Posted on 03/20/2020 1:59:03 PM PDT by yardboyd
Main Street may be more resilient than Wall Street during the coronavirus crisis.
Former Office of Management and Budget director David Stockman warns the pandemic is exposing risky speculation and shaky market fundamentals.
“Wall Street is toast,” he told CNBC’s “Trading Nation” on Thursday. “It’s going to end as a financial crisis because the illusion that central banks always have your back and the economy would keep expanding and growing forever and ever ... was complete nonsense.”
Stockman, who served under President Ronald Reagan, has been forecasting an epic market decline for years.
Last March on CNBC, he blamed “day traders, chart monkeys [and] robo machines” for creating a dangerous market environment that lacked rationality and got flooded with overvalued stocks.
Even though there’s no way he could have predicted the coronavirus pandemic, he believes fiscal and monetary policy is not equipped to deal with the fallout.
“There are going to be bailouts,” Stockman said.
His base case is the S&P 500 will fall to 1,600, a more than 50% collapse from the index’s all time high hit last month. The move would imply another 34% plunge from current levels.
“We’re going to have a recession. It’s going to be fairly prolonged,” he added. “Covid-19 is a severe supply side shock.”
Stockman contends help from the Federal Reserve won’t be effective.
“We need to let the stock market work. We need to get the Fed out of the way. We need higher interest rates not lower, so all this speculation can get cleaned out of the system,” he said.
On the fiscal side, Stockman suggests the country cannot afford the price tag to bail out the country. A fierce critic of President Trump, he contends the administration’s plan to hand out $2,000 to every American is financially irresponsible and will only postpone an inevitable recession.
Longer-term, he suggests it’s unnecessary.
According to Stockman, 80% of America can get by during the vast business shutdowns by drawing down $4 trillion of unused credit card lines, $10 trillion of savings deposits and $1.3 trillion of checking accounts. He also cites a one trillion dollar safety net of unemployment benefits.
“Main Street will bounce back once the public health separation orders are relaxed in the months ahead,” Stockman said. “Main Street capitalism doesn’t have a death wish. Households and businesses will creatively find ways to cope and repair and replenish and restart.”
The White House did not provide a statement on Stockman’s remarks.
Stockman’s been writing disaster letters for some time. I don’t think he’s been happy since Reagan took him to the woodshed for mouthing off in the day.
Stockman is not playing with a full deck.
He was a Pajama Boy before there were Pajama Boys.
CORRECT. Like a stopped clock, the Chines virus has made his doom-filled prediction correct for once.
What a BOLD prediction!! Clearly thinking outside the box, this guy is. /s
He tells us....NOW. He is a regular Nostradomus. I bet he will next tell me to stock up on toilet paper...
I wish I had a ton of idle cash right now. Buy Buy Buy
He’s been right about as often as Krugman. Doom and gloom since Trump’s election. About the same record as the ex Clinton Advisor......what’s his name? The guy who sucked toes or something.......
> Stockman’s been writing disaster letters for some time. <
You beat me to it. He may well be right this time, but it won’t be due to any genius on his part. It will be due to those filthy, lying ChiComs.
Then, let's thank America's fascist leaders for continuing it.
Dick Morris. I haven't heard from him for a while.
let’s separate the message from the messenger.
is the message correct?
at least 4 senators seemed to think so, judging from their actions (not their words).
Stockman has had no problem with the evil combination of high income taxes on US workers and zero import tariffs sucking the wealth out of the USA for decades. He is not to be listened too.
When was the last time Stockboy was right about anything???
This is exactly what he said would happen to the markets and economy. Same as Peter Schiff has been saying. And Egon von Greyerz. And John Hussman. And Doug Casey. And Jim Richards. And Gerald Celente. And Marc Faber. And numerous others. And they all were right. Of course none of them predicted the exact timing or the virus. But they were right. If the virus didn’t come along, there would have been a different pin that popped the everything bubble. This is only the beginning.
I’m telling ya’, one of these times Stockman is going to be right!
To: All
Novel coronavirus cases could have been reduced by 95 percent had China responded to the outbreak just three weeks earlier than it did, a March 13 study by the University of Southampton has found.President Xi Jinping’s The Yellow Peril ChiCom Wuhan Pneumonia Novel Coronavirus aka the Red Death/Mass People Killing Virus, Chinobyl#2, The Yellow Peril, Made in China!
8 posted on 03/19/2020 12:37:25 PM PDT by Grampa Dave ((FearRepublic.com - keeping the media panic narrative going 24/7 to finally bring down Trump)!!!!)
Stockman may be hitting the target with his 5% accuracy rate here.
Yuck - just watching that GIF makes me reach for the trash basket.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
