We are in a whole new ball game. The Deep State, the House Dems, the Mueller hit squad and the mainstream media are all going in for the kill.
They are determined to take the Donald down and preserve the rule of the bipartisan establishment in favor of Empire abroad and Big Government, massive debt and Fed-fueled Bubble Finance at home.
At the same time, the Donald is now practically handing them his political head on a platter. That's because he has bombastically embraced the "big, fat, ugly bubble" that he so accurately harpooned during the campaign.
But that bubble has now reached a fatal triple-top and is fixing to implode, and to take the American economy and Trump's presidency down with it.
That's why we've titled our new book, PEAK TRUMP: The Undrainable Swamp And The Fantasy Of MAGA.
There has rarely been such a fraught moment in American history. We are heading for the double whammy of a political/constitutional crisis and a thundering financial breakdown at the same time.
Indeed, this perfect storm will gravely impact the personal liberty and economic welfare of every American citizen---so you need to understand what's coming down the pike and how it will impact Washington and Wall Street alike.
That's why we are making this special offer: A copy of PEAK TRUMP and a free trial subscription to David Stockman's Contra Corner for the bargain price of $12.99.
And after the first free month of Contra Corner, the price is just $1 per day to receive commentary and updates five-days per week on the unfolding political and financial crises looming ahead. (You can unsubscribe at any time if you find Contra Corner isn't what you are looking for).
PEAK TRUMP starts by documenting the miserable failure of the Washington/Wall Street consensus, which is the real reason for the Donald's election victory against all odds.
Years and years of massive money printing and financial repression by the Fed have produced a failed, bifurcated economy.
So down on Wall Street there has been a 200% inflation-adjusted gain in stock prices (NASDAQ-100) since the 2008 crisis. But main street has essentially been pinned to the flat-line, barely recovering the 11-years ago starting point.
That's right. During the years since the Q4 2007 pre-crisis peak, total labor hours employed are up just 7%, industrial production has grown less than 4%, real median household income stands at 0.0% and manufacturing production is still 2% lower.
The impending danger is that even the Fed cannot indefinitely levitate a monumental financial bubble that has become totally decoupled from main street production, worker incomes and corporate profits.
In fact, pretax corporate profits today are no higher today than they were in 2012----notwithstanding all of Wall Street's gimmick-ridden "adjusted" versions of reported profits.
PEAK TRUMP also shows that the massive money printing policies of the Fed have caused the C-suites of corporate America to gut domestic investment in favor of pumping trillions back into Wall Street via stock buybacks, speculative M&A deals and dividends bloated with borrowed money.
At the same time, the Fed's idiotic 2.00% inflation policy has driven up domestic costs, prices and wages year after year. In turn, that has badly eroded American competitiveness, caused the massive off-shoring of production and good jobs and fueled the nation's unsustainable $900 billion annual trade deficit.
So Trump was right during the campaign when he castigated Washington's failed economic policies and labeled the faux prosperity of 2016 as an ugly bubble that was fixing to implode on the American people.
Still, just because Donald Trump targeted the symptoms correctly that doesn't mean he had a plan to fix the American economy or the skills and know-how to move the turgid, essentially paralyzed machinery of the Federal government.
In fact, we show that the mainstream media has the whole story wrong. The Donald is not remotely the force of nature he's been made to seem by the Trump-obsessed journalists and talking heads.
To the contrary, he's actually a political flyweight, megalomaniacal incompetent and bile-ridden bully who stumbled into the Oval Office against all odds; and then lucked-out a second time by riding high on the final two-year crest of a deeply impaired and unsustainable economic recovery and monumental stock market bubble.
And here is where experience comes in. Since starting in Washington as a legislative assistant in 1970, we have seen every business cycle and President up close and personal. So we know that the Donald committed the most egregious rookie mistake in the history of the American presidency.
That is, he insouciantly embraced a financial bubble that was destined to crash and took ownership of a struggling, geriatric business cycle expansion that had "recession ahead" written all over its forehead.
After all, the Donald was sworn in during month #90 of what was already the third longest business expansion in American history and he was elected for a 48 month term. That means it would be month #138 when his first term ends----a point never, ever reached before.
Even the tech boom of the 1990s---previously the longest ever cycle---ended in recession during month #119, and back then there were plenty of tailwinds to keep it going, which is the very opposite of today.
To wit, at the turn of the century the Federal budget had been balanced for three years running compared to today's massive and growing rivers of red ink; the Fed's balance sheet was only $500 billion and had room to grow, the opposite of the $4.5 trillion recent peak that even the Fed heads understand must be sharply contracted; Europe had just adopted the single currency and was fixing to ignite a borrowing and spending boom that would last nearly a decade; and the Red Ponzi was just getting its "growth" sea legs and had only $3 trillion of debt, not today's staggering sum of $40 trillion.
In a word, all of these year 2000 tailwinds have now become ferocious 2019 headwinds. Europe is rolling over into recession, the Red Ponzi is floundering under its massive load of debt and malinvestment and the US economy is imperiled by $70 trillion of public and private debt and egregious Wall Street bubbles whose days are clearly numbered.
Moreover, recessions have not been outlawed by the economic gods and there are overwhelming odds that the next one will hit before November 2020.
And when it does, Wall Street, the US economy and the Donald's fantasy of MAGA will come tumbling down with it.
That's why we call our book PEAK TRUMP: He's now ridding a cycle that has nowhere to go except down.
Accordingly, we think the Donald will mainly be remembered not as the restorer of MAGA, but as the Great Disrupter. His lasting contribution will be to discredit the handiwork of Imperial Washington.
After all, it is the self-serving consensus of its bipartisan ruling class in favor of permanent war, unchained entitlements, fiscal incontinence, unsustainable debt-fueled household spending, rampant corporate financial engineering and Keynesian monetary repression and "wealth effects" based central banking that lies at the roots of our current economic malaise.
At the same time, PEAK TRUMP demonstrates that Trump has no real program to restore domestic prosperity and that he has actually made matters inestimably worse with his four misbegotten wars on the American economy.
By that we mean his Trade War on domestic consumers; his Border War on needed immigrant labor in pursuit of his Mexican Wall vanity; his political war on the Fed when it is belatedly trying to normalize; and what amounts to a war on the nation's solvency embedded in the Donald's runaway additions to the soaring national debt.
On the foreign policy front, we do give Trump a B+ for earnestly trying to roll back the Empire and to bring American forces home. For instance, from places like Syria where they should never have been sent in the first place, and which have no bearing on security of the American homeland, anyway.
Unfortunately, as we also demonstrate, Trump's America First foreign policy has mostly been stymied, smothered and sabotaged by the Deep State incumbents who continue to run the government.
And that's been abetted in no small measure by the phalanx of failed generals and neocon interventionists like Bolton and Pompeo that Trump has unaccountably installed in key offices.
As to the "undrainable swamp", it should never be forgotten that deep-end lies on the Pentagon side of the Potomac. Yet the Donald has fed the military/industrial/ surveillance complex like never before, thereby defeating his own stated goal.
That is, America's desperately needed pivot to fiscal and national security sanity was stopped cold by the Trump's mindless $85 billion per year boost of an already vastly excessive and waste-ridden national defense budget. And now that crucial pivot has been further blocked by a reckless economic and political war against Iran that will do exactly nothing to further the security and safety of the American homeland.
PEAK TRUMP also shows that even if the Donald's policies were better focused, his efforts to make MAGA never had a chance owing to the utterly groundless Russia-collusion investigation and the Mueller witch hunt.
The latter has now been thoroughly discredited by Mueller’s own report, but it has nevertheless functioned to disable Trump’s presidency. In fact, the Donald's fluke elevation to the Oval Office has finally caused the Deep State to come out of hiding and bare its fangs against American democracy itself.
So doing, however, it has finally awakened the sleepwalkers of the Foxified Right about the immense dangers of the Warfare State and the sweeping surveillance and police state apparatus that has been created in the service of the neocons' misbegotten war on terrorism and quest for Empire.
Moreover, the terrifying capabilities, resources and (purported) credibility of the nation's $75 billion per year intelligence community were literally hijacked by Obama officials led by then CIA director, John Brennan.
It is now more than evident, as we thoroughly document, that they illegally pursued a plot to first forestall Trump's election, and then to re-litigate the outcome and eviscerate his Presidency after the voters had spoken.
Finally, PEAK TRUMP demonstrates how the twin fiscal menace of the Warfare State and Welfare State will be the Donald's undoing. After taking the $2 trillion per year of uncontrolled entitlements off the table, Trump then added insult to injury via his unfunded $1.7 trillion tax cut and massive defense and domestic spending increases.
All told, the result will be a guaranteed $20 trillion explosion of the Federal debt (on top of the existing $22 trillion) over the coming decade.
In the immediate term, the US Treasury's unprecedented need to borrow $1.2 trillion during the current year (FY 2019), which is the tenth year of an aging business expansion, is where the life-long "low interest man" and leveraged real estate speculator in the Oval Office will meet his final comeuppance.
Notwithstanding Trump's anti-Fed tweet-storms and Powell’s recently announced policy of “patience”, the central bank has very little room to maneuver. In fact, it has very little “dry powder” at all after having dithered and delayed the process of normalization for years.
But now, after its cowardly pivot to patience in the face of the Donald’s attacks and the Wall Street hissy fit on Christmas Eve, the FOMC will have virtually nothing to "cut" from its already rock-bottom 2.4% interest rate in the next crisis; and its balance sheet, likewise, will be stuffed with $3.7 trillion of government debt, leaving it little head room for another round of QE.
Taken together, the Fed's normalization campaign, which has already dumped $535 billion of government debt into the Wall Street bond pits, and the Donald's unprecedented late-cycle Fiscal Debauch will bring the mother of all supply/demand collisions to the fixed income markets, which, in turn, will trigger the greatest financial crisis ever.
The bond pits will need to absorb $1.2 trillion of new Federal borrowing this year alone and also about $800 billion of existing bonds being dumped by the Fed (via quantitative tightening) through the end of September.
But that's not going to happen at today's 2.60% interest rate on the 10-year Treasury note. Not in a million years.
Stated differently, crunch time is coming to the casino and that's what is sure to bring the Donald down. The stock market is heading not only for another 50% correction (1500 on the S&P 500), but also a long L-shaped bottom rather than a quick V-shaped rebound which occurred after 2009.
So the combination of the mess he inherited and the compounding damage from his four misguided wars on the American economy add-up to a looming catastrophe.
To be sure, we do not know exactly when the brown stuff will hit the fan. But we do know that Washington's Empire abroad and phony prosperity at home are terminally failing and that the sell-by date draws near.
We also know that whatever comes next won't be MAGA. Not by a long shot.
Indeed, once upon a time the prospect of $40 trillion of public debt—even a decade down the road--- was literally unfathomable.
In fact, in one of our favorite remembrances from our White House days, we recall telling President Reagan in the photo below that America was on the verge of having a $1 trillion national debt. That was in January 1981, and at the time crossing the $1 trillion mark was almost a nightmarish prospect.
But President Reagan was not intimidated. He properly insisted that this looming Rubicon was emblematic of the mess he had inherited, and that under his watch the nation's soaring public debt would finally be stopped cold.
Alas, it wasn't. By the time he left office, the national debt was pushing $3 trillion, and it was off to the races from there.
When Bill Clinton packed his bags to leave the White House the public debt was $5.7 trillion, then soared to $10.7 trillion by the end of George W. Bush's two terms, stood at $19.9 trillion when Obama moved on and has already passed $22.0 trillion on the Donald's watch.
But here's the thing. President Trump is no Ronald Reagan. If the Gipper couldn't stop the Washington deficit and debt brigades, there is not a snowball's chance in the hot place that the Donald will.
In truth, unlike all of the Gipper's successors, who relentlessly added to the debt during their turn at the helm but at least gave lip service to the notion of fiscal rectitude, the Donald just flat-out doesn't care and he's taking the GOP with him into fiscal fantasy-land.
What this means is that America is now fast drifting toward the Debtberg. It is only a matter of time before the impending collision shatters the faux prosperity and wanton complacency that prevails on both Wall Street and in Washington.
Still, it is not too late to get prepared.
PEAK TRUMP explains how we got here and why the Donald is only accelerating the arrival of the next crisis; and our daily Contra Corner commentary provides a running update on these unfolding events as they happen.
As we said at the beginning, $12.99 for the package upfront, and $1 per day thereafter if you continue to subscribe, is a bargain for the unique angle we bring to the table after four decades at the intersection of Wall Street and both ends of Pennsylvania Avenue.
In all humility, we don’t think you can afford to go without Contra Corner any longer as we plunge into the truly perilous times ahead.
So we hope to be sending you PEAK TRUMP and Contra Corner on a daily basis very soon.
David A. Stockman