America's ace in the hole is Donald Trump's impulsive incompetence.
In 2017, history handed Trump an economy on the mend, with interest rates at historic lows, no inflation in sight, low unemployment, and a booming stock market. With automation and low-wage competition making products ever more plentiful and cheaper, economists forecasted sunshine. As unemployment kept declining, some people even got modest wage hikes.
But then Trump presided over a massive tax cut for the rich, which did nothing for the real economy while increasing deficits by close to $2 trillion. Next, he escalated trade conflicts with China—not in service of a clear plan but to show how tough he was. Just to pour oil on the flames, so to speak, he brought America to the brink of war with Iran.
None of this had any strategic coherence. Belatedly, these chickens are coming home to roost.
The stock market was pumped up by corporate stock buybacks financed by Trump's tax cuts. Silicon Valley's inflated stock prices are the result of monopoly abuses that even the Trump Federal Trade Commission is resisting. Trump's trade bluster with China has added to the risks of global economic slowdown. And the prevailing mix of speculation and austerity has just taken down Argentina's economy, with traders worldwide worrying about contagion.
The Dow is down over 700 points today alone, and about 2,000 points off its recent peak. As financial markets sink back down to earth with the real economy following, all of these blunders will hurt Trump's chances for re-election.
Character, as the Greeks liked to say, is fate. Let's hope there is not too much collateral economic suffering, and that Trump's complementary foreign policy debacles don't blow us all to hell before the voters throw him out.
