3 weeks ago
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February 21, 2025 | 12:00am
What’s happening in America today is something we can’t just watch from a distance. It is a mess out there and everything seems like a miniseries streaming on Netflix.
But even Hollywood productions about the US presidency and American politics were not half as exciting as what’s unfolding before us today. We can’t help but sit at the edge of our seats every morning when we read about what horrendous things Trump and Elon Musk did overnight while we were sleeping.
Trump and Musk are like two bulls running wild in a china shop. Their reckless behavior is causing damage to people and American institutions. And yes, add the rest of the world, too. All that mayhem will affect us sooner or later.
One would think they wouldn’t be as reckless as to fire the people in charge of America’s nuclear arsenal. But they did. They fired the researchers working on the bird flu virus at a time when the virus seems to be on the verge of infecting humans.
And they fired cancer researchers working to keep American healthcare at the cutting edge of technology.
They fired the people at the USAID in charge of its humanitarian aid program, putting $500 million in food aid at risk of spoilage in ports, ships and warehouses worldwide.
It gets worse. A recent article in The New York Times warned that Americans are blundering their way into a financial crisis. That’s worrisome. Remember that when the US catches a cold, the world gets pneumonia.
Some of us will say we, in the Philippines, are better insulated from such problems because our resilient economy isn’t dependent on exports like China and our ASEAN neighbors are.
But our OFWs and the BPOs, which fund our consumer-driven economy are exposed to a financial crisis that starts in America and contaminates the world. Also, we import a lot, including our food. We aren’t an island fortress like some of us think.
Actually, we have bigger worries than potentially losing the average annual $200 million in foreign assistance that the USAID gives us or the promised $500 million in military aid to help strengthen our defenses against China. The specter of a global financial crisis cannot be ignored. If it happens, sooner rather than later, the crisis will be politically driven by Trump.
A lot of warnings have been made about America’s unsustainable debt level, now at 120 percent of GDP, and the danger of financial markets eventually reacting negatively. But the NYT article, written by scholars from the Brookings Institution, states the problem isn’t so much the rising debt level but the true risk of American “political leaders doing something wildly irresponsible that unnerves financial markets… Political blunders have always been the more concerning potential trigger for an American fiscal crisis.”
That became even more imminent after Trump threatened to withhold payments on trillions of dollars of congressionally enacted spending. The NYT article warns that “when Mr. Trump asserts, he can pick and choose which payments to make, regardless of laws enacted by Congress, it is not impossible to imagine the president declaring he can pick and choose which holders of United States Treasury securiti
The article recalled that “during his first term, senior officials from Mr. Trump’s administration reportedly considered the idea of canceling some of the payments on US Treasuries held by China as retribution for its purported role in the pandemic. Now, with DOGE itching to meddle in Treasury payment systems, the president may soon have the means to withhold payments at his personal whim. ‘We’re even looking at Treasuries’ he told reporters ominously when discussing his plans to commandeer the payment system…maybe we have less debt than we thought.’”
The Brookings scholars explained why America has a potential crisis in the making.
“The $28 trillion market for Treasuries – by far the most important financial market in the world – depends first and foremost on trust. By that we mean confidence that the United States Treasury will pay its interest and principal on time and that American politicians won’t drive the economy off a cliff. Because of that trust, Treasuries are viewed as risk-free assets. They serve as the benchmark for interest rates on all kinds of loans such as mortgages, business loans and borrowing by other governments. That trust is why American retirees and overseas pension funds put their money in Treasuries when they can’t risk losing it. It’s the bedrock of America’s economy.
“Imagine if Mr. Trump threatens to withhold debt payments to China, prompting the Chinese to sell their nearly $1 trillion portfolio of US debt. The sell-off would be likely to make financial markets jittery. But would it end there? Would other foreign investors, who together hold nearly a third of outstanding Treasuries, worry they might be next?”
The biggest risk arising from the Trump administration’s recent actions is a loss of confidence in US governance. What they are doing to undermine US institutions and international alliances have serious lasting consequences way after Trump leaves the scene.
Mr. Trump, the Brookings scholars conclude, “is bringing chaos to one economic sector after another. More disruption is sure to come. While we can’t predict what’s going to happen, we know for sure that the risk of a fiscal crisis is higher than it was just four weeks ago.”
An asteroid has been determined to make a close pass on earth or crash into it in 2032. At the rate our world leaders are behaving, will the world still be around to see the asteroid take us out of our misery?
Boo Chanco’s email address is [email protected]. Follow him on X @boochanco
