I was just reading the reactions of some of the many presidential candidates to today's market sell off. For the most part, what they said is pure nonsense. Let's look at a few:
Bernie Sanders blamed the Wall Street bankers who have rigged the system to "redistribute wealth to the wealthy". Only someone like Bernie could say that. After all, the bulk of today's losses were losses by those same Wall Streeters who hold a large percentage of the stock in our economy. Half of all Americans don't own stock; that half also happens to be the half which Bernie says is getting short changed as Wall Street "redistributes" the wealth of the nation. So according to Bernie, the people with the power to move money are responsible for taking hundreds of billions of dollars away from themselves. Unbelievable!
Donald Trump blamed China and the close relationship between the Chinese and the American economy. He wants to put distance between China and the USA. Trump also says that he has been warning for years that we are too close to China. Of course, the problem is that Trump has not been warning for years, months or even weeks that America is too close to China when it comes to the economy. He has said that the Chinese have out negotiated our leaders. He said that we made bade deals with the Chinese. He did not say, however, that if China's economy were to crash, it would bring down the US economy with it. But let's forget Trump's dishonest claim and examine the merits of what he is now saying. Did the market fall in the last three days because America is too close to China? Nope! Without a doubt, the slowing of the Chinese economy (maybe even the recession in China) is hurting the world economy. Developing countries that sell raw materials to China have just seen half or more of the market for their commodities evaporate. This is inflicting pain on countries in Latin America, Asia and Africa. That, in turn, cuts the market for some of America's exports. It also hurts Europe which is more dependent on trade, so the American companies with substantial European assets are being hurt. But for America, we buy much, much more from China than we sell to the Chinese. That means that a slow down of the Chinese economy will likely lower prices paid by US consumers. That is something that ought to help. In simple terms, the big problem is how big an impact China and its problems will have on countries other than the USA; Trump is misdiagnosing the problem. I do wonder if Trump really believes what he is now saying. He has had enough experience with the financial world to know reality from fiction; why is he spouting the latter?
Mike Huckabee is blaming the Washington-Wall Street elites for the market meltdown. I'm surprised he did not blame Satan. Huckabee talks about things, but every time he opens his mouth to address the economy or the markets, all he does is prove that he does not understand how those things work.
Carly Fiorina blamed the Federal Reserve for following policies that pumped up stock for too long. She says that it was inevitable that stock prices would come down at some point after they were over-inflated for so long. Guess what? That's as good an explanation as any. She knows what she is talking about.
The true reality, however, is that what caused today's drop is the market. Within the market, there are a myriad of reasons, with perhaps the biggest one being the fear engendered by the drops in the previous two days and elsewhere around the world.
It would be nice if we had more like Carly and fewer like Bernie and the Donald.
Bernie Sanders blamed the Wall Street bankers who have rigged the system to "redistribute wealth to the wealthy". Only someone like Bernie could say that. After all, the bulk of today's losses were losses by those same Wall Streeters who hold a large percentage of the stock in our economy. Half of all Americans don't own stock; that half also happens to be the half which Bernie says is getting short changed as Wall Street "redistributes" the wealth of the nation. So according to Bernie, the people with the power to move money are responsible for taking hundreds of billions of dollars away from themselves. Unbelievable!
Donald Trump blamed China and the close relationship between the Chinese and the American economy. He wants to put distance between China and the USA. Trump also says that he has been warning for years that we are too close to China. Of course, the problem is that Trump has not been warning for years, months or even weeks that America is too close to China when it comes to the economy. He has said that the Chinese have out negotiated our leaders. He said that we made bade deals with the Chinese. He did not say, however, that if China's economy were to crash, it would bring down the US economy with it. But let's forget Trump's dishonest claim and examine the merits of what he is now saying. Did the market fall in the last three days because America is too close to China? Nope! Without a doubt, the slowing of the Chinese economy (maybe even the recession in China) is hurting the world economy. Developing countries that sell raw materials to China have just seen half or more of the market for their commodities evaporate. This is inflicting pain on countries in Latin America, Asia and Africa. That, in turn, cuts the market for some of America's exports. It also hurts Europe which is more dependent on trade, so the American companies with substantial European assets are being hurt. But for America, we buy much, much more from China than we sell to the Chinese. That means that a slow down of the Chinese economy will likely lower prices paid by US consumers. That is something that ought to help. In simple terms, the big problem is how big an impact China and its problems will have on countries other than the USA; Trump is misdiagnosing the problem. I do wonder if Trump really believes what he is now saying. He has had enough experience with the financial world to know reality from fiction; why is he spouting the latter?
Mike Huckabee is blaming the Washington-Wall Street elites for the market meltdown. I'm surprised he did not blame Satan. Huckabee talks about things, but every time he opens his mouth to address the economy or the markets, all he does is prove that he does not understand how those things work.
Carly Fiorina blamed the Federal Reserve for following policies that pumped up stock for too long. She says that it was inevitable that stock prices would come down at some point after they were over-inflated for so long. Guess what? That's as good an explanation as any. She knows what she is talking about.
The true reality, however, is that what caused today's drop is the market. Within the market, there are a myriad of reasons, with perhaps the biggest one being the fear engendered by the drops in the previous two days and elsewhere around the world.
It would be nice if we had more like Carly and fewer like Bernie and the Donald.
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