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Endgame?

The endgame is approaching. The truth about Trump is being revealed. After disastrous midterm elections he is weak and has the stench of a loser attached to him. The most recent revelations are going to be the the last straw, and his part will finally abandon him. This week showed us why.

Of course, this has nothing to do with what’s been said in court. Nevermind that his longtime lawyer has completely turned on him, or the man who buried his secrets for decades. The Republican Party doesn’t care about illegal activities now any more than they did before the election – when it was just about as obvious as it is today, as chronicled here.

It’s the steep decline in the stock market that is the unforgivable sin.

Bad stock news requires a picture like this. Apparently, these traders still exist.

Barataria predicted as long as a year ago that this would happen. There are simply too many things happening all at once for the market to ignore it all forever. What has always driven everything is what we can roughly call the “Global Savings Glut” or excess of money ready for investment and no good place to go.

The tax cut that was passed a year ago was all about increasing the money supply for investment and thus somehow stimulating the economy. It never made sense in the first place, given that a lack of demand is the critical problem globally, as noted before. For a variety of reasons, developing nations, particularly China, heavily favor saving money over spending it on consumer goods.

Here in the US, there is a lack of money in the hands of people who might otherwise spend it, the young. Couple that with the retirement of Baby Boomers, which is progressing properly, and we have a demographic situation which exacerbates the excess of capital and net shortage of credit to spend.

Not everyone can do this.

As of this writing, the S&P 500 is off about 3.8% year to date and a solid 11.5% off the peak hit just two months ago. The market stormed up most of the year but eventually succumbed to weak demand around the world.

Demand for goods is not helped by uncertainty, and the ongoing trade war is not going to help anyone develop confidence.

While all of this was inevitable, the question in front of all of us is what will happen because of it. There is little doubt that political uncertainty will follow, given that blame has to be assigned for this problem. But what will come of it?

The short answer is that economic issues remain the basis of American politics. Nevermind that there is only so much any politician can do in a free market economy – this is what people care about. Obama did a great job of not screwing up, but that wasn’t enough to keep everyone happy. Trump, for his part, has been screwing up massively with a three pronged attack on the economy. Somewhere between the trade war, the deficits, and the excess of capital there simply had to be a reckoning.

That time is now.

Money talks, but bonds have a nationally syndicated show.

We can expect that his own party will abandon him soon. They might even make good use of the blatant illegal activities as their reason for turning on him. But make no mistake, the unforgivable sin is screwing up the stock market. That’s what they really care about.

It may take another month yet for the end-of-year statements to be mailed out. But they will show a loss for the first time in a decade. What should be a time of great prosperity as wages come up has instead been turned into a disaster. Weak retail sales and the retail apocalypse that has been in the works for a generation won’t help that feeling. Trump will become the one that we can blame for the oblique failure of supply side economics at a time when demand is flagging at the exit of a depression.

It may feel good to get rid of him when it finally happens, but little will have changed. Pence will be in charge, greatly weakened, and we will have learned nothing.

It’s still up to the Democrats to save the nation. The party is not quite ready to do that yet, but the time is not right despite the apparent urgency. It won’t be until we learn from this mess that we will have a solid way forward which makes sense.

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One thought on “Endgame?

  1. There is no way anyone can ignore the many felonies that Trump has committed. I’m sure you are right that the stock market will be a part of what contributes to his downfall but with Michael Cohen totally flipping Robert Mueller has everything on Trump now. No one can ignore this.

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