that a country that’s tariffed pays it and that’s how to punish it. It seems to be the Donald’s way of conducting international trade.
It’s why Paul Krugman, who wrote the primer on international trade, is sounding the alarm on the world economy: he thinks it may be on the brink of a 2008 or a 2020 crash.
The difference is that the first was caused by the bursting of a US housing bubble and the second, by a global pandemic. There is no reason for a third. If it occurs, it will be entirely self-induced, a Trump-cession if you like.
Trump inherited a strong economy when he took office a mere two months ago. During the period, the Disruptor-In-Chief sent global markets reeling last Wednesday by blasting it with more tariffs than Messrs Smoot and Hawley ever envisaged. The duo was responsible for the 1930 Tariff Act which exacerbated the Great Depression.
Having practically bombed the markets into submission, he “paused” the move, a week later, for 90 days.
Even so, there is now a blanket 10% tariff on all exports to the US. Separately, Trump singled out China as the US’ main threat: he slapped a 145% tariff on all Chinese imports. Beijing retaliated with an 84% tax of its own.
It’s heightened risk: US bond yields have risen making it more expensive for the US to borrow money. And it’s ushered in a period of what Krugman describes as “destructive uncertainty.”
The Economist newspaper was briefer: it was just “bonkers.”
What’s emerged in the wake of Bonkers is a New World Odour: a reek of narcissism so thick, it’s sickening. Trump’s crude and self-absorbed ways were on full display post-pause. He boasted that many countries were pleading with him to renegotiate tariffs: “They are kissing my a##.”
Just when you think he’s hit rock-bottom, he grabs a shovel and starts digging.
Such is the distrust of the man that some people actually think the whole episode might have been staged to take financial advantage of the crashing markets. In theory, a person who knows the markets will plummet could make a fortune if he’d short-sold the market beforehand.
Some Democrats notably Adam Schiff have vowed to find out. But so far there have been no outright accusations.
Even so, it is no secret that Trump has used his office for personal gain. It’s ranged from the petty – launching his own coins – to the heroic: Forbes, a staunchly Republican publication, estimated that his firms raked in US$2.4 billion during his first term in office.
Trump did not divest his businesses when he took office, pledging, instead, not to incur any conflicts of interest. He did.
The man’s grifting ways were also widely reported during his last campaign against Kamala Harris but it did little to damage him. Nothing, it seemed, could faze Uncle Scam.
His handling of the US economy could prove the turning point.
WE