I don't want to write about Trump and his administration's incompetency in every blog. So I was not even going to comment on the government shutdown that is going on. I was trying to find something upbeat to write about. But today's news out of Wall Street makes me angry and nervous. The Dow lost another 650 points today. I knew that this December was going to end up as one of the worst of all time. But on Christmas eve, when the market is open for only half a day, a big drop in the Dow was not expected. For someone like me who has retired and has no pension from a company, the profits I have made over the years in the stock market is what I will have to live on for the rest of my life. I am smart enough as an investor to know there will be bear market to suffer through. But the drops recently, especially today, were all unforced errors on the part of the administration.
A president gets too much credit when the economy is doing well and too much blame when things are bad. So I don't think Obama's handling of the economy is way better than that of Bush. But you can't argue that Bush was better than Obama, that is for sure. It is also a fact that the economy that Obama left for Trump was good and that if Trump doesn't screw it up, I think the economy will be still be good when he runs for reelection in 2020. But he is screwing it up. The trade war, the third government shutdown, the blaming of the Fed, the mess in his own cabinets, the numerous lies. All these have negative effects.
So today, Treasury Secretary Steve Mnuchin announced that he had discussed with all the major banks and he wants to assure everyone that there is liquidity in the banks to lend to consumers. This scared the market because nobody thought there was no liquidity in the first place. It is like telling a woman that you just met that you went to the doctor and you have no STD. That will really make you attractive to her! Right after that, Trump tweets that the Fed is to blame for the market crash. So is he going to fire the chairman? He said the Feds don't understand the value of the trade war. Neither do most of us. China's market is down but that won't win the trade war for us. When China gets the flu, it will be contagious to us as well. This is hurting the confidence of season investors like me. Can you imagine what it does to novices in the market? All unforced errors.
Monday, December 24, 2018
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I've always said that if the economy does well, most people will forgive what other actions the president takes. Funny how money is a great equalizer.
ReplyDeleteSo, when the market was up, people didn't mind the lies and turmoil. Now that the market is taking hits, the gains are now lost. I'm not so sure that a majority of these people who forgave him, will turn his back on him, but there is still a chunk of them that will now see things in a different light.
I talked to an economist about the trade war. He believes that there will be no winners but if there is one, it'll be China. He based it off the fact that the American economy is reliant on imported goods from China. He said that China can get what American goods it gets from other parts of the world. While this will cost both economies, he believes that China could withstand it because it's economy and infrastructure is built on being self reliant.
I understand that Trump campaigned on trying to even out trade with China and he's trying to keep his promise, but I wonder how long he'll keep the war up if he sees cracks in the economy. This could have been a miscalculation on his part and I wonder if his economic people signed off on the trade war.
Trump now has less than two years to fix what has gone wrong and that is plenty of time. But I think we'll see people complain more that he's willing to spend all this money on the wall but not put that money to use in other areas.
Don't underestimate that Trump followers. Even if the economy tanks, he'll still get a good amount of people showing up to vote for him. I think he's too powerful to hold off on any candidates at the convention too. He's proven to be a Teflon guy so far and most leaders would be in major trouble with all the defections and firings. It'll be interesting to see if there will be more fallout and more people quitting the next couple of years and what effect it'll happen.
At least gas prices are down so that people can travel to see loved ones during the holidays. Though I have yet to see airfares go down!
-LBOAYM