Trump and the New Hitler-Stalin Pact

In the early morning hours of August 24th,1939 Soviet Foreign Minister Vyacheslav Molotov and German Foreign Minister Joachim von Ribbentrop entered into a pact that would ratify the division of Poland and the ceding of Lithuania, Latvia, Estonia, and Bessarabia to the Soviets. The press would soon call it the Hitler-Stalin Pact that enabled Germany to invade Poland on September 1st and Soviet Russia to invade three weeks later. 

Today President Trump, echoing Russian propaganda, called Ukraine President Volodymyr Zelensky a "dictator" and accused him of starting the war in Ukraine, a complete lie. Put bluntly, Trump has thrown Ukraine under the bus. My guess is that Putin called in all his cronies and broke out the vodka in celebration of a new Hitler-Stalin Pact. And to put icing on the cake for Putin, Defense Secretary Hegseth announced substantial budget cuts for the Pentagon.  Instead of dividing Poland, Trump and Putin are setting the predicate for the division of Ukraine. The result in 1939 was a World War. I fear a Trump-Putin condominium will lead to a similar result. 

For previous posts on Ukraine, see for example: https://shulmaven.blogspot.com/2014/03/the-ukraine-what-is-to-be-done.html and https://shulmaven.blogspot.com/2022/03/mr-zelinskyy-goes-to-washington-via-zoom.html.

Donald Trump, Four Weeks in: The Good, the Bad, and the Ugly

Donald Trump’s second inauguration certainly did not take its cues from Lincoln’s second where he said, “with malice towards none and charity for all.”  It is turning out like a vengeance tour where he is flooding the zone with a host of initiatives, some of questionable legality. However, he is keeping his campaign promises and is acting in sharp contrast to the somnolescent Biden Administration.  Below is my take on the good, bad, and ugly so far. To be sure it is arbitrary, and it is no way a full list with the bad and ugly massively outweighing the good.

The Good

• A few good cabinet appointments: Marco Rubio at State, Scott Bessent at Treasury, Doug Burgum at Interior and Elise Stefanik, at the U.N.

• Doing away with DEI in the federal government and its contractors.

• Joining social-democratic Europe with restrictions on gender reassignment care for minors.

• Banning biological males from participating in women/girls’ sports.

• Although it can turn ugly fast, passing the Laiken Riley Act and a crackdown on unlawful undocumented immigrants. Tough actions on border security are long overdue. 

• Cracking down on campus antisemitism.

• Unambiguous support for Israel.

The Bad 

• DOGE, Elon Musk’s Department of Government Efficiency. Although the New York City power broker Robert Moses taught us you can’t make an omelet without breaking some eggs, Musk is going way too far in his noble attempt to cut government waste. He is using a butcher knife instead of a scalpel. As a result, many hard-working government employees are living under what they rightly perceive as a reign of terror. Simply put, it is very hard to improve the efficiency of government with a demoralized work force.

The Ugly  

• Pardoning the January 6th rioters.

• Decapitating the FBI, Justice Department and the CIA, leaving us vulnerable to acts of terrorism.

• Horrendous cabinet appointments featuring incompetent and vile people. Namely, Pete Hegseth at Defense, RFK, Jr. at HHS, Tulsi Gabbard at National Intelligence, and Kash Patel at the FBI. Yet again the Republicans in the Senate have proved themselves to be moral eunuchs in approving these appointments, with Patel pending. (See: https://shulmaven.blogspot.com/2021/02/the-party-of-moral-eunuchs.html) With Hegseth, Gabbard and Patel, our security is at risk.

• Starting a trade war with our allies Canada, Mexico, E.U. and Japan. This is a sure-fire way to increase inflation and to lower growth. (See: https://shulmaven.blogspot.com/2025/02/the-tariffman-strikes.html)

• Practically surrendering Ukraine on a platter to Putin at the Munich Security Conference. 

• Dropping the bribery prosecution of NYC Mayor Eric Adams.

My Review of Williamson Murray's "The Dark Path: War and the Rise of the West"

 War Through the Ages

The late Williamson Murray, a military historian at Ohio State, has written a tour de force history of war from the 1500’s to the present. He argues convincingly that the intense competition for the mastery of Europe led to advances in military technology and the infrastructure of war making were responsible for European success in mastering the globe.  His other thesis is that wars are not won by decisive battles, but rather by brute numbers, organization, economics, finance, and logistics. 

For example, Napoleon’s victory at Jena, which so impressed Hegel and Ludendorff’s victory at Tannenberg did not determine the outcome of the Napoleonic Wars and World War I, respectively. Napoleon lost because the coalition against him was far better organized and financed and had numbers on their side. Similarly, Germany and its allies lost world War I because with America’s entry into the war they were outnumbered and out financed. However, “time and chance happen to all” or in Clausewitz’s word “friction” and at times friction can overcome a lack of resources. For example, Ukraine is still in the fight, but it appears that heroic country was just sold-out by Trump.

Williamson discusses at length the various revolutions in military affairs. He starts with gun powder rendering castle walls obsolete and he goes on to discuss innovations in sailing that happened 100 years later that enhanced naval power. The most important revolution was the merger of the French Revolution with its levee en masse with the industrial revolution which made war total by making the civilian population enmeshed in warfighting. The flowering of that would occur in the American Civil War where the North was far better organized with far better logistics to overcome the South. The war lasted as long as it did because of poor generalship on the part of the North and better generalship on the part of the South.

If there is a hero in the book, it is Otto von Bismarck, whose strategic vision unified Germany with three wars. He had strategic focus and fully understood Clausewitz’s dictum, “that war is the extension of politics by more violent means.” Thus, the lack of strategic vision is road to ruin in wartime. For example, Bismarck understood that after victory against Austria he chose not seize any territory and that ultimately made Austria an ally.

For recent history Murray relies on the work of Andrew Marshall, the longtime head of the Pentagon’s Office of Net Assessment. ( A biography on Marshall was reviewed here: https://shulmaven.blogspot.com/2015/04/my-amazon-review-of-andrew-krepinevichs.html ) In that biography I noted, “As the Cold War was winding down in the mid-1980s he focused his attention on the rise of China and was quick to point out how the revolution in military affairs (precision weapons, computerized command and control and information warfare) in the 1990s would significantly change the nature of future battlefields.” Indeed, this is how Murray viewed Marshall’s work. Further Murray noted that Marshall was among the first to see the Soviets lacked the economic strength and the scientific bench to keep up with the U.S. in 1980’s, which highlighted the fact that war involves far more than kinetic battlefields.

Although “The Dark Path” is a long book, it offers a kaleidoscopic view of the history of war over the past 500 years. It is not for the casual reader, but for those interested in understanding how our world came into being, it is well worth the effort.

Trump's Gaza Plan: More than Meets the Eye

 At his joint news conference with Israel's Prime Minister Netanyahu, President Trump stunned the world by calling for the resettlement of Gaza's population to pave the way for a massive development project under U.S. auspices in Gaza. According to Trump it would be a new "Riviera." Aside from the Israel far right, the idea was uniformly panned in the middle east, Europe and among Trump's MAGA base. Simply put, it is not going to happen.

However, Trump's forced the region to wake up to the fact that we can't go back to the world as it stood pre-October 7th. It will force the Palestinians to come to terms with the new realities of the region.

What has not been said is that while the U.S. will not rebuild Gaza, Trump's idea has whetted the appetite of every property developer from Egypt to Turkey to Saudi Arabia to the Gulf. While Gazans won't accept the U.S. to take the lead, they might be more amenable to an Arab consortium in a project that, of necessity, would involve the temporary exile of portions of the current population. I have to believe that discussions are already underway across the capitals of the middle east.  

The Tariffman Strikes

Donald “the Tariffman” Trump will announce today a 25% tariff on all goods coming from Mexico and Canada and a 10% additional tariff on all goods coming from China. And this is only the beginning with additional tariffs on E.U. products and some specific duties coming. The tariffs on Canadian and Mexican products are an obvious violation of the United States-Mexico-Canada Treaty that Trump signed when he was president the first time. 

To put the tariff question in context, the U.S. imported $3.3 trillion of goods last year, about 11% of our GDP. On a purely arithmetic basis, a 10% tariff on all imports would raise the price level by approximately one percent and a 20% tariff would raise the price level by 2%. However, a potentially stronger dollar and foreign producers absorbing part of the cost would partially reduce the inflationary impact.

Although many economists poo-poo the long-term inflationary impact of the tariffs as a one-time increase, I am skeptical. Why? First, the tariffs will cause a costly rejiggering of supply chains in the longer run, and second in the short run there will be chaos at the Mexican and Canadian border points of entry where all goods shipment will be held up until the tariff is paid. Further it is not clear to me how consumers will respond to the price increases. Instead of thinking like an economist, many consumers might believe that a new inflationary spiral has started. Recall, all the talk about the transitory nature of inflation in 2022.

Importantly, we have to remember that tariffs are an excise tax on imports. As such they raise prices and reduce output with stagflation being the result. Throwing sand into the gears of the economy can hardly promote growth. To the contrary it will stifle growth and add to inflation.

Delta to Resume Flights to Israel

 Delta Airlines announced it will resume flights to Israel. (See below) Less than a week ago we called for the three major U.S. air carriers to end their boycott of Israel. (See: https://shulmaven.blogspot.com/2025/01/us-air-carriers-stop-boycotting-israel.html) Delta has followed though and we applaud Delta CEO Ed Bastian for his decision. Now it is time for United, who had the most flights to Israel, and American to follow through.

Delta to resume Tel Aviv service from New York-JFK on April 1

Delta will restart daily nonstop service to Tel Aviv (TLV) from New York-JFK on April 1, utilizing its Airbus A330-900neo to provide customers with nearly 2,000 weekly seats. 

Staff Writer 

Jan 24, 2025 9:00am

https://news.delta.com/delta-resume-tel-aviv-service-new-york-jfk-april-1

My Review of Andrew Leigh's ""How Economics Explains the World: A Short History......"

History Through the Lens of Economics

Andrew Leigh over-promises and under-delivers in his history of the world through the lens of economics. To be sure economics is particularly important but as Ecclesiastes says, ‘time and chance happens to all.” Economics gives us tools to help understand the world, such as incentives, diminishing marginal utility and sometimes, as behavioral economics has taught us, people aren’t as rational as the classical theory would predict.

He, of course, mentions many of the great economists from Smith to Keynes and Freidman, and Kahneman. There works clearly help explain the world. He also mentions the work of Jared Diamond on the importance of an economy residing along and east-west axis as opposed to a north-south axis. This helps to explain why the northern hemisphere has done so much better than the southern hemisphere, but what does that have to do with economics?

He fails to discuss how human beings can really screw up what apparently looks like a strong endowment. Witness the weakness of Russia and Argentina and the converse of South Korea and Japan.

My bottom line is if you want a very short overview of the role of economics in history, this book might be for you, but it leaves out much.

U.S. Air Carriers: Stop Boycotting Israel

An Open Letter to:

Robert Isom

CEO, American Airlines

Ed Bastian

CEO, Delta Airlines

Scott Kirby

CEO United Airlines

As a frequent flyer to all three airlines, I have one question for you: Why are you boycotting Israel? All three of you had regularly scheduled flights from the United States (JFK, EWR, ORD, DFW, ATL, LAX, SFO, and IAD).  I recently flew on El Al  from LAX to TLV. I would have preferred an American carrier, but because of your boycott I had no choice, but to fly on El Al.

I understand that Israel has not been the safest of countries. Nevertheless, El Al has been operating safely since the Gaza war began and now with a limited cease fire in place, I don’t think you have any excuse for not flying into Tel Aviv. If your current policy of not flying into Israel persists, there can be only one explanation: you are boycotting Israel. 

I therefore urge you to resume flight operations to Tel Aviv as soon as possible. Otherwise you would be doing a great disservice to the flying publics of the United States and Israel. You also would objectively be taking the side of Hamas in the Gaza War. If that is your policy, say so!

My Review of Stuart Banner's " The Most Powerful Court in the World:...."

 A History of the Supremes (Not the Motown Group)

UCLA law professor and former Supreme Court clerk Stuart Banner has written an encyclopedic history of the Supreme Court of the United States. He not only covers the case law, but he also covers the personalities, the politics inside and outside the court, from its earliest beginnings in the 1790’s to the present. In the interest of full disclosure, I had a very small adventure with the Supreme Court as a plaintiff in Yahr v. Resor (4th Circuit 1970) and having cert. denied in 1971.

What Banner rightly argues, the Supreme Court always was and always is a political body. When the Senate was controlled by a party not in the White House, appointments were often delayed until the next election. Merrick Garland’s nomination in 2016 was not an exception to history. As the old wag goes, “the Supreme Court follows the election returns.”

What I found interesting was Banner’s discussion of the 1925 judicial reforms, authored by Chief Justice Howard Taft and adopted by Congress. Those reforms enabled the Supreme Court to reject cases coming before it and it enabled the court to leave a rather dingy office space in the Senate office building to the Greco-Roman shrine it occupies today. According to Banner the ability of the court to choose its cases enabled it to take cases, many concerning civil rights, that it wouldn’t have previously taken because of a very crowded docket. Further he notes that the Republican Administrations in the 1920’s appointed several moderate justices, Harlan Fiske Stone, Charles Evans Hughes, and Owen Roberts. Those three justices played a meaningful role in ratifying the New Deal legislation of the late 1930’s.

While Banner applauds and criticizes many Supreme Court cases, he is silent on why the Supreme Court, from Marberry v. Madison in 1801 to Dred Scott in 1857, the Supreme Court did not overturn a single act of Congress. While after the Civil War and to this day many congressional acts were overturned. So, why was the court, so deferential to the congress in the early 1800’s. Banner rightly mentions Gibbons v. Ogden ((1824) which established federal supremacy over interstate commerce, but he fails to mention its huge economic impact in opening the Midwest and establishing New York City as the nation’s leading port.

He also doesn’t criticize Euclid v. Ambler Realty (1926) which ratified local zoning and, in my opinion, a regulatory taking; Berman v. Parker (1954) and Kelo v. New London (2005) which enabled government to seize private property and turn it over to another private party, not for direct use by the government for a public purpose.  He does note the extreme extension of the commerce power in Wickard v. Filburn (1942) which prevented a farmer from growing crops for his own use, hardly interstate commerce. My guess is that the case would be decided differently today. 

Lastly, he speaks favorably of Chevron v. NRDC (1984) which gave huge discretion to administrative agencies to go beyond the clear intent of Congress. Fortunately, that was overturned this year in Loper Bright Enterprises v. Raimundo. I do note that his book went to press ahead of that case.

These criticisms aside, Banner clearly explains how and why the Supreme Court overturned much of Reconstruction and how and why much of the rights we enjoy today were creatures of Supreme Court actions from the 1920’s on. However, although he discusses how the Supreme Court functioned as a super-legislature in overturning laws protecting workers and individuals, he is less critical of the court creating rights without any direct constitutional underpinning. The controversy over Roe v. Wade and its repeal is an exemplar of this. This is a book for supreme court nerds, and if you are one, it is well worth the long read.

We are in the Early Stages of a Bond Bear Market

Bond market cycles last a long time. For example there was a bond bull market from 1920-1946 when long term U.S. Treasury yields declined from 6% to 2.3%. Thereafter a 35 year bear market ensued to September 1981 which took the yield on 10-Year U.S. Treasury Bonds to 15.84%. This was followed by a 39 year bull market that ended in August 2020 with the 10-Year U.S. Treasury yield trading at a meager 0.56%. It seems clear to me that with the 10-Year bond closing this week at 4.76%, we have been in a bond bear market for over four years. 

Thus if history is any guide, we are only the the early stages of a bear market that could last another two decades. Of course, as in any bear market, there will be rallies along the way, the the path for yields will be decidedly upward.

The fundamentals underpinning the bear market include monumental budget deficits throughout most of the world's largest economies, unfunded pension plans, a still smoldering inflation, and, at least in the near term, the global electorate's preference for populist politics that is working to deglobalize the world economy.  Further, if you add to the mix the need for enormous expenditures to harden infrastructure for weather events and the costs associated with energy transition, all the forces are in place for higher inflation and higher yields.

As far as the stock market goes, stocks can and have risen in the early stages of a bond bear market. That certainly has happened over the last four years. However, as high interest rates begin to bite, the stock market will no longer have a bond bull market at its back to support a near record price-earnings ratio for the broad market.  

The views outlined here are consistent with an earlier blog in 2022 outlining the prevalence of 13-year cycles. (See: https://shulmaven.blogspot.com/2022/05/the-useconomy-is-entering-new-thirteen.html) Also see my recent short term outlook       (https://shulmaven.blogspot.com/2024/12/2025-revenge-of-bond-vigilantes.html)

Memo to the Republicans: Don't Over-Reach

You missed a bullet by electing Mike Johnson speaker on the first ballot. By the way I think Johnson has been under-rated by the media, and it is my guess that he has the potential to turn out to be a speaker of consequence. My primary suggestion is that you don't make the same mistakes the early Biden Administration did. They over-reached, and while it looked good early on, the Democrats reaped the whirlwind in 2024. Don't let that happen to you. Remember we are still a 50/50 country; Biden forgot that.

Thus you should focus on a few narrow, but important priorities. Namely extending the 2017 tax cuts with few amendments, immigration control, energy deregulation, increased defense spending and targeted tariffs. Don't mess around with the tax subsidies for alternative energy embedded in the misnamed Inflation Reduction Act. For example wind energy supplies a huge portion of the electricity needs of all of the states going north from Texas to North Dakota. I need not remind you that the folks in those states are your prime constituency. 

I am not smart enough to know that all of this can be done in one or two reconciliation bills. That tactical decision is way above my pay grade. But remember, success breeds success and if you can get this done early, the rest of your wish list could very well come within range.

One more thing, on the foreign policy front, do not abandon Ukraine. If you do, it will be your Afghanistan.