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Monday, 9 May 2016

Dumb, dumber, trumpest

I am still wondering how it's possible that someone with a Narcissistic Personality Disorder (PsychologyToday) can become the Republican Presidential nominee. What does it imply about the USA that people support someone who is foul mouthed, expresses hatred towards women and minorities, and insults friends and frenemies?? His newest idea is in line with my blog of 22 April 2016 (Tipping points - USA) about the United States of Insolvency (Time Magazine).

Donald Trump sees a possible “deal” in the ginormous amount of US debt: let's buy it back at a discount and solve the US debt problem. Essentially, the debt of the USA is hardly better than the one of its overseas territory Puerto Rico. Take away the expectation of full repayment and there's nothing left but (country) downgrade and default.

The idea of refinancing US debt at low interest rates may work for residential and commercial real estate mortgages. Sometimes even for businesses in a turn around when expectations are sound. Argentina recently showed - once again - that country debt is different (Wiki). In 1997, even Russia started redeeming on its 1917 Tsarist railway bonds (eg, Independent).

A country that thrives on spending and pays unreasonably low taxes, is like a ticking time bomb. Donald Trump’s idea implicitly shows that the US debt is unsustainable and similar to the one of its overseas territory Puerto Rico – or Greece. A serious haircut on US debt would indeed decrease US government debt and also its ability to issue new debt to regular creditors. Vulture creditors may still lend to the USA but only at (very) high interest rates.

The domestic and international fall-out of such a discount might be worse than the 2008 bankruptcy of Lehman Brothers. A domestic - and possibly international - cascade of bankruptcies is likely to happen. The recent US$ decline (eg, Bloomberg) might also be related to the rise of Donald Trump. Also see my blog of 22 April 2016. His newest idea may accelerate the decline of the US$ until the US Presidential election of 8 November 2016 (Wiki).

Commercial businesses thrive on the success of their products and services and regardless of the egos of their CEOs. Governments thrive on reliability and trust. Donald Trump is creating a dire and gloomy mix of both. At some point in time, people outside the USA will accept the possibility that he might win from Mrs Clinton. The unexpected recent US$ decline could be an early warning.

In 1976, the Eagles had a hit song with “New kid in town”. This song seems appropriate in three ways: political outsider (new), behaviour (kid), and Washington DC (town). However, more and more, I feel that I'm watching a sequel of the Dumb Dumber movies (IMDb-1, IMDb-2). When will the American people stop cheering for this new movie called Dumb, dumber, trumpest??

The Eagles – New kid in town (1976) – artists, lyrics, video, Wiki-1, Wiki-2 

There's talk on the street; it sounds so familiar 
Great expectations, everybody's watching you 
People you meet, they all seem to know you 
Even your old friends treat you like you're something new 

Donald come lately, the new kid in town 
Everybody loves you, so don't let them down


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