Browsing the blog archivesfor the day Friday, December 7th, 2018.


On the Brink

Trump Maladministration

I think financial journalists and fashion writers are the same people. The S&P 500 appear to be tottering on the brink of an abyss, and the financial press is full of stories about “Five Surprising Stocks to Buy Now!” written with the same breathless optimism as articles promoting fashion — “Five Makeup Essentials to Make You Look Ten Years Younger!” “Dress Like a Star With Glitter, Bedsheets and Safety Pins!” Whatever.

The more serious stock market people are alarmed that they are getting mixed messages from the White House. Larry Kudlow says one thing; Peter Navarro, who seems to have ten different jobs, says another.

Kudlow told CNBC on Friday that the trade talks with China are “extremely promising.”

Kudlow, director of Trump’s National Economic Council, said that Trump has indicated he might be willing to extend the 90-day negotiating window if there’s “good, solid movement and good action.”

Navarro, the trade hawk of the White House, struck a different tone on CNN. Asked whether the administration would walk away if issues with China are not resolved within 90 days, Navarro suggested Trump would “simply raise” existing tariffs on $200 billion worth of Chinese goods.

If China fails to change its ways on trade, “we have a president that’s going to stand up to that for once,” Navarro said.

Navarro also championed the nearly $12 billion that the United States has raised from tariffs, even though that money is being mostly paid by American consumers and businesses.

Of course, the real problem is that there’s nobody at the helm. Well, there’s Trump, but he has no idea what he’s doing. Paul Krugman writes,

Unfortunately, he really, really doesn’t know what he’s doing. On trade, he’s a rebel without a clue.

Even as he declared himself Tariff Man, Trump revealed that he doesn’t understand how tariffs work. No, they aren’t taxes on foreigners, they’re taxes on our own consumers.

When trying to make deals, he seems to care only about whether he can claim a “win,” not about substance. He has been touting the “U.S. Mexico Canada Trade Agreement” as a repudiation of NAFTA, when it’s actually just a fairly minor modification. (Nancy Pelosi calls it “the trade agreement formerly known as Prince.”)

Most important, his inability to do international diplomacy, which we’ve seen on many fronts, carries over to trade talks. Remember, he claimed to have “solved” the North Korean nuclear crisis, but Kim Jong-un is still expanding his ballistic missile capacity. Well, last weekend he claimed to have reached a major trade understanding with China; but as J.P. Morgan soon reported in a note to its clients, his claims “seem if not completely fabricated then grossly exaggerated.”

Markets plunged earlier this week as investors realized that they’d been had.

Of course, allowing oneself to be “had” by the likes of Trump suggests one wasn’t too smart to begin with. Michelle Obama said recently that the Masters of the Universe types really aren’t all that smart, and I believe her.

Elsewhere: Rex Tillerson made some candid remarks about his time in the Trump Administration recently. Naturally The Creature had to weigh in.

The above is a genuine tweet by the allegedly adult POTUS. I pulled it off his Twitter page personally.

Forbes has an in-depth look at How Donald Trump Shifted $1.1M Of Campaign-Donor Money Into His Business.

The appointee to become U.S. ambassador to the United Nations is a former Fox News reader who not that long ago cited D-Day as a high point in U.S.-German relations.

Update: Neil Irwin of the New York Times notes stock market volatility and wonders why it took so long for the money people to get nervous.

First, why is this happening when the economy is so strong? TheNovember jobs numbers released Friday showed the unemployment rate remains at a rock-bottom 3.7 percent amid healthy job creation, just the latest piece of economic data to come in relatively strong.

Second, what took so long? Why are markets just now recognizing the risks the economy faces in 2019, which have been obvious for months to anyone paying attention?

My answer is that most of these people don’t want to face the obvious. They want to believe everything will be fine.

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