Jack Welch, the CEO and Chairman of GE from 1981 – 2001, and an acknowledged leader, said “Leadership is the relentless pursuit of truth and ceaseless creation of trust”.

One can’t honestly credit Trump for a relentless pursuit of truth. He has often claimed, without evidence, that he stopped several wars, in his singular quest for the Nobel Peace Prize. A prize that’s now forever denied to him by the Nobel Committee after he accepted it as a ‘gift’ from the awardee, Maria Machado, who is also denied it. Rightly so. The Award is to be earned, in the eyes of the committee, and is not a parcel to be passed in a childish manner. Trump’s act of accepting a hand-me-down is not a ceaseless creation of trust.

In fact Trump has walked out of several international bodies (WHO, UNESCO, International Solar Alliance, others) and has withdrawn/passed Executive Orders to withdraw from several global/multilateral/bilateral agreements, out of 66 he has decided to quit from (Paris Climate Accord, UNCTAD, Peace building Commission *, Global Counterterrorism Forum, INF, a nuclear prevention treaty, Open Skies Treaty, and JCPOA).
a UN body focusing on prevention and resolution of conflicts which he has now usurped by creating a Board of Peace, at Davos).

Not only has he not created trust, but by withdrawing from global bodies that serve to promote health, education and environment and those that strive to prevent wars, including nuclear, and resolve conflicts, he has eroded the trust created by previous Presidents.

Perhaps this was his way of following Jack Welch’s advice – by welching on previous agreements!

He has then gone on to bash, bully and berate his allies, such as Canada, with whom America shares the world’s longest border. He has expressed a desire to ‘acquire’ Canada as America’s 51st State, and, at Davos, stated that its PM, Mark Carney, should be ‘grateful for all the freebies he has got’ from USA. Trump also mocked French President Macron for wearing his aviator sunglasses (he was using them to protect his eyes, which had burst a blood vessel), as well as the Swiss President.

The allies are upset also by the high tariffs he has placed on imports from their countries. Trump has ruffled EU feathers because of his desire to “buy” Greenland, which is governed by Denmark, if necessary, by use of force. Use of force to acquire another NATO member creates a piquant situation for other members. They are sworn, under Article 5, to defend a member under attack, but here both attacker and defender are members! They have rallied behind Denmark. At Davos, Trump announced that he would not use force.

This is where Jack Welch’s advice on the need to pursue ceaseless creation of trust becomes evident. Trump’s assertion he wouldn’t use force is being taken with a barrel of salt.

Confronted with high tariffs, insults to its leaders, withdrawals from existing global bodies and agreements, threat of forcible seizure of their territories, US Allies have sought trade and defence deals with others. The EU and India have signed a huge trade deal, lowering tariffs all around, and affecting 2 billion people. Canada signed a trade deal with China under which it allowed import of 49000 Chinese EVs at a low tariff rate of 6.1%.

This will affect America’s status as the largest market in the world whenever the extraordinary privilege of having the world’s internationally accepted reserve currency ends. This privilege allows it to borrow to fund it’s over consumption and it’s senseless wars. Control over the financial messaging system, SWIFT, gives USA the power to sanction. It has abused this power to eg threaten sanctions on countries opposing his takeover of Greenland!

The de-dollarisation movement is gaining momentum; Saudi, for example no longer sells it’s oil solely in USD, which was the foundation of dollar hegemony. Russia, China and India called SPFS, CIPS and SFMS, respectively. These systems are faster, and much cheaper, than SWIFT, so other countries will gravitate towards them. Using them breaks the stranglehold SWIFT has, and averts the risk of freezing funds. USA froze $300 b. funds of Russia’s central bank.

Loss of allies will isolate America, at a time when conflicts are escalating in Iran and over Taiwan.

American aircraft carrier Abraham Lincoln, is positioned in the Middle East, ready for deployment against Iran. A conflict would result in a sharp spike in the price of crude oil. It’s ironic that Abraham Lincoln, who once emancipated people, is now seeking to subdue them!

China is reportedly in political turmoil, with some reports even claiming that tanks are rolling on the streets of Beijing. President Xi Jinping has reportedly arrested the topmost army general, Zhang Youxia. The volatile situation would depend on which way the majority of the arms moves. Whichever way it does, it seems likely that the survivor may make a move on Taiwan, in order to get the populace to back him.

The BSE Sensex closed the week at 82269. It has remained stoic amidst these geopolitical earthquakes measuring high on the Richter scale.

India continues to peacefully move ahead. India’s Index of Industrial Production hit a 26 month high of 7.8% in December ). Adani group, which owns and manages several airports in India, has signed a deal with Embraer of Brazil to make commercial aircraft in India. The Indian State of Maharashtra, together with Department of Atomic Energy, are in talks to develop thorium based nuclear reactors. India has the world’s largest reserves of thorium, a chemical element, of 0.85-1 million tonnes (global reserves 6 million tonnes). It is far safer than uranium based nuclear plants, and cheaper too. Maharashtra is also looking for collaborations for thorium based small modular reactors. This will significantly reduce the cost of crude oil imports.

Not only is Trump de-friending Allies, he is also angering Americans, sending ICE agents into Minneapolis, making America groan again. This will have a negative impact in the mid term polls in November 2026. All 435 seats of the House of Representatives will be up for elections, and a third of the 100 seats in the Senate. The results will determine which party will control the House and the Senate for the remaining two years of Trump’s term.

A big financial concern is the health of US banks, especially the Community Banks. These, like Silicon Valley Bank, were affected by the poor health of Commercial Real Estate (CRE), due to high interest rates, and increasing WFH, work from home, trends. The CRE crisis remains, and will likely cause another crisis.

Perhaps the biggest risk factor is the likelihood of a US attack on Iran, over the weekend.

These trends explain the spike in prices of gold and silver. People have lost faith in Paper currencies which are backed only by the trust they have in their Governments.

And that trust has gone with the wind.

———————
Comments may be sent to: jmulraj@asiaconverge.com