It’s Trump’s stock mar­ket

Pawtucket Times - - OPINION - By HELAINE OLEN

When it comes to the stock mar­ket, Pres­i­dent Don­ald Trump is in a box of his own mak­ing. He re­peat­edly took credit for 2017’s stock mar­ket gains, with the S& P 500 de­liv­er­ing a nearly 22 per­cent re­turn. “Stock Mar­ket at new all- time high! Work­ing on new trade deals that will be great for U. S. and its work­ers!” went a typ­i­cal tweet, this one on July 15 of last year. “High­est Stock Mar­ket EVER,” he de­clared a few days later. I pre­dicted this would not end well for Trump. “Should the Amer­i­can econ­omy or stock mar­ket hit a rough patch, Trump will get stuck hold­ing the bag,” I wrote late last fall.

And so it has come to pass. The stock mar­ket fell dra­mat­i­cally on Tues­day, with the Dow Jones in­dus­trial av­er­age div­ing al­most 800 points, more than 3 per­cent. While pre­dict­ing what causes gy­ra­tions in the stock mar­ket is not ex­actly a science, most ob­servers think this cul­prit is ob­vi­ous: Trump’s er­ratic, bel­liger­ent talk about trade and China could trig­ger both a trade war and a re­ces­sion in the United States.

Trump has been talk­ing tough on the sub­ject for months, adding tar­iffs to a host of goods. China, nat­u­rally, re­tal­i­ated. But Trump be­came more con­cil­ia­tory this past week­end, ap­par­ently com­ing to an agree­ment with Chi­nese Pres­i­dent Xi Jin­ping to pause all fu­ture tar­iff in­creases for 90 days while the coun­tries at­tempt to set­tle the dis­pute.

Then came Tues­day. Trump took to Twit­ter to say while a deal “prob­a­bly will” hap­pen, “I am a Tar­iff Man.” The se­quence of events, when com­bined with Trump un­der­cut­ting his chief eco­nomic ad­viser Larry Kud­low on when, ex­actly, the 90- day ne­go­ti­a­tion pe­riod with China’s gov­ern­ment would be­gin, sent the stock mar­ket right back into a tail­spin.

One could ar­gue that Trump is, in a rare event, not com­pletely in the wrong. There are prod­ucts that China charges a higher tar­iff on than the United States does in re­turn. China’s pro­tec­tion of in­tel­lec­tual prop­erty is shoddy, to put it kindly. Ar­ti­sanal crafters and ma­jor cor­po­ra­tions alike com­plain about a ver­i­ta­ble tsunami of coun­ter­feit goods from China. For all the talk of the North Amer­i­can Free Trade Agree­ment cost­ing Amer­i­cans jobs, one study found that it was trade with China that re­sulted in the loss of 1 mil­lion Amer­i­can man­u­fac­tur­ing jobs in the pe­riod be­tween the turn of the 21st cen­tury and the start of the Great Re­ces­sion.

But putting Trump in charge of fix­ing such a prob­lem as this is un­likely to go well. Be­yond the usual prob­lems – his pro­found ig­no­rance, in­com­pe­tent ad­vis­ers, volatile tem­per and sus­cep­ti­bil­ity to flat­tery – Trump’s un­der­stand­ing of eco­nom­ics seems lim­ited. He ap­pears to think, for in­stance, that coun­tries pay tar­iffs. Wrong! The com­pa­nies im­port­ing the items into the United States pay the bill – which they then al­most al­ways pass on to con­sumers.

Trump’s un­der­stand­ing of the stock mar­ket is equally lim­ited. Be­fore his run for pres­i­dent, Trump ad­mit­ted pre­fer­ring real es­tate to stocks, though stocks have his­tor­i­cally pro­vided bet­ter re­turns. He pro­claimed stocks were over­val­ued in both 2015 and 2016, and he talked about “very scary sce­nar­ios” for in­vestors. Ob­jec­tively speak­ing, this was not true. Any­one who sold off based on Trump’s say so is poorer for it to­day.

By Wed­nes­day morn­ing – when the mar­kets were closed for the fu­neral of for­mer Pres­i­dent Ge­orge H. W. Bush – Trump tried to calm things down. He took to Twit­ter and claimed Xi’s gov­ern­ment was send­ing “very strong sig­nals” that the two coun­tries would come to an agree­ment. One can only hope, but it doesn’t take much know- how to know Twit­ter is hardly the place to con­duct in­ter­na­tional diplo­macy.

Trump pitched him­self to gullible vot­ers as a busi­ness ge­nius, some­thing that was all but laugh­able to any­one who ac­tu­ally un­der­stood how busi­ness worked. He in­her­ited the bulk of his money and con­nec­tions, two things that did not pre­vent him from tak­ing his com­pa­nies into bank­ruptcy mul­ti­ple times. His come­back in the 2000s was al­most cer­tainly the re­sult, not of unique busi­ness in­sight, but of some com­bi­na­tion of mar­ket­ing mythol­ogy en­abled by “The Ap­pren­tice” and a will­ing­ness to en­gage in deals that look sus­pi­ciously sim­i­lar to cash laun­der­ing with an in­ter­na­tional as­sort­ment of shady klep­to­crats.

In Trump’s view of the world, he is re­spon­si­ble only for suc­cess, not for fail­ure. He got away with this in­sis­tence when he ran the pri­vately owned Trump Or­ga­ni­za­tion, mostly be­cause no one cared much about him at all out­side of a cer­tain tabloid star­dom. But he’s in the White House now, and he pub­licly claimed credit for the stock mar­ket’s suc­cess. He can hardly turn around and deny he has noth­ing to do with it now that the hot streak has cooled. It’s Trump’s stock mar­ket now. Let’s hope he can keep it. THE TIMES — Thurs­day, De­cem­ber 6, 2018

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