As I write, markets are plunging. Donald Trump plays golf, dreams of military parades, and posts deranged missives from his tropical bunker. You will soon be saturated with analysis offering predictions about the growing financial crisis Trump caused. To know where we go from here we have to review the story so far.
This post is more of an “clip show episode” than a preview trailer. I’ve written it for the benefit of family, friends, and other people I personally know that are now tuning in. If you’ve been obsessively following the news since January, you’re unlikely to find anything you don’t already know here. I also expect some of the post’s stylized assumptions to soon become outdated.
Trump’s three bubbles
In my first two posts in this series 1, I analogized the Trump presidency to an economic bubble divorced from any underlying ground truth. It was propelled purely by vibes, and more specifically people convincing themselves to ignore the reality behind their fantastical delusions. Another factor propping up the bubble was that Trump — and by extension America — was “too big to fail.” There’s not much upside to being right when there’s nowhere to shelter from the storm.
Many Americans — regardless of whether they approved of Trump — believed they could withdraw into the richness of their private lives and assume someone else would take care of everything for them. Others — such as Trump’s backers in the tech industry — believed a new golden age was dawning. Any harm Trump caused was justified because he was a vehicle for their messianic ambitions. Memories of the daily near-misses of the first term were suppressed.
A familiar pattern became apparent in the first two months of Trump II. Trump, his manifestly unqualified cabinet, and the eclectic collection of other malcontents orbiting around him repeatedly undercut stabilizing mechanisms they did not appreciate or want to understand. The Signal war plans fiasco revealed not only that the administration cared little for security but also that there was no real organized chain of command. It often seemed like decision-making was conducted via ChatGPT.
Insanity, stupidity, and cruelty filled the news. Anyone that paid close attention to all of these developments — particularly reportage by Wired and TechDirt — could see the path we were all traveling down. You can’t keep destabilizing a complex web of relationships keeping the system running without something important breaking. So what was stopping everyone else from seeing it? There were, in actuality, three bubbles occurring simultaneously.
The first bubble was Trump’s presidency itself. Admitting that Trump was unfit to serve and that he and his associates (most notably Elon Musk) were setting America up for disaster created an intractable problem. People who were actively or passively enabling him would need to do something. More broadly, admitting Trump was dangerous would run up against the foundational assumptions behind the US presidential system itself and the vast powers vested in the chief executive.
The second bubble was the lattice of international political, military, technological, commercial, and other relationships underlying the US-led hegemonic order. These relationships required a minimal level of confidence in the US that Trump was at best indifferent to and at worst actively hostile towards. However, de-risking yourself from America would be a truly costly and difficult endeavor, so American partners hoped for the best in spite of their reservations.
The final bubble was, of course, financial markets themselves. Businessmen, financiers, and other traditionally conservative groups expected Trump to be favorable to their interests and pliable to their influence. Domestic and global markets also, due to America’s outsized profile, needed to make assumptions about American political stability. Trump’s reckless behavior was worrisome, but here too the consequences of taking it seriously were painful and uncertain.
The crisis triggered by Trump’s tariffs represents the turbulent interaction of all three bubbles as they face correction. Trump’s willingness to effectively declare war against the entire international economic system is suggestive of profoundly unwell motivations. He never cared too much for the systemic consequences of his actions to begin with or saw much need to ground them in mind-independent reality. If he walks back from the ledge, what else could he do if he’s capable of this?
The tariff barrage forces Americans — and the rest of the world — to re-evaluate the assumptions behind the three bubbles of the Trump presidency. Trump’s second presidency is a product of irrational expectations. Those expectations are failing before our eyes, and to the tune of trillions of dollars. Given the suffering the administration caused and will soon cause, that is still cold comfort. But the “correlation of forces” 2 is undeniably changing.
Trump himself now has been revealed to be a mad king, with no “adults” around him to tame his need for destruction. America under Trump lacks the stability to justify risky and “weaponizable” interdependence.— or even visit without being harassed by thuggish customs and immigration officers. And a man willing to light piles of money on fire will not bring the financial prosperity Wall Street envisioned when it threw its weight behind the Trump administration.
Behind the orange curtain
So what now? I don’t have the necessary expertise to say anything useful about the devastation afflicting markets. Besides, I see the crisis itself as the initiation of a new and dangerous phase of the decade of political surrealism Trump ushered in when he ran for office in 2015. Regardless of how it resolves, Trump initiated a crisis and then went golfing. That cannot be unseen, and it is merely the most public and destructive episode in a two-month pillaging of American power.
The issue at hand is summed up very well by a passage from a recent New York Times article:
A top Goldman Sachs executive summed up the frustration with Mr. Trump succinctly: Someone has to stop him. The financial world’s top leaders have stayed silent.
Everyone is expecting someone else to step in and take action. They want to avoid the costs of trying to put a stop to the madness, and also need someone else to provide a model to imitate. So they’ve alternated between wishcasting about some notional “adult” intervening, wallowing in learned helplessness when their savior fails to materialize, and muttering “surely he will come to his senses” while Trump ominously boasts about how committed to the bit he is.
Our problem is simple: the American people elected Donald J. Trump to a second term in 2024 and facilitated Republican control of Congress and the Senate. Trump predictably appointed a sycophantic cabinet, hollowed out the civil service, and unlawfully undermined the separation of powers by seizing non-presidential authorities. The GOP-controlled legislature, which will remain operative until at least 2027, has yet to be anything more than an advisory body.
Trump’s GOP controls all three branches of government, and the Supreme Court is not eager as of yet to intervene. Outside of government, it is truly remarkable how little elites willing to oppose Trump during his first term have resisted him. The economic interests backing the administration — elements of the technology industry, the financial world, and other business factions — are currently unwilling to criticize Trump publicly. Perhaps that may change if things get bad enough.
The larger issue is that Trump — inconsistently in control of an amorphously structured administration and his own liminal desires — is a weak President that nonetheless is still stronger than the vast majority of comparable world leaders. In a parliamentary system, his government would have already collapsed. But under the American system, he can only be expunged via resignation, impeachment, or the 25th amendment. Each constitutional remedy faces significant obstacles to deployment.
Trump and his confederates have gone too far to let go so easily, and the President casually talks of seeking an illegal third term. Similarly, the structural dependence of the GOP on the administration and fear of its zealous supporters also mitigates against relief. Trump’s polling is underwater but not yet at the point at which the rats are willing to jump ship. No actor’s decision calculus is set in stone. Still, any mechanism of change is an unproven hypothesis. That hypothesis is going to be tested.
Several days ago, reinforced fencing went up around the White House. Someone clearly is anticipating heavy protests — and they’re not unwise to do so. Millions of people turned out for 1,400 individual protests across the country this weekend. The purpose of the mass protest — and a steady drumbeat of other less publicized protests before it — was to build the rudiments of an opposition network. As the network grows and solidifies, it will look for opportunities to directly apply pressure.
The unpopularity of the administration’s agenda has forced them to operate purely through executive action instead of the legislative process. Lesser courts have not been kind to the administration, repeatedly overturning or blocking administration decisions. Still, so far our story has mostly been a narrative about the follies of elite actors. Civil society has, aside from helping drive Tesla stock into the gutter, not exerted much influence. Opposition began in a demoralized and fragmented state.
The Democratic party, reeling from its electoral defeat and institutionally risk-averse, looked ahead to the 2026 elections and kept its head down. It struggled to keep up with the relentless pace of Trump and Musk’s destructive actions and satisfy base demands for resistance. Democratic leadership now faces a choice of riding the wave of discontent Trump is accumulating or being washed away by it. The political environment cannot wait until 2027, when a Democrat-led legislature could take office.
Covidian premonitions
In December, I was seized with oppressive dread. I wasn’t the only one that feared the consequences of a second Trump term. But my fears were colored by memories of how the first term ended. From December 2019 to March 2020, the spread of COVID-19 was only breaking news to a small collection of observers that saw the danger and panicked. By April the world was shutting down and widespread perturbations to supply chains were occurring. Still, many people thought it couldn’t last long.
Trump, instead of leading the federal government response, abdicated responsibility and actively undermined pandemic countermeasures. By June, a combination of mass unemployment, schools and businesses shutting down, the George Floyd protests, and Trump’s growing unpopularity generated massive civil unrest. Trump’s attempted crackdown set in motion a sequence of events ending in the January 6, 2021 insurrection. I feared history would repeat itself, even if I was unsure how.
Do not take my premonition as prophecy. This scenario is not inevitable, and I’ve always taken my own imagination of it with more than a little skepticism. We always fight the last war, and perhaps the emotional intensity of how I experienced 2020-2021 is clouding my head. It is helpful not to think in terms of any one particular scenario but rather an ensemble of possible directions we are being pulled toward. As events move forward, the gravity well of some scenarios becomes stronger than others.
The longer that Trump and Musk keep undermining system stability, the greater the chance of large-scale disruption that neither man can easily roll back, Whether or not that systemic and sustained disruption arises from either a single failure and/or cascading failures is irrelevant. Engineering professor Maxim Raginsky put it best:
Because control acts to reduce externally perceived complexity, it may lead to a false impression that, just because things have been going reasonably well for so long, certain mechanisms or practices or policies are no longer necessary and can be done away with…Unstable systems are everywhere—in markets, energy, public health, biotechnology, financial industry, transportation, political decision-making, and more. The behavior of individuals and institutions involved in the operation and use of these systems is one of the sources of instability, but it can also contribute to reliable functioning when interconnected with properly designed control policies. These include not only explicit rules and regulations, but also norms, conventions, and culture…However, it is precisely because these control mechanisms keep instabilities in check, there is a risk of complacency on the part of individual actors, which can (and, as we are witnessing in real time, does) lead to crises.
Raginsky goes on to list many areas — air traffic safety, vaccination, and public administration — where Trump and Musk have stripped away control mechanisms holding back instability. I don’t have enough space to name all of them or even a representative sampling, because the arsonists in the White House have in some form or fashion eaten away at every single important function of governance. The civil service — itself a source of control — has been deliberately wounded and cut down to size.
One of the most important system controls is the Social Security system. The Social Security Administration (SSA), has been one of Musk’s most prominent targets. Musk, who has openly claimed Social Security is a “ponzi scheme”, is trying to cripple the SSA. Office closures, staffing and service cuts, whiplash-inducing policy changes, and hasty technical migrations are already having a disruptive effect on the SSA’s ability to provide benefits and services to 69 million Americans per month.
The SSA, like much of government, appears insufficient and archaic to the young and zealous men Musk has brought to Washington. But those who understand how systems work at the granular level know, as former Air Force officer Mike Black joked, that
As I said the other day, there are two kinds of people: those who’ve seen a 130 year old piece of equipment in some machine shop that is the only thing that can make a widget that upholds a global manufacturing network, and those who think manufacturing supply chains are easy/just happen.
There are many seemingly insufficient and archaic things that are, in fact, quite load-bearing. Take, for example, aircraft part supplier Howmet Aerospace. Howmet, which supplies parts for planes constructed by AIrbus and Boeing, declared force majeure. Due to tariff-induced uncertainty, Howmet can no longer guarantee that it can meet its obligations to supply products and services. Even if nothing directly “breaks”, constant uncertainty in and of itself will break systems.
If and when large-scale disruption occurs, Americans will find themselves back in something resembling 2020 again. Aspects of everyday functionality they take for granted will suddenly be thrown into doubt or suspended altogether. Solidified conventions that make social behavior predictable will liquefy, creating a revolutionary environment. This is how Trump’s first administration ended. Given how little guardrails restrain his second, it would be unwise to ignore the potential for breakdown.
The last argument of trolls
This concludes my clip show recap of Trump Season 2 so far. I have, as stated earlier, opted to summarize what I feel to be the most important plots and subplots and have tried to be upfront with the assumptions I make about them. It has only been two months out of a notional four-year term, and much could change. I stand by my February argument that Trump will fail. What remains to be seen is how that failure will play out and how much misery it will generate before it is through.