He had to.
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| Recession warning. |
It was an easy prediction to make two days ago. Trump's tariff war may be triggering a recession.
Donald Trump has one big principle, and it isn't tariffs.
It is winning.
It is winning.
Donald Trump inherited an improving economy. He can win re-election, even if a majority of people don't like or respect him.
The Approve-Disapprove number is real, but irrelevant. The presidency isn't about who is a nice guy.
We routinely choose things we don't particularly like. Some people will hire the lawyer with the reputation for being a bulldog and a jerk, if his reputation is also that he is effective. Some people appreciate internet trolls.That is the Trump victory formula: convince his Christian conservative base that he is coming through for them on judges; his GOP loyalist base that he is a Republican with steadfast support from other Republicans; and his white male working class base that he is standing up for "regular guys." That gets him to 40 to 44 percent.
The final electoral college victory margin comes from people who don't like Trump, but who grudgingly admit that the economy is pretty good and that they, themselves, don't want to rock the boat. It's the economy, stupid.
What about the alternative to Trump, the Democrat? Negative branding is underway. Sleepy lost-a-step Joe. Pocahontas the socialist. Take away your health insurance Harris. Socialist crazy Bernie. Fake-name Beto. Alfred E Neuman.
Democrats must count on this, absorb it, and integrate it into their thinking: by election day the Democrat will have been discredited. The Democrat will be widely understood to be not just incompetent, but dangerous. Trump has two billion dollars to sell that idea. Trump and the overall political/media environment will make this a matchup between a "bad Democrat" versus a disliked bullying Trump. The question will be whether people consider themselves better off or not. It will be a referendum on Trump's effectiveness.
If the economy is weak and getting weaker Trump will lose.
If the economy is in about the condition it is now, with newspaper headlines talking about the lowest unemployment in fifty years, then enough people will vote for Trump, thinking he is a jerk, sure, and he inflames racial tensions, sure, and voters wish he acted more presidential, sure, but the Democrat is a dangerous socialist and the country is actually doing OK.
One more thing: culture war resentment. If man-hating women and pencil neck academics and reparations-seeking blacks and presumptuous immigrant leaches and the liberal politeness police are all in a tizzy over Trump, all the better. People don't like being shamed or scolded. A lot of peole feel they are being called "racist" unfairly. Woke Democrats are still implying that less-woke Americans are deplorable.
Big talk. Trump talked like a bully on China tariffs. He was blustery, accusatory, and confident. If China doesn't knuckle under, then we will raise tariffs some more. So there!
Tariffs complicate world trade and they pull money out of the hands of consumers. Wall Street was virtually unanimous that Trump's tariffs were bad for the economy. We were seeing slowing manufacturing in the US, China, and Europe, and lower corporate margins, and in lower future growth expectations evidenced by bond yields. The stock market stopped going up.
Switch. Trump just delayed the tariffs until after December 15.
The real returns on the ten-year bond are less than zero, and the yield on the thirty year bond is less than the yield on the two year bond. Each are rare occurrences and denote economic weakness, and coming at the same time is even more rare. More confirmation.
Moreover, businesses realize these indicators are measures of economic weakness, and are taken seriously as portends by people making business decisions. Nobody wants to make new investment commitments right before the bottom falls out, so people react to the warning signals themselves, amplifying the pull back that creates a recession.
Trump is now scrambling to protect the economy, reversing himself.
As this blog noted two days ago, when it predicted Trump would soon retreat on his tariff war, it may be too late.
Democrats must count on this, absorb it, and integrate it into their thinking: by election day the Democrat will have been discredited. The Democrat will be widely understood to be not just incompetent, but dangerous. Trump has two billion dollars to sell that idea. Trump and the overall political/media environment will make this a matchup between a "bad Democrat" versus a disliked bullying Trump. The question will be whether people consider themselves better off or not. It will be a referendum on Trump's effectiveness.
If the economy is weak and getting weaker Trump will lose.
If the economy is in about the condition it is now, with newspaper headlines talking about the lowest unemployment in fifty years, then enough people will vote for Trump, thinking he is a jerk, sure, and he inflames racial tensions, sure, and voters wish he acted more presidential, sure, but the Democrat is a dangerous socialist and the country is actually doing OK.
One more thing: culture war resentment. If man-hating women and pencil neck academics and reparations-seeking blacks and presumptuous immigrant leaches and the liberal politeness police are all in a tizzy over Trump, all the better. People don't like being shamed or scolded. A lot of peole feel they are being called "racist" unfairly. Woke Democrats are still implying that less-woke Americans are deplorable.
Big talk. Trump talked like a bully on China tariffs. He was blustery, accusatory, and confident. If China doesn't knuckle under, then we will raise tariffs some more. So there!
Tariffs complicate world trade and they pull money out of the hands of consumers. Wall Street was virtually unanimous that Trump's tariffs were bad for the economy. We were seeing slowing manufacturing in the US, China, and Europe, and lower corporate margins, and in lower future growth expectations evidenced by bond yields. The stock market stopped going up.
Switch. Trump just delayed the tariffs until after December 15.
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| Click: "Bonds are Expensive" AQR |
Will we have a recession?
Maybe. Nothing is a sure thing, but the chances have gone up, and are now greater than 50-50 of a recession.
The real returns on the ten-year bond are less than zero, and the yield on the thirty year bond is less than the yield on the two year bond. Each are rare occurrences and denote economic weakness, and coming at the same time is even more rare. More confirmation.
Moreover, businesses realize these indicators are measures of economic weakness, and are taken seriously as portends by people making business decisions. Nobody wants to make new investment commitments right before the bottom falls out, so people react to the warning signals themselves, amplifying the pull back that creates a recession.
Trump is now scrambling to protect the economy, reversing himself.
As this blog noted two days ago, when it predicted Trump would soon retreat on his tariff war, it may be too late.
3 comments:
While the suffering if others under a drumpf inspired recession would bother me greatly, seeing this dirtbag re elected would bother me even more. And I am truly amazed that the gaggle of never gonna be Candidates running for the Big Oval are so unwilling to acknowledge that unless Moscow Mitch is gone, it won't matter who wins the White House. Apparently the DNC doesn't recognize this fact either.
Even though politicians generally only can mess up the economy, many voters seem to believe, naively, that they have magic powers to create prosperity. If I remember, even though the Obama administration bailouts and monetary policy held off a prolonged recession, they didn't crow about it.
Now that it's clear the 2016 election was a racist backlash, aided by Progressive complacency, and also clear that Republicans elected self-serving looters, there is a good chance for a return to normalcy, with the last four years an embarrassing footnote.
I predict a "Prosecution Channel" (PNN?') on cable that will just follow indictments and trials.
A Prosecution Channel might even get me to sign up for Satellite RV, if Roku doesn't carry it. I'd like to have been a gallery member at Nuremburg. Maybe I can come close with this.
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