08.02.2018

Earthquakes and H-bombs

Paul Demarty reports on the heightening drama of US politics

It falls to us to wonder how lucky Donald Trump is feeling just this second.

Last week has to be called a pretty good one for him, with a ‘state of the union’ address that managed to play to the core of his appeal without turning into a screaming tantrum, and a slew of economic good news - employment and hourly wages up, stock market riding high … To say that the ‘springtime in America’ shtick was a little short-lived this time around would be quite an unTrumpian understatement. On Monday, the Dow Jones industrial average - a decrepit, but still influential, stock index - suffered a record single-day drop, with the misery following the sun to Asia and then Europe. Things seem to have stabilised for now - the Dow and Standard & Poor’s 500 have, at time of writing, rebounded somewhat, though it is a rough ride. The picture is not, however, one of a strong economy thriving under the leadership of its perma-tanned helmsman.

What we can say, indeed, is that this little wobble - if a wobble it remains - is symptomatic of the broader situation in which Trump finds himself, and which he has done so much to create. There is a dangerous and pervasive uncertainty surrounding the president on numerous fronts, of which the economy is only one: the outcome of the two great political challenges before him - the ‘Russiagate’ investigations and this autumn’s midterm elections - are another. In another sphere, meanwhile - that of defence and foreign policy - he is very much more securely in power, more’s the pity, for the result is that the rest of us stand at the edge of a shift towards much more aggressive nuclear doctrines on the part of America.

Irrational exuberance

Let us look at the stock market chaos in more detail, then.

There is no shortage of bourgeois economists - wise after the fact in the usual fashion - lining up to tell us that this was a long time coming. The American stock market was overvalued; low interest rates shifted investment from ‘safe’ bonds to speculation of one sort or another - the most absurd example being the crypto-currency asset bubble (Bitcoin, we note, is at something of a low ebb - at time of writing, again, for it may well soar back up to $20,000 in the next 20 minutes, for all anyone knows).

Trump has staked a lot on the dramatic rise in equity values since he took the reins, for which he naturally claims all the credit. It is likely that this made things worse: it promoted to Wall Street the idea that Trump was treating the Dow and the S&P as vanity metrics, and thus would be inclined to artificially prop them up. The proximate cause for Monday’s ‘correction’ was the appointment of a new chair of the Federal Reserve of unknown opinions, and it was merely the possibility that Jerome Powell might be more of an interest rate hawk than Janet Yellen that set all this chaos in motion.

What began as a desperate rearguard action to get money circulating again after the 2007-08 banking crisis - rock-bottom interest rates and money-printing - has ended up persisting for the best part of a decade, because any pace of normalisation higher than the excruciatingly glacial leads to the first whispers of panic in major investors. The result is the situation before us, with enormously leveraged financial instruments like exchange-traded funds (indexed-linked securities traded like stocks) proliferating.

This is the situation Trump was boasting about until February 4, as if it were not the case that the stock market was roaring in mid-1929. It is axiomatic for Marxists that capitalist crises shall inevitably recur - in theory, it is also axiomatic for most schools of bourgeois economics, although they seem to be very good at talking themselves out of it when things are looking up. That kind of cyclical naivety was revealed in the February 5 trading, and it cannot be long before a more serious blow to the world economy is struck. Carl Icahn, the notorious financier and inspiration for Gordon Gekko, suggested that this was the first rumbling before the earthquake; he has his own interests, of course, but it is difficult to disagree.

The question for Trump is whether it comes before or after the November midterms - especially added to his other worries. Another piece of last week’s good news, from his point of view, was the concession that it was ultimately the Democrats’ opposition research department that fed the highly dubious Steele dossier to the authorities, thus beginning the chain of events leading to the present investigations of Trump-Putin collusion in 2016. In the end, the substance of the question - whether he or his associates actually did collude, and on what scale, with the Russian state, is left unresolved; but it is certainly a stark reminder that there is more than the stubborn civic duty of America’s three-letter agents at work in the Russiagate controversy. Yet this has been just one news cycle on the issue - others are still to come before Americans go to the polls to elect congressmen and women.

Bloodbath

Those midterms are quite the most uncertain thing of all; on average, the party of the incumbent president loses 30 seats in the House of Representatives, and four in the Senate (only a third or so of the latter seats are up for grabs), which would be more than enough to put both houses in the hands of the Democrats. It is hardly surprising: just as the campaign trail is a place of overpromising and grand vistas of national renewal, so the actual slog of government in America’s paralytic constitutional set-up must tip eager voters into the trough of disillusionment.

Today, of course, we are not in a ‘normal’ American political cycle. We have a president elected in the teeth of the most violent opposition the establishment can reasonably offer a man who might actually win, whose reign has been as mercurial as his campaign. The spectre of another economic crisis looms, but we are only now truly feeling the political consequences of the last one.

On the blue benches, and despite the best efforts of the world’s most well-groomed professional politicians, things are hardly a picture of unity of purpose. The left of the Democratic Party - sidelined for so long by the permanent Clintonite yuppiocracy - received a large and unexpected shot in the arm with Bernie Sanders’s insurgent campaign for the presidential nomination in 2016, and all the signs are that the congressional primaries are going to be hard-fought affairs. The Democrat right wing currently looks almost bereft of purpose - the ones who pitch themselves as the smartest guys and gals in the room, with their finger on the pulse of history, and yet their great champion was bested by an absurd charlatan - but it is not at all bereft of institutional power within the party. A bloodbath beckons - another variable in an already incomprehensible midterm equation.

Nuclear threat

It is in this context - war being politics by other means - that we must evaluate the results of America’s latest ‘nuclear posture review’, which had been heavily trailed for weeks.

Most nuclear arsenals are old; the battle in this country over Trident is worth fighting, in part, because there will come a point after which the existing missiles are effectively inoperable - the last possessors of the operational folk-knowledge necessary to keep them ready to launch over decades having died out. Failure to renew is to decommission by default. The USA is certainly not ready to give up its nuclear capabilities and a programme of renewal was thus quite inevitable.

What is interesting is the shape of the proposed renewal. The idea is to increase the number of ‘small’ warheads - bombs with a modest Hiroshima-esque yield - in the United States arsenal. This is very worrying, for reasons that might have been lifted directly from Dr Strangelove. The trouble with the real world-ender sort of bomb is that … well, it is a world-ender. It is effectively unusable without triggering a conflagration that will effectively wipe out the human species. In that light, however, it is not terribly useful as a deterrent, since nobody takes seriously the idea that you will use it. Small bombs, however - America has used them! They might be used again, on battlefields rather than over cities. Deterrence is restored, and peace is safe!

We live now in an age where it cannot be taken for granted that things will be left at the level of ‘deterrence’, however (not that it ever could be - ‘mutually assured destruction’ having always been a rotten example of the complacency of the ‘strategic doctrine’ wonk). Trump is not the only overtly nationalist executive to be elected in the recent period and the danger of war, like economic crisis, is that it is never going to happen, until it does. And it happens because it is in people’s interests - people like unpopular presidents.

America’s fate is uncertain indeed: it may be decided by politics, or by politics by other means.