I've been warning that Donald Trump's merry band of dumbasses would eventually tank the economy, and it looks like we're well into that scenario now with the major markets down 15% or more just this month on top of a continuing government shutdown, not to mention the live grenade of pulling out of Syria and firing Defense Secretary Mattis.
Now Treasury Secretary Stephen Mnuchin is trying to clean up the mess by very loudly yelling through a bullhorn that the economy is perfectly fine, which as you can imagine is having the completely opposite effect on Wall Street.
Treasury Secretary Steven Mnuchin startled financial analysts, bankers and economists on Sunday by issuing an unusual statement declaring that the nation’s six largest banks had ample credit to extend to American businesses and households.
Mnuchin made the statement on Twitter after calling the leaders of the six banks, seeking to address an issue that had attracted little concern ahead of the treasury secretary’s tweet.
The statement came hours before Asian markets were set to open and following a sharp sell-off that made last week the worst for U.S. markets in a decade. President Trump has been furious at the sell-off, and efforts by Mnuchin to inspire confidence in the market have so far failed.
Several analysts said Sunday night that his outreach to the banks and subsequent statement were likely to backfire and drive even more concern.
“Panic feeds panic and this looks like panic in the administration,” said Diane Swonk, chief economist at Grant Thornton. “Suggesting you might know something that no one else is worried about creates more unease.”
There are many components in the economy and financial markets, and they don’t always move in tandem. For example, a sliding stock market does not necessarily mean there are problems in the banking system, and there can be problems in the banking system that aren’t reflected in the stock market’s performance.
In Mnuchin’s statement, which was posted while he was vacationing in Mexico for the holidays, the Treasury chief said the executives told him “they have ample liquidity available for lending to consumer, business markets, and all other market operations." Mnuchin said the executives added “that they have not experienced any clearance or margin issues and that the markets continue to function properly.”
Mnuchin telling everyone there are no banking liquidity problems when the problem is confidence in Trump's collapsing regime is a bit like trying to assure a jumbo jet full of nervous flyers that all the parachutes are in working order, when if you've flown on a commercial airliner ever, you know damn well there's never parachutes on the plane.
Also, the number three engine just caught fire.
Today is going to be an interesting day.
[EDIT] Dow closed down 600 points in shortened Christmas Eve trading. Now off 4000 points for the month of December.
This is 2008 all over again.