I got a chance to read The Atlantic report about the editor-in-chief being added to the White House group chat. It’s a fiasco but I don’t want to weigh in on the politics because there’s no investment strategy or macro takeaway from that angle.

Where I think something revealing (and useful) taking place is the world view of the people involved in the chat.

In deciding whether to strike, US Homeland Security Advisor Stephen Miller writes that Europe and Egypt need to pay:

“If Europe doesn’t remunerate, then what? If the US successfully restores
freedom of navigation at great cost there needs to be some further
economic gain extracted in return.”

This is a view of a transactional Presidency.

It’s something we’ve Trump hint at economic policy and other dealings but here it extends to military policy. That suggests it dominates both his thinking and entire administration’s motives. It highlights a sort-of protection racket.

During the early Roman empire Marcus Licinius Crassus, who was one of the wealthiest men of his time had a private fire brigade. If your building was on fire, he would arrive and negotiate extortionate fees to put it out.

Is that how foreign policy is going to work now? Or maybe even aid to American states?

For trade and the economy, this almost certainly devolves into fighting over the pie rather growing the pie.

If you’re Europe or another American ally what do you do after reading this?

“I fully share your loathing of European free-loading. It’s pathetic,” wrote defense secretary Peter Hegseth.

NATO is effectively dead.

Another takeaway is that it’s all so unprofessional and improvised. That’s going to lead to mistakes and unintended consequences. You would hope that tariff policy is being run differently but all indications are that it’s haphazard.

An ad hoc approach to major decisions suggests policy driven by immediate
leverage opportunities rather than strategic coherence, which
introduces additional systemic risks beyond just the transactional
mindset.

It won’t end well.

Finally, there are lessons in history here.

If you create a transactional system in the international order rather than a rules-based system it ends badly. The US will lean on countries and will likely exert some gains but in the long run, other countries aren’t going to lay down. They may tactically retreat and absorb some pain (which will create the illusion of gains) but the long game will be establishing their own leverage and decoupling; they will develop alternative arrangements to reduce their vulnerability.

Globalism is dying and I suspect that once it’s dead, we will all regret it. The last 30 years have been bumpy but unfathomable wealth has been created, high employment and good standards of living. That’s worth preserving.