So now we have a market correction. A market correction is an event where a certain kind of amateur investor – call him Joe – loses his shirt and impoverishes his family. The Joes of the world fund bubbles by always buying what they’re told to buy, and they imagine that they’re getting rich while the bubble inflates. (They also imagine that they’re investment geniuses but that’s another story.) Sooner or later the market needs to drive the Joes out, and does. Poor Joe, and poor Mrs. Joe and little Joe Jr and Josephine as well. Life on the outer edge of a bubble is exciting but brief. Surface tension is easiest to detect when it’s stretched beyond its limit and just lets go.
Presidents get the credit for inflating bubbles and they get the blame when bubbles pop. Presidents really can do things that cause or burst bubbles but it’s often the wrong president who gets the credit or blame. Bill Clinton’s incredibly foolish but thoroughly bipartisan deregulation of banking eventually caused a huge amount of misery worldwide but he doesn’t get nearly the blame he deserves (largely because Hand-worshipers cannot say bad things about deregulation). Bush took the credit for Clinton’s bubble and fueled it some more with his off-the-books war spending. Obama did some but not all of what was necessary to stop Bush’s collapse and then left before most of the Joes saw his own bubble start to grow. But Trump – Trump is something else.
Trump owns this loud pop in a way few presidents ever have. He claimed all the credit for Obama’s bubble, which in itself is not so unusual. But two aspects of it were unusual in the extreme. First, his untempered braggadocio and his insistence that he alone owned the emerging Obama bubble. Second, the vast amount of greenhouse gas he really did blow into that bubble.
Trump’s gas was of two different but hard to distinguish kinds. First were the bubble-growing things he really did, mostly hope for that tax cut and then the cut itself. But second…ah, but second was his unrestrained and relentlessly repeated promise to the Joes that now, now and for the rest of his time in office, the bubble, which he always claimed was his bubble, his personal bubble, could not burst. The economy would grow because he was a business genius who knew the secrets of growth and would never do any of the things that stifle it. And some Joes believed him and plunged in with everything they had or could borrow. And other, just barely wiser Joes knew better but went along for the ride because they saw the bubble growing and knew it for what it was but figured they’d know when to pull out – and almost nobody ever knows exactly when to pull out (we’re talking markets, Madame, markets).
A whole lot of Trump’s Republican-but-not-Republican-base support was entirely down to his wonderful, personal bubble. I don’t know how much of it but I know it had to be a lot. It had to be a lot because the Republicans always own the voters who put their own investments before anything else (just as the Democrats used to own the voters who put their wages first). So this inevitable correction is a threat to his standing, and he and his people know it. And that 80% Republican support is all that’s keeping him in the white house and he and his people know that too. They have to do something to solidify that 80% and they have to do it fast. This will get very interesting very soon.
(Ed note: I bumped this piece up from previous comment thread to where it rightfully belongs)