“The stock market goes up and down and the market is not the economy. But it is, for many people, their retirement or their college savings plan. And a lot of wealth has been wiped out because of the trade war, the tax cuts, and volatility not in the market but in the Oval Office.”
The deeply harmful government shutdown over President Donald Trump’s demand for billions in border wall funding continued with no agreement in sight.
From his vacation spot in Cabo San Lucas, Treasury Secretary Steve Mnuchin on Sunday sent markets tumbling with a bizarre Twitter statement assuring the public that there is absolutely no reason to believe Wall Street is about to collapse—a move one reporter described as the “financial equivalent of yelling fire in a crowded theater.”
“The incompetence of this administration keeps eclipsing what was previously imaginable.”
—Ryan Grim, The Intercept
And, holed up in the White House instead of his Mar-a-Lago resort on Christmas Eve, Trump fired off a tweet-storm blaming the Federal Reserve for what’s shaping up to be the stock market’s worst December since the Great Depression.
These chaotic and anxiety-inducing circumstances culminated on Monday with Mnuchin holding an emergency call with members of the so-called “Plunge Protection Team,” a group that includes top officials from the Federal Reserve, Securities and Exchange Commission, and Commodity Futures Trading Commission.
The Christmas Eve call, as CBS News put it, summoned the “ghost of 2008,” as the team—formally called the President’s Working Group on Financial Markets—also convened during the 2008 financial crisis, which ultimately wiped out trillions of dollars in wealth, sparked a massive foreclosure crisis, and inflicted harm to ordinary Americans that persists to this day.
The specifics of Monday’s call have not yet been made public.
While noting that the U.S. financial system is not on the brink of collapse, analysts argued that the incompetence of the Trump White House at every level—demonstrated repeatedly over the holiday weekend—could help drag it to that dangerous point.
“Is Steve Mnuchin… trying to create a financial crisis?” asked Slate‘s Jordan Weissmann in response to the Treasury Secretary’s alarming statement on Sunday.
The last time the “Plunge Protection Team” was convened was in 2009 — during the financial crisis. There was a financial crisis already *underway.* We are not in the midst of a financial crisis. The stock market is convulsing. Mnuchin is an amateur. https://t.co/x0HhXjZMfr
— Tim O’Brien (@TimOBrien) December 24, 2018
Steve Mnuchin tweets he’s convening the Plunge Protection Team.
How would you feel if you were on a cruise ship, and the captain came running down the aisle with his hands in the air screaming, “Don’t worry! Everything’s fine! There will be no crash!“? https://t.co/h9MJBVfV6y
— Thom Hartmann (@Thom_Hartmann) December 24, 2018
The incompetence of this administration keeps eclipsing what was previously imaginable https://t.co/q431zO8uFV
— Ryan Grim (@ryangrim) December 24, 2018
Warren Gunnels, policy director for Sen. Bernie Sanders (I-Vt.), observed on Twitter that Mnuchin’s insistence that the financial system is in tip-top shape calls to mind Bush Treasury Secretary Hank Paulson’s claim—in the midst of the 2008 crash—that “the American people can remain confident in the soundness and the resilience of our financial system.”
“Break. Them. Up,” Gunnels wrote of the nation’s largest banks.
Treas. Sec. Paulson, 9-15-08: “the American people can remain confident in the soundness & the resilience of our financial system.”
5 days later: Congress must pass a 3-page, $700B blank check to big banks or the economy will collapse.
Break. Them. Up. https://t.co/xfYruYrcQO
— Warren Gunnels (@GunnelsWarren) December 24, 2018
As the Guardian reported, Monday’s “crisis call” with the Plunge Protection Team didn’t have the intended calming effect, as markets continued to slide on Christmas Day.
Adding to concerns about the U.S. financial system’s stability over the weekend were rumors that Trump is considering firing Federal Reserve chair Jerome Powell, a move that analysts warn could further disrupt markets and have deep ramifications for the American public.
Pointing out that the stock market “is not the economy,” Sen. Brian Schatz (D-Hawaii) noted that nonetheless the Trump administration’s disarray combined with its plutocratic policy agenda has harmed ordinary people while further enriching those at the very top.
“The stock market goes up and down and the market is not the economy. But it is, for many people, their retirement or their college savings plan,” Schatz wrote. “And a lot of wealth has been wiped out because of the trade war, the tax cuts, and volatility not in the market but in the Oval Office.”