EC No, Mr. President, There Isn’t A Santa Claus

Even together, it is unlikely that President Trump’s positive policies will eliminate the budget deficit. It is however absolutely certain that any reversal of them would cause it to spiral to infinity, condemning the United States to insolvency and poverty. It is thus very much to be hoped that Trump achieves re-election in 2020, and that whoever succeeds him in 2024 is either a Trumpian Republican (preferably with the addition of a Coolidge-like taste for government economy) or at worst a Bill Clinton Democrat who understands the damage that over-regulation and wasteful spending can do.

Trump himself undoubtedly wishes for re-election, or if he feels like retiring in 2020, to be succeeded by someone like-minded. However, the twin problems of monetary and fiscal policy may not let him achieve this. For one thing we are likely to see a stock market collapse as the Fortune 500 companies that have undertaken buybacks are forced to recapitalize themselves with emergency share issues at much lower prices. We are also likely to see a crisis in the junk bond market; indeed such a crisis has been quietly brewing for over a year already, as it did in the housing finance market in 2006-07.

Whether those two problems cause an outright recession with a rise in unemployment is as yet unclear, but it will be tough for the U.S. to avoid one, almost certainly arriving before November 2020. That in turn will make Trump’s re-election very hard to achieve, and potentially condemn the economy to worse policies and worse problems in future. Only a Santa Claus, in the form of very good luck, can save President Trump’s and our own futures.

Yes, Mr. President, we too wish there was a Santa Claus. But alas, there probably isn’t.

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(The Bear's Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of "sell" recommendations put ...

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Barry Hochhauser 9 months ago Member's comment

Martin Hutchinson, why do you suppose #Greenspan did nothing to correct the problem even after he identified the issue early on?

Angry Old Lady 9 months ago Member's comment

Wait a minute... Santa isn't real??

Gary Anderson 9 months ago Contributor's comment

I can't believe I just read this.

Alexis Renault 9 months ago Member's comment

Why not?

Gary Anderson 9 months ago Contributor's comment

The trend growth is likely below 3 percent. Most rational people do not hope Trump wins in 2020. He is doing great damage to our nation on many fronts, including economic policy. He is a dreadful human being on many fronts. The author does not share my views, which is fine. But it is a tough read.

Alexis Renault 9 months ago Member's comment

I agree that #Trump is a dreadful human being. Personally I can't think of a single positive thing to say about him personally. But I was under the impression that Wall Street and business in general were supportive of Trump and his policies.

Gary Anderson 9 months ago Contributor's comment

I don't think Wall Street thinks tariff wars, full blown tariff wars, can be won. Certainly, Wall Street gives Trump the benefit of the doubt, that he is negotiating. But this is really how business in the US feels about the potential tariff war, and certainly the steel tariffs are just killing American business slowly by 1000 cuts: https://www.uschamber.com/tariffs

Alexis Renault 9 months ago Member's comment

:-(