Apparently Trump really really really wants a Nobel Peace Prize

Apparently Trump really really really wants a Nobel Peace Prize

When I read that Trump sent a letter to the Prime Minister of Norway Jonas Gahr Støre saying that he wanted Greenland because he wasn’t given the Nobel Peace Prize, I thought it was from the Babylon Bee. No. Instead the Bee said that Trump was going to disguise himself as a Muslim migrant so Europe would let him invade Greenland. That bit of parody was just as funny as the president’s letter. Only the letter apparently was no parody. Here is the letter:

“Considering your country decided not to give me the Nobel Peace Prize for having stopped 8 Wars PLUS, I no longer feel an obligation to think purely of Peace, although it will always be predominant but can now think about what is good and proper for the United States of America.”

If this were anyone else, even the most MAGA among us would say that the president is making a idiot out of himself. But of course, those who only have their lofty status because of Trump like Treasury Secretary Bessant will say “I think it’s a complete canard that there’s any kind of equivalence with the Nobel Prize.” Sure. Mind you, Trump says he is threatening the Danish protectorate of Greenland because Norway didn’t give him the Nobel Peace prize. Never mind that these are two different countries. Never mind that the Norwegian government has little if any say so in who gets the Nobel prizes. That would be like Trump deciding who gets Britain’s BAFTA award for Best Actress (actually I would not put that past him to try to do so). If Trump is mad at Norway, then why didn’t he threaten to seize its Bouvet Island instead?

Now Trump has taken a page from the playbook of Chairman XI Jinping when he raised the tariffs on our NATO allies by 10 percent for supporting Denmark and promising to increase them 25% more if they didn’t knuckle under by the end of June. The Chinese do this all the time, using economic coercion to force countries to bend to their demands. Trump’s action is probably because he remembers that in 2010 China hit trade sanctions on Norway after the Nobel Peace Prize committee awarded the peace prize to Chinese dissident Liu Xiaobo. China is a leading buyer of Norwegian salmon which ultimately forced Norway to make them some concessions. In the case of Greenland, what concessions can Norway make to Trump? Is Trump saying that if he gets the peace prize that he will stop trying to intimidate Denmark to hand over Greenland? Pardon me if I am a bit confused.

Nonetheless, it is a bit weird that the president would choose to raise tariffs to punish our allies when the tariffs punish Americans instead. Studies find that 96% of the costs of the tariffs are borne by Americans and not by the exporting country. So Trump’s solution is to have Americans pay more for European goods and services. Wow! That’ll show those Europeans! The result of the new tariffs is upset and unsettled markets. The Nasdaq promptly had its worse day since October. The dollar retreated against world markets, gold soared to a new record, and importantly for Trump, the 10 year Treasury went to its highest rate since August.

Mind you, the president wants the Fed to lower its Fed funds rate, thinking erroneously that it will lower government borrowing costs, while his pique fit is causing borrowing costs to rise. Gee, doesn’t the Fed control interest rates? No. The market determines the rates, not the Fed and the yields on Treasurys are going up as markets react to Trump’s tariffs and concern over Fed independence.

What this episode has shown is that because Trump’s trade deals are unilateral and nonbinding that he can and will change them on a whim. Markets, businesses, importers and exporters cannot plan in the face of such uncertainty about what mood the president might be in on any given day. Trump first said that the tariffs were a result of an imaginary national emergency caused by trade deficits. But in reality, the tariffs were a flexing of the US’s economic might to bend the rest of the world to its will – much like the Chinese have been doing for years. What is significant is that these latest tariffs undermine any argument that the administration will have before the Supreme Court about the use of presidential emergency powers to levy tariffs – especially these tariffs.

There is an obvious economic counter that has just been employed when a Danish pension fund, AkademikerPension, sold its entire portfolio of US Treasurys. Although it was only $100 million, the sale is significant. Anders Schelde, AkademikerPension’s investing chief said that the decision was driven by “poor [U.S.] government finances” and “not directly related to the ongoing rift between the [U.S.] and Europe. But of course that didn’t make it more difficult to take the decision.”  

European investors hold over $8 trillion in US debt nearly double that of the rest of the world combined. What if they started to unload their holdings – or even threatened to do so? What then? Europeans weaponing capital markets would be more disruptive than Trump’s weaponizing of trade market. European investors dumping dollar-denominated assets and repatriating those funds in retaliation to Trump’s actions along with growing concerns that those assets may no longer be safe havens would have devastating effects on the US. The US would then have to self-finance its enormous appetite for borrowing to spend with concomitant increases in borrowing costs and inflation. You would think that the uptick in the 10 year Treasury due to threats on Greenland would send Trump a message to back off. And maybe it did because the president announced while at the World Economic Forum in Davos that he had reached an agreement with NATO and would withdraw the additional tariffs.

The question becomes whether the threat of the Europeans selling Treasurys would impact on Trump’s continued desire to project his will around toward Greenland in particular and to the globe writ large.

I am reminded of the story of the dog chasing the car. What is he going to do with it if he actually catches it? Currently, Denmark sends Greenland about $600 million a year in a block grant to fund the island’s welfare state. This is half of Greenland’s budget and about 20 percent of its GDP. It pays public sector salaries, funds free health care, pensions and municipal services. It also pays for Greenland’s airports. One third of those employed on the island work for the government. Unemployment is high. So presumably, if the US took over Greenland it would have to keep paying for these handouts to its residents. I guess AOC and Bernie would demand that we do the same for all US citizens. Hey but $600 million is a rounding error in the US budget. There is a poll that says that 76 percent of the Greenlanders do not want to be part of the US. Do you think it is because they love Denmark or do they just love the subsidies?

Economically, Greenland’s primary industry is fishing, accounting for more than 90 percent of its export revenues. What do they do in the winter? Greenland’s per capita disposable income is the lowest in the Arctic other than Russia’s and less than one third that of Alaska’s. One of my readers has sent me the perfect solution regarding Greenland. Instead of negotiating with Denmark, why don’t we just offer each of the 57,000 residents $2 million – $114 billion total – if they vote to join the US? Again, this is chump change and amounts to only 1.63% of the US budget for 2025. Greenlanders may be marching around carrying signs saying “Greenland is not for sale.” Wanna bet?