Let’s Not Lose Sight Of The Fact That Trump/Republicans Decided To Do A Huge Economic Stimulus Package At A Time When The Economy Was Already Booming
That’s a grand experiment that’s never been attempted before. Is it already backfiring? Too early to tell. Investors have now lost more than $1.6-trillion on paper so far in February, in just 3 trading sessions. While the Dow Jones Industrial Average, suffered its biggest one-day point drop ever: 1,175 points, it’s still near record highs. (And despite some mainstream media calling it a “crash”, it isn’t: typically a definition of a market crash is a single-day decline of 10% or more, this last session the Dow was down less than half that). A big drop nonetheless.
• The market likes low inflation and low growth better than anything else. That’s part of why stock prices have been on a steady upward climb since the end of the 2008 Recession. There’s been virtually no inflation (in fact, oil prices have come down substantially), and growth has been slow, but steady.
• Inflation is usually triggered by putting too many dollars in the system, which then drive up the cost of employees and products. That’s exactly what the tax cut is doing. Half of that is good: with near-full employment, salaries are going up. Half of that is bad: with more dollars available to buy goods, the price of those goods will go up, meaning for many workers it’ll end up being a wash at best: they’ll make more, but they’ll pay more for everything from housing to household goods.
• Running gigantic Federal Deficits at a time when inflation is causing rising interest rates, also means the government will have to borrow more money, and will have to pay more to borrow that money, which will then mean we’ll all have to pay more to borrow money.
• Trump’s immigration policy also plays into this. And it’s a question we’ve asked many times before (and one of the few things we agree with the Koch brothers on): why would you deport tons of people who have not committed crimes, and cut way back on the number of legal immigrants, exactly at the time you are in desperate need of more workers to keep your self-described “turbo-charged” economy revved up?
• We also feel a looming constitutional crisis and an obvious intensifying of the Trump/Russia investigation is a component that at the moment almost no one is talking about. Because another thing the market doesn’t like is uncertainty.
• It also doesn’t help that the federal government has still not managed to put an annual budget together. Instead, it’s headed for its 5th continuing resolution, with no deal in sight, and there may never be one. The budget process this year (which actually started last year), might very well involve little pieces being passed here and there along with additional continuing resolutions, reflecting an exceptionally high level of dysfunction on Capitol Hill. A stronger President might force everyone to get together and make a budget happen. Trump insists on punching people in the face first (as New Orleans Mayor Mitch Landrieu said), and then asking for their cooperation. Doesn’t work that way. And another example of instability.
• Of course none of that explains why the sell-off is happening just now, when a lot of those factors have been in play for weeks, if not months. Stock values have been way higher than underlying earnings should justify for a long time. The market’s been going up pretty much in a straight line for more than a year. Nothing goes up in a straight line. It was a bubble. It was due.
Bloomberg has a continuously updated live feed of global market activity.
Trump’s Not Using The Argument (Yet) That The Stock Market Is Plunging Because He’s Doing Too Good A Job. He’s Probably Waiting For The Sell-Off To Blow Over. Which It Might.
In fact, the President was silent on the subject of the market plunge. At a non-campaign/campaign-like appearance in Ohio, he stuck to “paychecks…going way up….taxes…going way down”.
He then quickly changed the subject: complaining Democrats didn’t applaud for him during last week’s State of the Union Address he got such “good marks” for; bringing a “negative energy” to the room. Hasn’t the President seen a State of the Union before? That’s the way it always goes. Or did he think it’d be different this time, because Trump? He even goes so far as to call Democrats “treasonous” for not cheering when he mentioned Black and Hispanic unemployment were at record lows. Watch his comments by clicking on the photo below:
Dictionary.com responded to this far better than we could:
Republican-Controlled House Intelligence Committee Votes Unanimously To Release Democratic Rebuttal To “The Memo”. Let’s Ask Ourselves Why…
Yes, there might be some value to issuing the Democratic rebuttal to give a contrasting and fuller picture of what was and wasn’t included in the F.B.I.’s application to monitor Trump campaign associate Carter Page. And there’s almost certainly some value in putting Trump on the spot by making him decide whether or not to allow its release.
Still, we still think the release of the Democratic rebuttal runs the risk of playing right into Republicans’ hands. Which is why they unanimously approved the release, after rejecting it initially.
• Because the memo was such a dud, and there’s been so little momentum in the aftermath of its release (except by the President, via Twitter), that issuing a rebuttal might only extend and expand its impact. Republicans realize this could make them look better; make the original memo look better, simply by making it look “worthy” of a serious rebuttal.
• It’ll give Trump something new to attack.
• How many people will actually take the time to read both memos, or care about what’s actually in them? Just like no one involved with the Hillary/Benghazi hearings ever really cared that no one ever found any wrongdoing. It was all just about saying “Benghazi, Benghazi, Benghazi” until it came to mean what they wanted it to.
• Democrats were in a much better position when it looked like Republicans were trying to hide something, than they will be trying to defend rebuttals to their rebuttal. They should’ve just complained about it, and then dropped it. Now, at best, they are going to have their own lackluster memo. Great.
Some Other Trump/Russia Developments
• House Intelligence Chief Nunes does now admit the F.B.I. in fact disclosed the “political origins” of the so-called “Steele dossier” as part of its application to monitor Trump campaign associate Carter Page. That’s according to Politico. But Nunes said it was just a footnote, and should’ve been mentioned more prominently. Still, it’s a fact he left out of his 4-page memo alleging wrongdoing among intelligence agencies investigating Trump’s team.
• The New York Times is requesting the Foreign Intelligence Surveillance Court unseal all documents related to the F.B.I.’s investigation of Carter Page. While that info is normally kept as a closely-guarded secret, the Times argues Trump “lowered the shield of secrecy” by declassifying the contents of the Nunes memo.
• The New York Times is also reporting Trump’s lawyers are advising him to refuse to testify in-person before Special Counsel Robert Mueller’s team. The reason should be pretty self-explanatory: under oath or not, it’s illegal to lie to federal investigators. And Trump was so “looking forward to it…”
A Slap In The Face Of Gerrymandering, From An Unlikely Source
Supreme Court Justice Samuel Alito refused to block a redrawing of electoral districts in Pennsylvania, recently ordered by that State’s Supreme Court. That’s a victory for Democrats. As we’ve mentioned before, even though Pennsylvania has 800,000 more registered Democrats than Republicans, Republicans control 13 or 18 Congressional districts, an outcome attributed to partisan gerrymandering.
The ruling turned some heads, especially since the Court recently granted a similar request from Republicans in North Carolina. scotusblog speculates as to why that might be: the Pennsylvania case relies on the state’s constitution which names the State Supreme Court as the final arbiter on such matters. So while there’s no way of knowing for sure, it may be more of a case of state’s rights vs. an explicit expression of opposition to a political gerrymander.