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Trump’s Imminent War(s) and Economic Damage as His Legitimacy Crumbles

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Since Trump 1.0 suffered sustained frontal attacks on his legitimacy via Russiagate, he has operated his second term with a laser-like focus on making sure that he has his hands firmly on every lever of power he can grab, from having toadies in top Administration position to crippling funding cuts to what he sees as competing power centers, above all universities and the science and medical establishment (recall that Trump regards dealing with climate change as another limit on his freedom of operation) to open jackbootery with ICE raids by masked agents, threats to “flood” peaceful cities like Portland with what he intends to look like occupying forces in the form of National Guard deployments.

As we’ll describe soon, Trump looks to be on the verge of launching wars against one or both of Venezuela and Iran. But he looks to have overplayed his hand with the US military with calling generals and flag officers to Quantico to give them not just a bizarre set of anti-DEI and anti-fat directives, but also to have Secretary of War Pete Hegseth and then Trump himself say that they expected the military to operate against US citizens on US soil, harping on the “enemy within”. Recall that the armed services defied Trump in his first term, when he issued lawful orders to pull out Afghanistan that were simply ignored. Admittedly these directives came at the very end of his time in office.

It is also worth keeping in mind that the armed services have served as checks on trigger-happy civilian leaders. In the Biden Administration, Lloyd Austin repeatedly and often successfully opposed Biden and Secretary of State Blinken’s Ukraine escalation plans, one suspects by pointing oyt the limits of US weaponry and Russia’s retaliatory options. But as Larry Johnson pointed out in a talk with Daniel Davis, the last actual resignation of a general over illegal orders, to his knowledge, was under Bush the Senior, as in decades ago. Hegeseth’s and Trump’s addresses received a very stony faced reception, and YouTuber accounts second-hand from those in the room suggest a combination of gobsmackedness at the pathetic display and horror at the demand to operate domestically against Trump-designated demons. The measured Daniel Davis, in a talk with Colonel Macgregor, pointed out it was obvious that Trump’s definition of “radical left” threats could easily include all of Team Dem.

As these events are happening, Trump is implementing another method for quashing domestic dissent via his new national security directive, NSPM-7, which as Ken Klippenstein describes, looks to have as a major objective stripping not-for-profits that don’t toe the Trump line of their not-for-profit status. And the plan seems to be to target only only ones allegedly engaged in the wildly expanded definition of terrorism (as in challenging the Administration’s version of American values) but also ones that receive funding from purported baddies. Expect the grantees of Soros’ Open Society foundation to be at the top of this new enemies’ list.

In parallel, the evidence of harm from Trump’s economic malpractice is mounting. Payroll processor ADP reported a 32,000 fall in private sector jobs for September, compared to the expected weak gain of 51,000. ADP also revised its August figures to negative 3,000 from an initial report of 57,000 jobs added. Perhaps there was an offset via a rise in state and municipal employment, but with DOGE deploying its chainsaw, one would expect a fall in Federal jobs too. Thanks to the shutdown, BLS reports are expected to be delayed. But will anyone believe them after Trump fired the BLS head for earlier large revisions?

On the inflation front, Trump has kept TACO-ing with tariffs, and has “delayed” putting 100% tariffs on patented and branded prescriptions. But he is still set to impose 25% tariffs on furniture and kitchen cabinets and a 10% ones on timber and lumber on October 14. This sort policy whipsaw leads to stockpiling when possible and makes planning close to impossible, which will deter investment and expansion plans.

More less than cheery sightings:

The problem is that Trump may have gotten far enough with his authoritarianism that no one can stop these freight trains, particularly his rush to war. One possible blindsiding event might be a market meltdown. Trump does not even begin to have a team that could cope adequately, and being at war with the Fed does not help. An AI-bubble-implosion stock market crash would be highly attention-getting and would likely induce a big pullback of spending at the very top which has helped prop up the economy. So the result would be a dot-bomb reply, of a recession and the Fed trying hard to pump some activity back into the economy via a protracted period of negative real interest rates. As we explained long-form in ECONNED, that set the stage for the structured credit bubble which fed both frenzied subprime mortgage lending and too many who should have known better buying CDOs composed heavily of the riskiest subprime bond exposures.

But more and more unexpected defaults and delinquencies of significant creditors would choke lending and if enough banks took losses, might even induce a crisis. However, unlike the subprime crisis, where the bad action was concentrated in one big sector and one could see the body blows to banks via instruments like asset-backed commercial paper, second mortgages, and CDOs, here more types of loans are coming under strain, and they also involve a lot of non-bank lenders, most prominently credit funds.

But at a certain point, if enough loans look wobbly, the greater opaqueness means no one will know where bad debt sits. That will lead creditors to yank deposits, refuse to roll commercial paper and short-term loans rather than risk loss of access to their funds, even if arguably for a short time.

To return first to the reaction from the top military officers at Quantico to the Hegseth-Trump shtick conjoined with an ugly demand. Judge Napolitano and former Lieutenant Colonel Karen Kwiatkowski discussed how dead the reaction in the room was:

Starting at 6:15:

Kwiatkowski: What I hoped that Hegseth would say, but what I truly expected was that it would be a big nothing. It would be a nothing burger…. And Hegseth, I think, delivered on that. He didn’t have much to say. But Trump actually, he actually moved the ball way far to an own goal. I mean, that that was an own goal. Frankly, everything Trump said was uh hurting us, violating our standards. I’m sure that those generals and admirals that were sitting there, while I don’t agree with most of them, and I really consider them to be a parasitical class on this country, but even them, I think, were shocked at at the kind of lack of knowledge that Trump exhibited. And he spoke forever…

[9:30] Well, clearly uh they noticed they had pauses where they expected applause to happen or punchlines and that kind of thing and they didn’t get that. They didn’t get that applause… a lot of those guys based on uh that they’re currently active duty, they they came of age in uh the Bush 43 wars, you know, in the Middle East. And we know the lessons of those wars, you know, you don’t lie about your intel. You don’t make up stuff. You don’t try to nation build…

[11:10] Weare fomenting wars and ruining our own ability to uh maintain the bare essentials. And and the generals and admirals know this. They know this far better…..bringing all these people back on short notice and you would think you would be coming back for something really important and andit not only wasn’t important, it was it was insane.

Larry Wilkerson, on Dialogue Works, was more pointed. Starting at 1:55:

Wilkerson: It was absolutely bizarre. Um I can’t describe it any other way and as bizarre but welcome in my military professional mind was the stoic response of his audience. I mean, they were truly imbued with what I would say is a an ethic that is pure in the United States military, probably more so than any other military in the world. I don’t say that loosely… And they came in with the idea of we’re just going to sit here. We’re not going to have any facial expressions of note. We’re not going to clap in any particular way. We’re not going to acknowledge anything that’s being said as we’re pro or we’re con and we’re just going to sit here. It really was a spectacular performance in a subdued sort of way by 300 or so of these generals and admirals and it was probably the only performance they could make other than getting up in mass and walking out in resignation. And I had that argument with the general just a few minutes ago before we came on and right after I finished the Judge [Napolitano] because he had sent me an email reprimanding them for not getting up and walking out. And I said back to him, general officer, I said back to him, what would happen to the real security of the United States if they were to do that? because you’d be talking about abandoning all of the key positions in the US military in front of all our enemies on television and you you that would be unconscionable to do that. There would be there’s too much right now. We’re looking at a potential war. I think it’s coming. It’s coming like a freight train with Iran that has the potential to go nuclear.

Other YouTube commentators, such as Colonel Douglas Macgregor, Larry Wilkerson, and Matthew Ho, argued it was disgraceful that there were no walkouts. But notice Wilkerson’s tacit assumption, that the disgust was so widespread that departures would or could have represented nearly all the attendees.

And the same way financial time runs faster than political time, so too here military time runs faster than political time. Even a mass decampment, which would represent mass resignation (Hegseth said that anyone who didn’t want to be part of the new whiter and thinner armed services should leave, as in quit) which would flip out the press and Congress, does not seem likely to impede the war operations Trump has set in motion. If nothing else, Israel is primed to act and the US would have to execute its part of the plan. Large scale resignations at the top would run the risk of only the most Trump loyal and Zionist crazed being at the helm.

But then again, the passivity may run deeper than Wilkerson can admit to himself:

In the meantime, in a paler version of the runup to the Iraq War, and similar to right before the 12 day war with Iran, the US is moving military assets to the Middle East, particularly refueling jets. In a talk with Daniel Davis at Deep Dive, Douglas Macgregor said he was hearing that the US was also deploying old Tomahawks and very heavy bombs. He speculated the latter might not be intended for Iran but to complete the flattening of Gaza while all eyes were on Iran.

Later in Larry Wilkerson interview that we reposted above, Wilkerson said he was hearing that forces were being called up to move on Venezuela. Are these reports/orders meant to serve as an attempt at a diversion regarding the timing of a strike on Iran? Is the US really so deranged to think it can fight two wars in two different hemispheres at the same time? Those World War II days are long past, and the Allied win was in a big way due to the costly efforts of Russia and China.

Conventional wisdom had held that the attack on Iran was coming soon, likely before year end, presumably due to concerns that more time would enable Iran to get more equipment from Russia and become better at using it. I’m not sure if this applies to Iran, but the IDF avoided attacks on Lebanon in January and February because the mountains were misty enough to impede air operations.

But the movement of equipment suggests action is more imminent; I believe it was Douglas Macgregor who suggested the timing was days or weeks.

Even if the US intends these deployments to be a show of force, Netanyahu has agency.

Hegseth, in a moment military professionals derided as the posturing of a junior staff officer, taunted US opponents, most of whom actually have no interest in being enemies:

It looks more likely that the US will be the party to find out. But sadly, a world of innocent bystanders will be along for the ride.

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