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Home Topics in Depth Foreign Affairs Why Robert Shiller Is Worried About the Trump Rally

  • Purveyor (2633 posts)
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    Why Robert Shiller Is Worried About the Trump Rally

    The last time Robert Shiller heard stock-market investors talk like this in 2000, it didn’t end well for the bulls.

    Back then, the Nobel Prize-winning economist says, traders were captivated by a “new era story” of technological transformation: The Internet had re-defined American business and made traditional gauges of equity-market value obsolete. Today, the game changer everyone’s buzzing about is political: Donald Trump and his bold plans to slash regulations, cut taxes and turbocharge economic growth with a trillion-dollar infrastructure boom.

    “They’re both revolutionary eras,” says Shiller, who’s famous for his warnings about the dot-com mania and housing-market excesses that led to the global financial crisis. “This time a ‘Great Leader’ has appeared. The idea is, everything is different.”

    For Shiller, the power of a new-era narrative helps answer one of the most hotly debated questions on Wall Street as stocks set one high after another this year: Why are traders so fixated on the upsides of a Trump presidency when the downside risks seem just as big? For all his pro-business promises, the former reality TV star’s confrontational foreign policy and haphazard management style have bred uncertainty — the one thing investors are supposed to hate most.

    more…

    https://www.bloomberg.com/news/articles/2017-03-14/as-trump-charms-wall-street-robert-shiller-gets-dot-com-deja-vu

    daleanime, Koko, Haikugal and 1 otherPunxsutawney like this

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  • Punxsutawney (1345 posts)
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    1. Lambs to the slaughter

    The only question, the million $ one if you wish, is when? But it’s coming.

    Oh, and Wall Street may talk a good game about uncertainty, but what they really hate is any regulations that mess with their grifting. So Trump is “A OK” there.  But at some point a house of cards….

     

    To neoliberals, everyone and everything are disposable. -  Chris Hedges  “The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness" - J.K. Galbraith
    • Purveyor (2633 posts)
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      2. It is going to be ugly when it happens. Fed have little they can do at this

      point which may be why they are jacking up interest rates.

      That will give them a bit of leverage, but not much, when the lid blows off this pot.

      • Punxsutawney (1345 posts)
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        3. I agree

        And a big part of the problem is that nothing has been done structurally since 2008-09. So all of the underlying problems are still there if not much worse.

        To neoliberals, everyone and everything are disposable. -  Chris Hedges  “The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness" - J.K. Galbraith
        • daleanime (2115 posts)
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          5. Yeahup…..

          When the going gets tough, the tough take care of each other
    • Koko (3376 posts)
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      4. Agree!

      Something is going to come.  Maybe not this year, but next.  The Optimism in the manipulated markets is just too strong to last much longer.  Yellen’s interest rate hike seems to be coming and with people already strapped it seems that it will make things more difficult for Housing, Auto Loans.

      But, so far, nothing seems to bother Wall Street and the Oligarchs.