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The Dictatorship

Why Bill Clinton was so afraid of bond traders — and Donald Trump should be too

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Why Bill Clinton was so afraid of bond traders — and Donald Trump should be too

President-elect Donald Trump will sweep into office in January with few formal checks to his power. Republicans control the House and Senatewhile a conservative majority sits on the Supreme Court. For his critics, it’s a dispiriting time.

But as other presidents have learned, there are some checks and balances that aren’t described in your AP Gov textbook.

An unlikely one surfaced recently as veteran Wall Street strategist Ed Yardeni cautioned that investors in U.S. bonds could play a critical role in forcing the incoming Trump administration to back down from its plans for an all-out trade war with everyone from China to Mexico and Canada.

Reviving a term he first coined in the 1980s, Yardeni warned that “bond vigilantes” could take action if Trump’s plans go too far.

Like Batman, these vigilantes only swing into action when the system isn’t working. Instead of putting on a costume and roughing up street punks, though, they simply sell off 10-year government bonds when they think the government isn’t being serious about long-term fiscal policy. That may not sound dramatic, but it can have huge effects, raising the costs of government borrowing and even forcing the Federal Reserve to change course.

There’s a great anecdote demonstrating exactly how serious this threat can be in Bob Woodward’s book “The Agenda,” about the early days of Bill Clinton’s presidency. The Arkansas governor had not yet taken office when he sat down for a briefing on his economic plans. One of his advisers then explained how a lot would depend on whether bond traders thought his plans to reduce the deficit were credible.

“At the president-elect’s end of the table, Clinton’s face turned red with anger and disbelief,” Woodward wrote. “‘You mean to tell me that the success of my program and my re-election hinges on the Federal Reserve and a bunch of f—— bond traders?’ he responded in a half-whisper.”

More recently, bond vigilantes in Great Britain were blamed for the downfall of Prime Minister Liz Truss. After she announced a package of energy subsidies and tax cuts that would be paid for by raising deficits, investors in British government bonds rebelled, causing interest rates to rise and hurting the pound. Truss’ party revolted, and she was forced to resign after just a few months in office, famously outlasted by a slowly rotting head of lettuce.

There’s no risk of something quite so dramatic in the U.S., where bond traders don’t have nearly as much influence due to the strength of the dollar. But Wall Street analysts point to ways in which Trump’s plans to dramatically disrupt the federal government and foreign trade could backfire on him.

If bond traders start to think that deficits are getting too high due Trump’s tax cuts, they could get antsy.

If bond traders start to think that deficits are getting too high due to Trump’s tax cuts and inflation is going to make a comeback due to his tariffs, they could get antsy. If they start selling, the government has to raise interest rates to compensate, borrowing gets more expensive, the Federal Reserve starts worrying more about inflation, local chambers of commerce start nervously calling up their Republican representatives — and suddenly Trump doesn’t have quite so compliant a Congress.

The same dynamic can play out in a number of different ways over the next four years, in part due to Trump’s blunt-force proposals for his second term.

Trump’s plans for mass deportations will be checked by responses from civil rights activists, immigration lawyers, farmers, Democratic state attorneys general, federal judges and foreign officials. His plans for slashing government programs will be balanced by angry constituents, labor unions, government contractors and special interest groups. And many of his plans can be thwarted by sufficient public outrage, especially as lawmakers start looking ahead to the midterms.

Trump has grand plans to remake America. He will succeed in some and fail at others. But in all of them he will face a rule of politics as ironclad as Newton’s third law of motion: Every action he takes will have an equal and opposite reaction somewhere else.

The first response to watch may very well be from vigilante bond traders. But there will be others to come, and often from equally unlikely quarters.

Ryan Teague Beckwith

Ryan Teague Beckwith is a newsletter editor for BLN. He has previously worked for such outlets as Time magazine, Bloomberg News and CQ Roll Call. He teaches journalism at Georgetown University’s School of Continuing Studies.

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The Dictatorship

NEXT: MAGA VOWS TO SILENCE FOES

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NEXT: MAGA VOWS TO SILENCE FOES

WASHINGTON (AP) — President Donald Trump is escalating threats to crack down on what he describes as the “radical left” following Charlie Kirk’s assassinationstirring fears that his administration is trying to harness outrage over the killing to suppress political opposition.

Without establishing any link to last week’s shooting, the Republican president and members of his administration have discussed classifying some groups as domestic terrorists, ordering racketeering investigations and revoking tax-exempt status for progressive nonprofits. The White House pointed to Indivisible, a progressive activist network, and the Open Society Foundations, founded by George Soros, as potential subjects of scrutiny.

Although administration officials insist that their focus is preventing violence, critics see an extension of Trump’s campaign of retribution against his political enemies and an erosion of free speech rights. Any moves to weaken liberal groups could also shift the political landscape ahead of next year’s midterm elections, which will determine control of Congress and statehouses across the country.

“The radical left has done tremendous damage to the country,” Trump told reporters on Tuesday morning when leaving for a state visit to the United Kingdom. “But we’re fixing it.”

Trump has sometimes made similar threats without following through. But now there’s renewed interest fueled by anger over the killing of Kirk, a conservative activist who was a prominent supporter of Trump and friends with many of his advisers.

More than 100 nonprofit leaders, representing organizations including the Ford Foundation, the Omidyar Network and the MacArthur Foundation, released a joint letter saying “we reject attempts to exploit political violence to mischaracterize our good work or restrict our fundamental freedoms.”

“Attempts to silence speech, criminalize opposing viewpoints, and misrepresent and limit charitable giving undermine our democracy and harm all Americans,” they wrote.

White House blames ‘terrorist networks’

Authorities said they believe the suspect in Kirk’s assassination acted alone, and they charged him with murder on Tuesday.

However, administration officials have repeatedly made sweeping statements about the need for broader investigations and punishments related to Kirk’s death.

Attorney General Pam Bondi blamed “left-wing radicals” for the shooting and said “they will be held accountable.” Stephen Miller, a top policy adviser, said there was an “organized campaign that led to this assassination.”

Miller’s comments came during a conversation with Vice President JD Vance, who was guest-hosting Kirk’s talk show from his ceremonial office in the White House on Monday.

Miller said he was feeling “focused, righteous anger,” and “we are going to channel all of the anger” as they work to “uproot and dismantle these terrorist networks” by using “every resource we have.”

Vance blamed “crazies on the far left” for saying the White House would “go after constitutionally protected speech.” Instead, he said, “We’re going to go after the NGO network that foments, facilitates and engages in violence.”

Asked for examples, the White House pointed to demonstrations where police officers and federal agents have been injured, as well as the distribution of goggles and face masks during protests over immigration enforcement in Los Angeles.

There was also a report that Indivisible offered to reimburse people who gathered at Tesla dealerships to oppose Elon Musk’s leadership of the Department of Government Efficiency. Sometimes cars were later vandalized.

Indivisible’s leadership has said “political violence is a cancer on democracy” and said that their own organization has “been threatened by right-wingers all year.”

Nonprofits brace for impact

Trump’s executive actions have rattled nonprofit groups with attempts to limit their work or freeze federal funding, but more aggressive proposals to revoke tax-exempt status never materialized.

Now the mood has darkened as nonprofits recruit lawyers and bolster the security of their offices and staff.

“It’s a heightened atmosphere in the wake of political violence, and organizations who fear they might be unjustly targeted in its wake are making sure that they are ready,” said Lisa Gilbert, co-president of the government watchdog group Public Citizen.

Trump made retribution against political enemies a cornerstone of his comeback campaign, and he’s mobilized the federal government to reshape law firms, universities and other traditionally independent institutions. He also ordered an investigation into ActBluean online liberal fundraising platform.

Some nonprofits expect the administration to focus on prominent funders like Soros, a liberal billionaire who has been a conservative target for years, to send a chill through the donor community.

Trump recently said Soros should face a racketeering investigation, though he didn’t make any specific allegations. The Open Society Foundations condemned violence and Kirk’s assassination in a statement and said “it is disgraceful to use this tragedy for political ends to dangerously divide Americans and attack the First Amendment.”

Sen. Chris Murphy, a Democrat from Connecticut, wrote on social media that “the murder of Charlie Kirk could have united Americans to confront political violence” but “Trump and his anti-democratic radicals look to be readying a campaign to destroy dissent.”

White House spokeswoman Abigail Jackson said “it is disingenuous and false for Democrats to say administration actions are about political speech.” She said the goal is to “target those committing criminal acts and hold them accountable.”

Republicans back Trump’s calls for investigations

Trump’s concerns about political violence are noticeably partisan. He described people who rioted at the U.S. Capitol on Jan. 6, 2021, as “hostages” and “patriots,” and he pardoned 1,500 of them on his first day back in the Oval Office. He also mocked House Speaker Emerita Nancy Pelosi after an attack on her husband.

When Trump condemned Kirk’s killing in a video message last week, he mentioned several examples of “radical left political violence” but ignored attacks on Democrats.

Asked on Monday about the killing of Minnesota state Rep. Melissa Hortman over the summer, Trump said “I’m not familiar” with the case.

“Trump shrugs at right-wing political violence,” said Ezra Levin, the co-executive director of Indivisible, in a newsletter.

Some conservative commentators have cheered on a potential crackdown. Laura Loomer, a conspiracy theorist with a long record of bigoted comments, said “let’s shut the left down.” She also said that she wants Trump “to be the ‘dictator’ the left thinks he is.”

Katie Miller, the wife of Stephen Miller and a former administration spokeswoman, asked Bondi whether there would be “more law enforcement going after these groups” and “putting cuffs on people.”

“We will absolutely target you, go after you, if you are targeting anyone with hate speech,” Bondi said. “And that’s across the aisle.”

Her comments sparked a backlash from across the political spectrum, since even hate speech is generally considered to be protected under the First Amendment. Bondi was more circumspect on social media on Tuesday morning, saying they would focus on “hate speech that crosses the line into threats of violence.”

Trump is getting more support from Republicans in Congress. Sen. Ted Cruz of Texas and others proposed legislation that would enable the Justice Department to use racketeering laws, originally envisioned to combat organized crime, to prosecute violent protesters and the groups that support them.

Rep. Chip Roy of Texas wants the House to create a special committee to investigate the nonprofit groups, saying “we must follow the money to identify the perpetrators of the coordinated anti-American assaults being carried out against us.”

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Associated Press writer Bill Barrow in Atlanta contributed to this report.

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The Dictatorship

Japan’s exports to the US continue to fall, hit by Trump’s tariffs

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Japan’s exports to the US continue to fall, hit by Trump’s tariffs

TOKYO (AP) — Japan’s exports to the United States plummeted 13.8% in August compared to the same month the previous year, marking the fifth straight month of declines, as auto exports were hit by President Donald Trump’s tariffs.

The Finance Ministry data released Wednesday showed the rate of the drop in exports to the U.S. compared to the previous year worsened from a 10.1% slip in July.

U.S. tariffs on Japanese automobiles and auto parts decreased from 27.5%, the amount Trump initially levied, to 15% this week, but that’s still higher than the original 2.5%.

Wednesday’s data reflect the month of August, when the tariffs were higher. Japan’s overall exports were little changed, slipping 0.1%, as exports grew to Europe and the Middle East.

The provisional data for August showed Japan’s imports from the world fell 5.2% from a year ago. Imports from China grew 2.1%, while exports to China fell 0.5%. Imports from the U.S. grew 11.6%.

Exports to the world grew in food, gaining 18%, as well as in ships, growing by nearly 25%. Imports grew in computers, adding nearly 35% on-year, while aircraft rose 21%.

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Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama

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The Dictatorship

The Fed cuts interest rates by quarter-point after Trump’s pressure campaign

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The Fed cuts interest rates by quarter-point after Trump’s pressure campaign

The Federal Reserve on Wednesday cut interest rates for the first time this yearwith policymakers opting for an expected quarter-point cut to the Fed’s benchmark rate.

The announcement comes as President Donald Trump has been pushing for rate cuts while attempting to assert more control over the historically independent central bank. He has sought to fire Biden appointee Lisa Cook from the Federal Reserve Board of Governors, a move that an appeals court temporarily blocked Monday night but could ultimately be resolved soon at the Supreme Court. The Trump administration had argued for kicking her off the board ahead of the Federal Open Market Committee’s two-day meeting that started Tuesday, at which rates and other important matters were discussed.

The Republican-led Senate just this week confirmed a new board governor appointed by Trump, Stephen Miran, who has said he would not resign from his economic adviser position in the Trump White House. Miran replaced Biden appointee Adriana Kugler, who abruptly resigned last month before her term’s expiration in January.

Another”https://www.federalreserve.gov/newsevents/pressreleases/monetary20250917a.htm” target=”_blank”>disagreed with Wednesday’s actionas he preferred a larger cut.

The New York Times previously reported that the projected quarter-point rate cut “won’t have a significant effect on consumers’ financial lives, but it may provide a tiny bit of relief for people carrying credit card debt, while savers may see slightly less generous yields.”

This is a developing story. Check back for updates.

Jordan Rubin

Jordan Rubin is the Deadline: Legal Blog writer. He was a prosecutor for the New York County District Attorney’s Office in Manhattan and is the author of “Bizarro,” a book about the secret war on synthetic drugs. Before he joined BLN, he was a legal reporter for Bloomberg Law.

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