Very sensible and comprehensive overview. One day US and Europe may have a serious split, but it won't be over Greenland. Cool heads can structure a deal that kicks the can down the road for now.
Thank you Mark. Didn’t realize Xi is into strong stuff. I’m afraid though the split between Europe and the US has already happened, even if there is a deal over Greenland (and even if many European governments prefer to remain in denial about it).
I think you have to factor in how this may smell like Czechoslovakia circa 1938. I know there is this whole everything Trump does is Hitler political reflex circling around on the left, but actual threats and aggression to annex a territory is going to make that seem a lot closer to reality than political fever dream.
How many in European capitals might be worried about being the next Neville Chamberlain? Its a factor worth considering.
As far as treasuries you correctly cite the difficulties of formal capital controls although I wonder if they might do something directionally similar say a special additional tax on interest from US treasuries that would tend to make them less attractive and put pressure on rates.
Yeah that’s why I think they won’t fold quickly this time around. But when it comes to weaponizing capital flows, I think the Americans have the upper hand. You can threaten all kinds of things but aside the pain you’re inflicting on your own asset holders you run big risks that things blow up and then you have a big problem on your hands.
No doubt. Thats how mutually assured destruction works. The question is at what point does that seem preferable to the alternative. My guess is an actual occupation of Greenland would probably do it. My hope is Trump somehow finds an offramp that lets him declare victory.
At some point if you go all in on every hand you are going to be called. Whats different relative to poker is should you be called everyone loses.
so that’s interesting. I assume we would both acknowledge these are all probabilities rather than statements of what will happen. I see meaningful retaliation as likely in the case of a flat out invasion. You see it as unlikely due to internal EU divisions? Is that a fair summation?
I don’t think there’ll be flat out invasion because there’s probably going to be some kind of a deal. As I mentioned in the piece, the Europeans aren’t going to stay idle this time around and will retaliate in some way if there are tariffs or other measures. They won’t give up without a fight but I think in the end they’ll concede something they won’t be happy with. In a way, an outright invasion may be the outcome least likely to produce European division. But as you say, these are all probabilistic statements.
Informative commentary. More is needed on actual U.S. security benefits from owning Greenland and what can be achieved with alternative arrangements. The issue needs to move from 'attitude' to productive discussion. Your piece is a nice start. Too bad so many politicians want to concentrate on attitude.
Thanks. When the US can have all the security benefits without the nominal sovereignty - the latter being the prerogative of the people of Greenland and the Kingdom of Denmark - the administration’s attitude is all that remains, I’m afraid.
Unfortunately, this really isn't about rational analyses of security benefits. This is about an intellectually limited 80-year-old fantasist giving the tough-guy performance of his life for his base.
The US has long had the "alternative arrangements" that allow it to do whatever it needs to enhance its security.
Would a rational actor trade the current arrangement (an unrestricted right to do meet its security needs) for one that provides no incremental security benefit while saddling you with the financial responsibility of supporting a local population and eliminating your strongest security alliance?
Moutai . . . Xi is drinking moutai.
Very sensible and comprehensive overview. One day US and Europe may have a serious split, but it won't be over Greenland. Cool heads can structure a deal that kicks the can down the road for now.
Thank you Mark. Didn’t realize Xi is into strong stuff. I’m afraid though the split between Europe and the US has already happened, even if there is a deal over Greenland (and even if many European governments prefer to remain in denial about it).
I think you have to factor in how this may smell like Czechoslovakia circa 1938. I know there is this whole everything Trump does is Hitler political reflex circling around on the left, but actual threats and aggression to annex a territory is going to make that seem a lot closer to reality than political fever dream.
How many in European capitals might be worried about being the next Neville Chamberlain? Its a factor worth considering.
As far as treasuries you correctly cite the difficulties of formal capital controls although I wonder if they might do something directionally similar say a special additional tax on interest from US treasuries that would tend to make them less attractive and put pressure on rates.
Yeah that’s why I think they won’t fold quickly this time around. But when it comes to weaponizing capital flows, I think the Americans have the upper hand. You can threaten all kinds of things but aside the pain you’re inflicting on your own asset holders you run big risks that things blow up and then you have a big problem on your hands.
No doubt. Thats how mutually assured destruction works. The question is at what point does that seem preferable to the alternative. My guess is an actual occupation of Greenland would probably do it. My hope is Trump somehow finds an offramp that lets him declare victory.
At some point if you go all in on every hand you are going to be called. Whats different relative to poker is should you be called everyone loses.
Pleasure.
I think if you’re Canada that might work - Carney can rally his people behind him. Europe will be divided at some point.
so that’s interesting. I assume we would both acknowledge these are all probabilities rather than statements of what will happen. I see meaningful retaliation as likely in the case of a flat out invasion. You see it as unlikely due to internal EU divisions? Is that a fair summation?
I don’t think there’ll be flat out invasion because there’s probably going to be some kind of a deal. As I mentioned in the piece, the Europeans aren’t going to stay idle this time around and will retaliate in some way if there are tariffs or other measures. They won’t give up without a fight but I think in the end they’ll concede something they won’t be happy with. In a way, an outright invasion may be the outcome least likely to produce European division. But as you say, these are all probabilistic statements.
appreciate the discussion. thanks!
Why can't We Use Somali Welfare Fraud Loot to Buy Greenland?
https://torrancestephensphd.substack.com/p/why-cant-we-use-somali-welfare-fraud
Thanks.
Now game this out as a long term process.
Recently, Trump declared war on the US led order.
Even though he caved on Greenland today, yesterday's threats cannot be unmade.
There is also clearly now an increased risk of holding US assets, especially US debt.
So, in spite of Trump caving, the result is increased risk premium plus fear of any and all vulnerability to US coercion.
Why wouldn't other countries now slowly move away from US debt assets?
Sure, I see the point about risk premia. All I’m saying is that it’s not weaponizable.
Informative commentary. More is needed on actual U.S. security benefits from owning Greenland and what can be achieved with alternative arrangements. The issue needs to move from 'attitude' to productive discussion. Your piece is a nice start. Too bad so many politicians want to concentrate on attitude.
Thanks. When the US can have all the security benefits without the nominal sovereignty - the latter being the prerogative of the people of Greenland and the Kingdom of Denmark - the administration’s attitude is all that remains, I’m afraid.
Unfortunately, this really isn't about rational analyses of security benefits. This is about an intellectually limited 80-year-old fantasist giving the tough-guy performance of his life for his base.
The US has long had the "alternative arrangements" that allow it to do whatever it needs to enhance its security.
Would a rational actor trade the current arrangement (an unrestricted right to do meet its security needs) for one that provides no incremental security benefit while saddling you with the financial responsibility of supporting a local population and eliminating your strongest security alliance?
Agreed in principle but in the end it will come down to some sort of a deal (as we’ve seen) - the rationality or fairness of it is a different issue.