Wednesday, January 4, 2017

Why Do Democrats Really Fear Trump?

Since election night we have heard a constant refrain from Democrats and those in the media (actually one in the same?) of all of the reasons they fear Donald Trump.

It started on election night when liberal economist Paul Krugman wrote this as the reality of a Trump presidency sunk in. (He actually posted this shortly after midnight at 12:42 am)

It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover?
Frankly, I find it hard to care much, even though this is my specialty. The disaster for America and the world has so many aspects that the economic ramifications are way down my list of things to fear.
Still, I guess people want an answer: If the question is when markets will recover, a first-pass answer is never.

Paul Krugman stated that the markets were plunging because of the Trump victory and that the markets would never recover.

For context, remember that Dow Jones futures fell by some 800 points as the reality of the Trump win became apparent. that night. After all, markets do not like surprises no matter what they are. However, by the opening bell the next morning the entire 800 point plunge was gone.

What has happened since then?

This chart shows the Dow Jones Industrial average from November 8, 2106 until today.

It closed on November 8, 2016 at 18,332. On January 4, 2017 it closed at 19,942---up over 1,600 points.

What is the basis for this market surge? Optimism and renewed confidence. It is as if a heavy burden has been lifted off of the United States economy overnight.

For example, the National Federation of Business surveys small business owners on their outlook and optimism on a monthly basis. Just before the election, small business owners were slightly negative  (-6) on whether business conditions would improve in the future. That measure went to +38 right after the election.

That is one of the reasons that Deutsche Bank recently revised its GDP forecast for the United States substantially upwards. Compare the post-election black columns to the pre-elections columns in gray.

That is an upwards revision of over 2 percentage points in GDP looking out some 12 months from now. Let's put that in context. Current projected GDP for 2017 by the Congressional Budget Office is approximately $20 trillion. An additional 2% in growth equates to $400 billion of additional money in the economy and in potential governmental revenues. That is not chump change.

Or course, this optimism and renewed confidence may not be realized. We may not see economic improvements in the end. However, Trump appears to be off to a good start. And he certainly has proven Krugman's prediction wrong that the markets would never  recover.

Of course, the economy is not the only fear Democrats have expressed about Trump.

They fear he will enforce immigration laws.

They fear he will repeal and replace Obamacare.

They fear he will appoint judges who believe in preserving, protecting and defending the United States Constitution.

They fear he will lift restrictions on energy production to provide a level playing field for all types of energy.

They fear he will bring tumult to the Middle East based on his foreign policy views.

They fear he will start a war with Russia. At the same time they also fear he will be too cozy with Russia.

I could go on and on about the fears the Democrats state they have about Donald J. Trump.

Of course, how rational is any of this fear?

They exhibited no fear whatsoever when Barack Obama was taking office despite the fact that he had absolutely no managerial experience, he had no foreign policy experience, he had served but four years in the United States Senate before taking office and he had been in the public eye for less than five years.

Compare that to Donald Trump's nearly 50 years of business experience and over 30 years where he has been consistently in the public eye.

I think the answer is very clear as to why Democrats really fear Trump.

It is the most awful fear imaginable for the Democrat party and the media elite.

However, you will never hear this fear spoken aloud.

Their greatest fear is that Trump will be successful.

That is something to truly fear if you are a Democrat.

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