No worries

And you think we have problems…

Poor newbie homebuyers in the US are facing mortgage rates that may hit 7% this week. That’s a withering three hundred basis points more than here. Inflation is higher, and rising. They’re at war. Their old leader is deteriorating before our eyes. And he seems ready to pounce on his own central bank.

The next three days will tell a tale. In Canada the prime minister is hosting a global investment summit hoping to attract $1 trillion in new capital into the country. There’s word the EU is to invite us into their club as an official Associate Homie. Not sure what that means, but there may be fresh croissants and gelato in it.

It’s all part of diversifying away from the unreliable Americans who have twice chosen Donald Trump to lead them over a cliff. This week, Mr. Market is expecting some fireworks.

After Friday’s inflation report, the odds of an interest rate increase by the Fed soared to just over 87%. The chances of another hike in October are 50-50. Everyone expects by Christmas the price of money will have gone up twice. No wonder. Oil is over $100 again. AI spending is out of control. The bond market has had several cows, with investors demanding higher yields as protection against rising prices. It all means the bill for interest alone on the American debt is over $1 trillion a year.

And despite that, Trump shocked everyone last week by saying if people vote the right way (Republican) he’ll give every adult citizen $5,000. That’s $1.3 trillion the country does not have, and would need to borrow. Meanwhile the most powerful nation on earth is being stymied by a third-rate power with cheap drones and a bunch of Houthis in bent Toyota pickups.

See what I mean? We look golden by comparison.

We’ll probably look even better on Wednesday afternoon.

The US central bank has no option but to start jumping its key interest rate. Inflation is too high at 3.4%, and next month’s report will push it further. Europe just raised rates for the second time, and the mess in the Middle East will go on for months, if not years. Inflation is hot. The US has missed its target every month for five years. More to come. Consumer confidence has taken a hit. Deisel is over $6 a gallon and gas close to $4.50. It was under three bucks before the crazy attack on Iran.

If new Fed boss Warsh does not hike, faith in the American central bank – the most important one in the world – will be rattled. That will hurt US Treasuries, confidence in that country and likely the value of the dollar. Kevin Warsh will be a spent force, just months after taking the helm, having buckled to a president who knows a lot more about building a ballroom than monetary policy. (But he sucks on pool liners.)

However, if Warsh does the right thing and uses higher rates to tamp down rising prices, Trump has threatened the unthinkable in retaliation. The US president says he will halt trade with every country that has a deficit with America, which includes Canada, Mexico, China and South Korea. The result of that would be a global recession within weeks. A depression within months. He said on Truth Social: “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.”

It’s absurd. Unprecedented. Probably illegal. But rules don’t stop Trump.

The trade threat aside, 47 is certain to trash Warsh (his hand-picked guy), to claim the Fed is controlled by Democrat, socialist, commie appointees from previous administrations, and to meticulously undermine its independence while he ramps up attacks on its governors.

Trump wants lower rates to goose the economy, make the obscene national debt easier to pay, lower the value of the dollar to boost trade, ease growing consumer pain with cheaper loan costs and inflate stock values (already at a record). But that would feed inflation and lead to a situation requiring sharp rate increases later.

The White House is already trying to stimulate on its own. That’s the logic behind the $1.2 trillion cash giveaway after the midterms (if people vote red), and also his treasury secretary’s move to escalate bond buys and force rates down (it’s not working).

All this is to underscore one key point: their mess exceeds our mess.

You now live in one of the most stable, promising nations on earth. Tell Alberta.

About the picture: “This is my friend’s dog Rita,” writes Paul. “Rita is a guard dog.  No hubcaps have gone missing since Rita arrived.  Thank goodness you keep writing this blog, Garth.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/09/13/no-worries/