Michelle Goldberg, Why Did So Many People Delude Themselves About Trump? New York Times, April 7, 2025:
Donald Trump’s 2024 election sent many finance types into spasms of anticipatory ecstasy as they imagined freedom from regulations, taxes and unfamiliar pronouns. “Bankers and financiers say Trump’s victory has emboldened those who chafed at ‘woke doctrine’ and felt they had to self-censor or change their language to avoid offending younger colleagues, women, minorities or disabled people,” The Financial Times reported a few days before Trump’s inauguration. It quoted one leading banker crowing — anonymously — about finally being able to use slurs like “retard” again. The vibes had shifted; the animal spirits were loose.
“We’re stepping into the most pro-growth, pro-business, pro-American administration I’ve perhaps seen in my adult lifetime,” gushed the hedge fund manager Bill Ackman in December.
One Wall Street veteran, however, understood the risk an unleashed Trump posed to the economy. After Trump’s victory in November, Peter Berezin, chief global strategist at BCA Research, which provides macroeconomic research to major financial institutions, estimated that the chance of a recession had climbed to 75 percent. “The prospect of an escalation of the trade war is likely to depress corporate investment while lowering real household disposable income,” said a BCA report.
The surprising thing isn’t that Berezin saw the Trump tariff crisis coming, but that so many of his peers didn’t. You don’t have to be a sophisticated financial professional, after all, to understand that Trump believes, firmly and ardently, in taxing imports, and he thinks any country that sells more goods to America than it buys must be ripping us off. All you had to do was read the news or listen to Trump’s own words.
Creatures of the herd:
On Monday, as stocks whipsawed on shifting news and rumors about the tariffs, I spoke to Berezin, who is based in Montreal, about how Wall Street had gotten Trump so wrong. He told me that many investors who pride themselves on their savvy are in fact just creatures of the herd. “All these cognitive biases that amateur retail investors are subject to, the Wall Street pros, are, if anything, even more subject to them because they’ve got career risk associated with bucking the trend,” he said.
Self-deception:
“The markets should have put two and two together that if you’re talking about annexing Greenland, Canada, the Panama Canal, you’re probably going to be more radical on trade as well,” said Berezin.
But Wall Street professionals, like so many other ostensibly smart people, refused to see Trump clearly, mistaking his skill as a demagogue for wisdom as a policymaker. “I don’t think this was foreseeable,” a mournful Ackman posted on X on Monday. “I assumed economic rationality would be paramount.” What an odd assumption to make about a man who bankrupted casinos.
CODA: Big Tech
Check this out as well: Cecilia Kang, Tech C.E.O.s Spent Millions Courting Trump. It Has Yet to Pay Off. NYTimes, April 8, 2025.
The biggest technology companies and their chief executives donated millions to President Trump’s inauguration, hosted black-tie parties and dinners in his honor, and allowed him to announce and take credit for new multibillion-dollar manufacturing projects.
But less than three months into the president’s second term, Mr. Trump has hardly returned their lavish gestures with favors.
The sweeping tariffs he imposed last week will squeeze Apple’s iPhone supply chain and make it much more expensive for Amazon, Meta, Google and Microsoft to build supercomputers to power artificial intelligence. The president has slashed federal funding for research into emerging technologies like A.I. and quantum computing. His immigration clampdown has incited fears that he will cut off pipelines for tech talent.
The Trump administration has also signaled that it will continue an aggressive regulatory stance on reining in the power of the biggest tech companies, beginning next week with a landmark antitrust trial to break up Meta, the owner of Facebook, Instagram and WhatsApp.
Somewhat later we have this:
The hostilities between the tech industry and Mr. Trump date back to at least 2016, when multiple tech executives endorsed Hillary Clinton for president and donated to her campaign. After Mr. Trump was elected, tech leaders criticized the president’s immigration ban for Muslims and his skepticism about Covid-19 vaccines.
Mr. Trump’s first administration took a tough regulatory stance on the industry, filing antitrust lawsuits against Google and Meta. He railed against social media and other internet giants for censoring him and amassing too much power. He also blamed the platforms for contributing to his election loss in 2020.
Some crumbs from the table:
There have been some benefits. Mr. Musk is now a close adviser to the president, and critics say his businesses are likely to reap rewards from his proximity. Mr. Trump has also signed executive orders delaying a sale or ban of TikTok, as mandated by a law passed last year over security concerns about the app’s Chinese parent company, ByteDance.
Despite slashing its federal funding, Mr. Trump has opened the door to a continued light regulatory touch on A.I., which he has declared his top priority to beat China in a race for global tech leadership. Last month, Google, Microsoft, Meta and other tech giants submitted suggestions, asking for the administration to stay out of the way.
And U.S. regulators have almost entirely dismantled a yearslong government crackdown on the crypto industry, a volatile sector rife with fraud, scams and theft. That benefits companies including the venture capital firm Andreessen Horowitz, a major investor in the space.
Still:
Perhaps the biggest blow to the tech industry came in the form of tariffs last week. Apple, one of the hardest-hit companies, produces 90 percent of the iPhones it sells around the world in China, where tariffs, which were already at 20 percent, are expected to increase to 34 percent this week.
“These tariffs will raise consumer prices and will force our trade partners to retaliate,” said Gary Shapiro, the chief executive of the Consumer Technology Association, a trade group. “Americans will become poorer because of these tariffs.”
Berezin thinks Wall Street still hasn’t come to terms with the cost of the nascent Trump presidency. “I do think that at this point we might have passed the event horizon, meaning that even if Trump backs off from the tariffs, there’s been enough damage done to the U.S. economy, to the global economy, to investor confidence, consumer confidence, that we’re probably going to see a recession regardless of what happens,” he said.
There's more at the link.
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