Welcome to the Fire Sale Republic

Hedge-fund economics, health-care hostage taking, offshore drilling, and the steady and inevitable collapse of the Trump regime

Good morning! From the crumbling empire once known as the United States of America we have grim news. Max from UNFTR kicked things off this week with a video essay that really should have come with a content warning: “May induce sudden understanding of just how fake everything is.” He walks through the newly released Treasury International Capital data, the stuff we didn’t get during the shutdown because the government was too busy holding its breath and turning blue. Once the numbers finally crawled out, they confirmed what anyone with a pulse suspected: foreign central banks are quietly backing away from U.S. Treasuries, selling more of our debt than they’re buying. On net, they’re getting out of the business of funding our habit. The only reason the headline figures still look respectable is that “foreign private buyers” have stepped in to fill the gap.

“Foreign private buyers,” in this case, turns out to be code for hedge funds in the Caymans, levering themselves 50 to 100 times over to run basis trades in short-term Treasuries. They borrow cheap, buy our debt, skim the microscopic difference, and pray interest rates don’t twitch the wrong way. The Fed has already pointed out that Cayman-registered funds are sitting on far more U.S. securities than Treasury’s country tables admit, which means a big chunk of our “foreign demand” is just our own hedge funds in a sombrero and fake mustache, walking around the block and pretending to be someone else.

That’s the first magic trick: we are buying our own debt with highly leveraged funny money and calling it confidence in America.

The second trick is happening in Japan. For decades, Japanese institutions have been running the yen carry trade: borrow in yen at basically zero, convert to dollars, and load up on U.S. Treasuries, pocketing the rate differential. Same basis trade, nicer stationery. But now Japan’s economy is heating up, inflation is back, and Japanese yields are under pressure. Suddenly that trade isn’t quite so safe, and there’s a non-trivial risk that Japanese firms decide they’d rather bring their money home than keep subsidizing Uncle Sam. Trump’s Treasury Secretary, Scott Bessant, has been leaning on the Bank of Japan to raise rates “responsibly,” which in practice means “in exactly the way that doesn’t blow up the carry trade and send a trillion dollars fleeing out of our bond market.” Reuters has been tracking this quiet trans-Pacific begging tour; it’s not subtle.

So domestically, Trump goes on stage and screams that the Fed must cut rates to juice “the greatest economy ever,” while his own Treasury is overseas asking Japan to do the opposite. American monetary policy now consists of yelling “faster!” at Jerome Powell and “not yet!” at Tokyo, hoping nobody notices that the entire Jenga tower is being held together by hedge funds and wishful thinking.

The delayed jobs report finally appeared, like a hostage blinking Morse code. September posted 119,000 jobs, technically beating expectations, but unemployment ticked up to 4.4%, the highest since 2021. Previous months were revised downward, and key sectors like transportation and professional services are softening. The October report doesn’t exist at all because Trump fired the BLS commissioner and shut down the government. When you start deleting the scoreboard mid-season, it’s not because you’re winning. It’s because if people saw the actual numbers, they’d stop buying the merch.

Underneath those macro figures, the human indicators are blinking red. Foreclosures are up nearly 20 percent year-over-year. Personal bankruptcies are up 16 percent, and the vast majority of new filings in September were individual households, not corporations. The “strong consumer” our pundit class loves to invoke is really the top ten percent of earners, who still account for about half of U.S. consumption. They’re keeping the corporate earnings line alive with luxury purchases while everyone below them spins on the hamster wheel of medical bills, rent hikes, and credit-card rates that now qualify as psychological warfare.

All of this would be bleak enough if it were just an accounting problem, but of course it isn’t. Every one of these games Max describes, basis trades, carry trades, tariff wars, Saudi “investment” in AI data centers, is ultimately a claim on future energy, metals, land, and water. You cannot layer infinite leveraged promises on top of a finite biosphere and expect the spreadsheet to save you. Every time Trump coos about the Saudis putting “a trillion dollars” into American tech and AI, what he’s really salivating over is another wave of power-hungry data centers and concrete-heavy server farms burning more fossil fuel and draining more aquifers so we can auto-generate a slightly punchier corporate memo while firing the people who used to write them.

Max is right: the music, financially speaking, has stopped. The credit system is coughing and stumbling while the band on cable news insists they’re still taking requests. But it’s not just that the song is over. The building is actually on fire. And instead of asking, “Should we stop lighting things?” our elites are fighting over which hedge funds get priority seating in the lifeboats.

Which is the perfect segue to the Obamacare cliff, otherwise known as “what if we engineered a health-care crisis for fun?”

The enhanced ACA subsidies, the pandemic-era boost to premium tax credits that made marketplace plans semi-affordable for low- and middle-income people, expire on December 31. After that, unless Congress acts, about twenty-two million people will see their health insurance premiums spike, with an extra thirty-five billion dollars a year dumped onto households that are already scraping the underside of the month. Democrats tried to trade a subsidy extension for ending the shutdown; Trump refused, then went on social media to tell Congress not to “waste time” extending subsidies at all.

Now we’re inside the two-week window, and Republicans are packed into closed rooms, no press allowed, naturally, trying to invent a story in which this is all somehow the Democrats’ fault. Bill Cassidy wants to take the enhanced subsidies and turn them into Health Savings Accounts so people can put money they don’t have into accounts they can’t fund for care they can’t afford. Rick Scott wants to go further and convert even the base ACA subsidies into “Trump Health Freedom Accounts,” which sounds like a discount punch card from a strip-mall chiropractor but is actually an effort to hollow out the entire structure of the ACA under the cover of “choice.” Policy analysts from groups like the Bipartisan Policy Center have already warned that these account schemes would destabilize the risk pools and drive up costs for sicker, older people left inside the exchanges.

Both men insist their plan is what Trump wants, and Trump has made it clear that a clean subsidy extension is dead on arrival anyway. Democrats, for once, are the boring ones: Chuck Schumer has called the HSA gimmicks “deeply flawed” and said the only serious option is straightforward extension. But the real conversation in the no-press-allowed meeting isn’t about policy design. It’s about dosage. How much pain can they inflict on sick and low-income Americans and still plausibly blame on “Biden’s inflation,” “liberal mismanagement,” or whatever random noun Scott Bessant is workshopping this week while he tries to pin the GDP slide on the “Schumer shutdown.”

This is where sustainability frustration and my petty rage hold hands and skip through the flames. The same crowd that tells us we can’t afford thirty-five billion dollars to keep people insured is shoveling hundreds of billions into tax cuts, fossil-fuel subsidies, and military toys, guaranteeing higher future health costs as climate disasters, heat waves, and pollution-related diseases pile up. If your idea of fiscal responsibility doesn’t include giving people a fighting chance to stay alive in a world of pandemics and 120-degree heat indices, then it isn’t responsible, it’s just class war with a calculator.

While they’re gaming out how to make chemotherapy unaffordable again, the authoritarian B-team has been busy.

In one of the more surreal episodes of the week, an internal Coast Guard policy surfaced showing that the service had quietly downgraded the swastika, the noose, and the Confederate battle flag from clear-cut “hate symbols” to merely “potentially divisive” imagery, while deleting the phrase “hate incident” altogether. After public outrage, the Coast Guard rushed out a new policy dated November 20 putting those symbols back where they belong on the hate list, as if this had all been a silly misunderstanding and not an alarming case of an armed federal service trying to read the vibes of a regime that flirts constantly with white nationalism.

At the same time, the White House press corps is being told that they should accept Trump calling female reporters “piggy” as part of the “access and transparency” package. Misogynistic degradation is now just a line item in the credentialing process. And while the press is supposed to smile through the abuse, Trump is on social media fantasizing about hanging Democratic lawmakers for “sedition” because they posted a video reminding military personnel that obeying unlawful orders is illegal. Literally, a sitting president is openly musing about executing opponents while his administration deploys ICE and the military internally in increasingly aggressive ways.

No authoritarian day is complete without attacking the planet, Trump’s Interior Department is also gearing up to reopen federal waters off California to offshore oil drilling for the first time in roughly forty years. Leaks describe a plan to auction off around 240,000 acres of coastal waters in the next several years, even though California has spent decades building legal armor around its coast and even though the amount of recoverable oil out there may be modest at best. Gavin Newsom has already declared the idea “dead on arrival,” Alex Padilla and Adam Schiff are vowing to fight it, and even some industry analysts admit this looks more like speculative lease-flipping than meaningful energy policy.

Nancy Pelosi called Trump “the worst president for America’s children” years ago, citing not just health care and education but the basic right to clean air and water. That was during the first term. Since then, we’ve added record-breaking heat, megafires, floods, and a president now trying to stick new rigs in the Pacific while ripping away health coverage and food assistance from those same children. The kids can look forward to asthma, heatstroke, and medical bankruptcy. Still, on the bright side, a hedge fund in the Caymans has a killer basis trade going.

Out in foreign-policy land, the same “cash out now, someone else can deal with the rubble” mindset is playing out with real bodies. Reporting out of Europe and D.C. says the U.S. presented Ukraine with a secret twenty-eight-point “peace” plan that would have effectively forced Kyiv to surrender much of eastern Ukraine, permanently renounce NATO membership, and accept structural limits on its own military. Ukrainian officials, after conferring with European allies, told Washington to shove it. MeidasTouch adds the detail that a Russian sovereign wealth fund chief was involved in back-channel discussions with the Trump White House to stage-manage this “surrender” ambush in Istanbul. Even if some of the more lurid details are still emerging, the pattern is unmistakable: Trump’s team keeps gravitating to “peace” proposals that happen to align neatly with the Kremlin’s wish list.

The trade side offers the same level of honesty. Trump keeps bragging that he got China to agree to buy 12 million metric tons of U.S. soybeans, (a fraction of what it used to purchase), when in reality China has already shifted the bulk of its soybean sourcing to Brazil and Argentina. In 2023, over 70 percent of China’s soybean imports came from Brazil; the U.S. share was down around a quarter. So his triumphal “deal” is mostly him claiming credit for purchases that either aren’t happening or have been re-routed through massive deforestation in the Amazon, where industrial agribusiness is torching rainforest to grow soy so we can pretend our trade deficit is nationalism and not ecology on fire.

At the same time, China’s expanding export controls on rare earths and other critical minerals have made it painfully obvious that our vaunted “manufacturing revival” is built on components processed in a rival’s backyard. Controls on key magnet materials, gallium, germanium, graphite and more have put defense and semiconductor supply chains at risk, and Trump’s response has been the only move he knows: more tariffs, more bravado, more hidden taxes on American consumers. We’re in the late-stage ritual where every real-world constraint, planetary boundaries, mineral depletion, exhausted workers, is treated as a personal insult to the Leader that must be answered with another executive order and an angry rally.

Hovering behind all of this like a horror-movie soundtrack is the Epstein files. Congress, in a rare display of near-unanimity, passed the Epstein Files Transparency Act, and Trump just signed it. DOJ now has thirty days to release all unclassified Epstein-related records, documents, communications, investigative materials, in a searchable format, with only narrow redactions for victim privacy and active investigations. House Oversight has already subpoenaed hundreds of thousands of pages, begun releasing tens of thousands, and members like Ro Khanna are openly warning Pam Bondi’s DOJ that over-redaction and stonewalling will be treated as obstruction and revisited by a future administration. For once, survivors, the public, and politicians from both parties are aligned on something: no more games.

Trump’s answer so far has been predictable: post stories about Larry Summers and other non-Trump elites, frame Epstein as a “Democrat problem,” and hope people forget the new address book, the logs, the photos, the long pattern of proximity. But you can feel the panic in the way the rest of the agenda is spinning out death threats against lawmakers, swastika memos, health care cliffs, offshore drilling, surrender “peace” plans, like someone stomping on everything in the room because they can hear the safe door being drilled open down the hall.

What most economists still understate is that “fixing the economy” inside the current logic is no longer on the menu. The basis trades, the yen carry trade, BRICS de-dollarization, Saudi money pouring into AI, offshore drilling off California, soy-driven deforestation, rare-earth choke points, these aren’t separate stories. They’re all facets of a system that only works by expanding extraction faster than the planet can absorb it. There is no version of the future where we keep global temperatures at anything resembling safe levels, maintain breathable air and drinkable water for Trump’s “forgotten” base, and keep running an economic model built on ever-rising consumption, ever-cheaper energy, and ever-riskier financial engineering.

Sustainability is not the garnish; it’s the plate. If your “solution” to the crisis involves drilling more, burning more, cutting health care, and praying to the carry trade, it’s not a solution, just a slower collapse.

The tiny bit of hope, and the reason we keep doing this work even when it feels like shouting into a bonfire, is that people do remember what something better felt like. They remember when the air didn’t taste like wildfire season, when a pink slip didn’t automatically mean you’d lose your doctor, when democracy felt at least minimally real. Every foreclosure notice, every bankruptcy filing, every premium spike, every denied claim, every SNAP cut, every kid coughing through another smoke advisory while the president opens new oil leases, that’s all pressure building.

Our job is both rhetorical and material: to call this what it is, to refuse the rigged choice between “the economy” and “the planet,” and to keep insisting on Medicare for All, climate-safe public works, housing first, and a politics that understands sustainability as “will there be anything left for the children Trump has already been the worst president for.”

The music has stopped. Inside the ballroom, the elites are still applauding their own performance, mistaking the echo for a standing ovation. The rest of us are already out on the sidewalk, listening to the building groan, tallying the damage, and quietly sketching what might be built from the rubble, if we get the slightest chance.