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Stock Market Crash

Good column from Heather Cox Richardson. All are good, but this specifically speaks to the focus on the stock market.

https://heathercoxrichardson.substack.com/

I am obsessed with the stock market. Not because I gamble there, or because it gives a true picture of our economy. I am obsessed with it because its rise and fall gives a good sense of how the elites who benefit most from Trump’s policies feel about the current economy. They have stuck with him no matter what else he did so long as their investments paid off. But once those people turn on him, he cannot win reelection. So the volatility of the stock market these days is about politics as well as economics. Trump knows this very well indeed.
The economy is increasingly paralyzed by the world pandemic of novel coronavirus. First supply chains out of China were disrupted, and now our domestic economy is hurting as restaurants close, airport travel declines, and authorities tell people to stay home. Today the administration called for closing schools, avoiding groups of more than 10 people, and ending discretionary travel, eating out, and so on for fifteen days to try to slow the virus, but this will also slow the economy.
This drop has been reflected in the stock market over the past few weeks. To counter that drop, Trump has been badgering the Federal Reserve Board to lower interest rates to free up money for investment. Yesterday, the Fed slashed interest rates almost to zero and pledged to buy at least $700 billion in bonds, which would inject cash into the country. In theory, the loosening of money should pump up the economy and keep the U.S. from falling into a recession (generally defined as a decline in the Gross National Product—that is, the total value of all the products and services produced in a certain period-- for two consecutive quarters, or six months).
But, rather than rising in response to that stimulus, the stock market today began sliding as soon as the opening bell rang. (At the New York Stock Exchange, there is indeed a physical brass bell that sounds, although the ringer is automated.) It slid so fast and so far—more than 2,250 points on the Dow Jones Industrial Average-- that it triggered a trading halt to try to reset the market. The halt stopped the free fall, but the market dropped over the course of the day, ending up 2,997 points down in its worst day since the market crash of 1987. And that’s it. There is little else the Fed can do to shore up markets directly.
So all eyes are turned to Congress, to see if it will pass the relief measures necessary to enable sick workers to stay home, and those hurt by the economic downturn to make payments and eat until the pandemic eases. On March 14, the House of Representatives passed a bipartisan measure by a vote of 363 to 40 (and one vote of present) to provide such financial assistance, and to fund free testing for Covid-19. It strengthens unemployment insurance and food security, requires some paid sick leave, and puts money into Medicaid. At the time, news reported that Trump had agreed to sign the bill.
But it has run into trouble. First, opponents tried to kill it by claiming that House Speaker Nancy Pelosi was trying to sneak abortion funding into the bill. That boiled down to the fact that the bill provided up to $1 billion to reimburse laboratory claims, but it did not include the Hyde Amendment, first passed in 1977, which prohibits the use of federal money to pay for abortions except in rare circumstances. That amendment has been attached as a rider to every appropriations bill since, including that for the 2020 fiscal year. The coronavirus bill did not have it, because of course it is designed to combat this pandemic, not to override the 2020 budget. To address these concerns, House Democrats amended the bill so that funds could only be used for costs related to Covid-19.
A second issue arose when the House tried to pass as a package a number of technical fixes. Under the rules for unanimous consent, so long as a single representative objects, the bill cannot move to the Senate. Representative Louie Gohmert (R-TX) insisted on a public reading of all 87 pages of text, which would delay the bill for days. Gohmert apparently backed off after talking with colleagues and Trump.
So the bill is headed for the Senate. Before the House passed a final version, Senate Majority Leader Mitch McConnell (R-KY) dismissed it as a Democratic “ideological wish list” that was unlikely to pass the Senate. The situation has deteriorated since then, though, and the president has thrown his weight behind the bill, so perhaps that is no longer McConnell's angle.
In the meantime, Senate leaders and Trump are working on another relief package for businesses and families. White House legislative affairs director Eric Ueland said that “The president has instructed his team to look very expansively at what we need to do and not be impeded by the potential price tag of what’s necessary here.” In addition to overall stimulus in the bill, Trump has called for targeted aid to the airline, cruise, and hospitality industry.
The administration’s response to this crisis reveals its priorities: use the federal government to protect business, not people. That reflects a certain ideology, one that says economic growth comes from the top, as a small group of elites runs the economy, using their money, knowledge, and connections to organize the rest of us into an efficient means of production. If that’s the case, government’s job is to protect property and the businesses that enable property to accumulate.
That ideology stands in contrast to a different one that says economic growth comes from the bottom. If the government simply protects equal access to resources and education, and guarantees equality before the law, those with good ideas and the capacity for hard work from all walks of life will innovate and drive the economy forward.
It is well documented by now that Trump did not want to acknowledge the depth of the coronavirus danger because he was worried it would rattle the markets, frittering away weeks that could have bought us more time before Covid-19 got a foothold here. Under Trump, then-National Security advisor John Bolton got rid of the White House pandemic team and White House staff turned over so frequently that those who had been prepped by the Obama administration to combat disease are largely gone.
Left are those with a keen focus on business. When news began to spread of the deadly epidemic in China, if you recall, Commerce Secretary Wilbur Ross—who attended the Obama administration’s epidemic prep meeting but dozed off—speculated that the coronavirus would be a good thing for the U.S. because it would help bring back American jobs as manufacturers had to figure in the cost of epidemics when they thought about moving their operations to China.
The administration is interested in the stock market, and what it says about the faith of business leaders in the economy, but not terribly interested in leading the fight to save lives. Today, on a phone call with state governors who are scrambling to get adequate equipment to fight Covid-19, Trump told them: “Respirators, ventilators, all of the equipment—try getting it yourselves. We will be backing you, but try getting it yourselves. Point of sales, much better, much more direct if you can get it for yourself.”
—-
Notes:
https://www.cnbc.com/2020/03/15/tra...r-fed-cuts-rates-launches-easing-program.html
https://www.investors.com/market-tr...ails-boost-confidence-coronavirus-cases-rise/
Defining recession: https://www.nytimes.com/1974/12/01/archives/the-changing-business-cycle-points-op-view.html
https://www.politifact.com/factchec...osi-wasnt-caught-trying-add-abortion-funding/
Bill passes House: https://www.nbcnews.com/politics/co...democrats-coronavirus-relief-package-n1158306
Gohmert: https://www.texastribune.org/2020/0...t-puts-roadblock-federal-coronavirus-package/
https://www.usatoday.com/story/news...-could-take-days-reach-trump-desk/5059816002/
https://www.washingtonpost.com/business/2020/03/16/congress-fiscal-coronavirus/
Get it yourself: https://www.nytimes.com/2020/03/16/us/politics/trump-coronavirus-respirators.html
Ross: https://www.washingtonpost.com/business/2020/01/30/wilbur-ross-coronavirus-jobs/
Pandemic prep: https://www.politico.com/news/2020/03/16/trump-inauguration-warning-scenario-pandemic-132797
McConnell: https://thehill.com/homenews/senate/487235-mcconnell-house-coronavirus-bill-an-ideological-wish-list




I'm a fucking Wake fan, bro. I'm obviously a masochist.

Fair point. We're the same people who still follow Wake basketball.
 
so this stimulus package...

you know they teach industry to not save money for rainy days since tax payers will bail them out. they spent all of the tax break buying back shares and paying dividends to support the top 15% of wage earners. what ever happened to the Republicans that used to be free market disciples? These businesses, all the ones trying to get government assistance, got YUGE tax cuts, and the working class should not be tasked to provide welfare for businesses while real people can't get health care, housing, or food.

Priorities are fucked up right now in America. I have zero faith that Trump will not give big payouts to corporations, again, while leaving the bill on the working class Americans.

Poes

Its sucks that its taking a pandemic to expose it, but i'm glad that myth of American capitalism exceptionalism is being dispelled. Our economic system is nothing but one giant welfare system for the rich. Without government assistance most of our wealthier citizens wouldn't have a pot to piss in.
 
I’m sorry, very little of what Trump is doing right now is going to impact the stock market in the short term. The current economic climate is being impacted directly by the virus and the tensions between Saudi Arabia and Russia.

Those who think Obama would somehow have the stock market afloat in the current situation are half-witted. We will see how the stock market does when the virus is handled, because when there wasn’t a virus, or oil tensions, Trump and his administration obviously had a massive impact on the market, and the market was at an all time high.
 
Right now markets are reacting to enormous levels of fear and uncertainty. Assuming we can get this at least under control, not eliminated but contained, in the near term they will correct to reflect the actual economic impact which is certain to be tremendous but may be more or less than is currently priced in.
 
I’m sorry, very little of what Trump is doing right now is going to impact the stock market in the short term. The current economic climate is being impacted directly by the virus and the tensions between Saudi Arabia and Russia.

Those who think Obama would somehow have the stock market afloat in the current situation are half-witted. We will see how the stock market does when the virus is handled, because when there wasn’t a virus, or oil tensions, Trump and his administration obviously had a massive impact on the market, and the market was at an all time high.

So Trump had a massive impact on the market when bad things weren't happening, but Trump has had no effect when bad things were happening.

The stock market is specifically reacting to Trump's press conferences. Investors are hanging on to his every word.
 
because when there wasn’t a virus, or oil tensions, Trump and his administration obviously had a massive impact on the market, and the market was at an all time high.

I feel like this is a popular sentiment among people who consider themselves reasonable conservatives. That they don't like some of the things Trump says, but hey, look at the market. I don't think this is particularly well supported by the available evidence. What do you think Trump did that significantly improved the economy? His major legislation was the tax cuts, largely for rich folks, but there is very little evidence that these changed the trajectory of the economy in any significant way. Things like GDP growth, job growth, wage growth, etc, are all tracking in a similar way that they were prior to the cuts. By what measure you think Trump has improved the economy dramatically, and what specific action do you think his administration took that lead to that measure?
 
Yeah the market literally dropped off precipitously during Donald's presser yesterday. You could try to argue that it was due to the substance rather than Donald's "leadership" or whatever, but they're pretty inexorably linked.
 
If you believe Trump boosted the market, OK. Fine. That's your belief. But to think that Obama didn't boost the market when we saw larger gains is just ridiculous. It's clear they're just pro-Trump no matter what. "Vote Red Even If We're Dead."
 
to think that Trump hasn't effected the market is disingenuous to say the least. Trump was riding the shirt-tails of the Obama market and to continue the ride, they shot off every bullet they had (corporate tax cuts, FED manipulation, etc.), all to appease his rich friends and corporate backers. that is all Trump and his disastrous response to the virus and his disinformation shtick has left no confidence in him leading America out of this funk. THAT IS ALL ON TRUMP AND HIS ADMINISTRATION (including fox entertainment). his pressers are like a train wreck...

stop being stupid
 
Deserves credit when things are good. Not deserving blame when things are bad. Sounds very familiar.
 
Whats stupid is the Obama wouldn't be doing any better mantra because its an easy out because there's no way to test that. However if you assume that the markets are in a free fall because of chaos and the lack of a coordinated response, then its safe to assume they would react more positively to having someone stable in charge, listening to experts and projecting a calm unifying voice. Sure the market wouldn't be looking all that hot when millions of people are forced to isolate and airlines and travel are disrupted but probably better than they look right now. The simplest test should be if you were to pick right now between Obama and Trump who would lead a better response and a better market and if you got it wrong you die, good luck with your trump pick.
 
I generally think that Presidents get way too much credit/blame for the stock market. It's mostly a casino with semi-predictable results based on the underlying fundamentals of the American economy. Most presidents have been wise enough to avoid bragging about stock market gains on their watch, because they know at any moment the casino could turn on them. Donald Trump is not a wise man, so he is now reaping what he sowed.

That said, watching markets decline in real time during two of his pressers, and watching them go up when he finally got serious about stimulus and a relief package with the House, has tested my overall theory. At least in a time of crisis, signaling from the top can alter the trajectory, at least in the short term.

In any case, what matters most right now is not the Wall Street casino, it's finding a way to (a) stop the pandemic and save lives, and (b) help the millions of waitresses, cooks, hotel clerks, cleaners, and other people who mostly have no stocks, or any other fallback savings, who will be crushed by the efforts under (a). Get that right, and the stock market will take of itself.
 
In trump’s defense, there’s no chance Obama gets anything close to UBI through Congress. It would be DOA as socialism.
 
A general POTUS does get too much credit or blame, but Trump is different. His lies and changes of topic make the markets more nervous than they should be.
 
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