History Rhyming with Trump and Greenland

Mark Twain noted that history doesn't necessarily repeat, but it rhymes. This is exactly what is happing with Donald Trump's proposal to seize Greenland. Before Hitler took the Sudetenland in Czechoslovakia in 1938 he threatened to invade. Similarly, Putin made noises about taking Crimea in 2014 before invading that part of Ukraine. It seems that Trump is giving new life to my "Reliving the 1930's series. (See: https://shulmaven.blogspot.com/2023/11/reliving-1930s-part-5.html ) The difference here is that instead of acting like a leader, Trump is acting like a three year-old toddler. He neeeeds Greenland. Unfortunately, his tantrum is breaking up NATO and like the previous episodes I noted, it will make the world a far more dangerous place.

My Review of Amit Segal's "A Call at 4 AM"

 A Primer on Israeli Politics

Leading Israeli reporter Amit Segal has written a primer on Israeli politics going back to the State’s founding. I would characterize his views as center-right. However, a long time Israeli friend and former reporter would argue that Segal is firmly on the Right. In the beginning Israel created a parliamentary system consisting of 120 delegates to the Knesset who would be elected via a party slate by proportional representation, not by constituency. In 1948 with the new state’s boundaries up for grabs, it wasn’t really possible to create individual districts. You would think that accountability would flow through the political parties, but, in fact, the party leaders became personality cults starting with David Ben Gurion. It seems that once in power prime ministers never know when to quit. Ego mania is alive and well in Israeli politics.

 

With 120 seats in the Knesset, a majority of just 61 seats runs the country. For the first 29 years the Mapai Party (Labor) had a monopoly on power. However, since 1977 when a rightwing bloc formed around the Likud Party under the leadership of Menachem Begin took power, it has for the most part represented the dominant coalition in the Knesset. Israeli governments are coalition governments, because even during the heyday of the Labor Party, no party ever achieved a majority.

 

The trick is to put together a coalition of 61 members and for the past 50 years by the dint of demographics and divisions in the Left, rightwing governments tended to run the country. It has to be kept in mind that the distinctions between right and left are not of the American variety. According to Segal, what separates the right from the left is the distance from Yasser Arafat and his successors. Historically the left has been open to a two-state solution while the right has not.

 

Segal points out the reasons for the ascendancy of the right. The 1973 Suez War destroyed the credibility of the left on the security issue. The failure of the 2000 peace talks with Arafat led to the second intifada thereby causing the left to lose the peace issue. In the 2026 election the critical question will be the right’s failure to defend the country on October 7^th, 2023, be enough to topple its long-term hegemony or alternatively will its subsequent success be enough for it to hold power.

 

On the importance of personality over party, Segal highlights the case of General Ariel Sharon who became a Labor Party member to be promoted in the early 1970’s, he then broke with them to help found the Likud Party and later he founded his own party. During his life he built settlements that he would later destroy.

 

Today political divisions in Israel evolve around Prime Minister Binyamin Netanyahu and the question of Jewish versus Israeli identity. Israelis are either for him or against him, so much so that most center and left parties won’t be in a coalition government with him especially when Netanyahu’s guiding philosophy is “no enemies on the Right,” and no one trusts him. That abstention gives power to the Haredi religious parties whose votes in the Knesset are traded for draft exemptions and huge public subsidies that are bleeding the country white.

 

Those citizens who view themselves as primarily Israeli are largely secular and their views about trading West Bank land for peace with the Palestinians are based on a cold-eyed analysis of Israel’s security. On the other hand, those Israeli’s who view themselves as primarily Jewish view Judea and Samaria as sacred ground of the Bible where their forefathers walked and where David and Solomon were kings and where the prophets spoke truth to power. Thus, control of that land is non-negotiable.

 

After reading Segal’s book I have come to the conclusion that the only way to pull Israeli society together after the brutal Gaza War is for Netanyahu and the center left to form a coalition government that would remove the far-right Ben Gvir and Smotrich factions from the government as well as the religious parties.  ( See: https://shulmaven.blogspot.com/2025/10/my-review-of-yaakov-katz-and-amir.html ) That would lower the temperature in Judea and Samaria and pave the way to radically reduce the power of the Haredi parties. It is not perfect, but as they say, politics is the art of the possible and both the right and the left are going to have to swallow their pride.

Donald Trump (National Socialist) - Part 2

Donald Trump took two more steps down the road to national socialism today. (See: https://shulmaven.blogspot.com/2025/09/donald-trump-national-socialist.html ) First, his Justice Department announced a criminal investigation of Fed Chair Jay Powell to further his attempt to control the central bank. In March 1933 Hitler appointed Hjalmar Schacht to lead the Reichsbank to reinforce his control over the economy and to secretly fund the military as part of his first 100 days.

 

Second, his Department of Labor put out a slogan on social media calling for “One Homeland, One People, One Heritage.”  This slogan brings to mind the Nazi slogan “Ein Volk, Ein Reich, Ein Fuhrer,” which means “one people, one nation, one leader.”  Whether the Department of Labor knew its historical antecedents or not, it is a troubling sign. All the while the Department of Homeland Security is over-reaching, to put it mildly, in rounding up illegal immigrants. To anyone with a historical memory, it is not a pretty sight.

Venezuela: Too Early to Tell

Much has been written about the rendition of Venezuelan President Nicolas Maduro to the United States to stand trial on drug trafficking and arms smuggling charges. We have had predictable reactions from the Right hailing it as successful operation to remove an anti-American  dictator and from the Left attacking it as a throwback to the Yanqui Imperialism of the early 20^th Century that will lead to a quagmire.

 

To me, it is far early to tell how it will turn out. What we do know is that Maduro was an evil dictator who tortured and murdered his people with abandon and the country has a heavy presence of Russian, Chinese, Iranian, and Cuban forces. Thus, Venezuela represented a threat to U.S. security. Whether the threat is imminent or not is an open question. We also know that Venezuela possesses the largest oil reserves in the world, but much of it consists of tar sands which is costly to produce and that the oil fields are operating in a dilapidated condition causing oil production to drop from three million barrels a day to just under a million barrels a day over the past 20 years.

 

We are far from being reassured by Trump talking about oil and not talking about a return to democracy. Indeed, the entire security apparatus of the Maduro state remains intact. We do not know to what degree Vice President and now President Delcy Rodriguez will cooperate with Trump. She has given off very mixed signals, and we don’t know where the army will end up. We can surmise that given the intelligence that was available to the U.S military, it is likely that someone on the inside is working for us. Who that person or persons are, and their future role will be critical in the days ahead.

 

Trump is opting for stability over democracy. That may work in the short run, but if there aren’t any plans for elections after six months this whole adventure could go south very quickly. It is obvious that the Democratic Opposition would win an election; they did so under Maduro’s control. The question is whether or not the Maduro security apparatus will allow an election to take place and if it does take place will they allow the winner to be seated. Before rushing to judgement let’s give it some time for events to play out.

 

Outside of Venezuela both China and Russia are looking on. They too can make similar moves in the Taiwan straits or the Baltic States, respectively.

My Review of David McWilliams' "The History of Money"

Money Makes the World go Round

 

Irish economist David McWilliams has written a very informative and entertaining book on the history of money with loads of anecdotes. McWilliams views money as one of the great innovations of human beings just behind fire and the wheel. Why? Money facilitates intra-community and inter-community transactions to the benefit of society as a whole. As the great economist Paul Samuelson noted that money is a social contrivance. McWilliams argues that puts human interactions into overdrive as the lust for it propels economic progress.

 

He takes us back in time to the Sumerian Civilization of 2000 BCE where a handful of grain equaled a shekel and where there were lending transactions calling for the payment of interest all the way up today’s quantitative easing of central banks. The first real breakthrough occurred around 1500 BCE where in Lydia the first gold coins were produced. Later Greek and Roman coinage unify the Mediterranean region as one giant free trade zone.

 

McWilliams history is not dry. He introduces us to Johannes Guttenberg of printing press fame who was quite the scoundrel. One of the original users of his new technology was the Catholic Church where the printing press automated the production of indulgences which brought in great wealth. Calligraphy was out and printing was in. He also tells us that much of the church land in Europe came from the foreclosing of mortgages of the nobility. We also witness John Law’s Mississippi Bubble in France which cratered the economy and made banking a scandalous profession where the name bank was not used for years.

 

There is also an interesting vignette on James Joyce, who while living in Trieste owned a movie theater and later owned one in Dublin. The great writer was from immune from the temptations of money.

 

Gold plays a key role in the history of money. It was widely used for centuries as the coin of the realm. For example, the Florin gold piece of the Florence Republic was widely circulated for three hundred years. However, over time gold backed paper notes were used in place of physical gold thereby creating the gold standard.

 

McWilliams is a critic of the gold standard because it places the economy in a straitjacket by limiting the supply of money which, in his opinion, slows economic progress. When money is easy, but not too easy to cause inflation, the way is open for all kinds of invention and innovation. He believes that the gold standard stifled innovation and thus progress making him a strong proponent of the central bank managed (fiat) currencies we have today. Of course, fiat currencies require a high degree of trust in the issuing authority. Without that its value craters.

 

Here, I think, he goes too far. Economist Robert Gordon makes a convincing case that the bulk of economic progress that we have today arose from 1870-1940 where for almost all of that period the gold standard reigned supreme. (See: Shulmaven: My Amazon Review of Robert J. Gordon's "The Rise and Fall of American Growth" ) Think automobiles, electricity, telephones, indoor plumbing, aircraft and radio, for example. I would note that in 1879 the year the U.S. returned to the gold standard both the incandescent light bulb and the telephone were invented and over in Germany the internal combustion engine was invented and in the 1880’s the U.S experienced a record railroad building boom. It is hard to make the case that the gold standard stifled progress. What did in the gold standard were the huge distortions caused by the financing of World War I and the subsequent battles over reparations and inter-war debts.

 

McWilliams argues that money subjugated the people under colonial rule from 1600- 1960. That was certainly true of Belgium’s barbarism in the Congo caused by the need for rubber to make bicycle tires at the turn of the 20^th Century. Those tires were invented by the Irishman John Dunlop. However, Latin America was liberated in the early 1800’s and long-term economic growth in that entire region was hardly stellar.

 

McWilliams has the U.S. leaving the gold standard in 1936; it was, in fact, 1933. He has the United States returning to the gold standard in 1873; it was 1879. In 1873 the U.S. started the process of returning to the gold standard but wasn’t fully realized until the fulfillment of the Resumption of Specie Act in 1879. My quibbles aside, McWilliams has written a very lively book on what makes the world go round.

My Review of A. Wess Mitchell's "Great Power Diplomacy"

 The Art of the Deal

 

Diplomat/historian A. Wess Mitchell has offered us a long history of diplomacy starting with Sparta’s conflict with Athens in 400 BCE up to the Nixon/Kissinger opening of China in the 1970’s. Instead of the direct application of force Mitchell views active diplomacy as a way of getting the best out of a weak hand and as a way to strengthen a strong hand in the game of nations.

 

His case studies also include Byzantium’s struggle against the Huns and Persia, Venice making peace with Milan to engage the Ottoman’s, Austria’s many struggles in Central Europe, France’s grand strategy in the 1600’s, Bismarck’s in the 1800’s and Britain’s at the turn of the 20^th Century. Above all to Mitchell, interests triumph over ideology requiring a nation to play the hand with the cards it is dealt.

 

Especially interesting to me was Austria’s Prince Kaunitz, Metternich’s predecessor, using Louis XIV’s mistress Madame Pompadour as a go between to establish an alliance with France against Frederick the Great’s Prussia. A few years later we see Austria, guided by Metternich making an alliance with Prussia to stave off France. Indeed, interests are far more permanent than alliances. Also fascinating are the machinations of France’s Cardinal Richelieu making an alliance with Protestant Sweden against Catholic Austria. Mind you this is against the backdrop of huge religious strife in Europe.

 

Mitchell discusses at length Britain’s realization that by 1900 it was overstretched and had to reduce its global commitments. Mitchell follows Lord Landsdowne as he makes deals with Japan limiting its involvement in the Western Pacific, with Russia in Central Asia and with the Untied States in the America’s. All of this was necessary to gird the nation for the war that would come with Germany. If there is one message in the book is that core interests take precedence over peripheral interests. This blog previously reviewed Kori Schaki’s work on the same topic. (See: Shulmaven: My Amazon Review of Kori Schake's "Safe Passage: The Transition from British to American Hegemony" )

 

Another lesson of the book is the importance of mobilizing effective coalitions and isolating the enemy. The worst thing that can happen is to be isolated against a strong enemy. Opponents have to be constrained and if they can’t be constrained by the threat of force, bribery sometimes works as in the case of Byzantium buying off the Huns. But bribery should not be confused with appeasement of a direct rival. In the case mentioned Persia was the direct rival and the bribes enabled Byzantium to hold its own.

 

In reading Mitchell’s book, one has to shudder just to think about Trump’s foreign policy. Instead of making alliances, he is destroying them and making America more isolated while Russia and China are moving in the fill in the vacuum, not a pleasant sight. ( See: Shulmaven: Some Thoughts on Trump's National Security Strategy ) One would hope that at least a few Trump staffers would sneak away to read this valuable volume on foreign policy.

 

2026: A Year of Turbulence

  “ When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

                          Chuck Prince, Citigroup CEO, July 2007

 

Before discussing the outlook for 2026, I would like to review what we got wrong and what we got right about 2025. (See: https://shulmaven.blogspot.com/2024/12/2025-revenge-of-bond-vigilantes.html )

 

·       Yet again we were wrong about the stock market. Instead of the S&P 500 trading in a 6400-5500 range stocks traded between 6900- 4900 and closing at the top of the range. We thought stocks would end the year lower.

·       We were right about inflation running at 3% annual rate. The year-over-year change in the CPI of 2.7% reported for November will be revised higher to correct data errors.

·       We were right about tariffs and the mass deportations of illegal/undocumented immigrants.

·       We were wrong about the 10-Year U.S. Treasury yield exceeding 5%. The yield peaked early at 4.79% and trended lower towards 4%.

·       We were mostly correct about the passage of the Trump tax cuts thinking that the 2017 cuts would be extended and the SALT deduction would increase to $20,000, it turned out to be $40,000 with an income cap. We were wrong about other aspects of the Trump tax package that passed. (i.e., no tax on tips and overtime)

·       We were wrong about Congress taking down two Trump cabinet appointees.

·       We were right about Israel attacking Iran’s nuclear infrastructure.

·       We were right about France being on the road to becoming the new Greece.

 

Because I am a glutton for punishment here are my thoughts about 2026.

 

·       Inflation will run hotter than what the market expects. It will end the year at a 4% run rate. The combination of fiscal stimulus, monetary ease and AI capital spending will propel inflation higher. 3% will be the new 2%.

·       The yield on the 30-year U.S. Treasury bond will approach 5.5% causing both the Treasury and the new Trump Fed to institute a policy of yield curve control. It has already started with the Fed buying $40 billion of T-Bills a month through April and the Treasury swapping long term bonds for T-Bills.

·       Gold will surge past $5,000/ounce.

·       Stocks will trade in a broad 7500-5500 trading range and close down by more than 10%. The $310 of S&P 500 estimated earnings will not be enough to levitate stock prices. Put simply, the time to dance will soon be over.

·       NVDIA margins will take a big hit late in the year as competition forces price cutting. (See: https://shulmaven.blogspot.com/2025/12/the-economic-obsolescence-to-nvidia-gpus.html )

·       The Democrats will seize control of the House gaining anywhere between 15-40 seats and could very well take the Senate. Just to note the last time one party controlled all three branches of government was 2003-2006 inclusive and before that it was 1977-1980 inclusive. Americans like divided government. I would also point out that in wave elections partisan redistricting actually hurts rather than helps. ( See: https://shulmaven.blogspot.com/2018/07/gerrymandering-wont-save-republicans-in.html )

·       The Minnesota Medicaid scandal will reach into the offices of Governor Tim Walz and Congresswoman Ilhan Omar.

·       Israel will again attack Iran’s nuke and missile infrastructure.

·       Khamenei will meet his virgins in the sky and Maduro will be out.

 

As usual I end with I am often wrong, but never in doubt.