For a guy for whom his only viable argument for reelection is his status as an economic guru, Trump sure likes to play fast and loose with his meal ticket. Not only did the Dow drop another 1,450 points today, it also picked up a new moniker.
Just before 4 PM, David Gura on MSNBC, reporting from the floor of the stock exchange stated that we were now officially in a bear market. For those of you with more important things to do all day than dick around on E-Trade, it’s very simple. The term bear market means nothing more or less than a 20% drop from a previously recorded closing high for the market. But in the cloistered air of the stock market it has a more ominous meaning. It tends to mean that investors are more interested in selling than buying, and are likely to remain so for a while.
Last night on MSNBC, a lifelong independent oil trader said something that warmed my heart, because I already knew it. He said that only an economic ignoramus like Trump could be surprised by the current events on Wall Street. This downturn is already more than 3 years overdue. The average recovery and expansion coming off of a recession is 7 years. But because of the intelligence and restraint shown by President Obama in dealing with the recession, along with the underlying strength of not only the US economy, but the world economy as well, we squeezed an extra three years out of this recovery. Well, the free ride is apparently over, and with a vengeance.
The reason that this is important, and so deadly to Trump’s reelection chances is this. I wrote recently that on the day Trump took office, the Dow had closed the day before at roughly 25,683. Late last month, the Dow briefly broke the 30,000 marker before closing just below that high. So to put it in simple gambling terms, for the last three years, people with a market account have been playing with the house’s money! The market goes, up, the market goes down, it’s all good because you’re playing with more money than you personally put in, the house’s money.
But that just changed, and there are indications that the change may last for quite a while. A couple of days ago, the Dow dropped more than 2,000 points in a single session, its worst day since the start of the great recession. This dropped the closing total well below the 25,600 mark it was at when Trump took office. Yesterday it desperately clawed back about half of that amount, closing about 1,000 higher. But today the Dow dropped another 1,450 points, coming to a shuddering close at right about 23,600.
Here’s why this wonderland tour of numbers is important to you. For the first time in more than three years, Donald Trump is costing you real fucking money! When Trump took office, your account(s), whether 401k, or IRA, or personal day trading accounts were sitting at 25,600. For the next three years, you rode the last wave of the Obama economy. Every single time that you opened your monthly statement, whatever the total, it was higher than when you looked at it on January 20, 2017.
But not anymore. The next time you open your statement, and quite possibly for many months thereafter, you’re going to be looking at a balance that is below what you had in your account on January 20, 2017! Now, granted, this is not carved in stone. A 401K or IRA could be composed of any number of combinations of equities, bonds, or other investment vehicles. But the overall point to be made here is that we’re now in a bear market and in only three lousy days, Donald Trump has pulled a 2,000 point rug out from under your feet and it may manifest sooner rather than later in your retirement account statement. And none of that is “house money,” he burned through all of that in the last two weeks. The more you had in your plan, the more you lost, and the longer it’s going to take to make it up. The people who are going to be the ones worst hurt are those already retired, or those within 5-7 years of retirement, because they don’t have the contributory time to allow for the market to make the correction naturally. And we may be nowhere near bottom yet.
This stock market crisis is Trump’s worst nightmare because it is out of his control. It is being caused by the two things that are immune from his bullshit, the stock market, and the coronavirus. Trump is at his best in a crisis when he’s facing off against a walking, breathing opponent that he can blame for everything. But Trump can’t denigrate or insult the stock market, or a supercharged case of the flu. They are going to do what they want whether he likes it or not.
Funnily enough Trump may have made his own problem worse. As I’ve written previously, when the economy starts to slow, one of the most commonly used tools is for the Federal Reserve Board to incrementally lower the interest rate, to pump more money into the economy, and soften the landing. But in his brainless pandering to his big money backers, Trump repeatedly badgered the Fed to lower interest rates when there was no sane reason to do so. And as a result, now that there is every reason to do so, the Fed doesn’t even have that tool in its toolbox anymore.
For those of you who were willing to suffer the pains of a recession if it meant getting Trump out of the White House, you may be about to get your wish. It’s possible that the market could stabilize itself, but that’s something that it would have to do on its own, and if there’s one thing about Trump, it’s his complete inability to step back, shut up, and let the pros do their work. But one thing is for sure. But from where I’m sitting, the best possible outcome for His Lowness on election day would to be able to brag that he managed to get you all the way back to where you were four years ago. I dunno. Sounds kinda weak to me, what about you?
To know the future, look to the past.before the insanity of the 2020 election, relive the insanity of the 2016 GOP primary campaign, and the general election, to see how we got to where we are. Copies of President Evil, and the sequel, President Evil II, A Clodwork Orange are available as e-books on Amazon, at the links above. Catch up before the upcoming release of the third book in the trilogy, President Evil III: All The Presidents Fen