The Bond Reverse

We are, by now, used to abrupt u-turns by the Trump Administration (including the first one).  It's a strategy to assert dominance, a strategy used by bullies and abusers.  One of many strategies typically used by bullies and abusers that we're having to become familiar with.

So the sudden 'pause' in the tariff policy (by a President who proclaimed  “MY POLICIES WILL NEVER CHANGE”) was predictable; I would have put money on it, if I were inclined to gamble.  But the reason for this reversal is interesting.

The reason involves a stratum of global economics which is way above my pay grade here at New World II, and so I can just sort of summarize it.  You're free to find a lot more detail in the many articles that have appeared in the last day or two.  It's about the bond market.

Specifically, US Treasury bonds which, apparently, are how we accumulate our national debt, or The Deficit.  We sell bonds, usually to other countries; they give us money for the bonds, with the promise that we'll pay them back plus interest at some time in the future.  

Treasury bonds have, apparently, been a pretty stable, conservative risk, at least until this week.  This week, after repeated acts of insanity at the highest levels in the US, countries which held a lot of our debt decided to dump it.  The tariffs were the last straw, it seems; a great sell-off ensued and the value of Treasury bonds tanked.

Now if I've learned one thing from our financial advisor (who, it must be said, is very patient with me), when stocks go down, bonds go up, and vice versa, which is the reason you have a "balanced" portfolio, with a good representation of each.  But this week, as stocks went down (a lot), Treasury bonds went down, too.  

"Because bond revenue pays for the cost of government programs that tax revenue doesn’t cover, worries abounded that Trump’s broader agenda was in jeopardy," was how CNN put it (in an article which described the 'pause' as "one of the most humbling retreats of [Trump's] presidency").  One of the elements of "Trump's broader agenda" is trillions of dollars of tax cuts to the 1%, so that same 1% were storming the gates (meaning Trump's phone) to make it stop.  Continuing the bond slide much further would also do enough damage to our economy to cause a recession, not to mention the economies of bondholder countries, but I think that was probably secondary to the Big Rock Candy Mountain promised in the tax bill (which has gotten its start in the House) that they could see slipping away.

So Trump can be turned around, but only by a concerted effort of the most powerful people in the world.  And that leaves democracy where...?

And I dreamed I was flying

And high up above my eyes could clearly see

The Statue of Liberty

Sailing away to sea

And I dreamed I was flying