As much as I’d like to take time to celebrate observe the death of David Koch, there is more significant news. As I write this, the Dow is down 457 points. Earlier today is was 500. It’s possible the Big Money people will dump enough money into the markets to prop it up before the bell rings, of course.
But what caused today’s financial scare? Trump, of course. Well, and China.
The trade war between the U.S. and China worsened Friday as Beijing imposed retaliatory tariffs on $75 billion in American goods and President Trump took the extraordinary step of calling on U.S. companies to stop doing business with China.
The new tariffs, which included reinstated levies on auto products, delivered a strategically timed blow as recession warning signs cast doubt on the strength of the U.S. economy.
Now, that’s a bad thing. What would a sensible, level-headed response from the White House be? Probably not this:
Trump initially directed his ire at Federal Reserve Chair Jerome H. Powell in Friday tweets, painting the Fed’s lack of monetary easing as a greater threat to American workers and businesses. But moments later, he said he would be responding to China’s tariffs later Friday and demanded American companies cut ties with China.
The Dow is down 573 points perhaps on the news that Representative Seth Moulton, whoever that may be, has dropped out of the 2020 Presidential Race!
— Donald J. Trump (@realDonaldTrump) August 23, 2019
Who knew that Moulton (which one was he, again?) was that significant? 573 points? Latest updates I can find say 536.26. Not lookin’ good.
Anyhoo — this morning the Federal Reserve Chair Jerome Powell said that interest rate cuts are on the table, but that the Fed could only do so much to counteract Trump’s trade policies. Well, he didn’t mention Trump, but that’s what he meant.
“Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States,” Mr. Powell said, adding that there were “no recent precedents to guide any policy response to the current situation.”
Trump went ballistic.
….My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?
— Donald J. Trump (@realDonaldTrump) August 23, 2019
The thing is, recent events clearly point to, um, deterioration in Trump’s mental and emotional state. The Chinese are not stupid. They might have sensed the time to strike is now.
Trump really did order all U.S. companies to stop doing business with China. “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,” he tweeted.
Wait. I thought we had all agreed that nothing Trump tweets is actually an order or anything like it. It’s merely a manifestation of how Trump wants his base to perceive him. In this case, he apparently wants them to perceive him as Albert Speer or something.
Anyway, the president obviously doesn’t have the authority to order US companies to do anything, even if he does use a big word like “hereby.” Still, I assume Republicans will all be shocked and outraged by this megalomaniac attempt to interfere in the free market. Right?
Ha. But I guess if you think you’re Jesus, it’s not that far a stretch to be emperor of commerce, too. And the G7 is about to start! Great fun!
Also: On a sober note, it’s been announced that Ruth Bader Ginsburg is being treated for pancreatic cancer. This is seriously bad.
Update: Just a couple of minutes before the closing bell the Dow was down over 700 points, but last minute trading brought it back up to 622.6. Still, there’s nothing like a bad Friday to lead to a worse Monday.
Although it's not a Chinese art, I the the Chinese just used a little Jiu-Jitsu, economic Jiu-Jitsu, on Trump. Now what's he going to do? Reimpose the tariffs that he so kindly withheld for the benefit of the American consumer for the upcoming holiday season? Trump is a stupid bag of shit who doesn't have the foresight to see that the Chinese are going to take him apart piecemeal in his easily winnable trade war.
Can we please change the mascot of the Republican party to a cricket?
While their great white savior is signaling to mass murderers, kissing up to Putin trying to get G7 to G8, and now roiling markets and causing a recession. And what do we hear from the party of wealthy? Crickets. When their great white hope shows he is bonkers , and then forbids China trade. Ask him where his phone is made, where his socks are made , where his ties are made and where Ivanka's junk is made. Maybe when he quits China we will too.
Trump promised to respond this afternoon. By some coincidence, he waited until after the Friday bell (Wall Street) to announce he will retaliate with tariffs. I'm not clear what goods will be impacted in October with the new round of brinksmanship, but if it's consumer goods, it will be bad for the Christmas season which so many merchants depend on. "Made in China" aside, if consumer confidence is shaken it won't matter where stuff is made, we will be in an economic tailspin when Americans cut back in buying.
Trump understands illusion. The belief that the economy is great is self-fulfilling. So is the expectation of a downturn. The death blow will be when jobs numbers go south. You can stick a fork in Trump when the US bleeds jobs. Wall Street was shaken today when China fired a salvo – I expect further sell-offs on Monday from Trump's return volley. At some point, it will be a Bear-Stearns moment for the economy. It will be a confidence recession (consumers pull back in spending)
Barbara hints at a factor that will be in play Monday – stock price manipulation. As a matter of fact, the tax cuts were a cash boon to major corporations – they have money they don't know what to do with and virtually unlimited credit. The CEOs often get their major compensation thru stock options – they make a killing if stock prices stay high. It stands to reason there are orders to buy stock when investors start to bail using company money to stave off a crash. By Monday, will those players be prepared to jack up stock prices if/when investors bail? I do not know but there are limits to how much the market can be sustained artificially. I'd love to ask Krugman but if stock prices are sustained while the economy contracts, the corporations who bought their own stock at vastly inflated prices are on the hook when the bubble bursts.
[delurking] I expect by now you have the information on RBG's health status. The news was delayed until she was feeling well again: she has completed a period of radiation to remove a small tumor on (as in "not in") her pancreas. There is no indication of any other cancer in her body, and there are no plans or need for any further treatment.
I think I actually felt my heart skip a beat when the news announcer got the first 10 words out. Given our current status of having a president who thinks he is the second coming of ghod (eg. the Chosen One) has the authority to demand that US companies find alternative sources for everything they now buy from China, I'm about all packed and ready to flee from any other major announcement. Personally, I think the universe just gave us a "don't give up!" message with the Ginsberg news.
and having an economy that could burst like a balloon and fall down on top of us,
So many windmills to vanquish and no one to rely on but the loyal Sancho Panza. On a mission resulting from grey matter decay, our leader drags us all along as unwilling witnesses to his journey from objective reality to the subjective distortions of a mind gone awry. As always, many are in denial, and fight to twist and distort what is happening to avoid the harsh truth. Those of a religious bent wrestle with the notion that not even God works at this level of strange and mysterious ways. It will take them a bit longer to get a grip on things.
The theme of skepticism keep creeping into the writing of financial analysts as to the accuracy of government data. On a public TV a long running farm markets report program the analyst cast doubt on recent crop projections from the US department of agriculture. Respected financial publication echo caution in taking US government data at face value, with some oddities being noted. As Doug writes, illusion skills appear intact with the chosen one. It is hard to imagine that agency heads have not learned survival skills. By now they all know that the economy is beyond great if not the greatest economy that has ever been. Posting facts that contradict this message could result in a trip to the rubbish pile of those deemed disloyal. They must learn to ride the Sancho Panza donkey.
Well, what is real for farmers is that crop prices will be lower. The tax a.k.a.. tariff on grain and livestock China has imposed will continue to push the price down. This is for the simple reason that US agricultural products will include a tax other counties selling to China will not have. This is not good news for the farm economy so you should expect illusionary messaging. I do not expect John Deere to be adding workers to meet growing domestic demand for farm equipment in this greater that great economy. You can't have a trade war without some casualties. It is best they come from areas where a controlled media desert can blur it's impact.
Christmas goods have landed by now and taxes a.k.a. tariffs are already paid. The Grinch will not arrive that soon. Prices will rise or profits will fall after that. The rise in prices will effect those who have the least. It will be like a new tax upon them imposed at the store but since it comes from a tariff, lots of them will not understand that they got a tax increase and had no chance to vote against it. Taxation without representation and no tea to hurl in the harbor. Oh and what and who again are we fighting this trade war for? How will we know when it is over and who won? Better yet, who will have enough credibility left to make any believable announcement? Welcome to the age of post-truth politics.
The Chinese government know a decent US economy reduces Trump's odds of jail time and might make him an offer he can't refuse. Of course the "president" would claim it the greatest deal in history and that no other president before him was genius enough to do it. Especially not Obama.
That would work for culture war Republicans who see Trump as The Chosen One, but not for the money wing. However, the Scrooge McDucks might try to buy him a second term anyway because, like Putin, they know the value of useful idiots (see the matching set of W. Bush deregulation and bailout scams).
Despite it all the croak of David Koch is a transcendent note in a noisy and unharmonious world.
"Hereby." I'm sure it has the same legal authority as calling "Not it!"
Maybe I should apply for a job at the State Department as a Chinese mind reader.I knew what they were thinking before they ever said it.
Such unilateral and bullying trade protectionism and maximum pressure violates the consensus reached by head of China and United States, violates the principle of mutual respect and mutual benefit, and seriously damages the multilateral trade system and the normal international trade order,” China’s commerce ministry said in a statement on Saturday.