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Wednesday, February 13, 2019

The stock market crash that wasn't

Chuck and Nancy were excited on December 24. Stock prices had their worst December since the Great Depression.

“It’s Christmas Eve and President Trump is plunging the country into chaos. The stock market is tanking and the president is waging a personal war on the Federal Reserve — after he just fired the Secretary of Defense,” Nancy and Chuck said in a joint communique.

Democrat operatives in the media were sure the recession was coming.

Scott Wren, global equity strategist at the Wells Fargo Investment Institute, told the Washington Post, “I can’t tell you the last time a percentage fall came in that short a time. Just three weeks ago, we were still looking at a successful 2018. Stocks then fell off a cliff.”

Um, stocks fell 23% on October 19, 1987. A "global equity strategist" should know that even if he was not born then.

Jared Bernstein, former economic adviser to Joe Biden, said, “The president believes he can tweet himself out of this bear market, and he is just making it worse.

“History is littered with economies that have been brought down by strongman populists muscling their central banks.”

But as with President Ronald Wilson Reagan in 1987, Democrats thought they had President Donald John Trump in December.

Silly socialists.

The Dow Jones Industrial Average closed at 22,445.37 on December 24.

It closed at 25,425.76 yesterday.

That's a gain of 13% in seven weeks.

What happened was a correction. After stock prices soared 40% from the day we elected Donald John Trump president, the stock market had a correction. That is how we shake out old dying companies like Sears and mismanaged ones.

This is normal.

But whenever the normal occurs under President Trump, the media reports it as unusually bad news.

Someday we will have a press worthy of the greatest nation on Earth.

15 comments:

  1. Missing in the left's reporting is that Trump was correct. The decline was the result of unnecessary, overly aggressive tightening by the Fed which Jerome Powell admitted to.

    Later, two former Federal Reserve Chairs - Bernanke and Yellen admitted the Fed was responsible for most if not all previous recessions.

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    1. Fundamentals are effing sound. You’d think more people would get it that the LibCommies LOVE wars, recessions, and pessimism. The Train don’t roll like that.

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    2. In other words:"the beatings will continue until morale improves."

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    3. Including the great depression. The Fed is the engine of all corruption

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    4. A book to give yourself nightmares: The Creature from Jekyll Island: A Second Look at the Federal Reserve. The swamp is huge, it won't be drained overnight.

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  2. Economies tend to do well when not screwed with. We hear a lot about China and how that's supposed to affect things, but the non-Chinese Asian economies seem to be doing just fine, thank you.

    I think macroeconomics is pretty worthless. It struggles to measure accurately, is a poor predictor, and does not provide tools that are able to command the supposed resources it makes available for manipulation. No "new normal" is normal within ten years. It's just an excuse to try and pathetically control things from a central point.

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    1. "macroeconomists have successfully predicted nine out of the last five recessions" Yoram Bauman https://www.youtube.com/watch?v=VVp8UGjECt4 - GOC

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    2. I doubt and have always doubted whether macroeconomics is really a thing at all.

      In my sole economics course in college, Prof. Thomas Fox (an LBJ economic adviser) gave us a computer simulation, back when Hollerith cards were a thing. The moral of the simulation was, the more government spent, the better off our economy was.

      Problem I saw was nobody talked about the givens. What about limited government? A constitution? Private property? The incentive to work and invest? Human nature itself?

      None of that. A lot of abstract brooding over interest rates and aggregate demand, which sounds like "Blah blah blah" to an eighteen-year-old.

      They need to teach economics from the ground up.

      Folks, this is what an economy looks like. If one person has to do all the work for himself and his family, things will be done poorly. If I have to grow the vegetables and hunt or raise animals, if I have to weave the cloth and tan the hides, if I have to design the house and build it with whatever material is available, if I have to make knives and axes, if I have to make soap and find good fresh water, if I have to be the family doctor, if I have to make the shoes, sew the shirts and britches, transport the goods, be the veterinarian for beasts of burdens, be the mechanic who fixes our water pumps, etc. etc. etc. and etc., I'm gonna do at best a half-fast job at any one of those tasks.

      But if I'm good at raising livestock, my neighbor is good at weaving and his wife can sew up a nice outfit, my other neighbor is a helluva good smith, his neighbor understands medicine, and so forth... then we all have a reasonable chance at making a good little economy amongst ourselves by specializing. Division of labor.

      "Macroeconomics" is just what happens when everybody does the things a) he's good at and b) some group of customers needs.

      And it doesn't exist without somebody playing the goon who will protect you from the other goons who want your stuff.

      Not a word about any of that in the course. I got a B.

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  3. This is all great and good, and I'm a proud supporter of President MAGA.

    But the national debt is the elephant in the room that nobody wants to talk about.

    SHTF is on the calendar. We just don't know when.

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    Replies
    1. Trying desperately to convince democrats we cannot spend our way out of bankruptcy. They just roll their eyes.

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  4. The only depression that will be experiences will be that of the Democrats as the economy grows and PDJT is re-elected in 2020.

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  5. "That is how we shake out old dying companies and mismanaged ones like Sears." There fixed!

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  6. The era of stagflation is over 40 years ago. Almost a half century ago. Trump developed his patriotic domestic and worldview around these times.

    The Fed is an anachronistic entity that does not have a clue and has been sitting in not just outdated policies, but ancient in terms of economics.

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  7. Unlike many other countries who's central banks borrow in dollars, the US will never default on US dollar loans.
    Inflation due to money expansion may be a problem, and higher cost imports due to a stronger Euro or Pound against the Dollar, but not default.

    The debt is bad, and getting worse. Because there is too much, mostly very popular, gov't spending. We won't reduce gov't spending until Dems call it a problem, along with excess gov't debt.

    Until then, Reps should increase the debt thru more tax cuts, so that more wealth produced will stay with the producers, who are far more likely to use it efficiently to produce more wealth.

    There is likely a recession coming, sometime in the future. It won't be Trump's fault, but it will be wrongly blamed on him.

    Stock market corrections will come more often, and the peaks will not continue to be higher each quarter, and that shakeout of weaker companies will continue. And feel bad for those in the companies, Like Sears, whose prior bad top management decisions have been a disaster.

    Thanks to competition most customers can choose better shops -- and do so. With stock market valuations following expected profits.

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