Let's try learning from the Brits. Richard Wolfe:
So now we know what to expect from the first days living under President-elect Donald Trump.
Yes, it feels strange to put those words together. But things feel even stranger in the UK, where the unthinkable has quickly turned into the ungovernable. Judging from the British experience since the Brexit vote, American voters can draw some clear indications about those first tumultuous days of a Trump transition to power.
First comes the shock to the markets, as they realize their investment positions were as wildly mistaken as the polls they so confidently discounted. Since the surprise British vote to leave the European Union, the pound has dropped to a 31-year low, the country’s credit ratings have been downgraded, and the stock market has lost $140bn of value."
"To a normal presidential candidate, this might be seen as a cause for some concern. But to Donald Trump, this kind of global turmoil is just another reason to pat himself on the back. “Crooked Hillary Clinton got Brexit wrong,” he tweeted. “I said LEAVE will win. She has no sense of markets and such bad judgement.”
https://www.theguardian.com/commentisfree/2016/jun/28/electing-donald-trump-would-be-like-brexit
What does this even mean 'She got it wrong?'
Trump fails to understand, he's running for President not to be the First Market Forecaster. That is not a skill required to be a good President, Indeed, engaging in market forecasting is probably something the POTUS should stay out of.
We see what happened when the Brits went down the rabbit hole. Larry Summers argues it would be worse in the case of Trump than Brexit:
"First, there is a substantial risk of highly erratic policy. Mr Trump has raised the possibility of more than $10tn in tax cuts, which would threaten US fiscal stability. He has also raised the possibility of the US restructuring its debt in the manner of a failed real estate developer. Perhaps this is just campaign rhetoric. But historical research suggests that presidents tend to carry out their major campaign promises."
"The shadow boxing over raising the debt limit in 2011 (where all participants recognized the danger of default) was central to the stock market falling by 17 per cent."
https://next.ft.com/content/84ebe1b2-29a8-11e6-8ba3-cdd781d02d89
"The currency and bond markets will get spooked by the dawning reality of a new president who, over the next decade, will likely add $11.5tn to the already huge national debt of $14tn."
"As the traders and analysts consider that ballooning debt, they will recall Trump’s plan to default on that debt by renegotiating with creditors in some giant national bankruptcy proceeding. “I would borrow knowing that if the economy crashed, you could make a deal,” he told CNBC.
https://www.theguardian.com/commentisfree/2016/jun/28/electing-donald-trump-would-be-like-brexit
That's how he handled his business bankruptices, after all.
"If all that weren’t enough to dump the dollar and Treasury bonds, the markets could always justify their panic by considering Trump’s next step. When economists challenged his debt default idea, Trump had another brainwave that is well known to the rulers of banana republics: “First of all, you never have to default because you print the money,” he explained on CNN.
"As that financial crisis unfolds, President-elect Trump will ready his plan to declare China a currency manipulator in January 2017 and impose a 45% tariff on Chinese imports. The result will be a trade war with the single largest holder of US debt, as well as a swift referral to the World Trade Organization."
This scenario does not faze the property developer, who helpfully explained last month: “Who the hell cares if there’s a trade war?”
"He might want to ask the brains behind the Leave campaign, whose success he so cleverly predicted."
"Boris Johnson, the campaign’s highest-profile leader, made it clear he wants to carry on trading freely with the EU, minus all that pesky immigration, financial support and legal complexity. The EU has reacted poorly to this fanciful idea, with the German foreign minister bluntly telling Der Spiegel: “In is in. Out is out.”
"What naturally follows is a whopping adjustment to reality. For the fervent supporters of these straight-talking insurgents, this phase of weasel-worded backtracking is particularly uncomfortable."
To calculate how disastrous Trump will be simply multiply Brexit by a factor of 10.
So now we know what to expect from the first days living under President-elect Donald Trump.
Yes, it feels strange to put those words together. But things feel even stranger in the UK, where the unthinkable has quickly turned into the ungovernable. Judging from the British experience since the Brexit vote, American voters can draw some clear indications about those first tumultuous days of a Trump transition to power.
First comes the shock to the markets, as they realize their investment positions were as wildly mistaken as the polls they so confidently discounted. Since the surprise British vote to leave the European Union, the pound has dropped to a 31-year low, the country’s credit ratings have been downgraded, and the stock market has lost $140bn of value."
"To a normal presidential candidate, this might be seen as a cause for some concern. But to Donald Trump, this kind of global turmoil is just another reason to pat himself on the back. “Crooked Hillary Clinton got Brexit wrong,” he tweeted. “I said LEAVE will win. She has no sense of markets and such bad judgement.”
https://www.theguardian.com/commentisfree/2016/jun/28/electing-donald-trump-would-be-like-brexit
What does this even mean 'She got it wrong?'
Trump fails to understand, he's running for President not to be the First Market Forecaster. That is not a skill required to be a good President, Indeed, engaging in market forecasting is probably something the POTUS should stay out of.
We see what happened when the Brits went down the rabbit hole. Larry Summers argues it would be worse in the case of Trump than Brexit:
"First, there is a substantial risk of highly erratic policy. Mr Trump has raised the possibility of more than $10tn in tax cuts, which would threaten US fiscal stability. He has also raised the possibility of the US restructuring its debt in the manner of a failed real estate developer. Perhaps this is just campaign rhetoric. But historical research suggests that presidents tend to carry out their major campaign promises."
"The shadow boxing over raising the debt limit in 2011 (where all participants recognized the danger of default) was central to the stock market falling by 17 per cent."
https://next.ft.com/content/84ebe1b2-29a8-11e6-8ba3-cdd781d02d89
Yes. The 2011 game of debt ceiling chicken lead to a credit downgrade just like Brexit did. Now Trump is casually discussing defaulting on the debt as a way to get a 'better deal' from creditors.
You don't need to be a good market forecaster in the market to be POTUS-better yet you should probably abstain from doing so as this leads to less rather than more confidence.
What you actually want is credibility. Keeping markets and other countries in the dark is the opposite of inspiring confidence or credibility.
It leads to panic. So even if he had great policies, by hiding these from the public and keeping us guessing it still leads to disaster.
But everything we've seen suggests his policies are quite a bit less than great.
"With such awesome predictive powers and market insights, the reality TV star should have no problem foreseeing the market response to his own victory."
"The currency and bond markets will get spooked by the dawning reality of a new president who, over the next decade, will likely add $11.5tn to the already huge national debt of $14tn."
"As the traders and analysts consider that ballooning debt, they will recall Trump’s plan to default on that debt by renegotiating with creditors in some giant national bankruptcy proceeding. “I would borrow knowing that if the economy crashed, you could make a deal,” he told CNBC.
https://www.theguardian.com/commentisfree/2016/jun/28/electing-donald-trump-would-be-like-brexit
That's how he handled his business bankruptices, after all.
"If all that weren’t enough to dump the dollar and Treasury bonds, the markets could always justify their panic by considering Trump’s next step. When economists challenged his debt default idea, Trump had another brainwave that is well known to the rulers of banana republics: “First of all, you never have to default because you print the money,” he explained on CNN.
"As that financial crisis unfolds, President-elect Trump will ready his plan to declare China a currency manipulator in January 2017 and impose a 45% tariff on Chinese imports. The result will be a trade war with the single largest holder of US debt, as well as a swift referral to the World Trade Organization."
This scenario does not faze the property developer, who helpfully explained last month: “Who the hell cares if there’s a trade war?”
"He might want to ask the brains behind the Leave campaign, whose success he so cleverly predicted."
"Boris Johnson, the campaign’s highest-profile leader, made it clear he wants to carry on trading freely with the EU, minus all that pesky immigration, financial support and legal complexity. The EU has reacted poorly to this fanciful idea, with the German foreign minister bluntly telling Der Spiegel: “In is in. Out is out.”
"What naturally follows is a whopping adjustment to reality. For the fervent supporters of these straight-talking insurgents, this phase of weasel-worded backtracking is particularly uncomfortable."
To calculate how disastrous Trump will be simply multiply Brexit by a factor of 10.
No comments:
Post a Comment