It’s April 22 and the stock market is in new, down territory. Again. Throw out everything that you know about investments (not to mention how the military is run, not to mention immigration, the Department of Justice and Homeland Security under the protection of a woman who can’t even protect her own purse) and it’s just another dangerous day in Trump world. Harry Enten, who does financial commentary for CNN, tells us that “Donald Trump is on a planet all by himself.” Oh, how we wish. If Trump was out on some asteroid somewhere and doing his madness long distance, or floating through space like the incarcerated criminals in Superman III, we might have some control of the situation. Alas, he’s here, omnipresent, and everything he touches dies, most notably hard earned investments.
I don’t agree with Enten that the chances of a recession are 50/50. I’m going along with the viewpoints of people with considerably more somber viewpoints on this topic. Trump is out of control and unless somebody close to him can get him to pump the brakes, our economy will match his untrammeled excesses.
Economist Torsten Slok says there’s a 90% chance of a recession if tariff policies are “swiftly changed” and of course that’s Trump’s dearest fantasy, that massive wealth is going to result from tariffs, just any ole day now.
Slok said small businesses that account for more than 80% of employment and capital expenditure don’t have the working capital to pay tariffs.
“Expect ships to sit offshore, orders to be canceled, and well-run generational retailers to file for bankruptcy,” he says.
There’s some math behind Slok’s assertion that puts a recession at a 90% likelihood.
During the 2018 trade war with China, the U.S. average tariff rate increased from 2% to 3%. Studies show that the impact on gross domestic product was between 0.25% and 0.7%.
Using the low end of the estimated impact, and Trump’s plan that at the moment calls for double-digit tariff rates, Slok says the negative impact on GDP in 2025 could be almost 4 percentage points — and that doesn’t even include the negative impact from uncertainty for consumer spending decisions and business planning.
Slok says there is an alternative. He pitches an idea of a longer 180-day pause — but 10% tariff — for all countries that agree to bring their tariffs down to zero as deals to negotiate non-tariff barriers are discussed. He also says on China, one approach could be to keep tariffs on strategic product groups like autos and solar while gradually phasing in tariffs over 18 to 24 months.
U.S. stock futures slumped on Monday with no sign the trade war was abating, and the additional fear now that President Donald Trump will try to fire Fed Chair Jerome Powell.
Firing Jerome Powell is the absolute worst move that Trump can make. That will send the markets into a tailspin like nothing else. And firing Powell is not like firing a maid at Mar-a-Lago. Powell can only be fired for cause. This is yet another situation where the Supreme Court might save Trump from his own most destructive impulses.
We’re not there yet. Right now Trump is scapegoating Powell because that’s what he does, is find a scapegoat and a victim. He can talk the crazy talk all he wants and he can blame it all on Joe Biden but the reality of the situation is that things are exploding on his watch.
and Homeland Security under the protection of a woman who can’t even protect her own purse)
I read that in the NYT. Talk about my keyboard suffering from too much coffee.
Republican Mantras:
Who said irony is dead?!?
You can’t make this sh*t up!!!
When someone first uttered the phrase ‘Everything Trump Touches Dies’ it soon proved correct. And then the wider ramifications started to become apparent.
But no-one thought it would include the US economy – least of all the self-proclaimed business geniuses who believed the sane-washed media about his dishonestly marketed ‘business abilities’.
And in the 20/20 vision of hindsight, handing control of ANYTHING economic to a multiple bankrupter of casinos, multiple convicted felon for fraud and dis-honesty offences can easily be seen as beyond stupid.
But here we are, thanks to the most moronic person to have the post of president, the US economy has gone from being a carefully nurtured, properly run ‘ wonder of the world’ with great record growth, record employment levels, and a booming stock market to a version of 1960s Argentina, but, of course, far, far worse due to it’s vast scale. A scale big enough, that it can take the rest of the world economy down with it.
To paraphrase a famous Briton, “Never before has so much been owed by so many, to so few.”
All because ETTD.