Elon Musk takes on Donald Trump on November 19, 2024 when launching his sixth test flight at SpaceX Starship Rocket in Brownsville, Texas Have a conversation.
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Oh, with the financial damage caused by Donald Trump and Elon Musk in Washington, Moody's and S&P Global, Moody's ) and S&P Global's walls fly.
In Asia’s conversations with policymakers, business executives and investor types, issues with credit ratings in the U.S. have emerged at a staggering frequency. It is worth noting for many in the region that we haven't heard more from credit rating companies, as U.S. President Trump and his tech billionaire entourage, led by Musk Upend Washington.
The stability, transparency and accountability that U.S. officials spend decades on Asian governments are disappearing in real time. Additionally, Trump-Musk's tag team stifled gifts from the US International Development Agency, a gift to China that was almost the same as Trump's 1.0 White House's withdrawal from the Trans-Pacific Partnership Trading Group in 2017.
More importantly, capital officials from Tokyo to Jakarta are working to understand why Musk and his dark tech brother band were granted the opportunity to enter the U.S. federal payment system. Written by Finance Secretary Scott Bessent, many hope to be a moderate force in Maga World.
However, for Washington's top bankers in Asia, it's all personal to lose its way for the 19 days since Trump regained power. Many of the largest holders of Treasury bills are central banks in Asia. Japan is Trump's 2.0 antics, with a $1.1 trillion treasury. China ranks second, with about US$770 billion.
Apart from executive orders surrounding the status of the trade war and wild attacks of whipping, the Asian central bank is concerned about the policies set by Trump. These include bigger tax cuts at the moment when U.S. national debt goes to $37 trillion, a strange theory that tariff-driven income can replace taxes, Trump tempted to devalue the dollar and his often-planned decision-making ability Wishes to stay away from the Fed.
This final risk makes many Asian officials the most direct officials. During the financial crisis of 1997-1998, Asia canceled most of its dollar nails. But for 27 years, the region has relied heavily on the dollar, U.S. government bonds and the whimsical White House.
Late last month, Fed Chairman Jerome Powell effectively resisted Trump's desire for lower interest rates. Trump told the CEO a week ago in Davos that he would “demand” interest rates to drop. Of course, Trump threatens to threaten tariffs, his massive eviction program at home will certainly increase inflation, thereby increasing the chances of the Fed's next move to tighten rather than relax.
If the conflict is as stated earlier – including Trump's hint that the Fed's mandate would have been harmful to watering nearly $3 trillion in Asian savings. Over time, the Trump team also considered the steps of devaluing the dollar or even defaulting.
By contrast, the consequences of these two Gambits could make the 2008 Lehman Brothers crisis seem tamed. A surge in U.S. production will destroy asset markets everywhere. The Asian central banks will also look for new safe havens with the size and liquidity of the US dollar. Finding one is easier said than done.
The best case scenario about Trump's dollar plan may be an attempt to implement another “plaza agreement.” In 1985, the initial Japanese agreed that the yen was significantly stronger. Who thinks Chinese leader Xi Jinping will do the same?
As China's deflation struggles, Xi Jinping's men are lying carefully how the yen surge 40 years ago destroyed Japan's economy, and are struggling even now. Tokyo still cannot obtain short-term interest rates that are above 0.5% today.
For one seven countries, Japan remains addicted to weak currencies. This case study explains some reasons why XI is reluctant to depreciate the RMB. However, if Trump brings the Sharpis to the dollar, all bets will be closed. The greatest game in history can cause incredible damage.
However, what has happened in the past 19 days has spinned Asia. What about the people at Moody's, Fitch and S&P? The deteriorating head rotation rate of U.S. governance standards seem impossible to ignore the guardians of financial goals.
As Trump quickly and loosens in the U.S. economic reputation, he takes Washington's Asian bankers for granted. If Tokyo, Beijing or elsewhere is called U.S. loan officials, that could be a serious mistake.
