FLASH
Shkruar nga Pamfleti
Trump risks plunging the world into economic chaos...
Wake up! When one of the world's most respected institutions, the International Monetary Fund, abandons its usual calm to sound the alarm about the political roots of global financial instability, it's time to pay attention. The IMF is warning of a not-insignificant risk of a $1 trillion hit to global output as Donald Trump's erratic "America First" agenda collides with a perfect storm of global financial weakness.
Such a shock would be equivalent to a third of that experienced in the 2008 crisis. But it would be felt in a much more fragile and politically charged environment. This time, the crisis stems not just from the markets, but from the politics at the heart of the dollar system. The IMF’s latest Global Financial Stability Report sees the risk in Mr. Trump’s trade policies, particularly his “liberation day” announcements, which have raised America’s effective tariff rate to its highest level in over 100 years.
The IMF warned investors that Trumpian volatility was happening because US debt and stocks – particularly tech stocks – were overvalued. It warned that the tariffs had led to “bets” that went wrong, deepening the chaos in bond markets. Ominously, the IMF drew a comparison, first made by analyst Nathan Tankus, to March 2020 during Covid, when the Federal Reserve directly bailed out US Treasury markets. Developing countries, already facing the highest real borrowing costs in a decade, could now be forced to take on even more expensive debt – the IMF warned – just to cushion the blow from Mr Trump’s new tariffs, risking a “sudden halt” and frightening capital flows.
At the heart of this chaos lies the US, the very country that is supposed to underpin the global financial architecture. A little over a week ago, Columbia University’s Adam Tooze wondered whether markets had begun to “sell America” as long-term US bond prices fell sharply. He thought markets were no longer responding solely to economic fundamentals, but to politics as a systemic risk factor. In this case: Mr Trump’s tariff threats and his increasing political pressure on Federal Reserve Chairman Jerome Powell. In essence, Prof Tooze gave us the theory; the IMF just confirmed the data.
The real concern here is not the technical dysfunction in Treasury markets or the mechanics of the Fed, which are the bedrock of the global financial system. It is the politicization of the monetary-fiscal nexus under a Trumpian regime that is fundamentally hostile to the norms of liberal-democratic governance. When even the dollar is no longer a safe haven, what – or who – can be? /Adapted from “Pamphlet” by “The Guardian”
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