Thursday, March 12, 2020

What did Donald Trump do today?

He said stocks would "bounce back" after his latest coronavirus plan cause the single biggest market crash in 33 years.

Major American stock indexes were down a virtually unprecedented 9-10% today, as a direct result of Trump's disastrous attempt to reassure investors last night. (Stock futures rallied just before Trump began speaking, then plummeted swiftly as he spoke.) 

The damage to investors—and to anyone whose income or business relies on investments—is difficult to express. It was the fourth worst day ever for the Dow Jones Industrial Average, second only to the 1987 "Black Monday" event, and the worst two days of the market crash of 1929 that foretold the Great Depression.

Asked about it today, Trump responded by saying, "You have to remember, the stock market, as an example, is still much higher than when I got here." 

That isn't true. Measured in terms of money lost, the markets have now lost all of the value gained since Trump was elected. Trump has bragged almost incessantly about stock prices since taking over for the Obama-era recovery from the 2007-08 recession. While stock prices are not a complete measure of the strength of an economy, a drop of 28% in the space of a month is catastrophic.

He added, "And it’s taken a big hit, but it’s going to all bounce back and it’s going to bounce back very big at the right time." Twelve trading days earlier, Trump tweeted similar advice:

$10,000 invested in an DJIA index fund at the time Trump said that would be worth $7,582 today.

Why is this a bad thing?

  • Americans have lost three years of retirement savings precisely because the coronavirus is not "very much under control."