“Oh my God, they’re worried about the banks!”

A panicky Wall Street just wrapped up the worst Christmas Eve trading day in human history. The Dow dropped another 650 points.

Why? Because Trump did something stupid: He attacked the Federal Reserve again. The Fed is right, he’s wrong, and he needs to back off. Low rates encourage excessive and even reckless borrowing; after years of low rates, debt levels are now very high and keeping rates low will throw more gasoline on the debt fire, until the whole works comes crashing down.

And also because Steve Mnuchin (aka “Munchkin”), Trump’s treasury secretary and a former Wall Streeter who should know better, called the bank CEOs yesterday and asked them, “Are you okay?” They said, “We’re fine,” but then when he told everyone about it, the investing public heard only the first part and reacted, “Oh my God, they’re worried about the banks!”

Our country is being run by dummies. The good part about this, though –and there is a good part — is that when the stock market crashes, it takes down mainly the rich, because they own most of the stock.

Merry Christmas, Trump voters. You deserve what you voted for.

Photo: The stock market is wiping that stupid grin off Munchkin’s face.

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  1. Mark Adams #

    Actually both Trump and the Federal Reserve Governors could both be totally right and both totally wrong. They certainly are not on the same page, particularly when it comes to the stock market Using the stock market to measure the fed is rather wrong, though it is done all the time. The fed has three primary monetary objectives: maximizing employment, stabilizing prices, and moderating the long term interest rate. Odd no mention of the stock market in there. Sure the Govs take the market into account, but it is not their priority. I cannot give the Fed a gold star in meeting its objectives. Maybe it has, maybe it has not, maybe sometimes it gets lucky, and is generally lucky. There are always smart people at the Fed, but they got the Great Depression wrong, the last crash, and have not been very effective with the recovery, in fact the economy has not responded to the tools used. The Fed has created a bubble, and it maybe about to burst. Oops. The stock market has been overdue a correction of 10% or more, and we are in correction territory. How bad the correction will be I don’t know, but cheering on the sidelines for a crash is terrible and ghoulish. Unless your betting against the market and going short. IN which case all your comments are just to put money in your pocket.

    Of course Trump is going to have issues with the Fed (most Presidents have) particularly when he has come from a part of the economy that thrives on debt and risk. Real Estate is all about the boom until the bust. There are ways to make money in that market no matter the current circumstances, but individuals who thrive there are going to have some fundamental disagreements with most of the bankers on the Fed Gov Board. And of course if you think the Fed is about to tank the economy then it is best to pin on the Fed early and often, when the Feds policies are meant to burst a bubble the Fed policies have created. And there is no reason to think low interest rates continued would be detrimental to the economy in the long run. So the medicine maybe worst than the cold. We just do know, but we are going to find out.

  2. Roger Rabbit #

    “we are going to find out”

    The stock market is up 5% today.