Economics versus a blind faith in Trump

Up until a couple weeks ago, I was a strong defender of most of Trump’s policy decisions. I thought tax reform, cutting onerous and inefficient regulations, renegotiating trade agreements, energy independence, and bringing manufacturing back to the United States were all excellent ideas that would undeniably help our economy prosper and reduce economic inequality. I thought ending foreign wars was a brilliant step toward fiscal responsibility. I totally support the idea of not spending trillions of dollars blowing up infrastructure on the other side of the world and then paying to rebuild it, but instead repairing our own infrastructure (what’s needed, not pork green projects).

Man, I miss the old Trump these days. The Trump who got things done instead of outsourcing them to madmen from the Washington DC bureaucratic swamp.

In the past couple of weeks, we have watched as Dr. Doom has laid waste to literally all of the gains made from those policy positions (and laid waste to our education and health care systems on top of that). In fact, Dr. Doom and his Exponential-Growth-and-We’re-All-Going-to-Die models have entirely destroyed Trump’s working class recovery, as job losses have hit lower-and-middle wage earners and minority groups the hardest. Trump doesn’t get to get up on stage at rallies anymore and brag about how much he’s improved the lives of these demographics. As of right now, that’s all in the toilet, whatever his good intentions used to be. And Trump is just standing by, making jokes and talking about his ratings. Because what the world needs now is obviously a good troll.

I have no idea how any person with half a brain thinks this situation is okay.

When I try to explain that Trump needs to make reopening the economy his number one priority right now, and that if he doesn’t he has probably lost his bid for re-election, some Trump followers tell me that we are going to have a robust recovery before the end of the year no matter what happens. They trust Trump fully and completely to crank his jobs machine up again, I guess because it seemed magical and not policy-driven to them in the first place. They cite old polls talking about how his approval ratings are going up and break out the “war-time president” line.

(Trump’s approval is much harder than they think to gauge, and I can see it shifting materially around me. Right now you have half the country who have turned Dr. Doom into their prophet and want stronger shutdown measures against all rationality and personal interest because the virus has become an all-powerful boogeyman for them. And then you have half the country who think Trump has not done enough to protect workers and small businesses, many of whom have taken a catastrophic personal hit and are seeing the Senate deal’s small business programs are actually pretty shitty. Put those two together, and do you have high approval? Pretty much the only things Trump has going for him right now are the hyenas in the media look clinically insane and the Biden camp wants the economy shut down until the middle of next year. I don’t think polls are particularly useful, but if you want to gauge the level of coronavirus fatigue Americans are at now, consider the fact that the companies that are still in business do not want to purchase Internet ads attached to any story about the coronavirus. Most Americans do not feel like they are patriots fighting in a war. They feel like they are living in an episode of The Twilight Zone and they want it to be over already.)

Some folks even get religious, saying that they are not worried about what the shutdown will do to the economy, because it is all in the hands of God. As if God is some cosmic version of the Federal Reserve that exists to make you prosper despite all of your bad policy ideas. On some level, the responsibility to make good policy decisions does fall on us. That’s just some Joel Osteen shit.

The degree to which this attitude ignores reality is stunning to me. First of all, most of Trump’s policy triumphs that built the jobs machine came before he lost the House of Representatives in the midterm election. Now, he has to battle Pelosi and Schumer for every little thing, and they have made it abundantly clear that they are perfectly willing to punish the American people if it means not letting Trump book a win in an election year. Schumer in particular doesn’t care if anything happens. His core constituency is Wall Street, and the Federal Reserve has Wall Street covered. This is why they have no problem sabotaging relief packages over and over, and they have most certainly done that. Everything seemingly good in the last piece of legislation comes with poison pills.

In fact, most Democrats would be fine leaving the economy shut down all year waiting for a surge in coronavirus cases that will never happen and just having the Federal Reserve keep Americans alive on Monopoly money. Many Trumpkins who bought into the panic seem to be okay with this too.

Second, there is not a single economist on the planet that agrees with their assessment. Most have given up on the idea of a V-shaped recovery already. Because the facts do not support it, regardless of what is happening in the stock market (which for the billionth time is not the real economy, especially when the Federal Reserve is intervening on a massive scale in the financial markets and even debating purchasing equities).

The stock market is not betting on Trump right now. They are betting on states and corporations bucking the shutdown idea en masse, which would be amazing if it actually happens. (Please, God, let this be an Easter miracle.)

The Trump administration’s idea of being bullish on the economy opening now is doing something a month or two out and convening a committee to talk about it until then like a bunch of lazy liberals. By then, we will be solidly in the throes of a second Great Depression. Trump’s moment to act is now and not later, and he seems bent on later. Maybe Trump will do a 180 and we will have a new policy stance overnight. That is how we got here after all. Trump went from being optimistic one week to suddenly being all-in on Dr. Doom. But that would involve him ignoring all the snakes he has around him, who run to the media to complain about how he’s not Armageddon enough every time he expresses any optimism. One of which seems to be his own son-in-law.

And even when the White House does issue guidance on returning to work, it is probably going to be some bullshit like staggered shifts with everyone separated yadda yadda yadda, like what Boeing is doing. That’s not going to be good for labor either. Because most employers are not going to keep a bunch of full-time employees that are functioning like part-time staff while generating expenses like benefits for months on end. They are going to lay off a bunch of people and give the survivors more responsibilities.

If the economy were re-opened this month, I could see us having something closer to a rapid recovery, but it is hardly going to be an immediate return to normal. We are going to be in negative territory for the year. A lot of businesses probably have shut down for good by now, taking jobs, rental income, contracts, and all that with them. We are going to see an uptick in defaults. It’s going to be a mess for a while as companies sort through the wreckage. Companies that retained at least some staff to keep the lights on are going to be in a better position than the ones who furloughed everyone.

But if this goes on another four to eight weeks, like Mnuchin was forecasting only days ago, we are going to see a lot more layoffs than furloughs and a lot more permanent economic damage. Once that happens, Trump is not going to save you from it. Because we are already at the practical limit of what monetary and fiscal policy can do to reverse an economic catastrophe.

It’s like these people are walking around with a suicide vest strapped to their torso gleefully saying “it doesn’t matter if they detonate it, Trump can just put my pieces back together again.” He actually can’t, even if he wants to.

This is the problem with turning anyone into your political god. It breaks your brain. You should not be congratulating Trump on allowing aggressively bad policy to persist. Right now, a not insignificant number of Trumpkins sound exactly like Democrats. They live in a fantasy world devoid of agency and accountability, and when you try to reason with them they start talking in terms of Armageddon. It’s really difficult to watch. They have the same economic logic as Alexandria Ocasio-Cortez. The trillions don’t matter to them because it will all end with some magical outcome.

Stop doing this to yourselves!

2 thoughts on “Economics versus a blind faith in Trump

  1. The economic damage is amplified by the structure of our economy. We have a exquisite financial ecosystem built upon multiple layers of hypothecation, leverage, and timely debt service. A wave of defaults generated by enforced job losses will become a shock wave that is amplified by the leverage and transmitted through the credit stack by successive inability of financial intermediaries to make payments. The Federal government should have assumed responsibility for meeting all payrolls in the 2nd quarter based on SSI data from January; and the IRS should have sent out checks like tax refunds. That would have prevented generating the shock wave that will sweep away Main Street and inundate Wall Street. Because America is the fount of capital generation in the world, pensioners worldwide depend upon the timely payment of American debt obligations. Most local economies, even in the advanced economies, fail to generate sufficient capital to fully fund local pension obligations. If there is widespread defaults on American debt securities, King Dollar will die, and the Eagle will fall from the sky. Enter the Dragon.

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    1. How you feel about that 100% depends on whether you believe the coronavirus is legitimately the end of the world, and much of the country does not agree with that (I sure as hell do not). If you think there were smarter ways to manage this than shutting down the entire country, then the idea of the federal government guaranteeing payrolls indefinitely is a horrific precedent. I certainly supported the federal government giving everyone a universal basic income when it seemed like this was going to be a short-term experiment. But now you have people who think the economy should be shut down until there is not a case of anything that even remotely resembles this virus being out there or until there is a vaccine. At which point, our economy (and the governmental entities that manage it) becomes nothing more than the shadows on the wall in Plato’s cave. This cannot be the playbook for managing disease. And honestly, if Democrats end up in power, I can’t wait until some of them start proposing that the government start replacing workers’ income so we can have mandatory pollution-free days to combat the “existential crisis” of climate change. Now everyone’s got an existential boogeyman that demands you feed it trillions of dollars.

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