How Trump screwed the world economy

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0:37And your medication is delivered directly to your home in discreet packaging. So your experience stays private from start to finish. Do your research, ask the right questions, then visit orderlymeds.com slash podcast for an exclusive offer. Again, that's orderlymeds.com slash podcast. Individual results may vary, not medical advice eligibility required. See site for details.

1:02This is a Global Player original podcast. And so tonight we have created a new award. We're going to do something we've never done before. We're going to honor him with a new award that we will present annually from this point forward. But he is the suitable and fitting recipient of the first ever America First Award. We can think of no better title for what that is. Who's it going to be? Who's it going to be? Who's it going to be? I can't guess. I can't guess. Come on, let's wait. That's this beautiful golden statue here, appropriate for the new golden era in America. And we want to let you know before we bring the president out, and the president has done so much for the American people, and we want to honour him in some small way.

1:45It was the president of the United States being honoured with a prize from Mike Johnson, the Speaker of the House. And it's a gold statue which can go alongside the other phony award he got from FIFA because we know that Donald Trump loves a phony gold statue. Isn't the lovely thing, though, that it's an annual award? So maybe he'll get it next year too. Welcome to the News Agents USA.

2:18It's John. It's Maitlis. And we're going to start with breaking news about a major ethics investigation that's going to launch in America now following some very suspicious trades that took place on the markets on Monday morning, 15 minutes before Donald Trump called off the dogs on the war in Iran. Oh, hang on, I've misread that. There isn't going to be an ethics investigation into what happened, but there bloody well ought to be. So just to clarify, then we saw that extraordinary volume of trading at around quarter to seven in the morning. We think that half a billion was it dollars in one trade exchanged hands.

3:00And we've seen the volume of trading point towards an activity that was so unusual that people said, why is all this going on? What's going on? What's going on? 40 minutes later, Donald Trump comes out, makes the speech, climbs down from the war, tells everyone that he's had peace in our times, conversations with Iran. and that particular trader or group of traders made an absolute killing on knowing something 15 minutes before Donald Trump spoke. Gosh, so the administration must be absolutely furious, right? And terrified that somebody has tipped somebody off to go out and make money on the back of what the president's...

3:42Might say. Words. So are they going to investigate? Are they... No. No. No. No investigation. insider trading looks like it has happened on an absolutely epic scale with one or two people making the most colossal bet at quarter to seven in the morning, when normally there is no trade going on, on the futures market, in the hope, in the belief, maybe in the knowledge that they were going to win. And why I think this is such a sort of interesting double bluff is because Trump was already trying to move the markets himself with that statement, right? So even though we now know no such talks existed, because Iran has now denied them, and obviously, we are now in a new world where we have to believe Iranian state TV before the US president.

4:32But even though those talks didn't exist, Trump, it seems, was trying to manipulate the price of oil downwards, help the price of oil go back to normal, more normal levels than it had been in order to sort of bring down the price for people at the petrol station, petrol pumps. And so the fact that the insider trading looks as if we have no proof, we have no evidence, but we do have very strong graphics showing exactly what was going on on the markets at that time. The fact that the insider trading was going on is the kind of, is almost the addendum to the main story, which is Trump is literally making stuff up to try and bring down the price of oil.

5:14Yes. And look, the bigger picture, you know, let's let's kind of zoom out from the oil trade that took place on Monday morning. The bigger picture is that four weeks into the war in Iran, the Strait of Hormuz is still absolutely closed to shipping from Gulf countries like the UAE, Saudi Arabia, Kuwait, Bahrain, because the Iranians control it. And for all the bombing that's taken place, for all the hardware, the military hardware that has rained down on Iran, the Iranians still control the Strait of Hormuz and 20 % of the oil, 20 % of the world's oil should be flowing through there and it's not.

5:55And this morning, the OECD, the Organisation for Economic Development, has made some of its predictions based on what looks to be the state of the energy markets as we talk. The Middle East crisis, they believe, will fuel a surge in US inflation to 4.2 % this year, the highest in the G7. That is not a good figure if you are a president facing midterm elections where everyone is telling you to talk about affordability. Everyone is telling you that the one thing consumers care about more than anything else is the price of gas, the price of goods, the price of the basket of food that you bring home.

6:36So this 4.2%, I think, will come as a major shock or a major alarm bell to Trump, because this year, I think inflation was going to hit about 2.6%. It's looking like it's almost doubled if this war does not end soon. And even actually, frankly, if it does end soon, the fact that everything that comes through the Straits of Hormuz can take between sort of four to five weeks means that things don't just suddenly go back down. You know, it's great that Donald Trump can do it with a statement, but actually the real flow of oil can take weeks to actually start getting into the system again. Well, let's speak now to possibly America's most distinguished economist, Paul Krugman, who won the Nobel Prize for economics.

7:33The real Nobel Prize or the gold statue. No, he won genuinely a real Nobel Prize. Just once. Just once. Not annually. Not annually. About what is happening in global markets. But Paul Krugman, if we could, can we start with this bizarre trade that seemed to happen just 15 minutes before Donald Trump spoke? What was going on? The circumstantial evidence that somebody is trading based on inside information is, you know, is really, really strong. If you know, there are two markets that we're all looking at. We're looking at the futures market for crude oil, which is extremely sensitive to whatever, you know, the latest Trump post on Truth Social.

8:19And we are in the futures market for stocks, which is the S &P 500 futures. And this latest on, I guess, Monday the 23rd, quite early in the morning, Trump suddenly announced that he was putting his plans to bomb Iranian power stations on hold. And we do have information on volume of transactions. Normally, this is at 6.45 in the morning. There's not a whole lot of activity in those markets normally, except that there was a sudden spike in transactions in both the WTI oil futures market and the S &P mini futures market at 6.49. And then Trump made his announcement at 7.05. We're talking about large sums of money.

9:17We're probably talking we're talking about more than half a billion dollars in the oil futures market and probably more than that in the stock futures. And that's a it's very, very hard to come up with a story about that other than somebody had gotten the word, somebody with a lot of resources that gotten the word and placed a bet. So let me just kind of play devil's advocate here. Is it possible that this was just a smart trader who took a bit of a punt and thought, you know, it's possible that Donald Trump's going to climb down? I'll place a bet that accordingly that the markets will move if he does that.

9:53Sure. It's and, you know, if this had happened. gradually over the course of an hour a day before or if it had been in only one market but I mean it's you know it's there there is a you know slight possibility that somebody just happened somebody with billions of dollars at their disposal just happened to place this big bet 15 minutes before the big news came down. It's also possible that a meteorite might crash through my window and hit me right here in my New York apartment. But it's extremely unlikely. The simple explanation is insider trading, partly because we've seen this before with Trump.

10:41Not on this scale, but particularly if you look at things like polymarket, you can clearly see that somebody was placing bets ahead of the attack on Venezuela before it happened. Paul, can I just ask, when you say somebody, I mean, if you're talking about the volume being much greater, I think we know between four and six times greater than it normally would be. Doesn't that suggest a lot of people would have had that information? Not just one, not just one or two, but a sort of serious handful of people that would have moved the markets to that extent. Well, not necessarily. Remember, you know, these these are the days of when a billion dollars is not all that much money.

11:24And in fact, there are there are multiple billionaires in the Trump cabinet. So it's not impossible that somebody actually in the government might have had the resources to do this. But also, this is quite, the numbers here are in the range where you can imagine that somebody, that one billionaire with a friend close to Trump did it. And the fact that it's really so confined in time, this is really, I mean, there could have been a, it looks like a single action. And maybe it was a cabal of investors rather than a single investor, but it could very easily be just one guy. So we don't know. Do you have confidence that this will be investigated?

12:14Do you think that there are people within or around the administration that will get to the bottom of this? No, I have high confidence that it will not be investigated as long as Trump is in office. I mean, let's be realistic here. We're talking about an administration that really does not investigate possible wrongdoing on the part of people on it that it considers to be politically on its side. No, so this is something where the case will be, if it's ever resolved, which I think it will be, but it will be under a future administration. The next president maybe will. So there is no ethics investigation that is taking place now?

12:55We don't know that, but we haven't heard a peep. I mean, you know, members of Congress have, Democratic members of Congress have raised the alarm about these transactions. And as far as I've been able to find out, there's been no response at all. Paul, can I just turn this on its head? Because there are some people who say rather than quantifying Trump as unpredictable, You should actually see him as entirely predictable. And the movement of his words and his posts tends to sort of take us to the brink on a Friday and then sort of take us off the brink and calm things down on a Monday. You could probably play the markets pretty well, couldn't you, if you sort of thought about him in that way loosely?

13:40Yeah, if I had a billion dollars to play with, I might have placed a bet on Sunday. You know, after Trump said I'm going to commit a massive war crime and bomb civilian infrastructure, I might have said he's not really going to do this and there's probably going to be a, he's probably going to talk, Trump always chickens out, he's probably going to back down. And I was actually, I had written about the whole of this and suggesting that it might well not happen and that there was even some concern that the policy itself might be about market manipulation. But that's a story about someone at some point over the or multiple people over the period before over the day or so before this policy reversal intervening, not about a massive trade.

14:3314 minutes. Yeah. Yeah. Can we just go wider than this about Trump's war in Iran or whatever he's calling it, special military operation, echoing the words of Putin, it feels like with that. How much impact do you think this is having and will have on the US economy and the global economy? It's quite large and you know at this point everything I mean if we actually take the there's an interesting question of financial versus physical here. In terms of the sheer physical impact this is terrifying. 20 % of the world's oil normally flows through the Strait of Hormuz. Only a little bit of it can can has an other has an alternative exit through the Saudi pipeline to the Red Sea.

15:24So if we're talking about a persistent removal of that much supply from world markets, this is way worse than 1979. It's way worse than 1973. This is the biggest, I guess the head of the International Energy Agency has said, this is the biggest energy shock in history. So if this continues, then it is really terrifying. Now, So economies are less oil dependent than they were in the 1970s. We consume a lot less oil per constant dollar GDP than we used to. But on the other hand, at some level, if the physical supply is cut off, prices have to rise enough to choke off enough demand to make up for that loss.

16:08And if the economy doesn't respond very much, then the prices have to go even higher. And it's not hard if you look at the physical flows to say, my God, this could be$200 a barrel oil, which is nasty. It's nasty. Even the United States produces more oil than it consumes, but not clear how much good that does us. I don't understand that, Paul, because all that we've heard about the U.S. in the sort of, you know, decade of fracking is how sort of sustainable America is now with its oil supply. So I don't really understand why America is going to be so badly hit by this if it actually produces so much oil itself anyway.

16:48Well, we have a market in oil. The price of U.S. petroleum products has shot up right along with everybody else's. Now, that's offset by large profits to the U.S. oil and gas industries. But what good do those profits do me? What good do those profits do to the ordinary consumer? It's a tool. As far as the sort of impact on standard of living, cost of living, it makes no difference whether the windfall gains from high oil prices are flowing to some Middle Eastern potentate or flowing to oil companies in Texas. Right. It's just somebody else. And and we have no mechanism for ensuring that those profits are shared.

17:43We don't have any windfall profits taxes. We don't have price controls. You know, any of the things that we might have had in the past. So this is this is just a transfer from consumers to oil producers wherever they may be located. Just going back to the trade that preceded Donald Trump's announcement. I mean, my guess is that the announcement was not about enriching some of his mates, but it was that terror of oil prices continuing to rise, hitting consumers and presumably hitting his chances in the midterm elections in November. Well, I don't think you want to entirely discount the idea that, if nothing else, that the constant back and forth.

18:28I mean, the fact that there's always an announcement of one thing on Friday after the markets close and the announcement of something different on Monday before the markets reopen could suggest that there's some financial concern. But sure, I think that the dominant point was that on the one hand, you know, Trump really wants to be dominant here, wants to intimidate. On the other hand, he looks around or and at the markets, looks at the at the midterm elections and backs down. I don't think we may never be able to settle exactly what the mix of motives is here. I think the more interesting question is why do people, why do the markets react so much to this when there's a pretty well-established pattern that says that whatever he says on a given day, he's very likely to reverse it three days later.

19:24And I don't know, I guess at some level, traders don't want to be caught offsides if it turns out that they were wrong in assuming that this latest thing would not actually turn out to actually happen. But it is kind of amazing that the markets are still responding so much to these highly variable statements. You've quoted the International Energy Agency looking at the kind of devastation this could have. I mean, Paul, am I right in thinking? This is not an America problem and it's not even a Europe problem primarily. that what it could do to Southeast Asia, what it could do to Africa, what it could do to the displacement of entire poorer populations is immense at this point.

20:10And we haven't even got a grasp of where this will go. That's right. And particularly, both poorer countries are less able, just in general, to withstand shocks, are highly dependent. Now, the one thing that is really important in determining who is really hurt is whether you are dependent upon imports of, not of oil, because that's a global market, but of natural gas, which is just the technology. It's a lot cheaper and easier to ship gas by pipeline, but that's only regional. And liquefied natural gas is a big problem. And so that's one place where the United States, it's not about the oil production, but we do, by and large, consume our own natural gas.

20:54And, yeah, the worst hit places that have significant weight in world GDP are in Asia. The worst hit places in terms of people is probably in Africa and in poorer countries. So this is a global crisis, as were the oil shocks of the 70s. But this is ugly. I should add, by the way, that it turns out that the Gulf area also produces a lot of the world's fertilizer, which is also shipped out through the Strait of Hormuz, which is basically because they have cheap natural gas, and one way to export that is to turn it into fertilizer. So this is hurting, you know, this will, that's a place where the United States is vulnerable because we have a big agricultural sector.

21:50So it's hard to, this is really ugly. The whole world has become heavily dependent on this region. And it all has to pass through a 33 kilometer wide strait that is easily closed by mines and drones in the modern world. Professor Krugman, thank you so much for joining us.

22:39Thank you. both name brand options and personalized compound versions when appropriate. So you have choices backed by clinical oversight, not guesswork. It's a simpler, more supportive telehealth experience designed around people who want clarity, care, and confidence in their weight loss journey. And your medication is delivered directly to your home in discreet packaging. So your experience stays private from start to finish. Do your research, ask the right questions, then visit orderlymeds.com slash podcast for an exclusive offer. Again, that's orderlymeds.com slash podcast. Individual results may vary.

23:15Not medical advice. Eligibility required. See site for details.

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24:09The News Agents USA. Last night came a court decision which has the potential to completely explode the way that Meta and Instagram currently function. They have been found liable for deliberately designing addictive products that hooked at least one user and led to her being harmed. This is what a jury decided on Wednesday night. Juries found that both tech companies had been negligent, had failed to provide adequate warnings about the potential dangers to their products. And they've awarded the plaintiff in this case damages of six million dollars. Meta will be paying around 70 % of that. The rest comes from YouTube.

24:59Now, last September, I spoke to a man who had spent many years at the top of Facebook, as it then was, Nick Clegg, our former deputy prime minister. And I asked him specifically whether he thought Mark Zuckerberg was designing products that could harm children. And this is what he said. I think you should go much further. Did you think Mark Zuckerberg cared about this stuff? Yes, of course he did. Do you? Really? Yes, of course he did. Look, you can think what you like about people in Silicon Valley, but this idea... No, it's not about me. I'm asking you, because you praise him. You're pretty fulsome.

25:37You call him, I think, indefatigably competitive. Yes, he's indefatigably competitive, sure. But look, the point is, I think the depiction that people in Silicon Valley want to actively harm children and that they have an incentive. OK, let me just give you this, because I think this is important. We spoke to a whistleblower, you'll know her, Sarah Wynne Williams, who described Mark like this. To mark the world was like a board game, risk, territories be conquered, be it China or be it children. Her book was called Careless People. It's not about active harm. It's about carelessness. Do you recognise that description of Mark Zuckerberg?

26:17I haven't read the book. Well, as it turns out, the jury went one further. They decided it was active, that companies, Meta and Google, were involved in the active harm of children. And this was a six-week trial. They heard from top executives at Meta and YouTube, whistleblowers, expert witnesses, and the 20-year-old woman at the centre of this lawsuit, she went by the initials KGM for the court proceedings, said that she had become addicted to YouTube age six and Instagram age nine, which had taken a serious toll on her mental health. She is just one person. She is the first person and she has won her case.

27:02Yeah. So, you know, if you look at the size of Meta and you look at the size of Google and you talk about a fine for a few million dollars, Well, frankly, that's loose change. That's pennies down the back of the sofa for companies of those sizes. But there are many other court cases that are pending now that will not just only lead to potentially huge fines if you aggregate all of them. It's going to lead to a change in the way that your Instagram feed is constructed or what you're going to see on YouTube, in which case you're going to talk about restructuring the whole algorithm and the way that social media platforms are able to offer you stuff and you just think that you know how much time do you spend looking at your Instagram feed and clicking on this video and clicking on that video and going through and on and on and on and it does it does have an addictive quality to it on a boring train journey I find myself going through Insta and looking at all sorts of weird and wonderful things.

28:10Well, that's what's so interesting, because actually, if this is sort of jolting a muscle memory in some of our older listeners, it's because the arguments that the plaintiffs used in this case absolutely mirrored those used against big tobacco back in the 1990s. Now, the story of big tobacco, as we know, is one of extraordinary longevity, because I think the first case against big tobacco, the first harm, was raised in 1920, right? So early on, and it took nearly 100 years to get to a place where people were willing to accept that it had not just been slightly harmful. It had been, as you say, absolutely addictive.

28:52And I guess the perception in those days would have been, well, if you just want to stop smoking, stop smoking. If you just want to stop watching Instagram, stop watching Instagram, as if it's kind of like a failure of the consumer to sort of understand what they're getting into. And I think that's why this is so potentially historic, because it is making that same link between the product and the harm, the actual product and the power to become addictive. and something that very few people are talking about at the moment. And I think something that will have a knock on effect in business terms is that insurance now, insurance companies will not have to pay out to Meta platforms to protect them against these lawsuits because of this finding that they were deliberately using actions that would harm children.