February it is said, is an honest month, without the pretensions of summer, the promise of spring, or the abundance of autumn. The leaves no longer shield buildings and homes, which are now clearly visible. February’s light is soft and subdued, and grass is grayed, as if a fine dust has settled over everything, including the sky. It is not harsh, but it is still revealing.
This February, we are seeing the inner workings of the most powerful government in the world laid bare, exposing unsettling facts and inefficiencies. Elsewhere, such revelations might incite revolution. But beyond politics, anyone with an interest in history, political economy, and governance must be mesmerized by the rapid pace of recent events in Washington.
The shutdown that followed the Covid pandemic created an unprecedented natural economic experiment—a once in a lifetime opportunity to observe how the global economy functions after a sudden stop. Now, we find ourselves in the midst of a second similarly intense natural experiment in creative destruction. This time, the epicenter is Washington DC, at the intersection of grand diplomatic and economic strategies.
This earthquake has, in turn, created a tsunami. We are at the point where the tide has preternaturally receded, revealing the flotsam and jetsam of economic policy failures on the ocean’s floor. The sight is eerily disturbing, an omen, and is called a drawback. What follows is inundation, an overwhelming force unleashed by the tectonic shift beneath the surface. Are we underestimating the force of this tsunami, as well as its inevitability?
One thing is also true about this force of nature, its momentum. Issues that have stalled for months, if not years now seem to be on a path towards resolution. US government disputes with Nippon Steel and TikTok could soon be over, and optimistically the wars in both Ukraine and Gaza could be fully negotiated in the first 100 days of the Trump Administration. The unsustainable fiscal path that we have taken over the past several years could be reversed as well, before our creditors take action.
Did you know… ⧉ 1
The momentum of a tsunami is a measure of its destructive power, determined by the product of its mass and velocity, which is significantly high due to the vast amount of water involved and its ability to travel at speeds comparable to a jet plane in deep ocean waters; essentially, the deeper the water, the faster the tsunami travels, equally in all directions, making its momentum substantial.
The four phases of a tsunami are initiation, split, amplification, and runup.
The four stages of Trump’s political tsunami are 1) Revelation 2) Follow the Money 3) Legal Issues, and 4) The Court of Public Opinion. We detail these as well as six key economic issues we are watching:
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