If you talk to a lot of Wall Street executives, you get a very scary feeling. No one knows what’s going to happen to the markets, and therefore the economy. And that’s scary.
I understand what you’re saying – these people really don’t know what’s going on, otherwise they would have noticed months before the 2007-2008 financial crisis happened.
In truth, they saw it coming but were mostly too scared to say anything, while other investors, such as hedge funds, didn’t want to draw attention to their market bets.
No, not this time.
The diversity of market forecasts is due to major policy-making errors that undermine the usual analytical tools, such as spending and money printing.
The politics and policies of the two presidential candidates have added to the confusion.
In other words, now is not a good time to be an economic forecaster, or for investors, consumers or American workers trying to prepare for the future.
And we can thank the clowns who have been making public policy and doing some really crazy and unprecedented things.
Yes, the ruling class in this country is probably the stupidest class in history.
Again, Wall Street will tell you this is bipartisan folly that goes back at least 20 years, but is even more problematic these days because so-called experts are behaving like fools, and it’s becoming more and more dangerous.
Former President (and likely next President) Donald Trump appeared calm and confident in Thursday’s debate against a stuttering, underpowered Joe Biden.
But Trump is no bargain either.
Consider this: he repeatedly vowed to build a wall on the southern border to stop mass immigration from straining the welfare state, but then wasted most of his four years in office on petty squabbles that ultimately prevented him from doing so.
Biden, on the other hand, has spent almost four years as the largely unconscious leader of the free world (as his debate performance again demonstrated).
President Trump has exacerbated the immigration issue, fearing he will lose the support of his Democratic Party, which advocates open borders and progressive policies, as the country’s social fabric crumbles under the pressure of poverty and high crime.
But what really troubles economic forecasters is the shaky stance of both sides on the economy.
President Trump increased the national debt to a staggering estimated $8 trillion during his four years in office, but he cannot blame it all on the COVID-19 stimulus measures and lockdowns that stalled growth in his final year in office.
Before that, he did great things like cut taxes and deregulation, which led to higher jobs and higher wages.
It was a time of peace and prosperity, the perfect time to sort out benefits (i.e. the future cost of Social Security) and put a burner on the federal government’s mess.
But he did the exact opposite.
When the coronavirus pandemic hit, he continued spending until his final days in office, when it was clear the economy was recovering and the pandemic was on its way out.
Trump has said he plans to continue the same policies if re-elected, which means we have to consider a whole new level of uncertainty given the scale of debt now on the books, which will eventually have to be paid back.
Biden’s Spending
As for the debt, it’s getting bigger and more onerous because when it comes to spending, Sleepy Joe is Trump on steroids.
He has promised to double down on his policies if re-elected: student loan forgiveness, more spending on useless green energy waste, ubiquitous electric vehicles and an end to the questionable industrial policies of government-subsidized semiconductor manufacturing are just the beginning.
If he is replaced (and that is a real possibility given his performance in the debates), whoever replaces him will likely present the same policies without any contradictions.
While the media (no doubt encouraged by Sleepy Joe’s cronies) has been making a big fuss recently about Trump having built up more debt than Biden, Wall Street pros tell me that’s a bit of a miss-match, since the economy came to a near standstill during Trump’s final year in office.
When Biden took office with the economy on the mend, he became enthusiastic about stimulus measures.
Pros point out statistics that are often overlooked.
The Congressional Budget Office projects that by early next year, debt growth under Biden will likely match or exceed that of the Trump administration.
Today, it is at near historic levels, 120% of the entire U.S. gross domestic product.
That’s down from the peak of the pandemic, but not a huge issue.
What if we had to increase spending on war?
What happens if creditors decide that spending has made the US dollar too commoditized?
Biden, through his appointees to the regulatory state, has injecting a hyper-wokeness into both our economy and our culture.
Trump is literally seeking revenge against the party that is trying to put him in prison.
Wall Street is now scrambling to feed those variables into computer models, creating a black box economics that is nearly impossible to predict.
That’s why the smart rich are scared.
Charles Gasparino is the author of the upcoming book “Go Woke, Go Broke: The Inside Story of the Radicalization of Corporate America.”
