All modern economies depend on public confidence
Robert Reich (an economist) on Trump and the stock market dive:
Let’s get this straight:
(1) Trump doesn’t want the public to think the stock market has tanked because of his government shutdown, his trade wars, and the $1.9 trillion increase in the nation’s debt caused by his tax cut for corporations and the wealthy. (Actually, these are major reasons for the market’s drop.)
(2) So he’s blaming the Fed and its chair, Jerome Powell, for raising interest rates. And he’s ordered his staff to find a legal rationale for removing Powell. (Trump has no legal authority to do so.)
(3) Which is spooking investors even more, because they worry Trump will try to infringe on the independence of the Fed and turn it into his own political tool.
(4) All modern economies depend on public confidence that politicians can’t lower interest rates to serve their own purposes — such as getting short-term growth at the expense of long-term inflation and instability. (Which is exactly what Trump wants to do.)
(5) Adding to the panic is Treasury Secretary Steve Mnuchin, who announced today that he called bank executives in order to ensure that markets are functioning properly – an intervention that Treasury secretaries typically make when there’s an economic crisis.
Bottom line: Trump’s ego and his economic team’s incompetence could tank the economy.
If that happens, many observers are saying, it’s game over. The Republicans will put up with any number of children dying in the custody of ICE and journalists carved up alive on ambassadors’ desks and schools shot up by angry teenagers with arsenals, but they will not put up with stock market fumbles. It’s the wallet, stupid.
I’d risk a bet that Trump’s stockbroker has been instructed to take full advantage of the plunge in share prices. Not in Trump’s name, of course. I doubt that even he would be so obvious at the moment.
Presumably many investors voted for Trump. I wonder how many buy his deflection tactic of blaming the slump on the Treasury, the ‘Democratic’ shutdown, anybody and anything but Trump?
Well, any that are unable to ever admit they made a mistake, at least.
And I am not sure that investors are necessarily any brighter than the rest of us, though they believe they are (at least if they are successful enough to be rich). They are probably just as good at rationalizing and justifying as the next person.
“Hey guys, I just ran a check on our Protection From Alien Invasion systems, and it all works fine just fine real good in fact… oh, no reason. Just don’t panic. Wait, why is everyone panicking?”
Incredible buffoonery.