Party Like It’s 1929

They thought he really knew what he was doing, that he was not out of his depth. They thought he would back off at the last minute, that he didn’t really mean it. They thought that wise counsel would prevail, talk him out of it. They thought that Donald Trump was intelligent enough not to proceed with his tariff plan. They were wrong: another 1929 moment now stalks the markets.

It's the economy, Mr Stupid President

The key difference between The Great Crash of October 1929 and today is that the latter is a direct consequence of deliberate acts by the US President. Trump is indeed out of his depth. He is a monumentally stupid individual embarked on a personal mission of vindictive retribution against the foreigners who he believes have ripped off the USA over many years.

By imposing sufficient tariffs on the rest of the world, he believes goods will be manufactured in the USA, rather than elsewhere. Like the iPhone, perhaps? Except to manufacture that device Stateside would, by one estimate, raise its cost price to at least $10,000. Yet his supporters talk of American workers screwing screws into iPhones. What screws?

You use an iPhone? Check the casing. Maybe look at a rather larger example: where does US plane maker Boeing source all those parts that get assembled into best selling aircraft like the 737? They don’t all come from the States. Tariffs will mean vastly more expensive planes. Or a change in the supply network taking years and costing more. Or a bit of both.

Yet away he went with his tariff plan, which, whisper it quietly, is still with us. The market reaction was as predictable as it was sudden: massive falls in stock prices, beginning on a Thursday, an ominous day to start, given the 1929 precedent. There would, claimed The Donald, be no turning back; moreover, he told anyone who would listen how well it was going.

Markets continued their fall. Even after the weekend, the falls went on, until the 1929 parallel came again. Then, the bankers had sent Richard Whitney to ostentatiously buy up blocks of shares; the market turned around. Now, a fake social media account claimed the tariffs were to be paused, and sparked a rally before being rumbled. Then came the flagrant and open corruption.

The Whitney comparison is instructive: as Galbraith noted, he was “a hero, his achievement was widely celebrated, and he was made President of the Exchange. Not long thereafter, he was off to Sing Sing for embezzlement”. This time, no-one will be off to jail, despite the corruption. Despite Trump telling his followers to buy stocks, four hours before finally pausing tariffs.

Those buying included, according to reports, rabbit hole occupant Rep. Marjorie Taylor Greene. From the Democrats’ side of the House, Rep. Alexandria Ocasio-Cortez mused “Any member of Congress who purchased stocks in the last 48 hours should probably disclose that now … It’s time to ban insider trading in Congress”. Trump was, meanwhile, celebrating.

There he was in the Oval Office, pointing to two of his guests and telling “He made $2.5 billion today and he made $900 million. That’s not bad”. One observer noted “Speaker Mike Johnson was ALSO caught on camera saying it was a good day to buy stocks. This is text book market manipulation”. There should be an investigation. Will there be one? Don’t bet on it.

And then came the dénouement: as ITV political editor Robert Peston put it, “We just learned that the world’s most powerful person, Donald Trump, has a boss: the bond market”. Not only were tariffs paused, he had to row back on them for smartphones and other electronic devices coming from China. But the Chinese Government is not making any tariff exemptions for the USA.

If anyone had been in any doubt as to Donald Trump’s fitness for public office, the tariff fiasco has exposed his shortcomings. The USA is having its economy trashed by a shambling old fool, an inept and failed businessman, an amateur human being. He took on the real world, and the real world won. The MAGA cult might not believe it, but they are now just an irrelevance.

The EU and China have begun talks to reduce electronic vehicle tariffs. Tesla EU sales were down 45% year on year to January. Art of the deal my arse.

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