How the Stock Market Will Cripple Donald Trump

As Donald Trump heads off for a two-week vacation at his golf club in Bedminster, New Jersey (not to be confused with his other 20-odd golf excursions since his inauguration, according to Politifact), it is worth noting how few of his many campaign promises he has actually accomplished in office. Trump, among other things, has not drained the swamp; or signed a health-care bill; or signed an immigration-reform bill. He has not revamped the tax code. He has not signed, or proposed, an infrastructure bill. Despite having control of both chambers of Congress, the executive branch has proven itself to be incapable of executing. If he had a board of directors, Trump would have been fired long ago.

Trump enthusiasts, for their part, point to two pivotal accomplishments since January 20. One is the confirmation of the conservative Neil Gorsuch as the 113th justice to the Supreme Court. (No need here to reiterate that Gorsuch’s seat really belongs to Merrick Garland, whose appointment was blocked by the heinous maneuvering of Senate Republicans, led by the Machiavellian tactics of Mitch McConnell, during Barack Obama’s final year as president.) Gorsuch is only 49 years old, which means that he is going to be around for a long time. Who knows how it’ll all play out in the years to come, but his vote will likely mean a repeal of many of the rights and privileges most Americans have come to take for granted. Give Trump credit: he got Gorsuch appointed, even though we will ultimately be lamenting it.

Trump’s other (and far more trumpeted) accomplishment has come to be known as the Trump Bump, which is code for the stock market’s inexorable rise since he unexpectedly won the election last November. Since market futures for the Dow Jones Industrial Average that night were heading toward a 1,000-point drop, the D.J.I.A. has been on a tear, reaching one new high after another. The D.J.I.A. is up around 20 percent since Election Day. With few other accomplishments to boast about, Trump is more than happy to take credit for the market’s rise. On August 3, he tweeted: “Business is looking better than ever with business enthusiasm at record levels. Stock Market at an all-time high. That doesn’t just happen!”

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True, it doesn’t just happen. But Trump would be wrong to claim sole responsibility for the bounce, as he seems to delight in doing. There are many factors that explain the current bull market in stocks, which started in March 2009, when the D.J.I.A. hit a low of 6,500 in the wake of the worst of the 2008 financial crisis. He won’t do it, of course, but Trump should be thanking Obama and the Federal Reserve, whose policies—re-equitizing the Wall Street banks, buying up trillions of dollars of toxic assets from the banks’ balance sheets, and keeping interest rates at unnaturally low levels—collaboratively resulted in the Dow’s rise to around 18,000 in the year before Obama left office. That’s a nearly three-fold increase. The Fed’s balance sheet has expanded to some $4.5 trillion, up from some $800 billion before the crisis. While ignoring a near tripling of the stock market under Obama, Trump is crowing about the 20 percent rise that has occurred in the D.J.I.A. since his election.

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