MAGANOMICS - PREMIUM AND PULLBACK

4 April 2025

What's premium for the US economy is pullback for the investor.... We knew it was coming - here's Joseph Wang on March 31, 2025:

"Revenue Side

The Administration's overall revenue goals suggest that Liberation Day will unveil tariffs that are both large and persistent. Officials have guided towards a goal of a reducing the fiscal deficit from 6% to 3%, which implies a $2t deficit reduction. Recent communication suggests half of this amount will come from austerity, and the balance from higher revenue. Secretary Lutnick has proposed golden visas, tax reform, and tariff revenue as the three primary mechanisms to raise $1t a year. This suggests that the heavy lifting will have to come from tariffs, which would also be in line with many sizable sector tariffs recently announced. This post walks through the revenue raising plan and suggests the market is still not fully prepared for the structural shifts planned by the Administration."

For a long term saver, such as someone in their 30s, saving for some medium term projects, but basically investing for retirement, they just keep on ploughing in their monthly amount (but don't put your lottery winnings in just at the moment!), and no need to be disturbed by this downturn.

For someone in retirement, it's not quite the same picture. Capital preservation is the order of the day, because this determines what can be withdrawn over the medium term (the 4% rule).

The surprise for most people in this latest pullback was how the dollar devalued by almost 2% whilst Trump was talking.

This is a bit of a fork in the road because maganomics calls for a weaker dollar, but the dollar milkshake theory (which I will finish off writing about...) says the dollar will go higher ...until the final reckoning in a few years out of course, when the US dollar loses its reserve status.

It is simply not possible to call market highs and lows, but if you go back to 12 Feb - see my blog post of the 12 Feb "this is behind my feeling that markets have topped" - then there's been a 12% pullback ... with another 20 to 30 percent to come... who knows? Keep in mind that the US market is still well over valued. For an exceptional example, Tesla is on a P/E of 100.

The least that can be said is that we are risk off while Trump is fixing the economy ie implementing his maganomics strategies. 

Think like a businessman. Trump is a pretty versatile character, but at base he is a businessman. 

 

          Kaplan and Norton

     "The Execution Premium"

The balance sheet, the P&L and cash flow are king, big ideas and clever strategies are fine, but success is all in the execution. Ie how you turn strategies into programs of work and roll them out into operations.

What is premium for the US economy is pullback for us. "Short term pain."

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MAGAnomics

3 April 2025

 

Trump’s signature principles can be seen as a “three-legged stool".

Leg One: The 3-3-3 Plan
Sometimes called the “three arrows,” championed by Treasury Secretary Bessent and staff early on. The idea: keep deficits below 3% of GDP, achieve real GDP growth of 3%, and add about 3 million barrels per day of domestic oil production (or some big chunk of increased energy output). 

If you keep deficits under 3% and achieve 3% real growth (plus maybe 2% inflation = 5% nominal), the debt-to-GDP ratio goes down - and that's what counts. You don’t have to pay the debt off—just roll it over. As long as GDP keeps on growing faster than the debt, the ratio declines, which maintains sustainability and thus confidence. 

The 3 million extra barrels of oil help keep energy prices down, contributing to growth and taming inflation.

Leg Two: Navarro’s Tariff Strategy
Peter Navarro is all about tariffs and reindustrialisation. The mainstream view says tariffs are inflationary, like a sales tax on Americans. However, the reality is that with consumers tapped out, foreign producers often eat the tariff cost. That can be deflationary since it compresses producers’ margins. It pushes foreign companies to relocate factories to the States to avoid tariffs, creating U.S. jobs. Historically, the U.S. relied on tariffs from 1790 to 1962—what’s called “The American System". Income tax is a relatively recent thing. So this is actually a return to older policies. Contrary to the notion that tariffs are a consumer tax, the cost typically isn’t passed to American buyers if they can’t pay higher prices. Instead, foreign producers absorb it.

Leg Three: Miran’s “Mar-a-Lago Accord”
Rickards coined that term in 2019 in his book Aftermath, see Chapter 6. 

Stephen Miran is an adviser who wrote a key paper about the U.S. seeking a weaker dollar, reminiscent of the Plaza Accord in 1985. He argues that if foreigners try to offset U.S. tariffs by devaluing their currencies, the U.S. should intentionally weaken the dollar, not lose its reserve status, but orchestrate the devaluation. 

That’s reminiscent of Nixon in 1971 and the Saudi agreement of 1974, and James Baker in 1985—both times the U.S. government, the Treasury Department, acting under direction from the President (and sometimes in coordination with the Federal Reserve) devalued the dollar heavily yet kept the reserve currency because of other geopolitical deals (like as we said the petrodollar in ‘74, or the official G5 deals in ‘85).

 In addition

Miran also floated a plan to swap short-term Treasury bills for century bonds. These are 100-year zero-coupon or steep discount bonds. No coupon, you buy at a maybe 40% or 60% discount and in a hundred years your money is yours again.. 

This would ease the government’s immediate financing cost, but it could be a time bomb for the global collateral system because short-term T-bills act as key collateral in the 1000 trillion dollar derivatives markets. If you replace them with illiquid long-term bonds, you risk blowing up the derivatives market. That’s the bit that is most worrying in this whole maganomics

In addition, Miran suggested revaluing the Treasury’s gold certificates from $42 to something like the current price, $3,100 an ounce, adding eight hundred billion to the TGA Treasury General Account, without any new debt. 

Turning to the assets side of the balance sheet (think like a businessman!), also monetising the enormous state lands - selling or leasing vast federal lands to monetise resources.

And we haven't talked about deregulation and we haven't talked about golden visas for high talent high net worth individuals and a host of other deals to kickstart the economy, 

It’s a big, multi-step plan to reduce deficits, raise growth, reindustrialise via tariffs, cheapen the dollar... but with potential pitfalls if executed poorly (especially the T-bill swap).

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SANLUCAR

Sanlucar

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IS AI RUNNING GOVERNMENT

1 April 2025

"Five Government departments are using artificial intelligence to answer questions in Parliament.

Labour ministers were accused of providing "stock answers generated by a computer" when responding to questions tabled by their fellow MPs.

It comes after it emerged that Peter Kyle, the Science Secretary, has used AI software ChatGPT to help him come up with policy advice.

All departments were asked last month by Tory backbencher Peter Bedford whether they were using AI to respond to MPs' parliamentary written questions.

The Department for Business and Trade, the Department for Education, the Department for Work and Pensions, the Department for Science, Innovation and Technology and the Foreign Office all confirmed that they were."

          The Daily Telegraph reveals

This is a good thing because it speeds up the required research, it formats intermediate output in a way that is easy to follow - use of headings and bullet points etcetera - and it helps write quickly in a convincing, but also standard style.

Would someone critical of this use of Al also recommend that the prime minister travel to work by horse-drawn carriage rather than EV?

With the right series of prompts, AI will format output that can be checked and then  fed back in to write a suitably nuanced answer in a style suitable for the houses of parliament.

For a writer it's  most helpful., it helps collect and analyse and organise and support thoughts into a broad and balanced comprehensive perspective of the writer's choosing. This output can b returned for help in communicating an interesting output.

So far so good for PMQs ?

Well, good for the writer, looking for a speedy, comprehensive and stylish text. But the writer is not making policy!

RASCI

The RASCI framework is widely used in organisations for deciding the roles of participants in a project. 

If you "think RASCI", it's a way for assigning responsibility in a project team, you can immediately see that the minister answering questions is accountable to parliament for government policy, but is not responsible. Accountable but not Responsible. You could say that his Support team and simply Informs him of what he must Communicate.

Shock horror?

Not really because it's always been that way. All that's happening is AI is helping the team of civil servants produce standard answers more quickly. If the minister's team is responsible for the content, then presumably they Validate and Improve the AI output, before giving the minister their "lines", and the minister Verifies before delivering to parliament.

The risk is the same everywhere, which is that with this massive and powerful support, we become lazy and uncritical, our mental faculties decline, and without a strict error check and validation process, for the minister to sign off, then things could go very wrong. Because surprise surprise AI can make mistakes.

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THE DANGER OF APOCALYPTIC GOVERNANCE

30 March 2025

The Danger of Apocalyptic Governance

In the course of history, political ideologies have taken many forms. Some are grounded in economic theories, others in visions of national identity, liberty, or progress. But in the 21st century, we are witnessing something altogether more dangerous: the resurgence of apocalyptic thinking within governance.

Apocalyptic governance is not just the belief that the world is nearing collapse. It is the conviction that collapse is inevitable, even desirable, as part of a divine or historic plan. And more dangerously, that leaders have a role to play in accelerating it.

This mindset is not limited to fringe groups. It is increasingly embedded in the policies and rhetoric of powerful political movements and governments, particularly in the Middle East and parts of the West. When ancient religious prophecy becomes a framework for modern statecraft, the results are perilous.

Consider the concept of Greater Israel, held by some within the Israeli political establishment and strongly supported by Christian Zionists in the United States. For many adherents, this vision is not just about land—it is about fulfilling biblical destiny. It sees geopolitical negotiation as heresy, and territorial expansion as sacred duty.

This vision often draws from the Book of Revelation, a highly symbolic and controversial text in Christian scripture. Revelation describes a sequence of divine judgements: the breaking of seven seals, the sounding of seven trumpets, and the pouring of seven bowls of wrath. It culminates in the great battle of Armageddon, where forces of good and evil clash before the final judgement. The arc moves from judgement and destruction to renewal and eternal peace — but only, unbelievably, after a total purification of the world through fire, war, and divine justice. It is a worldview that sees history as linear, redemptive, and final.

For secular observers, it may seem incredible that such imagery could play a role in modern politics. But in the United States, influential evangelical groups openly support policies aligned with this eschatology. In the Islamic world, some extremist movements also view current conflicts through a similar apocalyptic lens. These beliefs are not only shaping public opinion—they are influencing foreign policy, military action, and diplomatic inertia.

Apocalyptic thinking reframes compromise as weakness and demonises opposition as evil. It replaces policy debate with moral absolutes. And it renders long-term planning irrelevant, because the end is always near.

It is therefore essential that the public, especially in democratic societies, recognises and resists the infiltration of such ideology into governance. This begins with education: understanding the symbolic nature of apocalyptic texts, the history of their interpretations, and their misuse in political discourse.

We must also amplify voices—both secular and religious—that advocate for peace, stewardship, and cooperation over confrontation. Judaism, Christianity, and Islam all contain rich traditions of ethical responsibility, care for creation, and the pursuit of justice. These must be separated from the narrow eschatologies that seek to turn faith into a battlefield.

The idea that the world must be destroyed in order to be saved is a dangerous myth. In the hands of those with power, it becomes not just a belief, but a blueprint. And that is not a religious question - it is a matter of survival.

It is time to reclaim governance as a discipline of responsibility, not redemption. The stakes are too high for anything less.

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FROM EARTHQUAKE TO ARMAGEDDON, HOW APOCALYPTIAN THINKING SHAPES THE MODERN WORLD AND WHAT TO DO ABOUT IT

From Earthquake to Armageddon: How Apocalyptic Thinking Shapes the Modern World And What To Do About It.

"We can learn from cultures that saw time as a circle, not a line. From leaders who act more like gardeners than generals. From systems that focus on repair, not wrath."

Two days ago, an earthquake shook Northern Thailand. It came not as an isolated event, but as the third in a series of natural shocks: flooding in late 2024, annual pollution past dry season, and now  earthquake.

On its own, each disaster could be seen as unfortunate, perhaps a quirk of nature. But taken together, they point to something larger, something many people feel in their bones: that we are living in a time of cascading crises, even End Times.

The hope of this article is that by understanding the apocalypse mentality, we can avoid slamming into Armageddon.

Chapter 1: Local Shocks in Southeast Asia

Northern Thailand and its neighbours have endured a string of environmental hits:

• Floods  rivers that overflowed into streets and submerged fields and villages
• Pollution from crop burning and a haze from cleaning up forests.
• And now a 7.7 magnitude earthquake with tremors felt across the region

These disasters no longer feel rare or isolated. In places like Southeast Asia, they’re becoming seasonal, cyclical, even expected. And in some ways they are accelerating.

Chapter 2: Global Fault Lines

Beyond the local environment, tectonic pressures are building globally. Globally, there are worrying signs of more disasters to come:

• Public Debt Pile: Sovereign debts are ballooning. When the bill comes due, austerity bites, stability crumbles, the economy could enter recession ( this is not financial advice, but sell out to cas and gold, Monday) and people will take to the streets.
• Trade Wars: Globalisation is fraying. Tariffs and sanctions and the US dollar are the new weapons. 
• Hot Wars and Security Flashpoints: From Ukraine to Gaza to the South China Sea, conflict is turning conventional again. 
• Climate Change: The slow-burning catastrophe that underpins them all. Droughts, fires, floods, and forced migrations.

Each of these is a crisis in itself. But together, they are forming a perfect storm. And in that storm, old narratives begin to resurface.

Chapter 3: Apocalyptic Thinking is in Power

The world’s three great apocalyptic religions—Judaism, Christianity, and Islam—were all born in the harsh, unforgiving landscapes of the Middle East. In the desert, where survival is precarious and life can end in a moment, where people are forced to huddle together in groups, travel at night and conform to strict rules of behavioural conduct, it makes sense to see existence as a test. The idea of a moral universe where God judges good and evil, grew naturally in a place where life itself felt like a constant reckoning.

These religions gave us a powerful narrative: the world is fallen, history is a battleground between light and darkness, and in the end, there will be a final showdown - an Armageddon - where justice is served, the wicked are destroyed, the Saviour returns to govern the good.

That narrative would suggests that geography has shaped religion, and in turn, religeon with its prophecy and values has shaped geopolitics.

In the context of the apocalyptic mindset, geopolitics becomes a moral battlefield - not just about power and control, not just for territory or resources or mates, geopolitics is about fulfilling prophecy, choosing sides in a cosmic drama, and shaping history toward a final reckoning.

The Apocalyptic Mindset

For a modern, secular, or atheist observer, it must be quite baffling to imagine that the world's most powerful nations are guided, consciously or not, by an ancient narrative born in a desert thousands of years ago.

The Book of Revelation

The Book of Revelation, written near the end of the 1st century CE, provides the core script. It describes a scroll sealed with seven seals. As each seal is broken, a new wave of judgement is unleashed. 

The four horseman of the Apocalypse

The first four seals bring forth the infamous Four Horsemen - the 

Conquest; War; Famine; Death.

As the seals continue to break, the world descends into chaos. Next come

The Seven Trumpets

Hail and fire scorch a third of the earth; A burning mountain poisons the sea; A star named Wormwood poisons rivers; Sun, moon, and stars go dark; Demonic locusts torment humanity; Angels release deadly armies; And finally, there is a divine proclamation.

But it’s not over. Then come 

The Seven Bowls of Wrath

Boils and sores; Seas and rivers turn to blood; Scorching sun; Darkness and pain; The Euphrates dries up and armies gather; And finally, an earthquake and storm that tears the world apart. Then, 

Armageddon

A final battle between Good and Evil. The righteous are saved. The wicked destroyed. A new heaven and earth are created, but only after total cleansing.

It’s a potent mythos. But when embedded into the political and military thinking of global powers—especially in the Middle East, where many actors see prophecy unfolding in real time, it becomes extremely dangerous - just consider the situation in the Middle East today..

This isn’t fringe thinking. In the United States, 50 millions evangelical voters and key policymakers sincerely believe they are watching Revelation come true. In Israel, elements of the religious right see war as part of a divine timeline. In parts of the Islamic world, apocalyptic prophecies also shape expectations.

For a European raised on secularism, science, and diplomacy, this seems amazingly irrational. But if you believe the world must end first in order for redemption to come, you may feel justified, even compelled, to accelerate its demise.

This is why understanding the apocalyptic mindset isn’t just academic. It’s a matter of global survival.

From Prophecy to Policy

So how did it apocalyptic thinking become embedded into political and military thinking?

We can see that the apocalyptic mindset didn’t stay in the scriptures. It travelled with empires.

Roman emperors adopted christianity with its prophecy. Islamic rulers justified expansion as divine mandate. European colonisers saw themselves as instruments of God's plan, bringing light to the heathens.

In modern times, especially in the United States, apocalyptic thinking still has influence. Evangelical movements see Israel as the key to end-time prophecy. Wars are framed in terms of good and evil. Leaders speak of existential battles.

This isn’t just religious theatre. It seeps into tje deep state and how decisions are made. It justifies military action. It fuels zero-sum thinking. It blinds us to compromise.

Nowhere is this more evident than in the Middle East itself, where multiple actors - Zionists, jihadists, American evangelicals - see current events as part of a divine script.

The danger is obvious: if you believe the world must end in fire for salvation to come, what incentive is there to stop the fire? Surely there are other ways of seeing?

Chapter 4: River Cultures and Regenerative Thinking

Indeed, apocalyptic and times are not the only way to view the world.

Religions born in fertile, river-fed regions - like Hinduism, Buddhism, Shinto, and ancient Egyptian beliefs - tend to see the cosmos differently. Here, the world isn’t something broken to be destroyed and replaced. It’s a cycle to be tended, harmonised, and renewed.

Where the desert strips life down to its moral bones, the river invites us to see life as rhythm, regeneration, and balance.

This isn't romanticism. It's an invitation to reframe our crises. Floods, pollution, and earthquakes don't have to signal the end. They can be warnings, yes. But also calls to adapt, repair, and re-root ourselves in responsibility rather than destiny.

Chapter 5: A Different Future

If apocalyptic thinking has shaped the mindset of many world leaders, it doesn't have to define the future. We can challenge it:

• By exposing the myth of inevitable destruction
• By embracing systems thinking over saviour fantasies
• By elevating cooperation over conquest
• By recognising that moral clarity doesn't require moral war

Governance doesn't have to be about choosing sides in a cosmic battle. It can be about stewardship, tending to the fragile web of life with humility and care.

We can learn from cultures that saw time as a circle, not a line. From leaders who act more like gardeners than generals. From systems that focus on repair, not wrath.

Conclusion: From Apocalypse to Adaptation

The earthquake in Thailand reminded us that the ground can shift under our feet. But it also reminds us that we are not helpless. We are storytellers. The stories we choose matter.

We can choose a story that ends in fire. Or we can choose one that begins again, with fertile soil, with rivers, and with life.

If we want to survive the coming storms - economic, political, military, environmental, and spiritual - we need leaders who think like gardeners, not warriors.

The desert gave us Armageddon. But the river still runs. And it offers a different future.

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