Presidential Alert

At exactly seventeen minutes past eleven my cell put out a loud honk. I was in a store and my phone was set to silence, which made the noise even more surprising. All around, a similar braying was heard from customers in various aisles.

The US reaches out to all its citizens. How long will it be before this channel begins its tenure as government spam?

A message popped up to calm the good folks of the homeland—we were not yet at war with the bad hombres du jour. I wasn’t particularly calm about being so trivially easy to locate, but I suppose that growing up in a dictatorship left me with a big brother bias.

The few days I spent in the States left me with the same impression as always—nice people, eager to help. And yet the chasm between haves and have-nots is inescapable. On a broad level, it’s what you see in Asia or in Europe—not to mention Africa—so the US is certainly not exceptional.

But it’s odd to witness such affluence and then repeatedly come across folks who are not only homeless, but clearly mentally ill—a society without a safety net.

“Motherfucker!” the woman screamed at some poor fellow trying to cross the street. She repeatedly hurled abuse at the man until he managed to get over the crosswalk. Then she took her two battered suitcases, walked twenty yards with them, and parked them outside a bank. Still cursing at the top of her voice, living out the film inside her head, she went into a convenience store, stole a cart and made off back down the sidewalk. A prowler drove slowly down the street, the cops hardly glancing at her.

As I walked, more down and outs appeared, each with their particular foible. It was four in the afternoon.

This was LA, and I’m not talking about South Central. The homeless people I saw were either black or Latino, but there are plenty of whites going down that road. When Trump was asked to define ‘white trash’, he allegedly replied:

They’re people just like me, only they’re poor.

And although trash is an unacceptable epithet, the orange tariffs are sure to generate more poverty in the US. The recent taxes applied to aluminum are a case in point. The US imports eighty-five percent of the raw aluminum it uses, preferring to focus on value-added products.

The Trump administration (an oxymoron at best) was at loggerheads about the tariffs, with Commerce secretary Wilbur Ross and adviser Peter Navarro defending the tax on raw material, and Cohn and Mnuchin violently opposed—policy disagreements on trade issues eventually led to Cohn’s resignation, as Bob Woodward explains in Fear.

In a meeting in DC in June 2017, key players in the aluminum industry eagerly gathered to listen to the administration’s plans—Trump was about to make good on his promise to hurt China. Their joy was short-lived—instead of focusing on aluminum products, the Trump tariffs were aimed at raw materials.

The main beneficiary was a mid-size company based in Chicago called Century Aluminum, but the emblematic smelter held up to the scrutiny of the Trumpian base is located in Hawesville, Kentucky. Oh, and there’s one other thing—the company is owned by Glencore, a mining giant ‘based‘ in Switzerland.

Half a million tons of aluminum stashed at Braithwaite, SE of New Orleans by Castleton Commodities International LLC—hedge funds jump on the Trump tariff train.

Trump used a little-known law to impose tariffs and avoid congressional approval: the law emphasizes national security. Secretary of defense Jim ‘Mad Dog’ Mathis informed Trump that military requirements amounted to only three percent of US production—exactly the kind of statistic Trump was keen to ignore.

As usual, the traders were feathering their own nest. In particular, the London Metal Exchange and Chicago Mercantile Exchange, which warehoused vast quantities of aluminum, sitting on it to push up prices, moved their stash to private stockpiles—when Commerce personnel looked at data from the exchanges, only 120,000 tonnes were in the books, but in reality US reserves were far higher—about two million tonnes.

The players who stashed aluminum in the States have patiently waited it out. As soon as tariffs were imposed, their stocks, already in the US, suddenly jumped in value. Even more juicy, China retaliated to the move by setting tariffs on aluminum scrap. The perverse outcome is that the US began to import or keep more scrap, undercutting domestic raw production.

The winners of this game are hedge funds, together with companies such as Glencore—the losers are always the same—poor people with great expectations.

The India Road, Atmos Fear, Clear Eyes, and Folk Tales For Future Dreamers. QR links for smartphones and tablets.

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