A Trump Christmas

Alan Zendell,  December 24, 2018

Our Christmas present from the world of investing is that on the average, for every eight dollars we had invested at the beginning of 2018, we now have only seven. If you’ve been building a retirement account using investments keyed to the major stock indexes and your balance was $800,000 last New Years Day,  (not enough to support you for the rest of your life) it’s now $700,000.

Market indexes are never accurate measures of the state of the economy, but they’re what our president has been touting for two years. Savvy investors understand that the markets rose in 2017 on speculative hope that a nearly guaranteed tax cut law would inject a few more years of life into bull markets that were already long overdue to end.

That’s like looking at your pile of chips at the craps table knowing you’re already way ahead of the risk curve and saying, “Maybe I can roll one more seven.” No matter how long your winning streak is, you still only have a 22% chance of winning with another seven or eleven. Trump the casino magnate knows that better than anyone. He also knows that betting his administration on the stock market is dangerous.

But that’s what he did, and when the Federal Reserve Board (an independent arm of the government) decided that it was necessary to raise interest rates to avoid inflation, the markets reacted negatively. What’s Trump’s response? Find a way to fire the Fed Chairman he appointed last year. Anything that displeases our president has to be someone else’s fault. The Federal Reserve Board Chairman, acting responsibly to protect the overall economy failed to be guided by what would benefit Donald Trump’s image, so he must be disloyal.

Modest adjustments to interest rates wouldn’t normally cause the kind of precipitous drop in markets that occurred in December. They were merely a catalyst that caused nervousness over Trump’s trade war and his erratic military and diplomatic decisions to overflow, and whenever that happens, markets crash.

Trump knows touting market gains is cheating, taking credit for unfulfilled promises and expectations. He also knows that every cheat eventually comes home to roost. He failed to improve the health care system; in fact, his attempts to tear down what existed without a viable plan to replace it made things worse. He’s failed in his attempts to slow the flow of non-white immigrants into the country, and he’s left with defending his absurd border wall, which most experts including Mick Mulvaney, his Budget Director and Chief of Staff consider a waste of taxpayer dollars.

Walls couldn’t have prevented nine-eleven, and they haven’t stopped the flow of criminals and hard drugs through tunnels dug under walls that were already in place along the California-Mexico border. They won’t stop terrorists from smuggling everything from drugs to bombs through our ports, and they won’t shield us from cyber-terrorism. They can’t defend against caravans either, as the Supreme Court refused to support the administration’s ban on asylum seekers.

What we have now is a petulant spoiled child throwing a tantrum because he doesn’t have enough Legos to build his wall, and the majority of taxpayers would rather pay for health insurance and make sure everyone is fed than buy him more. Trump’s base loved that he never admitted he was wrong and never backed down. They misinterpreted that as strength, but many of them are beginning to realize that it’s simply desperation born of not having a backup plan when shooting from the hip yields a bad outcome.

Many are also beginning to realize that the temporary reductions in their income taxes were equivalent to drawing cash advances on their credit cards and leaving the bill for their children to pay. A trillion dollar deficit represents $45,000 of debt for every adult American that will have to be repaid by future generations. How does that compare with your tax refund?

Our Christmas present from the president is complete chaos and a non-functioning government. This morning he tweeted: “I am all alone (poor me) in the White House waiting for the Democrats to come back and make a deal on desperately needed Border Security.” He’s backed himself into a corner because most Americans do not equate border security with his wall, and I’m betting the Democrats won’t blink on that.

Trump is more alone than he realizes. Outgoing Senator Claire McCaskell (D, MO) summed it up for CNN talking about what Republican Senators acknowledge in private: “The guy is nuts, he doesn’t have a grasp of the issues, he’s making rash decisions, he’s not listening to people who know the subject matter.”

Merry Christmas to you too, Donald.

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