Bessent Screws Up Again

SCOTT BESSENT is a busy man. He is the guy inside the cockpit responsible for crisis management and economic warfare. And multiple crises are coming to a head simultaneously. The crises are related not only by their proximate triggers but also the slower-moving factors. The crisis responses his team has articulated in large part reflect the constraints under which they are working. But even conditional on the constraints, he is screwing up. In what follows, I spell out the stratagems outlined by Bessent and why they are not going to work.

Bessent pretended that the yen intervention was to help out an ally in trouble. But the precise weapon he used for the job belied the claim. Instead of buying yen dollars, he chose to use euros. Why? Because the objective wasn’t to stabilize the yen. It was to prevent the Japanese from dumping Treasuries, which would’ve driven up long-term US yields further up.