Davos, Greenland & the Absurd

The Davos World Economic Forum has always had an Oscar’s vibe where the swells and the glams get together on a mountain and congratulate each other on being invited. So it’s got to be a little galling to a group of self-important spread-sheet jockeys to get eclipsed by something that is fundamentally, obviously and undeniably absurd. And yet cannot be ignored. Greenland.

Or can it?

In full disclosure, I tried to watch the president’s address at Davos, but stopped when his incoherence went full Biden. Which was pretty early on. He did say, however that Greenland wouldn’t be taken by force, he’d just make a deal.Europe is breathing a sign of relief.  The playbook for dealing with Trump has always been to get him to the negotiating table where easily confused, he generally blinks. This time, however, might be different. There is nothing that the US gain by an expensive take-over that we don’t already have. It’s not security, it’s not the money which leaves ego and you can’t negotiate with that. He just wants what he wants. The danger now isn’t escalation of military action, but a trade war.

The first weapon in Trump’s economic warfare arsenal, the tariff weapon he’s threatening to lay on eight European countries for opposing his Greenland acquisition, is still in play. I’ve written about the use of the Oil Weapon - the deployment of which is brutally effective once, and then the markets reconfigure themselves so that it doesn’t happen again. The EU was half expecting these tariffs to come rushing back, so they’ve made contingencies in the form of an anti-coercion tariff package on better than $100bn worth of goods designed surgically to hurt red states. Mind, the US still has the leverage here, but EU can land a few shots as the fight escalate. Given the chaos and noise within the American political and economic systems right now, that might be all it takes.

Better still for a free marketer, the option of the tariff option may be moot. Not because Europe has found its spine, but because the Supreme Court ruling on the legality of using the International Emergency EconomicPowers Act (IEEPA) to impose levies could come this week. Currently, the bets are that it will go against the White House. This throws the power to levy tariffs back to a congress desperate to claw back relevance.

The timing is bad for the administration. Domestically, the crisis in Minnesota is creating an optics disaster everywhere but with the president’s base. Even Joe Rogan, who did as much as anyone to get the man in office, is calling ICE an American Gestapo. This boosts the Democrats, who are already favored to take the House. Party lines may not matter too much in the Senate as it makes vague motions to take itself back. Roughly 70% of the population are against using federal funds to acquire Greenland, and a whopping 86% oppose using military force. Those numbers are hard to ignore for anyone eyeballing re-election and a post-Trump career. The old man is a fixed asset, JD Vance is too unlikable to win a general election and the MAGA movement itself likely won’t survive the absence of its Big Man. Given that calculus, it’s hard to see congress releasing the money for a purchase (or giving the go ahead for military action when the trade war comes off the rails) regardless of the party make up of the houses.

Let’s not get started on the markets - the one thing of which Trump does seem genuinely scared.

We’ll see more about that in tomorrows episode of Unhinged Davos Man, in which Trump unveils his charter for the “Board of Peace” intended to supplant the UN and be led by him… for life. Per the charter any decision by member-states would be binding only if approved by Trump himself… for life. But the guy can’t live forever… which is why he’s got sole authority to pick his successor.

Make of that what you will.