Reviving The Specter Of Bond Vigilantes

Whoever coined the term TACO (Trump Always Chickens Out) was, consciously or otherwise, tapping in to a psychic need. The TACO rap was appealing to many in the Trump opposition, because, while false in a literal sense, it cut directly against the equally false, but demoralizing impression that Trump never backs down.

The truth has been somewhere in the middle all along. Trump actually backs down quite a bit, though not always in the manner of chickening out. He cares about some things more than others. When he encounters friction over matters that are of little interest to him, he may decide they’re not worth the trouble. He’ll back down, without retreating in a panic.

There are two canonical cases of him chickening out. The first was as he watched the world react to his LIBERATION DAY tariff announcement. The second was this week, as he watched the world react to his threats against Greenland and Denmark and the European Union.

Both of these retreats involved withdrawing tariff threats against angry allied nations. But the real symmetry doesn’t lie in the harsh words of diplomats or foreign leaders. It lies in the deeds of bond traders.

It turns out that Madman Theory crashes on the shoals of the bond market.

The madman theory, as indulged by Trump’s supporters (along with a variety of gullible commentators) is that there’s a method to Trump’s destabilizing bluster. He acts unpredictably and menacingly and irrationally on purpose in order to spook allies and adversaries alike into appeasing him with concessions.

Trump is really more like an actual madman than a rational person of low cunning. The idea that we’re watching The Art of the Deal at work is desperate logical backfill for cultists and propagandists. He is a textbook narcissist, terrified at the thought of failing before watching eyes, but also possessed of poor risk assessment, such that he frequently finds himself teetering on the brink of failure anyhow.

The bond market turns out to be the signal that most reliably alerts him that he’s chosen a course that will end in disaster rather than triumph. It turns out that being an extortionate shitheel of a president can cause severe, perhaps permanent economic damage to the United States.

This is Trump’s greatest vulnerability. Unfortunately, it’s the whole world’s vulnerability, too. Thus far, bond market reactions have spooked