Saturday, April 7, 2018
No-Limit Washington Hold'Em
It's not just Russia but China appears to understand the demographics of American elections very well. In response to Trump's tariffs, President Xi hit back with tariffs aimed directly at the heartland of the US that will hurt Trump voters the worst. Pretty ballsy move and one that certainly got the Chief Trumpkin's attention as the Big D wants to add another $100 billion in tariffs, as if he is playing some kind of high stakes poker game with China.
This had the impact on Wall St. everyone expected with the Dow tumbling nearly 600 points on Friday, as there was little Larry Kudlow could do to stop the bleeding, after first hearing of Trump's new tariffs the night before. Kudlow is now El Presidente's top economic advisor, but it doesn't seem he gets much attention in the White House, and therefore none on Wall St.
We now appear to be officially in the middle of a trade war with China. Xi has a better poker face than Donald, so I have to think most economists are putting their money on the Chinese president to win what we will call No-Limit Washington Hold'Em. Trump might be advised to heed Kenny Rogers's famous anthem to The Gambler, before it is too late, otherwise he will find himself in the same spot as the jilted husband in Lucille.
No one wants to see a crying Trump, but that's pretty much what we have now -- hopelessly out of his realm, making decisions on twitter that immediately hurt him, and leaving his staff to try to pick up the pieces the same day. The worst part about it is that he still thinks he is in charge when the only thing buoying him up is a relatively strong economy and his billionaire supporters who seem to be doing their damnedest to hold off a huge sell off on Wall St.
The only thing surprising about Friday's plunge was that it was so little. In fact, at one point it looked like the Dow was heading back toward even, only to take a big blow at the end of the day. This tells me there are interested parties, like the Mercers, determined to keep the stock market from tanking because of the money they have invested in Trump. Given the horrible decisions Trump made on tariffs, the Dow should be back below 20,000, not still hovering around 24,000. Note that the Chinese are well aware of this.
I'm no expert in such matters but we appear to be on the edge of another major crisis much like we were in 2008. Rather than making moves to stabilize the economy, the Trump administration appears to be doing everything it can do to undermine the economy, much like Bush did in an effort to stave off a recession in the early 2000's. Instead of a small dip in the economy, we will now have another deep crater that will take years to climb back out of.
Kudlow is the last person Trump should have brought on board to advise him on such matters, yet even he predicted a major calamity if Trump went through with his tariffs, whose only purpose appeared to be to prop of Saccone's flailing campaign in Pennsylvania. Saccone lost and now many other Americans will lose in reprisals meant to hit America where it hurts most -- Trumpland.
No one wanted this, but Trump felt he had to do something to address the trade imbalance between the two countries, if for no other reason than to assure his base he was still the big bully they voted for. But, Trump didn't think this through. No surprise from a guy who brags about his penchant to shoot from the hip.
It is impossible to keep this guy on script, and he veered wildly off course Thursday aboard Air Force One, as his hair took on a life of its own. He must have been fuming as his staff combed his mop back into place, venting to the press the short moment he gave them aboard the plane.
He hadn't had to face any retaliation yet from other countries for his ridiculous policies because to this point his foreign policy didn't really mean much. It was obvious China would respond to his tariffs but the human hair piece didn't expect Xi to target Chinese tariffs specifically at his base, where he is most vulnerable right now. So much for soy bean futures.
Trump is getting an ear full from the likes of Ann Coulter and other right-wing pundits, who are using their open mic to rail against him as Ann did at Columbia University. Of course, he still has the unwavering support of Sean Hannity to offset whatever loss comes from Coulter, but you have to wonder how much more conservatives can take of this erratic president, who threatens to drag the entire Republican Party down with him.
Playing high stakes poker in a trade war with China isn't going to endear him with the conservative business orthodoxy either. The Chamber of Commerce, which considers itself the voice of small business in America, came out sharply against the tariffs. In the end, we pay for all this false bluster in higher prices, as the companies pass the extra costs onto the consumers, which Wilbur Ross should examine the next time he decides to talk to a Campbell's soup can.
It's the US economy you are gambling with, Stupid!