September 2025 DDD

Full:https://paulkrugman.substack.com/p/an-emergency-non-emergency-post

Full:https://www.wsj.com/business/retail…8?st=Q73vm6&reflink=desktopwebshare_permalink

Full:https://www.wsj.com/business/retail…8?st=Q73vm6&reflink=desktopwebshare_permalink

Centuries’ worth of experience walked out of key government agencies this summer, including high-level departures from the CDC, Pentagon and intelligence community just in the past week.
Why it matters: President Trump and his allies believe the “Deep State,” scientific establishment and federal bureaucracy were overdue for a purge. They’re ushering in a government in which the officials maintaining nuclear weapons, monitoring medical trials or guarding state secrets have shorter resumes and smaller staffs — likely for many years to come.

Driving the news: Three of the CDC’s top scientists resigned this week after director Susan Monarez was fired, with hundreds of staffers staging a walkout in support of their outgoing colleagues and opposition to HHS leadership.

• Demetre Daskalakis, who resigned as the CDC’s vaccine chief, claimed Secretary Robert F. Kennedy Jr. and his team were manipulating data “to achieve a political end.”
• He also warned that the hollowing out of agencies like his would leave the U.S. ill prepared for future public health emergencies, telling the NYT: “We really are losing the people who know how to do this.”
• Kennedy, who once called the CDC a “cesspool of corruption,” said Thursday that “there’s a lot of trouble at CDC, and it’s going to require getting rid of some people over the long term… to change the institutional culture.”

Zoom out: Around 3,000 CDC staffers have resigned or been fired since January. Agencies like the FDA and National Institutes of Health have also shed thousands of staff, including many highly trained scientists.
Departures over the last week or so from America’s national security agencies have been particularly eyebrow-raising.

• Defense Intelligence Agency director Lt. Gen. Jeffrey Kruse was fired, Doug Beck abruptly resigned as the head of the Pentagon’s Silicon Valley-based Defense Innovation Unit, and Air Force Chief of Staff Gen. David Allvin retired two years ahead of schedule.
• The list of exits since Trump took office includes the heads of the Joint Chiefs, the National Security Agency, the Coast Guard and the Naval Reserve, as well as senior leaders from the Air Force, Navy and NATO — all career officers with decades of service, Axios’ Colin Demarest reports.
• While the administration hasn’t provided explanations for each individual ouster, Defense Secretary Pete Hegseth has railed against “woke” generals and emphasized Trump’s authority to elevate leaders he trusts.

Friction point: When Intelligence chief Tulsi Gabbard announced she was slashing her staff by 40% last week, she called the intelligence community “bloated” and “rife with abuse of power, unauthorized leaks of classified intelligence, and politicized weaponization of intelligence.”

• One outgoing veteran of the intelligence community told Axios that under Gabbard’s leadership, experience garnered suspicion rather than respect. “It just means you have been brainwashed for 30 years — sucking off the teat of the American people for decades.”
• The official contended that Gabbard’s tenure had been fraught with mistakes — like her alleged unmasking of an undercover CIA operative in an X post last week — that could have been avoided if she trusted the experienced officials around her.
• That view chimes with comments Daskalakis made Thursday on Kennedy’s leadership: “I am not sure who the Secretary is listening to, but it is quite certainly not to us.”
• The White House did not respond to a request for comment.

The bottom line: “I’ve been going to these going-away parties, it feels like every week,” another long-time intelligence official told Axios. “You look at what we’re losing … It’s depressing.”

• For Trump and his team, it seems, the sentiment is different: Good riddance.

China and India:https://danieldrezner.substack.com/p/donald-trumps-biggest-dumbest-personalist

Full:https://www.nytimes.com/2025/08/24/…ytcore-ios-share&referringSource=articleShare

Bringing down the hammer on financial firms that are helping Russia’s war machine has become only more complicated as the war in Ukraine has progressed. Cut off from much of the Western world, Russia has forged deeper ties with India and China, large economies that provide an economic lifeline.

“There are many companies around the world that have violated secondary sanctions threats,” said Edward Fishman, a senior research scholar at Columbia University and a former Treasury Department official. But, he added, “do you really want to strain your relationship with the U.A.E. or China?”

If sanctions were placed on major Chinese banks, international trade would slow considerably. Many American companies would be unable to pay Chinese factories for goods or receive payments for their own exports. Supply chains for everything from electronics to pharmaceuticals could freeze up, sending prices soaring for American consumers. This calculus has made Chinese banks nearly “unsanctionable,” according to Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics.

“Sanctioning a large Chinese financial institution,” he said, “could lead to global financial instability.”

Exemptions and Evasions

There was a time when being on the sanctions list was like a financial death sentence. The list, a 3,000-page document on the Treasury Department’s website, dates back to the 1960s.

Not only are the entities barred from doing business with the United States, they cannot interact with banks that use U.S. dollars. Because the U.S. dollar is the currency most widely used for international transactions, that ban effectively cuts them off from the global financial system.

There was a time when being on the sanctions list was like a financial death sentence. The list, a 3,000-page document on the Treasury Department’s website, dates back to the 1960s.

Not only are the entities barred from doing business with the United States, they cannot interact with banks that use U.S. dollars. Because the U.S. dollar is the currency most widely used for international transactions, that ban effectively cuts them off from the global financial system.

Twenty years ago, the Office of Foreign Asset Control mostly dealt with small-time violators, handing out fines that averaged a few thousand dollars for offenses like smuggling Cuban cigars, according to an analysis of government records.

But then America’s sanctions program grew from a niche tool into a centerpiece of foreign policy. From 2002 to 2019, the average settlement grew 400-fold. Multibillion-dollar penalties against global financial institutions that facilitated sanctions evasion — even inadvertently — became normal. In 2014, the French bank BNP Paribas paid the U.S. nearly $9 billion for having processed transactions on behalf of Sudanese, Iranian and Cuban entities.

The United States can investigate banks that are suspected of violating sanctions, a process that can take years to complete. Such cases may end in steep fines, but the far greater threat is the Treasury’s power to cut a bank off from the dollar.

Sanctions were imposed on Russia’s VTB Bank in February 2022, and it was kicked off the interbank payment system called SWIFT. SWIFT is the global messaging network that enables banks worldwide to communicate and process international money transfers, and without access, VTB should have been isolated from global finance.

However, the bank, which has expanded its China presence in recent years, seems to have found at least one workaround: It advertised that account holders could transfer up to 1 million rubles, or roughly $10,000, daily into their accounts on Alipay, a giant Chinese payment platform. VTB said there would be “instant enrollment” and funds available within one business day.

This could create a back door into the global financial system. Russian customers move rubles from VTB to Alipay and, once in Alipay, those funds can flow anywhere internationally, effectively washing the rubles into the broader economy and neutralizing a major Western sanction.

Ant Group, the owner of Alipay, denied that it had any ties to VTB. After The Times sought comment from Ant and VTB, references to Alipay disappeared from VTB’s website, which now tells customers that they can transfer money to “popular Chinese wallets.” VTB did not respond to multiple requests for comment, and did not address questions about whether the bank relies on Chinese intermediaries to facilitate the transfers to Alipay.

In Moscow this past April, business was humming along. Photos from Expo Electronica, a large electronics trade show featuring more than 600 companies, showed exhibition booths displaying advanced semiconductors, with LED screens advertising the exact chips the United States has tried to block from export to Russia. A Russian Ministry of Defense delegation, led by Vasily Elistratov, head of the Kremlin’s artificial intelligence development program, walked the convention floor chatting with vendors.

Among the exhibitors was Hong Kong-based Allchips, a semiconductor dealer that had been added to the U.S. sanctions list eight months earlier. Allchips sells components used in cruise missiles that Russia fires at Ukrainian cities.

When asked how the company accepts payment, an Allchips sales representative, whose contact information was listed on the company LinkedIn page, said via WhatsApp that the company accepted payment in dollars and Chinese renminbi through Alipay, or through bank transfer to the company’s VTB account.

Deep Value:https://humbledollar.com/2025/08/how-to-beat-the-market/

• I was back at the NYSE this week.
• It’s a magical place where great things happen.
• Show up, engage, do the work…

It felt good to be back on the floor of the New York Stock Exchange this week.

The building had a calmness to it – not surprising, since this was the final stretch of summer.

Sure, the calendar says summer runs until the autumnal equinox on September 22. But, on Wall Street, everyone knows Labor Day is the cutoff.

The kids are back in school, portfolio managers are back from the Hamptons, and trading desks finally get busy again.

That’s just how the rhythm of the street works.

But here’s what stood out: While everyone was easing into vacation mode, the market quietly delivered one of its strongest summers in four decades.

According to FactSet, the S&P 500 just logged its third-best Memorial Day–to–Labor Day run in the last 40 years.

Magic Happens at the NYSE​

The New York Stock Exchange is one of the most beautiful buildings in New York City.

As far as I’m concerned, this isn’t just another landmark–it’s the most important building in all of capitalism.

Think about what it represents. It has always been a place that brings people together.

I spent four or five hours there on Wednesday trading ideas and debating market trends with investors from all over the country.

Was the Uber (UBER) into the city overpriced? Probably.

Were the cocktails after the bell too expensive? Definitely.

Were the ribeyes and Bordeaux a bit outrageous? Absolutely.

But the value of those conversations will more than pay for themselves. You have to get out there. You have to listen.

Networking may be a lost art for some, but for those who still practice it, it’s a massive edge.

It’s Football Season​

In America, once football kicks off, summer’s officially done. The weather even turned cooler this weekend.

September has a reputation as a portfolio killer–the worst month of the year for stocks historically. But this time might be different.

According to my friend Ari Wald, head of Technical Analysis at Oppenheimer, September has historically been positive on average when it starts the month above its 200-day moving average.

And that’s exactly where we are heading into Tuesday.

On top of that, history shows the September-to-December period tends to run stronger under second-term presidents. Another tailwind for this year.

So, if you’re going to be bearish just because it’s September, you’re going to need a better reason. Seasonality alone isn’t it.

My time at the NYSE this week was a reminder: The market rewards those who show up, engage, and do the work.

The lost art of networking is leaving a lot of people behind. Don’t let it leave you behind too.

Get out there.

​

This Week in Everybody’s Wrong​

On Monday, we talked about how investors must separate what we want from what we have.

In other words, you have to play the cards you’re dealt.

Indeed, the only way to make money is to trade in the market that exists.

On Tuesday, we addressed the people who love to slap labels on me depending on where we are in the market cycle.

When stocks are trending higher, I’m often called a permabull, but when stocks are trending lower, I’m often called a permabear.

Of course, I’m neither permabull nor permabear – I follow data, price, and trend…

On Wednesday, we remembered that Financials make the world go ’round.

That’s based on a lot of personal experience, including the Global Financial Crisis of 2007-09.

Here’s why regional bank rotation is what to watch right now.

On Thursday, Friday, and Saturday, I invited my friend Matt Milner to share the secrets of private investing with you

Matt has sold several startups of his own, and he and his business partners own stakes in more than 50 private companies, including SpaceX and xAI.

We’ll continue to share ideas and opportunities such as this with you as they come across our desk.

Have a great Sunday.

We’ll see you Monday morning…

LOL.

What this essentially means is that the US has belatedly realised that China holds the whip hand.

With deficits already out the arse, this means inflation as the US will need to print dollars to buy commodities. Bull market in commodities anyone?

jog on
duc