About a week ago, the Washington Post noted that Donald Trump has kept "an almost obsessive watch on the stock market," while complaining to aides "about how unfair it is that he is blamed for the market's slide." The major indexes have fallen quite a bit further since the article was published.
At a certain level, the presidential agita is understandable: no one individual is ever responsible for the health of the economy, the direction of the unemployment rate, or the stock market's fluctuations. But for Trump, the picture is more complex. For one thing, he spent months telling the public that he deserves all of the credit for Wall Street's gains, confident that his overpowering greatness would prevent a downturn.
For another, it's easy to make the case that the president deserves at least some of the blame for recent developments. Were it not for Trump's trade war, his shutdown, and his successful-for-now lawsuit against the Affordable Care Act, recent losses likely wouldn't have been nearly this severe.
Making matters worse, Trump and his team are making matters worse. CNBC's John Harwood had a good piece on this yesterday.
Characteristically, President Donald Trump responded to bad news on Christmas Eve by blaming others. As battered markets slumped again, he faulted the Federal Reserve. "The only problem our economy has is the Fed," the president declared of the central bank chaired by his appointee Jerome Powell. Yet simply by making the assertion, Trump negated it. [...]Trump's erratic behavior and weak leadership have unsettled Wall Street and Washington alike -- and there's every reason to expect things will get worse.
A responsible and mature leader, wielding a steady and measured hand, would be well positioned to make a positive difference right about now.
Instead, we have Donald J. Trump, who doesn't appear to have any idea what he's doing.
The Republican's principal talking point is that recent tumult in the markets is the Fed's fault. And while there's a reasonable case to be made that recent interest-rate hikes are unnecessary, Trump isn't the one to be making it.
Part of the problem is that Trump used to believe the exact opposite of what he's arguing now. It doesn't help that the Fed board members who keep raising rates were appointed by Trump himself. Complicating matters further is the question of the president's personal financial interests, which are adversely affected by the Fed's recent moves.
But even putting all of that aside, Trump doesn't seem to appreciate the effects of his own posturing: against a backdrop of growing economic anxiety, the president's instinct is to lash out at Jerome Powell and the Federal Reserve, which only serves to increase economic anxiety. (The president has reportedly talked about trying to fire Powell, which he cannot legally do, though the chatter further rattled investors.)
The administration's team isn't much better. Over the weekend, Treasury Secretary Steven Mnuchin -- inexperienced and ill-equipped to boost anyone's confidence -- announced he'd initiated talks with the heads of each of the nation's largest financial institutions to discuss, among other things, their liquidity. In the process, Mnuchin answered a question no one had asked -- there were no liquidity fears before he brought it up -- raising fears and sparking a sharp selloff on Monday.
Catherine Rampbell noted on Christmas Eve, "The Keystone Cops are officially in charge of our economy." Is it any wonder many are nervous?