One ran a country like an economy.
He runs it like a leveraged company.
Manmohan Singh vs Donald Trump
I have been a great fan of both Steven Mnuchin and Dr Manmohan Singh – both were good accountants. The maths type of accounts, not the big4 type. Steve was the Treasury Secretary during Trump 1.0. He came from the movie industry. From the Dune Entertainment Fund to be precise (where he was a General Partner with Gregory coote, former ceo of anytime pte). Dune produced movies – including Avatar and Life of Pi – and even Darjeeling Ltd – all had an Indian angle.
Dr Manmohan Singh changed the destiny of India as Finance minister from 1991-96 under PV Narasimha Rao. Steve brought sanity to Trump 1.0.
Dr Singh is no more. And Steve is no longer treasury secretary. Dr Singh is succeeded by a like minded FM but sanity has left america.
Donald Trump is doing nothing new. It is Dr Singhs playbook of 1991 in reverse. Both had a bankrupt balance sheet in their hands. USA has a permanent deficit of usd 2 trillion, a 38 trillion debt and 5 trillion of imports. USA played its last hand with AI and China ate their lunch. And now India is getting its act together faster than anyone had predicted. Subjugation of the planet through technology hasn’t worked out yet.
Now a business man doesn’t think like an academic. He thinks the opposite. An economist cuts cost, a businessman tries to earn more. An economist liberalises an economy. A businessman tries to close it by adding tariffs etc.
Manmohan Singh believed deficits are a warning signal. Donald Trump treated them as collateral damage.
Singh
• Economist who feared bond markets
• Debt was a constraint
• Stability was the objective
• Politics bowed to arithmetic
Trump
• Businessman who ignored bond markets
• Debt was someone else’s problem
• Growth was assumed, not earned
• Arithmetic bowed to politics
The outcome is predictable:
• Discipline delays crises
• Populism accelerates them
You can shout at voters.
You can bully institutions.
You cannot intimidate the bond market.
Every country eventually learns this lesson. Some learn it quietly. Others learn it at 5%+ yields.
Math always collects.
Maths is not an opinion.
Or someone’s judgement.
But let us understand the maths. Deficit hit USA has little to sell other than its markets and its citizenship. So it is selling both.
But there is something new being done by Trump which is smart. He is trying to collect a trillion additional dollars in customs revenue. So instead of a flat rate of customs duty – he is customising it hoping that the threat will get him trade deals. His target is an average 35% on imports (= 1 trillion)
But with nothing to export, what trade deal will he negotiate. Imagine America trying to sell pork bellies or pistachios to India. Because there really is nothing else. Tesla cars don’t sell (Ford and GM are already closed) nor do Barbie dolls. Defence is one unknown.
No one makes money in India.
Not even the Indians
