This post may alienate you ⚠️
But I am trying to think though what had happened over the last 5 months and this is what I concluded

To understand Trump actions, one must understand his key goals in Trump 2.0
1. Maintain control of US govt - otherwise he will face waves of impeachment and investigations like Trump 1.0
2. Offer at least temporary fix of US debt problem - or his economic policies will not work
3. Fulfill some MAGA promises to keep his base happy
In this order, and yes MAGA is only #3 in his priority

If you look through this lens, everything Trump did in the past 5 months make sense

1/6 The first month of Trump policies is dominated by DOGE. You saw a lot of announced wastage found by DOGE team. Interestingly, most of these wastage were linked with Democrats. From wedding expense of Chelsea Clinton to money funnelling to organization founded by Stacey Abrams, DOGE became the hitman on Democrats either by design or by coincidence.

What happened to the downsizing of govt agencies where all the savings can come from?

At the end, DOGE saved $180B instead of $2T promised by Elon Musk. Elon Musk did his job and got kicked out of the power center (he was just used as an objective independent overseeing the uncovering of corruption and spread that info to his 200M followers). During the process, Elon Musk alienated a lot of people, his businesses suffered, but that is not Trump’s problem. Musk paid the price for being politically naive

From the start, there is no determination to cut the fat of govt, DOGE is just there to weaken the collapsing Democratic Party (fulfilling #1)

By March, the Democratic Party was in total disarray and you couldn’t see any coordinated effort to for a resistance against Trump admin

2/6

🧵 Why 🇺🇸 trade war with 🇨🇳 is destined to fail

Since Trump impose tariff on 🇨🇳 products in his first term, the friction between the world’s 2 largest economies emerged into full blown trade war. The arrest of Huawei’s CFO Meng Wanzhou indicated dirty tricks are allowed in this trade war.

Biden’s admin relentless effort trying to cripple 🇨🇳 high tech sector fell spectacularly with Huawei launched of Mate60 using 🇨🇳 made chip while 🇺🇸 Commerce Secretary Raimondo was visiting 🇨🇳 in 2023. With less than 60 days in office, Biden admin continue to add 🇨🇳 companies to hi tech sanction list (>1400 China companies in the list now)

1/7 🇨🇳 has been reluctant to retaliate other than claiming to “reserve the right to respond”. Eventually, 🇨🇳 impose export control of Gallium and Germanium in 2023. This month, 🇨🇳 outright ban export of Gallium, Germanium, Antimony and Graphite

🇨🇳 ban Germanium, Gallium, Graphite, Antimony export to 🇺🇸 in response to 🇺🇸 prohibit chip export to 🇨🇳. 🇨🇳 also stated any third party diverting 🇨🇳 supply to 🇺🇸 will be sanctioned
🇨🇳 accounts for
94% of Gallium production
83% of Germanium production
77% of Graphite production
48% of Antimony production

Germanium and Gallium are byproducts of Aluminium processing
You cannot “find” Germanium and Gallium if you don’t have large enough Al production

Finding replacement is not going to be easy

2/7

Much talk about #GOLD revaluation recently
Want to do a mental exercise and see how it works
If 🇨🇳 govt declares it will buy unlimited quantity of gold at RMB 1100/g (currently ~550/g), it means 🇨🇳 devalues RMB by 50%. Import for 🇨🇳 becomes expensive but 🇨🇳 export is cheap
1/5 🇨🇳 will flood its export globally killing jobs elsewhere
So other mfg countries will interfere FX to devalue their currencies in order to maintain stability against RMB.
West finds its export collapsing will also devalue their currencies to reach equilibrium with RMB
2/5

How to stop drinking milkshake?
Slowly then suddenly

So far this week
Kenya buy 🇸🇦 🇦🇪 oil in Kenyan Shillings
First Yuan LNG deal
🇨🇳 🇧🇷 trade in their currencies
ASEAN discussion on non-USD settlement

Only midweek 😁
#Dedollarization

https://twitter.com/meghupdates/status/1640303645010071552?s=61&t=5ERGqeMwtGeHdk_W7F-7xQ

https://twitter.com/meghupdates/status/1640303645010071552

🇺🇸 playbook is really smart
“Weaken a nation and takeover its asset at discount” works for decades
Ukraine crisis was planned to weaken 🇷🇺 and rob it like in the 1990s. If it fails, Europe is doomed and 🇺🇸 can rob European capital, knowhow, talent, asset like 🇷🇺 in 90s

1 Problem is the world already tired of this playbook and only 777 mn International Community stand with 🇺🇸
The rest of the world knows they need a new “community” and started to look for alternatives, e.g. BRICS, SCO, etc. All of them have key members 🇷🇺 🇨🇳 🇮🇳

2

Long 🧵 on 🇨🇳
Many experts’ posts on how bad is the 🇨🇳 economy, but the same experts kept telling their followers that 🇨🇳 number are all made up and unreliable 🤔

The key issue in 🇨🇳 this year is potential leadership change. One needs to learn how to read the tea leaves

1 🇨🇳 leadership for next 5 years will be decided in 20th CPC Congress. The top leadership held their meeting in Beidaihe earlier this summer to decide on personnel arrangement to be approved in the CPC Congress. So called experts not knowing this should not even talk about 🇨🇳

2

Long 🧵 on Taiwan
With the completion of Pelosi Asia trip, many different views on its merits and what will come next. My take is 🇨🇳 🇺🇸 each got what it wants. Taiwan is the clear loser.

1 🇨🇳 started military exercise the day after Pelosi visit. For the first time, PLA exercise around Taiwan, blockading the island. PLA repeatedly move beyond median line and its navy was within 12 miles of Taiwan, completely ignoring median line or “ territorial” water claim

2

1. Many experts have put out prediction how China would react on Pelosi trip
A. No fly zone
B. Interception of Pelosi flight
C. Actual invasion
While all of these are possible, it is not probable and I have a different view on the potential chain of events
cnn.com/2022/07/27/pol… 2. Global Times, the CCP media outlet has clearly indicated PLA will not sit idly by, so some reactions should be expected. But what will be the reactions by PLA?
globaltimes.cn/page/202207/12…

Long thread on China development model evolution

Deng Xiaoping was opened up Chinese economy back in 1978. At that time, the reform focused on attracting overseas investment to set up mfg in China for domestic and export purposes

1
washingtonpost.com/news/monkey-ca… Overseas Chinese (mainly Hong Kong, Taiwan, SEA) brought skills and capital to China, built factories in the specialised economic zones. What China offered then was “unlimited” supply of cheap labor, but lack infrastructure, regulations, skills or equipment.

2

1/5
Posted this a month ago, so much have evolved
1. Many nations ban export of food
2. Massive inflation on energy and food globally
3. Food & energy crisis already led to riots in some countries
4. Supply chain problems worsened by lockdown in China

https://twitter.com/davidle76335983/status/1506204296404434947

2/5
Financial system
1. 🇷🇺 line up non-USD trade deal with Global South (GS)
2. Ruble for gas, then other commodities for unfriendly nations
3. GS increases non-USD reserve
4. Massive selloff of UST
5. De-dollarization
6. Zoltan Pozsar and Sergey Glazyev on new financial system