Biden's Legacy: Chaos Abroad And Looming Crises At Home
The collapse of the Assad regime in Syria is the latest example of foreign chaos the Biden Administration has left for Trump, but it has also left looming crises at home, including our skyrocketing federal debt. In today's guest post, our friend Kevin Dolan notes the parallel to the Yeltsin years after the fall of the Soviet Union, and highlights some lessons we can take from that as we navigate the chaos ahead. .
Before we get to his post, a couple of quick investing notes.
- In a post a couple of weeks ago ("Turning Bullish On Supermicro"), we mentioned buying shares of Super Micro Computer (SMCI 31.24%↓) at $21.86. SMCI has more than doubled since then.
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Now on to Kevin's guest post.
Nothing but Ls for Our Sacred Norms; America's Yeltsin
[Last] week, Joe Biden issued a blanket pardon to his son Hunter, “for those offenses against the United States which he has committed or may have committed or taken part in during the period from January 1, 2014 through December 1, 2024.”
There seems to be broad consensus that this is another blow to the Rule of Law, with the only disagreement being whether that’s a good thing or not, and exactly whose fault it is.
I’ve been hanging out on Bluesky just to see how the libs are taking things, and as far as I can tell, the mood is defiant — when Biden pardoned his son, things were different, and anyway it was never a “norm” that you can’t pardon your son for being your bagman in a criminal enterprise that possibly started a war, and anyway Trump is a Convicted Felon.
This is all to the good, because “Our Sacred Norms” are pretty much the only reason these people can give that they shouldn’t be prosecuted in military tribunals.
So what’s left after we run out of Sacred Norms? Who decides what happens next? Whose authority is legitimate?
Our friend Indian Bronson asked the question: “Who is the most important person in this photograph and the reason the Soviet Union no longer exists?”
The USSR in 1991 was totally ideologically exhausted — no one believed in the Soviets legitimizing narrative anymore, not even the Communists themselves.
The sole remaining justification for their rule was incumbency — “we have the guns”. But no Soviet politician “had the guns”.
The most important person in this photograph is the person who actually had the guns: the kid in the tank.
One of the lessons of the Soviet collapse is that even when you’ve “won”, it isn’t remotely over.
Yeltsin assumed the Presidency of the Russian Federation in 1991 under the 1978 Soviet Constitution, and immediately instituted an economic and political reform program which drove the Russian economy into recession and infuriated Russia’s Parliament (still populated with Soviet bureaucrats.)
After two years of procedural shenanigans on both sides, Yeltsin dissolved the legislature (which he had no constitutional authority to do). The parliament responded by proclaiming a new acting president and barricading itself inside the House of Soviets.
Over the next two weeks, Yeltsin ordered the military to shell the House of Soviets, and special forces stormed the building to arrest the surviving parliamentarians.
Even after that decisive military victory, what followed was a decade-long free-for-all of foreign looting and organized crime in which power was truly renegotiated from the bottom of Russian society to the top.
Trump has initiated a renegotiation of America’s empire, and the state’s relationship to its citizens.
Like Yeltsin, Trump is about to take nominal control of a bureaucratic state which is sleepwalking toward bankruptcy, which cannot be reformed from the inside, and which will resist him at every step.
Like Yeltsin, he will have to impose painful economic reforms which will threaten entrenched interests and challenge his popular mandate. In order to solve the existential problems of the state, he will have to act outside (if not formally dismantle) the prescribed boundaries of his office.
Even more than Yeltsin, he seems to have the enthusiastic support of the people with the guns. He is erratic and flamboyant, but not a drunk — and while both he and Yeltsin were accused of being agents of a foreign government, Trump’s plans for economic liberalization do not include throwing the doors open to foreign carpetbagging.
The sins of Russia’s liberalization are often laid at Yeltsin’s feet, but even if he had been stone-cold sober, it would have been painful — and the worst humiliations of the era were largely the result of the (Western-devised) strategy of privatization and capital flight unfolding exactly according to plan.
Trump isn’t doomed to the same fate — but the path ahead of him will almost certainly involve many years of renegotiating who is in control of the government, and a whole lot of fake, subsidized malinvestment going to zero. That wouldn’t be a failure state — it’s what we elected Trump to do.
If you were a Russian citizen in 1991, how would you want to be prepared?
A little less than half of Muscovites own a dacha — a country home to which they could retreat in the event of political violence, or grow vegetables when their state paychecks stopped coming in.
This is the standard “bug-out” strategy. Those people didn’t starve, they weren’t homeless, they did okay.
But the people who thrived in the chaos:
Had a lot of friends, foreign and domestic
Controlled real, physical capital (whether they technically “owned” it or not)
Paid close attention and acted quickly while authority was being abdicated
Were liquid and ready to buy when everyone else was selling
That’s how I’d like to be prepared.
