I honestly am not obsessed with the DJIA, nor do I think it is some magical indicator of the health of the economy. But, it’s not nothing, either. I keep bringing it up because it is an obvious indicator of Trump’s tariff policies. It matters not just to highly invested members of the business class, but also to a lot of otherwise “regular” people who have investments for things like retirement or to educate their kids.
It’s not for nothing that we think about the market crash of 1929 as a key indicator for the start of the Great Depression. We know the market tumbled as a result of the financial crisis that led to the Great Recession of earlier in this century. Precipitous stock market declines get names like Black Monday.
The thing about all of those previous events is that they were the culmination of any number of external factors, not because of a very specific, very conscious policy. Moreover, it is a policy choice that anyone with an ounce of understanding could have seen coming.
Further, this situation is one in which I truly do blame Congressional Democrats for not specifically curtailing the president’s tariff powers in the 2021-2022 period. While I get a little frustrated by blaming the Democrats for the very bad acts of a Republican president and Congress, I think that if you know an arsonist might be coming to your house for a visit that it is advisable to make sure the matches and accelerants are safely stowed and not feel accessible.
I will add to this assigning of blame that the current Congress, controlled by the allegedly pro-business Republicans, should be telling themselves that their president has gone too far and that it is time to take his toys away.
We aren’t currently experiencing any result of the business cycle, the broader global economy failing, a pandemic, or paying the price for some culmination of bad decisions. We are suffering this situation because of a man who thinks that tariff “is the most beautiful word to me in the dictionary” and that the model of American greatness is to be found in the late 19th century.
The whole situation is painfully stupid.
It is not good history.
It is not good politics.
It is not good economics.
It is blindingly, excruciatingly stupid.
And the sycophants around him are all onboard. For example, via the Daily Beast, JD Vance Says He’s ‘Feeling Good’ About Market Mayhem: ‘It Could Be Worse’.
“We’re feeling good. Look, I frankly thought in some ways it could be worse in the markets because this is a big transition,” Vance said on Newsmax’s Rob Schmitt Tonight Thursday.
“You saw the president said earlier today, it’s like a patient who was very sick. We did the operation, and now it’s time to make the patient better. And that’s exactly what we’re doing,” Vance added.
He was referencing a Truth Social post from President Trump that said the economy is in a post-surgery phase, and metaphorical convalescence will lead to a more healthy outcome down the line.
“THE OPERATION IS OVER! THE PATIENT LIVED, AND IS HEALING. THE PROGNOSIS IS THAT THE PATIENT WILL BE FAR STRONGER, BIGGER, BETTER, AND MORE RESILIENT THAN EVER BEFORE. MAKE AMERICA GREAT AGAIN!!!” Trump wrote on his social media platform.
It strikes me that Elon Musk, who has more money than he could ever spend, had a sad and got mad because Tim Walz made fun of his stock dipping. But is it okay if millions of run-of-the-mill people see their retirement account evaporate? Is it okay if tens of thousands lose their jobs in the coming recession that is being created by choice?
And then there is this lunacy.
First, I suspect that most companies are going to wait to make massive investments. They don’t know what is coming next. There is this thing called “uncertainty.” Perhaps you have heard of it? One suspects a lot of people and companies and calculating (or hoping) that either this is a short-term bluff, or that someone will intervene. At a bare minimum, a lot of investors will try and ride this out until the next administration. It isn’t like the day after “Liberation Day,” companies started making plans to break ground on new plants.
Second, even if they all start today, it is going to take a hell of a lot longer to restore manufacturing to the US than two years. This is especially true given that some numbskull just made construction materials more expensive. (A reminder that tariffs will make domestic products more expensive as well, not to mention all of this could spark general inflation).
Third, the rest of the world remains part of global economy and doing business out there may be more agreeable to many companies than expending the funds needed to do business just here inside the Trump Tariff bubble.
Beyond the weird fantasies and the William McKinley fan fic, I am beyond astounded at how they came up with these tariffs.
Via The Verge: Trump’s new tariff math looks a lot like ChatGPT’s.
Economist James Surowiecki quickly reverse-engineered a possible explanation for the tariff pricing. He found you could recreate each of the White House’s numbers by simply taking a given country’s trade deficit with the US and dividing it by their total exports to the US. Halve that number, and you get a ready-to-use “discounted reciprocal tariff.” The White House objected to this claim and published the formula it says that it used, but as Politico points out, the formula looks like a dressed-up version of Surowiecki’s method.
[…]
A number of X users have realized that if you ask ChatGPT, Gemini, Claude, or Grok for an “easy” way to solve trade deficits and put the US on “an even playing field”, they’ll give you a version of this “deficit divided by exports” formula with remarkable consistency. The Vergetested this with the phrasing used in those posts, as well as a question based more closely on the government’s language, asking chatbots for “an easy way for the US to calculate tariffs that should be imposed on other countries to balance bilateral trade deficits between the US and each of its trading partners, with the goal of driving bilateral trade deficits to zero.” All four platforms gave us the same fundamental suggestion.
And yes, Kush Desai is the deputy White House Press Secretary, and I can find no reason to assume that the X account quoted isn’t real. I say that one because what he is admitting is so mind-bogglingly stupid that my first reaction was to assume it was a parody account.
To reference again Kingdaddy’s post from the other day, this smacks of Elon Musk and his techbro obsession with AI. But I am also reminded of another tech term I learned decades ago: GIGO.
See also, Futurism: Trump Tariffs Show Signs of Being Written by AI.
“Confirmed, ChatGPT…” Journal of Public Economics editor Wojtek Kopczuk tweeted. “Exactly what the dumbest kid in the class would do, without edits.”
We are being governed by fools and idiots. That is not a partisan assessment. That is as hard a political science observation as I have made in my entire career.
And, by the way, speaking of the Great Depression.
A reminder that probably the single biggest reason that Trump won was the economy and the simplistic (indeed, foolish) hope of many voters that he could bring down prices to their pre-COVID levels.
And by the way, if this had happend in the first couple of months of the Harris administration Trump and the rest of the right would be screaming bloody murder. That may be a hackneyed, cliched observation at this point, but it is true nevertheless.
