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Deja vu all over again




After briefly topping 27,000 early last week, the stock has tumbled 1200 points due to concerns over the renewed trade war between the US and China.  White House economic advisers have cautioned the president time and again about going down this river, but His Trumpness seems to think this is a war he can ultimately win.  After all, trade wars are easy, he once infamously said, he just didn't say how long it would take.

What's interesting is that our president is resting his re-election prospects on what he will do in his next term.  We have yet to see one of these great deals emerge from all his negotiations.  The only international trade agreement his administration has accomplished is the renewal of NAFTA, which was redubbed USMCA, as if were a new branch of the marine corps.  It was a deal roundly panned by economists as it offered no substantial improvements over the old North American trade agreement.  It was rushed to completion at the end of last year before the new Mexican president was inaugurated, lest he not be favorable to it.  The new trade agreement has yet to be ratified by Congress.

It's little wonder financial experts no longer have any faith in the negotiating strength of Trump.  No sooner did he issue a new round of tariffs on Chinese goods than China cancelled all purchases of American agricultural goods and devalued their currency.  So much for buckling under the force of Trump's will.  This sent shockwaves through Wall Street last week, especially after the Fed had finally given Trump what he wanted in lower interest rates, against the Fed chief's better judgement.

As in 2007-08, the Fed is caving into worries that the economy is heading toward recession and thinks it can do a little tinkering here and there to stave off a collapse.  Not a very promising sign.  Trump of course wants the Fed to do much more, thinking he can dictate economic policy the way the Chinese premier does, but it doesn't work that way.  The Fed is an independent entity and tries to maintain a balanced view of the economy.

After 10 years of steady economic growth, it is not surprising that our economy would begin to lag a bit.  Of course, our dear president would like us to think that the best things have yet to come and if you vote for him in 2020, the economy will grow like you have never seen it grow before.  Unfortunately, there has been nothing in his economic policy to indicate such unbridled prosperity.  Instead, his treasury has borrowed $2 trillion to cover the tax cuts from 2017, which did little to boost the economy.

The Dow peaked in January, 2018, at 26,600, and here we are today at 25,900, a net loss of 700 points over a period of 18 months.  Over that long stretch, the Dow has been as low as 22,450.  At one point, Trump was cheering when the stock topped 25,000 again.  Not even in Obama's lowest ebbs, did he have such a long stagnate period.  At most our former president had a stretch of 6 months of stagnant stock numbers, before things turned up again.  This current stagnation can be directly attributed to Republican tax cuts and Trump's horrendous trade policies.

China and the US seem further apart than ever on a trade agreement.  The Trump administration promised a new deal back in January, but we were told China wasn't playing fair and it was time to lower the boom on President Xi, with Trump issuing his first round of tariffs.  That didn't go over so well, as China decided to buy soy beans from Brazil and Argentina, leaving American soy farmers with their worst shortfall in decades and not knowing where to turn.  Trump infamously bailed farmers out with $12 billion in agricultural relief, which hardly made a dent in the gaping trade hole.  After some talks, China agreed to buy some soy beans again, but apparently that wasn't good enough for His Trumpness, so more tariffs, and now farmers, as is everyone else, are completely in the dark as to what is going on in Washington.

For a man who prides himself on his economic acumen, this isn't very good.  This latest round of tariffs not only will see a sharp rise in the cost of domestic products, but has signaled to China and the rest of the world, that Trump can't be trusted.   With the first caucuses and primaries around the corner, it is unlikely any country will want to cut a deal with Trump, no longer sure he will be in the White House come January 2021.  It's pretty clear to everyone that the United States is on the brink of a seismic political shift, even the farmers have turned against him.

Always the huckster, Trump once again is promoting secret plans that he will only hatch if re-elected.  The economy doesn't work that way.  It doesn't wait for a two-bit conman to unveil his grandiose schemes.   Wall Street expects the president to react to what is going on at the moment and adjust his plans accordingly, as it would any corporate enterprise.  Sadly, the White House is at wit's end as to what to do next.  His economic advisers have tried every hook and crook to prop up our sagging economy.  There's nothing left that they haven't already done.

Concerns grow over the real estate market, the first to get hit in a recession.  Gold prices soar.  Hedge funds bet against Wall Street.  Even bitcoin has seen a rise in recent months, as investors now look at cryptocurrency as a potential haven against a slowly imploding economy.  All bad signs for Trumponmics.

The writing was on the wall the day Trump took charge of the White House.  He vowed to roll back all the Obama-era economic policies so that we would have the tumultuous markets we saw in the early 2000s.  Everyone made money then, and Trump wanted to make money again.  The lessons we learned from the 2008 economic collapse were thrown out the window.

Everyone got excited when the stock market soared 6000 points in the space of a year, an almost 25 per cent gain.  This was boom time, baby!  Investors hopped on board while the getting was good, knowing full well it wouldn't last long.  Now they retreat to their safe havens while middle class Americans brace for another heavy blow.

You would think at some point we would learn from our mistakes.  After all, we pride ourselves on our resiliency.  But, how much more of this can we take?  These volatile markets only favor the rich.  The average farmer wants stability, as he tries to raise a family and have a little left over for retirement.  Yet, Trump would like these farmers to think that if they stick it out long enough their fortunes will turn.  That faith has been shattered, as there is literally nothing to indicate the soy market will improve in the immediate future.  All those acres of soy beans will be turned over and farmers will try their luck with other products.  China was the biggest market they had, soon to be filled by Brazil, Argentina and Russia, all BRIC countries by the way, as we move toward a two-tier world economy.

This economic collapse is shaping up to be worse than 2008 because we can no longer count on key economic allies to be with us after the dust has settled.  In fact, we may see the end of the dominance of the dollar and a new world currency emerge.  Trump has squandered any good faith the rest of the world had in the United States.  We can no longer be trusted to be "the leader of the free world."

By turning our economy into a high-stakes casino game, Trump has undermined the sense of security we once had in our economy.  Nothing is safe anymore as Republicans openly discuss the liquidation of Social Security to offset the soaring debt.  We won't even have our meager social security pensions and medicare to fall back on, if conservatives have their way.  An 80-plus year institution will be dissolved because Republicans couldn't manage the economy, which they long prided themselves as the party best able to do so.

It's not Trump's fault entirely.  He just sped things up with his high-risk trade policies.  No one could imagine it would all fall apart so quickly, but here we are the brink of yet another economic abyss.  This one may very well be worse than the Depression.  Brace yourselves!

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