Trump Always Chickens Out
I think many people have done something similar, which has had the effect of masking the deep crisis the USA are in. Expenses are being incurred now, which seems to stimulate the economy. But it is rather like the stress induced flowering in plants. Looks nice, but it is a sign of desperation.
On a different note: The Danish pension fund AkademikerPension intends to sell its entire holdings of US government bonds. The fund announced on Tuesday in Copenhagen that the securities are worth around 100 million dollars. The sale is expected to be completed by the end of the month. ‘The decision is rooted in the poor state of US public finances, which leads us to conclude that we must seek an alternative approach to our liquidity and risk management,’ emphasised Investment Director Anders Schelde in a written statement. The political tensions surrounding Greenland did “not complicate” the decision.
OK, one hundred million US$ is small change, but every avalanche starts small.
Cite in German.
I don’t believe the US will do anything beyond posturing and possibly some tariffing around Greenland. I think at some point Trump will do something like open a new base on Greenland, or gain “permission” to put Golden Dome installations on the island, which the US already has authority to do, declare victory and go home.
That does not mean serious damage to relationships and possibly the economy won’t be done, just that the US won’t buy or invade Greenland. To reiterate, the status quo will be repackaged as a Trump win.
I think world leaders are pretty aware that Trump just needs something that he can declare a “win” in most instances, but he does seem to have a bizarre Risk-based fixation on controlling Greenland. I worry that fixing up some mothballed Cold War installation and slapping a “Donald Trump’s Totally Awesome Base” sign over the gate might not cut it. Maybe if we stage an Iwo Jima-style flag raising for him he’ll go away happy. Hopefully something shiny will come along and distract him.
In the meanwhile, as per Pardel-Lux’s cite, I’m morbidly curious to see where the rating on Treasury Bonds is in another few months.
It’s the messaging that went with the sale that is key to starting an avalanche. They usually start with symbolic gestures like that one.
For anyone’s context, $billions in treasury bonds changes hands every day. I don’t think anyone ever sends out a “loss of confidence” press release explaining why they sold it, though.
Well that prediction came through fast!
And if anyone doubts the TACO theory, here’s what he posted to Truth Social today. He is backing down from imposing tariffs on European allies and, as for Greenland, I expect the agreement will allow for US bases on the island. (Never mind that existing treaties already allow for that; this new agreement is that he can declare victory.)
Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region. This solution, if consummated, will be a great one for the United States of America, and all NATO Nations. Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st. Additional discussions are being held concerning The Golden Dome as it pertains to Greenland. Further information will be made available as discussions progress. Vice President JD Vance, Secretary of State Marco Rubio, Special Envoy Steve Witkoff, and various others, as needed, will be responsible for the negotiations — They will report directly to me. Thank you for your attention to this matter!
Interesting train of thoughts.
I did by chance something similar and just purchased a new refrigerator even though the old one was pretty okay. The new one just consumes about half of the energy of the old . My preliminary guess is that it should pay back within three or four years, let alone the fact that we now have a prettier and bigger device in the kitchen.
Point being: sometime good Investments are to be obtained outside of the financial sphere, and saving your dollars away is not always the best decision.
I agree with your assessment.
But there is another angle to it: he keeps trashing trust and that is something that will never bounce back. So in a way he is burning bridges even though we never crosses them.
On the “buying high price tag items” question, I generally view any time that the market is high and bubble-icious as a good time to upgrade all your stuff.
If we view there as being a “true” value to the market then, if the price of stocks are half of what they should be relative to true, then you have to sell twice as many stocks to be able to buy something. If the market is double of “true” then you only need to sell half as many stocks as you need to, to buy those things.
Any big ticket item that you’re buying now, you’re effectively getting at somewhere between 50-60% discount when you look over the long term value of your assets.
Wise words…
(Do bear in mind the concept of asset classes, though… eg. Converting shares into a Maserati that will be worth half it’s value in a year is still a bad idea… Unless of course you have FU money.)…
But a lot of land, a condo or a heatpump or solar system is definitely a good “hedge” against wall street risks.
We are about to start a major renovation gutting kitchen powder room and upstairs bath.
As an investment this is not the best for cash return.
But hey this is our last house. The return is in life enjoyment of it.
Not everything can or should be viewed from the perspective of whether it’s a good investment. If you enjoy having a hot tub, that’s fine. It doesn’t need to provide any more return on investment than that.
This is TACO:
Trump Backs Down on Greenland: President Donald Trump on Wednesday scrapped the tariffs that he threatened to impose on eight European nations to press for U.S. control over Greenland, pulling a dramatic reversal shortly after insisting he wanted to get the island “including right, title and ownership.”
Late: I see I am very late and this is old news. It’s really the only predictable thing in finance.
A house is an investment, right?
We might have to move soon because there’s a good chance my son will be transferring schools. It’s gone from “when we can afford it” to “we’ll have to find a way.”
Right now I have created a budget category called Imaginary Mortgage to see how much house we can actually afford. I am paying into that category monthly starting next month. I aimed pretty high because we’re in a high COLA and I want to know for sure that we can afford it.
I don’t want to rush into anything but I don’t want to put it off, either. This long and brutal winter is opening my eyes to what my commute might look like when my kid’s school is an hour away and everything’s backed up on the freeway. (It’s 20 minutes from work.) We need to move closer, and when we do, we’ll be closer to all his other options if the first one doesn’t work. And we’ll be closer to our jobs. And I’ll be closer to other jobs in case something happens with this one.
I think the biggest sacrifice we’ll have to make is limiting travel, which is not a huge deal. We don’t travel much but we were planning to go to Ireland in 2028 and I don’t see that happening with a mortgage, but it’s so far down my list of priorities I don’t really care. I think it would be better for our family in a lot of ways.
We might get a condo but we have a lot of research to do first. It’s just that we don’t have a lot of bandwidth for things like yard work. If someone could handle that stuff for us, that would be great.
I just hope we don’t end up too crunched financially.
If this hasn’t already been answered, the market had a nice bounceback today. Over the last 5 days, the Dow is down just 11.02 points, or .02%. The S&P 500 is down a bit more over that span, 61.79 points, or .89%.
I think it’s pretty clear at this point, until some evidence appears to the contrary, the markets just sort of ignore Trump. Broader economic trends might move things, but the consensus seems to be that the US will do better than the world generally, and things are relatively stable, so keep the party rolling.
In the body building world, there was the view in (I believe) the 70s-80s that you pretty much want to hit the gym as hard and often as possible. A guy named Dorian Yates changed that by a) winning, and b) taking the position that success is part working hard and part relaxing. Your body needs to heal, it will do that more slowly if you’re stressed, not sleeping well, etc.
I’d take the same view here. Investing well is, at least in part, a mental sport. You need to be able to focus on details, react to news dispassionately, have the patience to do a bit of spreadsheet math, etc. All of that becomes harder if you’re not relaxed, well-rested, getting your nutrition, etc.
Subsequently, there’s non-zero investment results by balancing your assets with your life enjoyment. There’s a positive return by investing into yourself (not an infinite positive return and not always a cost effective return, but it’s something you can factor into the equation a bit).
Yes.
My comment is pertinent to the sort of improvements we are doing - we would not recoup them turning around and selling the house. The current kitchen and baths are … fine. The house will not appreciate in value much more in keeping with doing this project. As an investment we would, under average historical conditions, do, on a dollars return basis, much better putting/leaving the money in the market. But again we will be living here for the foreseeable future, possibly until we die, so this is instead amortizing a certain cost over the next ten to twenty years for our enjoyment of living here.
Owning vs renting is an interesting question from the investment POV in general though. Of course owning is an investment but the amount per month it costs over renting is also an opportunity cost - theoretically you could have instead put that money in low cost funds which might return better.
The other side of thinking about it from the investment perspective though is that it is a major investment diversification for many.
My thinking has been that:
- The advice to buy into an index and stay there - while pretty good - totally lost the whole thing about keeping and modifying a percentage that are in bonds/etc. Everyone’s just oblivious to any other advice but to put their savings into VTI and SPY and hold for 50 years. The rest of us are too small of a slice of the pie to adjust the prices sufficiently.
- Everyone assumes that economic disasters look like crashes. If Trump is borking everything then we should be seeing panics at the banks, empty shelves at the supermarket, etc. They’re not considering how it took from Julius Caesar crossing the Rubicon in 49 BC to 1453 AD, until the Roman Republic/Empire finally, fully collapsed. A big, successful engine that’s been built on thriving, distributed systems that are largely autonomous is a very hard to destroy. Sustained incompetence (e.g. due to moving from elected leadership to patrilineal inheritance) will, given the time to do so, destroy everything but that might be at such a slow pace that it’s past the average person’s ability to distinguish that they’re even on the downslope, let alone trying to identify which change it was that set them on that course.
(In our case, I blame the switch from the voice vote to the public vote, in Congress.)