Donald Trump
Donald Trump will never see the inside of a prison. Neither will he be fitted for an orange onesie.
Not because he is innocent. Based on the evidence I have read to date, he is guilty as Hell. And I am sure a lot more will come out during the numerous trials he faces.
No, he will remain a free man for several reasons. One is that his lawyers will use every trick in their legal library to delay, delay, delay. They will appeal against the Washington venue for the trial there. They will also claim that the Washington judge is biased. The same with New York.
Their objections will be dismissed. But justice requires that they be heard and that takes time.
Next, there is the jury selection. One recent trial took several months to select the jury because they went through over a thousand potential jurors. In the case of Trump, the difficult is in finding 12 people in politically polarised America who do not have an opinion of the man and his election lie.
Even if a jury is selected, a venue is agreed for all four trials and impartial judges are found, there is a reasonable chance that a dedicated MAGA supporter will find their way onto a jury and block a guilty verdict. Unanimous jury decisions are required in American trials. That is a high bar for the Trump prosecutors.
Let us suppose he is found guilty on a felony charge in a court by a jury somewhere in America. The verdict is then likely to outrage and activate his MAGA base to such an extent that Trump wins the 2024 election. If that happens he will simply pardon himself and his many co-conspirators. The case in Georgia will be more difficult because he can only give pardons for federal crimes and Georgia is a state crime. But his highly paid lawyers should be able to find a loophole.
If they don’t, there is the appeal process. If Trump is found guilty he will appeal. The appeal process can extend for years, possibly up to and beyond Donald Trump’s allotted time on this Earth.
Russian spies
Spies, spies, everywhere – especially the Russians. Which is not surprising. They had a huge spy network in Tsarist days. It was massive under the Soviets and, of course, Vladimir Putin was a KGB agent in East Germany.
There is also the fact that Russia is at war, oops, I mean conducting a “special military operation” (SMO) in Ukraine. The SMO means that Russia needs intelligence on who in NATO is supporting what, when, where, how and why in Ukraine. Also, who they can support to espouse the Russian cause, scatter seeds of division and discontent and maybe even overturn a government or two.
And finally, if the war escalates, how best to attack NATO.
The latest alleged Russian spies to be uncovered are in Britain – three Bulgarians who appeared in court this week to be formally charged before their trial. This in itself, is unusual, usually spies are simply sent packing back to Moscow. Rarely are they imprisoned, which is the fate which awaits the Bulgarian Three if they are found guilty.
The UK is not the only target of the FSB and GRU (the two main intelligence agencies in Putin’s Russia). SVT Nyheter, a Swedish television investigative news programme, reckons that at least a third of all Russian diplomats in Nordic countries are spies.
Nordic intelligence chiefs are also concerned about Russian fishing boats in the Baltic and North Sea. They claim that most of them are spy ships gathering information about wind farms and seabed communication links in case of war with NATO.
Earlier this month, three Russian spies were expelled from Germany. Poland broke up a 15-person spy ring. Finland booted out nine, Spain three. France, Italy, and the Netherlands have all recently expelled Russian diplomats for spying. The record, however, is currently held by tiny Moldova, which threw out 45 Russian diplomats who they accused of plotting a coup.
Ukraine
They were holding their breaths this week on the deck of the cargo ship the Joseph Schulte. The reason? The ship is a blockade runner.
It was not carrying guns. It was transporting Ukrainian grain – 30,000 tonnes bound for hungry African mouths. To reach international waters from Odessa it had to pick its way through a Russian minefield and past Russian warships.
A month ago this was not a problem. Ukraine and Russia had a deal to allow ships carrying Ukrainian grain to pass through the Russian blockade. Then on July 17th Vladimir Putin scrapped the deal, started bombing and shelling Ukraine’s onshore grain storage facilities and threatened to do the same to any ship carrying Ukrainian grain.
In fact, Russian warships did fire warning shots across the bows of foreign ships trying to enter Ukrainian ports. The ships turned back.
This week Ukraine – and the captain and crew pf the Joseph Schulte – called Putin’s bluff. The Ukrainian navy guided them through the minefield towards the international waters of the Black Sea. They gambled on Putin’s good sense to protect them from an attack by a Russian warship. If Putin sinks a ship of a third country then he is effectively attacking that country’s territory. That is an act of war.
In the case of the Joseph Schulte, the Ukrainians were hedging their bets because the ship is Hong Kong registered which means it is Chinese. Russia relies heavily on Chinese diplomatic support. But what would happen if the ship was British, American or French?
United States
Bidenomics is working. Or is it? Growth in the US is a healthy 2.6 percent – the best by far among the G7 countries. Inflation is 3.1 percent, down from 8.2 a year ago. Again, much better than most countries in the developed world.
Borrowings are extraordinarily high – $19.19 trillion dollars which represents a staggering 106 percent of the country’s GDP. However, most of the borrowed money is being spent on attracting foreign businesses and building the national infrastructure. So, in theory, the investments will result in increased tax revenues which will lower the public debt.
But there is a thorn in this rosy picture – people. Biden needs people to produce. Currently there are not enough of them. Unemployment levels are 3.5 percent which is to say that there is full employment in America. In fact, there is a labour shortage.
One of the key purposes of President Biden’s Inflation Reduction Act (IRA) was to attract foreign companies to build factories in America and bring American factories home. Sounds reasonable, but the factory owners are finding it difficult to find people to run them.
One sector that Biden wanted to encourage was the manufacture of computer chips. He passed the Chips Act alongside the IRA to tempt foreign companies. The world’s largest manufacturer of semi-conductors, the Taiwan Semi-conductor Manufacturing Company (TSMC), was tempted enough to invest $40 billion in a factory in Arizona.
But the TSMC can’t find the workers to even open it, let alone run it. The factory’s first chips were meant to roll off the production line next year. Launch date has now been put back to an iffy 2025.
Perhaps the TSMC will fare better in Dresden where EU incentives have encouraged them to invest $10 billion in a factory to build computer chips for Germany’s car industry. But, perhaps not, Dresden’s unemployment levels are 2.1 percent.
* Tom Arms is foreign editor of Liberal Democrat Voice. He also contributes to “The New World” magazine and lectures on world affairs. He is the author of “America Made in Britain,” two editions of “The Encyclopaedia of the Cold War” and “The Falklands Crisis.”
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21 Comments
Tom, many reports (including by the BBC) of prosecutions have stated or implied that there will be multiple trials next year, with no mention of the undoubted scope for delays. Surprising.
“Borrowings are extraordinarily high – $19.19 trillion dollars which represents a staggering 106 percent of the country’s GDP”
They aren’t high when compared to total assets. If someone is earning $100k pa after tax, owns a house worth $1 million, but still owes $106k to the bank on his mortgage would you be equally ‘staggered’?
“Unemployment levels are 3.5 percent…….the TSMC can’t find the workers to even open {their new facory}, let alone run it.”
Would it make any difference if unemployment were 10%? They wouldn’t be any more likely to possess the necessary skills to make semiconductor chips than those who are are currently in employment doing whatever they are doing.
As always economics is about resources rather than money per se. Money can help prioritise existing resources but if you need lots of skilled workers to start up a new industry it will obviously take time to get to where you want to be.
They’ll have the same problem in Dresden too!
Tom, could Mr Trump see the inside of a prison due to breaching his bale conditions? That seems to be what some commentators in the UK are saying at the moment.
Tom:
What is your interpretation of the provision in the U.S. constitution, section 3 of the 14th amendment, which states that no person who has taken an oath “as an officer of the United States” can hold office if they “have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof”?
Tom: Surely a Guilty verdict for Trump would energise his opponents as well as his supporters. Trump’s MAGA base is loud and form the majority bloc in the Republican Primaries, but is a minority within the general electorate. Yes a substantial minority, but they are the ONLY people who are *more* likely to vote for Trump if he is convicted (but surely they’d vote for him come what may so it probably wouldn’t make much difference. Everyone else (Democrats and swing voters) would be repulsed by the event and would be more likely to turn out against him.
Sorry everyone for not replying to your excellent comments/questions sooner. I was without my computer in a Welsh blackspot for a long weekend. But better late than never
Peter Martin, The ratio of debt to GDP is generally regarded as one way of measuring the economic health of a country. That is why the EU has set a target of 60 percent for its members. Germany is 59.8 percent. Other EU countries are less successful. France is 98.1 percent and Italy is 134 percent. In the UK economists are wringing their hands because we stand at, I believe, 106 percent. The Japanese, however, do not seem too worried even though there debt to GDP is 226.1 percent.
You are partly right when you say it is quality rather than quality that counts when it comes to finding the right employees. However, it is also true that a large poll is more likely– but not certain– to include a larger quantity of qualified workers. It is certainly the case that the Taiwan Semi Conductor Manufacturing Company is having difficulty with both quantity and quality when it comes to the US. And I think they will have the same problem with Dresden. My line at the end was an attempt at irony. It clearly failed.
@Yusuf Osman. The subject of raising the 14th amendment has been raised by various parties in the US. I do not think it will work. This is because Trump has not been charged with either insurrection or treason, probably because Special Counsel Jack Smith doesn’t think he could make such a charge stick. He has instead been charged with conspiring to defraud the government, conspiring to disenfranchise voters and corruptly obstructing a congressional procedure. I understand that Democratic activists in some states are planning to claim that those charges amount to insurrection and/or treason and will use that interpretation to have his name struck off the ballot. 1- I don’t think they will succeed and 2- I think such a move would feed Trump’s claims of a political witch hunt and backfire.
Which brings me to Alex’s questions about galvanising voter bases. You may be right. Time will tell. At the moment, however, the MAGA voters appear more galvanised than the Democrats. This is for several reasons 1- Biden’s age. A lot of Democrats and Independents are concerned about that. 2- Kamala Harris is unpopular and she would succeed Biden if he dies of old age while in office. 3- Poll shows that Biden is losing support among African-Americans and Hispanic voters, traditional Democratic voters. 4- Biden’s economic performance has yet to result in more money in the voters’ pocketbooks. 5- Hunter Biden is threatening to tar Joe Biden with the brush of corruption and this will introduce a stiff dose of whataboutery into a Trump v. Biden return match. All the above is why Trump and Biden are neck and neck in the polls. But then it is a long time before election day and the Trump trials have yet to start.
tom arms 22nd Aug ’23 – 1:09am:
That is why the EU has set a target of 60 percent [of GDP] for its members.
As specified in the Maastricht Treaty’s Stability and Growth Pact (SGP) along with a 3% limit for annual budget deficits. Breaching the latter resulted in the EU putting the UK into Excessive Deficit Procedure (EDP) with its prescription of “fiscal consolidation” (austerity measures)…
‘Austerity has not been a Tory choice, but an EU one’ [July 2019]:
https://joelrwrites.wordpress.com/2019/07/04/austerity-has-not-been-a-tory-choice-but-an-eu-one/
Most EU members are currently required to implement “fiscal consolidation”…
‘Fiscal rule legislative proposal: what has changed, what has not, what is unclear?’ [May 2023]:
https://www.bruegel.org/analysis/fiscal-rule-legislative-proposal-what-has-changed-what-has-not-what-unclear
In the UK […] we stand at, I believe, 106 percent.
100.6% for 2022/23, but now 98.5%…
‘Hunt faces calls to cut taxes after borrowing boost for Treasury’ [August 2023]:
https://www.telegraph.co.uk/business/2023/08/22/lower-government-borrowing-raises-hopes-tax-cuts/
@ Tom Arms,
“The ratio of debt to GDP is generally regarded as one way of measuring the economic health of a country.”
Yes it is. I’d say “generally and wrongly regarded….”.
The debt, ie govt debt, is the sum of all previous Government deficits. At least it would be if it were measured correctly. So if we go back to year zero, the debt is the amount that the government has spent into the economy which hasn’t come back as taxes.
So where has the extra gone? I’ve got a few euros in a ziplock bag. Others in the EU have lots more in bank accounts etc.
If the EU runs a truly common currency then the debts of the individual EU countries are no more significant than the debts of the individual US states. Did the people of the EU know what they were letting themselves in for when they adopted the euro? Their 60% example isn’t a good one to follow or even try to follow. The warnings weren’t just from leftish Keynesians. Milton Friedman is worth a read too.
The US govt has decided to try to become less reliant on Taiwanese Semiconductors. However it’s going to be more expensive to make them in places like Germany and Texas. But not impossible. The USA government has made a political decision and I’m sure there are enough smart guys in the Treasury there who’ve figured out what the bill is likely to be.
https://www.project-syndicate.org/commentary/the-euro–monetary-unity-to-political-disunity
The Taiwan Semi-conductor Manufacturing Company (TSMC) should be able to attract considerable numbers of Chinese students that study in US Universities China sends more students to US universities than any other nation.
This is particularly the case as China has stopped releasing youth unemployment figures after the figure hit consecutive record highs China stops releasing youth unemployment data
@ Joe,
“The Taiwan Semi-conductor Manufacturing Company (TSMC) should be able to attract considerable numbers of Chinese students”
They’ll do like any other student and take the best offer available which may not be doing what the US govt would like them to do. The US govt will get the right people in the right numbers but only if they pay them enough.
Also, what about the security risk with Chinese Nationals? They don’t even have to act as spies in the conventional sense. They can just work for a few years in the US or Germany, and then their accumulated knowledge back home to China.
According to the US Census Bureau, there are over 5.4 million Chinese Americans in the US, so not much point in worrying about infiltration by economic competitors. If the Chinese government could acquire an Atom bomb by 1964, I don’t expect semi-conductor technology would be too much of a challenge. Chinese companies can already produce advanced chips and will almost certainly catch-up with the latest technology within a few years. However, that didn’t stop the Trump administration deporting over a 1000 Chinese students US revokes visas for 1,000 Chinese students deemed security risk
When I started working in the USA in 1981 public debt was around 31% there. The Federal reserve Chairman had raised the bank rate to 20% and that was crippling farmers, small businesses and mortgages alike. The personal bankruptcies were followed by a swathe of bank failures and then a savings and loan crisis.
The combination of the Fed’s tight money policies and the expansive fiscal policy of the Reagan Administration (large tax cuts and a major increase in military spending) produced large federal budget deficits and significant macroeconomic imbalances in the U.S. economy. The combination of growing federal debt and high interest rates led to a substantial rise in federal net interest costs.
US Federal debt has now surpassed WW2 levels US National Debt by Year and the return to higher interest rates has seen the beginning of a number of sizeable bank failures. The nature of the banking industry is such that aggressive competition for loans and deposits will always drive excessive risk taking without tight regulation and close monitoring of bank’s fiduciary responsibility to protect customer deposits.
Large fiscal deficits will drive asset inflation and eventually consumer price inflation that will in turn rapidly drive up interest rates, leading to instability in financial markets, The pain is ultimately borne by small farmers, small business owners, mortgagors and those relying on personal debt while everyone (but a small few asset rich) are made poorer by inflation.
The near zero interest rates in the USA since 2001 led to house-price inflation and the sub-prime mortgage issues that sparked the banking crisis in 2008. Zero interest rates were in large part possible because of the deflationary effects of hundreds of millions of low paid Chinese workers flooding global markets with cheaply produced goods. With the era of zero interest rates over, what comes next for the US economy is likely to be a bumpy ride as it tries to stabilise economic conditions without reigniting inflation.
@ Joe,
The Federal Government can choose to have whatever level of interest rates it likes. The short term rate is decided by a committee. The longer term rate by the intervention or otherwise of the central bank in the bond markets. So, it can’t have been too concerned about high interest rates payments.
“Large fiscal deficits will drive asset inflation and eventually consumer price inflation that will in turn rapidly drive up interest rates, leading to instability in financial market”
Fiscal deficits are neutral in macroeconomic terms. If, for example, the Government were to pay me £1000 in return for something supplied, its deficit will rise by this amount. It wouldn’t matter if it were a bond or cash. It has no effect on the economy, and the debt remains the same if I choose to do nothing with it other than save it for future use. It’s when I decide to spend it into the economy that it will have a reflationary/possibly inflationary effect. At the same time the government will be reducing its debt as it begins to collect taxes on each transaction, and as that £1000 is spent and respent in the economy. On each respending there is a lesser amount available due to taxes being paid until eventually there is nothing left.
This has no direct effect on interest rates. As always they are entirely under Govt control.
The near zero interest rates in the USA since 2001 led to house-price inflation…. True. That’s because they weren’t near zero previously.
…..and the sub-prime mortgage issues that sparked the banking crisis in 2008.
Not true. It was the Fed’s decision to raise interest rates from 2006 onwards that caused the crash. This converted a high level of private debt into a high level of bad private debt which caused obvious and severe problems. At least they should be obvious except that mainstream economists somehow don’t see it and still think the use of monetary policy is the best way to regulate the economy.
Peter Martin,
Russia has just increased its interest rate from 8.5% to 12% to slowdown a precipitous decline in the Ruble against the dollar, euro, yuan and rupee amongst others. That is not a free choice at the whim of the Russian government. It is a necessary response to its economic condition and excess money creation in the Russian economy.
Fiscal deficits are not neutral where it involves new money creation that is spent into the economy i.e where banks are lending to the government via purchases of government bonds as has been the case for a number of years. The purchase of bonds is the equivalent of a bank loan where new credit/deposits are created. It is not the borrowing of existing savings. The creation of those new deposits by banks is facilitated by the Central bank’s creation of reserves and injection into the economy by buying government bonds in the secondary market. When that is done on a large scale we call it quantitative easing.
The US Federal reserve began raising interest rates from 2004 to 2006. It did so in response to rising consumer inflation concerns and an overheated housing market that was experiencing unusually rapid price inflation. It was not voluntary. It was in accordance with the Federal Reserve’s dual mandate to target inflation and sustain high levels of employment.
@ Joe,
Can we be clear about what you’re arguing here?
You’re saying that when a govt is borrowing too much, which is the same thing as saying its deficit is too high, it (or its not-so-independent central bank) needs to push up interest rates. This means that lenders will want to lend it even more money which will lead to it borrowing even more which will then mean it has to push up its interest rates higher still …
Does this really make any sense? If so, I can’t see it.
We tend to agree that when Govt is spending more into the economy the effect is reflationary and even inflationary if done to excess. I’m totally consistent in saying this. However you seem to make an exception on the question of higher interest rates. You’ve somehow convinced yourself that unnecessary government spending on these is deflationary.
Peter Martin.
you argue that governments can choose whatever interest rate they wish. In the real world central banks mostly react (often coordinated) to economic conditions created by global financial markets. Turkey is a case in point. When inflation was at 20%, Erdogan (against the advice of his economic advisers) ordered his central bank to lower interest rates. The result was an increase in inflation to 85% and the collapse of the Turkish Lira to the point where those Turks who can, insist on using the US dollar or Euro for business transactions and for savings accounts, undermining the role of the national currency as a medium of exchange and store of value even further. Erdogan has let inflation rip rather than raise interest rates or taxation. Now that he has been re-elected, interest rates have been increased by 9% to 17.5% Turkey: are we witnessing the end of Erdoğanomics?. Higher taxes will perhaps soon follow although with food inflation at 61%, this would not be practical until tighter monetary policy has begun to significantly reduce inflation and wages begin to rise to ease the cost of living crisis there.
When a government has higher than normal borrowing requirements, it needs to offer a sufficiently competitive interest rate coupled with a stable currency to attract domestic and overseas savings. If it cannot attract sufficient savings (as is typically the case in wartime), then it must resort to higher levels of taxation or alternatively money creation in the banking system and accept the inflationary consequences as Turkey has i.e, inflation just becomes another form of taxation, albeit less visible than direct tax increases and easier to point the finger at causes beyond government economic policy.
As to how higher interest rates impact on inflation see the Bank of England explainer How do higher interest rates help to lower inflation?
@ Joe,
“In the real world central banks mostly react (often coordinated) to economic conditions created by global financial markets.
They do and there is a pressure on any individual bank/govt to do the wrong thing if everyone else is making the same mistake. Which I agree is a big problem.
“When a government has higher than normal borrowing requirements, it needs to offer a sufficiently competitive interest rate coupled with a stable currency to attract domestic and overseas savings”
No matter ow you spin it, this is an argument for saying that when a government is borrowing too much it needs to raise interest rates so it can borrow more.
Governments should decide what level of interest rates they would like to have and do everything possible to keep them constant. It’s the changes that cause the problems. Reducing them creates asset price bubbles. Increasing them bursts the bubbles which can lead to economic crashes. Inflation and aggregate demand should be regulated via the taxation system which, as well as being socially fairer, is the only way to ensure that regulation is effective and doesn’t create the same boom and bust type problems.
Interest rates are determined by a combination of global financial conditions and domestic fiscal policy. Domestic fiscal policy is within government control. If budgets are principally financed by taxation with borrowing utilised for capital expenditure programs then that tends to approximate the increase in money supply required to accommodate sustainable economic growth.
Additional borrowing may be required when growth is lower than projected or in mild recessions. Automatic stabilisers (lower tax receipts and increased welfare support) generate larger deficits that are financed by short-term borrowing rather than increased taxation. More severe downturns may require discretionary fiscal stimulus to kickstart economic growth. That is basic Keynesian economics.
Automatic stabilisers also moderate an overheating economy with higher collection of tax receipts and reduced welfare support. Discretionary fiscal tightening in the form of supplementary taxation is not a flexible tool that can be adjusted month to month. It would most likely be public spending cuts. Hence, Interest rates are the preferred tool to control monetary inflation arising from an overheated economy.
Residential housing mortgages can be protected from interest rate fluctuations by the use of government supported insurance as is the case in the USA. This enables homebuyers to lock-in a 25 year fixed rate mortgage. To qualify in the USA, you need an acceptable credit score, a debt-to-income ratio of no more than 45% and 3% of the purchase price to cover closing costs. Most American homebuyers (outside sub-prime etc) use this option.