Amerigo Bonasera: “I believe in America. America has made my fortune.”
...
Vito Corleone: “I understand. You found paradise in America, had a good trade, made a good living. The police protected you; and there were courts of law. And you didn't need a friend of me. But now you come to me and you say – ‘Don Corleone give me justice.’ – But you don't ask with respect. You don't offer friendship. You don't even think to call me Godfather. Instead, you come into my house on the day my daughter is to be married, and you ask me to do murder, for money.”
– The Godfather, Mario Puzo
“You’re playing cards. You’re gambling with the lives of millions of people. You’re gambling with World War III. You’re gambling with World War III. And what you’re doing is very disrespectful — disrespectful — to the country, this country, that’s backed you far more than a lotta people said they should have.”
“Don’t tell us what we’re gonna feel because you’re in no position to dictate that. Remember that.”
– President Trump, joint press conference with President Zelenskyy, 28 February 2025
A political scientist once recommended to me Mario Puzo’s The Godfather as essential reading for modern Westerners trying to understand traditional cultures. The opening scene of the movie (Part I) well illustrates the contrast between an impersonal, rules-based, transactional society and one in which personal relationships and power dominate. In the former, you go to the police and the courts for justice and protection. In the latter, you go to your godfather or local potentate and kiss the ring.
I would likewise recommend The Godfather to Western elites and those in markets bewildered and dismayed by the first month of Trump 2.0. In Global entropy: Enter the dragons I described how the erosion of the “rules-based,” post- War liberal order (PWLO) had reached a tipping point where the “global policeman” could no longer dispense justice and Pax Americana was slipping into the twilight. Replacing it is a traditional order closer to that of The Godfather where the realpolitik of hard power and national interests rule.
In the new La Cosa Nostra geopolitical order, friendship and the protection it offers comes at a price, while flattery is sometimes showered on foes to distract them while one prepares for war. In The Godfather, a weakened Don Corleone embraced Don Barzini, the murderer of his first-born son, to keep the peace while he simultaneously instructed his youngest son and heir, Michael, to ruthlessly discipline and rebuild the Corleone family for war. Similarly, “Don” Trump courts adversaries like Russia and China, even as he coerces his own “family” with steep tariffs to ”[stall] an inevitable war with the former while cajoling the latter to reindustrialize and rearm” (as I put it in Party like it’s 1938).
Decades of peace, prosperity and “international law” under Pax Americana have left many US allies, like Amerigo Bonasera (perhaps more appropriately named for this context, Amerigo Bonaserata), hesitant to kiss the godfather’s ring and declare fealty. But in an increasingly dangerous world – with few if any other sources of economic growth or critical technologies – they have no choice. Shinzo Abe, the late Japanese leader who recognized the collapse of the PWLO earlier than most, kissed the ring in President Trump’s first term. Prime Minister Starmer of the UK also shows signs he understands the need.
President Zelenskyy of Ukraine, like Bonasera initially, made the mistake of assuming the new order is not only one of laws, but transactional like the PWLO, where one can simply buy protection. His mistake is likely to be very costly for him, though hopefully not for the people of Ukraine. Protection in the new order demands not just payment but respect and a pledge of “friendship.” In the police-free world of La Cosa Nostra, someone who offers only payment for protection can easily switch to a rival don. Thus “families” – or alliances – are held together not just with tribute but with fealty, the violation of which is severely punished.
President Zelenskyy is not alone. President Sheinbaum of Mexico and Prime Minister Trudeau of Canada, who were quick to submit to demands for payment, are learning that being part of the family requires something more: concrete demonstrations of fidelity.
But the most confused are continental European leaders. As they rush to “stand by” President Zelenskyy – in rhetoric only, mind you – after he was thrown out of the White House, they continue to assume the US position is transactional and the rift can be fixed simply by signing a minerals deal. Even as they gazed at the empty chairs for Brazil, China, India, Japan, and the US at last week’s G20 meeting or watched, stupefied, as the US voted against them at the UN, European leaders can’t seem to grasp that the PWLO foundation of their prosperity and their only source of influence is gone. In the new world order, they are simply a resource-poor continent with eroded industrial capacity, moribund innovation, few critical technologies, insecure borders, and small, poorly equipped militaries.
Most worryingly, some European leaders – particularly Friedrich Merz of Germany and EU foreign affairs head Kaja Kallas – are reacting less like Amerigo Bonasera, who ultimately does kiss the don’s wring, and more like Fredo, Don Corleone’s second and weakest son who simmers with resentment at being passed over for his younger brother Michael as head of the family. Consumed by his vain insecurities, Fredo unwisely conspires with the rival families to assassinate his brother, ultimately leading to his own death instead. Similarly, Europeans’ impotent rage at Donald Trump – the symptom, not the cause of the PWLO’s passing – will only worsen their situation.
The full cost of Europe’s decades of hapless self-indulgence likely won’t be known for years to come, but European leaders appear clueless that demands for fealty are not optional. The fat prosperity of the PWLO is gone and in the new order those who can’t defend themselves must not only pay La Cosa Nostra Americana for protection but swear their allegiance. The only questions for markets are (1) how long it takes European leaders to realize their situation, (2) how much their pride will cost them, and crucially, (3) whether markets realize Europe’s situation before they do.
Market pricing so far – bewildered by the torrent of rapid change and chaos emanating from the Trump White House – is confused and full of contradictions. Some market reactions like the rise in volatility of volatility that had been my strongest view for this year have indeed manifest. Other prices testify to the confusion and offer opportunities for those who adjust to the realities of a new world order.