Friday, January 13, 2017

Bloomberg: Summers Warns of Financial Crisis Risk from Trump Economic Plans

Bloomberg runs this article quoting Larry Summers as suggesting that if we do get another major financial crisis, Donald Trump may be to blame. This bears watching because one theory we have followed here is that some believe that Trump is setup to be blamed for any upcoming crisis ahead. This article is supportive of the idea that this could really happen. Below are the introductory paragraphs.

"Former U.S. Treasury Secretary Lawrence Summers attacked the policy proposals of Donald Trump on several fronts, saying the president-elect’s plans for deregulation were setting the stage for the next financial crisis.
“The deregulation in some areas like finance is hugely dangerous,” Summers said Sunday in an interview on Fox News Channel. “Who wants to go back to the era of predatory lending? Who wants to go back to the era of vastly over-levered banks?”
. . . . . .
"Trump’s plans to reduce corporate taxation, Summers said, would “hugely increase inequality” and could also help strengthen the dollar, further hurting U.S. exporters and the people who work for them."

My added comments: Comments like these coming from a source like this gets my attention. It suggests to me that there is still real concern that another major financial crisis could unfold during the Trump term of office. Clearly, if that were to happen, who the public blamed for the crisis would be important in terms of who the public would trust to try and deal with the crisis. Lots of what ifs and unanswered questions here. Only time will reveal what actually happens which is what concerns us here.
Just a few questions we could raise:
- Will we get a new major financial crisis during Trump's term?
- If we do, who will be blamed for it by the majority of the public?
- What solutions will be  proposed to deal with the new major crisis?
- Will a solution involving the IMF as global lender of last resort and the SDR as global reserve currency be put forward? If so, how would Trump respond to a plan like that?
- Are people like Larry Summers trying to "get ahead" of a potential new crisis and point a finger of blame now to try and prepare the public to think in those terms later?
Again, we have the answers to none of these questions. But when we see articles like this, we can reasonably assume that the idea of a new major crisis in the future is still very much in play and that who gets blamed is also of concern. Why make a statement like this otherwise?

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