The long-rumored and -awaited freefall - for this morning, at least:
A wave of selling gripped global markets as the rout in all but the safest assets deepened.
Chinese shares tumbled by the most since 2007, stocks in Germany headed for a bear market and commodities fell to a sixteen-year low. Russia’s ruble led a selloff in emerging-market currencies, while the yen strengthened and ten-year Treasury yields slid below 2% for the first time since April. Futures signaled U.S. equities will retreat for a fifth day.
“Everyone seems to be selling off, and there’s panic,” said Michael Woischneck who helps oversee the equivalent of $7.1 billion at Lampe Asset Management GmbH in Dusseldorf, Germany. “There’s no rational choice anymore, no rational reaction. The Americans will add to the European selling.” [emphases added]
And, sure enough, right on schedule....:
Stock futures plunged Monday in the United States, all but guaranteeing that the market will extend its sell-off after suffering the worst week in four years. The Dow Jones industrial average could be headed for a five-hundred-point decline.
Overseas markets were pummeled. The Nikkei index in Japan was down 4.6%, the equivalent of a seven-hundred-fifty-point drop in the Dow. Stocks were down 8% in Shanghai and 3% in London, Paris and Frankfurt.
“It is going to be a bad day,” CNBC’s Jim Cramer said on Today. “It’s probably going to be a bad week.” [emphases added]
Take a gander at the graphic above. The Dow plummeted over a thousand points at today's opening before rebounding, though not enough to even halt the overall downward correctionary trend.
The alleged proximate cause of the latest panic is said to be the attempt by the ChiComms to prop up their "stock market" by devaluing their currency (the yuan) again. I don't give that assertion a whole lot of credence because Red China does not have a true market economy, since Beijing can pull the plug on it at any time. It does affect the global financial markets in the sense that the ChiComms have embarked on a course of overseas aggression that is and will be destabilizing to the world economy.
As far as actual (quasi-)market economies go, we must remember that the only reason that of the U.S. doesn't appear as moribund and depressed as it really is is because the economies of Europe and Japan are in even worse condition. We, in other words, are following them off the proverbial cliff into an economic and social implosion that will send the entire planet spiraling into an indefinite dark age of poverty, instability, and war from which there will be no escape. Something that has been, frankly, a longer time coming than I expected, but which may finally have arrived to collect on the voting follies of the past six and three-quarter years, and which no amount of central bank "easy money" and negative interests rates can mask any longer.
But there is another factor to consider in this crash equation - the rise of Trumpmania:
Investors and financial journalists scrambling to find an explanation for the recent plunge in global stock markets have plenty of suspects.
Some look abroad for scapegoats: Greece or China. Others blame Janet Yellen: the Federal Reserve she chairs is at long last on the verge of raising interest rates, if only slightly.
Personally, I blame the decline in share values on Donald Trump.
Markets are finally taking note of the fact that the Republican presidential candidate atop the polls is someone who wants [to] cut back on foreign trade, and raise marginal tax rates. In each case, Trump’s policies are the opposite of the pro-growth approach....
Trump’s....bad on trade....The Smoot-Hawley Tariff of 1930 [made] Herbert Hoover’s presidency synonymous with economic disaster.
By contrast, the Kennedy round of tariff reductions and the North American Free Trade Agreement and GATT/WTO tariff reductions helped make the 1960s and 1990s times of widespread prosperity. Trump would turn us back to protectionism.
On taxes, Trump wants to raise marginal rates. “The hedge fund guys are getting away with murder. They're making a tremendous amount of money. They have to pay taxes. I want to lower the rates for the middle class,” Trump said Sunday on the CBS program Face the Nation.
Trump said hedge fund managers who “shift paper around” are “paying nothing,” in taxes, “and it’s ridiculous.” When Kennedy and Reagan lowered the top marginal tax rates, the economy boomed. When tax rates rise at the top — as they did with the Revenue Act of 1932 and with the tax increases of George H.W. Bush and Barack Obama — growth slows.
And stops. And reverses. Which is why we're in a permanent and artificially-imposed economic depression. One from which "Trumpnomics" would not deliver us, but rather brutally tighten the shackles of poverty even tighter.
History teaches again and again that emotion-driven "populism," just as revolutions, lead to tyranny and violence and disaster, not liberty, tranquility, and prosperity. Donald Trump is the current incarnation of emotion-driven "populism," with the added kicker of his biggest supporters being Tea Partiers who are enthusiastically and cathartically backing a candidate who is to the Left of all the "GOP establishmentarians" they can't stand. The biggest manifestation yet of how unmoored America has become from its founding documents, which created the most stable, prosperous, and powerful Republic the world has ever seen.
The previous incarnation of emotion-driven "populism"? Barack Hussein Obama.
This is the dawning nightmare to which global markets are awakening - the United States going off the deep end for good - and they are, in concert with the disintegrating international situation, rationally reacting accordingly.
The possibility of Trumpmania being more than a passing summer replacement "reality" series is certainly causing me to panic. Why not the rest of the world?
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