In our post yesterday ("Banana Republic"), we shared some reactions to Trump's felony conviction in New York. Those reactions were invariably negative. Our friend Kevin Dolan has a different take though--he sees the Trump conviction as positive development. He's been kind enough to let us share his post in full below. Before we get to it though, a quick follow up on yesterday's post.
Arsonists In The Lifeboats
One of the reactions we included in yesterday's post was this one by the economist Philip Pilkington.
They’re funding this mess with short-term paper. Then they’ll hand the “risky credit card debt” to Trump and chastise him when the bond market sinks. At a certain point you have to realise that Western liberals have become arsonists-in-the-lifeboats. https://t.co/Efz6Y15XzC
One gets the sense that at some point within the next year or so, the U.S. government may have trouble rolling over its Treasury Bills at reasonable yields, and markets will react poorly. In light of that, the hedged investing approach we wrote about earlier this week may be worth a second look, particularly as it has been crushing the market recently.
We know there's a tendency to be dismissive when a contributor suggests any investing approach other than stacking physical metals, but those of you with an open mind should click the image above and read that post. Any approach that can protect you when the crap hits the fan--and also outperform before the crap gets there--is worth careful consideration, in our view.
So far, hedged portfolios in two consecutive weeks more than doubled the performance of the market. We'll know tonight how well the next week's hedged portfolios did.
Now we know how our hedged portfolios from November 30th did.
After 18 consecutive weeks of beating the market with our portfolios hedged against >20% declines, the one from November 30th underperformed the market slightly.
But our portfolio hedged against a >25% decline more than doubled the performance of the market over the same, 6-month period (November 30th to May 30th).
You can find interactive versions of those charts here, and you can find the performance of our top names (unhedged) here (be sure to check the performance from December, 2022).
Took a little digging to figure out what he was actually accused of, so here’s a quick summary:
Trump has been found guilty of 34 counts of “falsifying business records”, by paying his attorney Michael Cohen a monthly legal retainer, from which Cohen paid Stormy Daniels $130,000 to keep quiet about allegations of a one-night stand with Trump in 2006.
The prosecution alleged that labeling Cohen’s retainer “legal services” was in furtherance of either a tax crime, a “falsification of bank records”, or a campaign finance violation.
Judge Juan Merchan informed the jury that the prosecution did not have to prove that any of those crimes actually occurred, nor did the jury have to agree on which crime Trump intended to commit.
Trump’s defense team argued that Trump paying his lawyer was just Trump paying his lawyer — and Cohen making a hooker go away was just standard rich-guy fixer things.
Cohen himself was the prosecution’s star witness, testifying that Trump knew that he made the payments from his retainer. (Presumably the feds turned the screws on Cohen over other charges.)
Trump will obviously appeal, and none of this will be fully resolved prior to the election.
In the meantime, the judge has some tools to restrict Trump’s speech and movement during the campaign — we’ll see how bold he is in deploying them.
Being able to call him “convicted felon Donald Trump” maybe claws back a few low-information suburban voters — but it also energizes Trump’s base, who see these prosecutions as emblematic of the lawlessness of the DNC.
Far from being a centralized conspiracy, it looks more like there is simply no one in the DNC with the juice to rein in the personal political ambitions of small-time hustlers like Alvin Bragg and Letitia James For the Good of the Party.
But ultimately, all that matters is who takes power in 2025.
Some commentators are calling this the death knell of the rule of law; but the actual governing authorities (who determine how you will live, and what taxes you’ll pay, and where your sons will go to war) haven’t respected the “rule of law”, even as a religious principle, since your grandmother was a child.
If anything, to the extent that this verdict clarifies that truth, and makes it intuitive in the guts of ordinary Americans, it’s good news.
It’s also good news if you believe that America needs Donald Trump to rise to the occasion, do what it takes to win, and govern very differently than he did in his first term.
Many of you will point to Trump’s first term performance as evidence that he is not up to the task — but I was a Malcolm Gladwell “follow the data” redditoid government finance drone in 2016. Everyone has changed in the last eight years — especially people who had to.
If Trump loses the election in November, his death in prison is overdetermined. Even if he wins, he will be locked in existential war with the administrative state for the duration of his term, whether he wants to be or not.
And then, if he fails, he will still die in prison. His entire family will face prosecution (if not proscription.) He has to ride the tiger until he brings it to heel, or get eaten.
In other words, Trump’s personal fate and fortune is intimately tied to his success in reforming the American state — which can only be a healthy thing. He would be the first head of state in our history to be so incentivized.
And if it turns out that he isn’t The Guy, then he will provide an eloquent object lesson for the next guy. (And for you.)
Either way, there will never be another normal election in the United States.
Biden and his family, and many other constituencies within the administrative state, also risk permanent expulsion from power and/or jail time if the coming power struggle doesn’t go their way.
Even if Trump were not vindictive by temperament, he can’t afford to leave these people in their positions. Once the expectation of a peaceful return to civilian life is broken, it’s broken for everyone, for good.
On the political, economic and demographic fronts, the only options are drastic (let’s call it “constitutionally expansive”) executive action, or permanent and total collapse. The Guy, whoever he is, will have his work cut out — and if he fails, the Blind Idiot State will simply trundle off these cliffs and die anyway.
So the old world is dying, and a new one struggles to be born.
It’s time to take a short position in the regime.
Get out of enemy jurisdictions, get out of dollars, get out of your W-2, get out of the two-income trap, get out of the public schools. Invest in skills, businesses, locations, and relationships that will grow in value as all these institutions repel decent people and implode.
You can follow Kevin on X here, check out Exit here, and check out his Exit blog here.
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