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Paul Krugman
@paulkrugman
, 3 tweets, 1 min read Read on Twitter
There's been a lot of speculation about why the stock market reacts so strongly to trade policy news — way out of proportion to the direct economic impacts of Trump tariffs. Today's surge after Trump's decision to delay some tariffs deepens the mystery 1/
The best going explanation of the tariffs/market link was that markets took tariff announcements as indications of broader decision process; to be blunt, how crazy Trump is. Hard-line announcements suggested more radicalism to come, softer announcements more rationality 2/
But this was obviously a defensive move to avoid price hikes before Christmas, not a change in Trump's world view or improvement in his decision-making. So why respond so strongly? 3/
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Paul Krugman
@paulkrugman
One thing not clear from this excellent Times read on the abuse of the "opportunity zones" tax break was whether the potential for abuse was sheer incompetence or deliberate malfeasance 1/ nytimes.com/2019/08/31/bus…
Worth remembering that the tax bill was rushed through without hearings or any time for analysis, and it was widely — and correctly — predicted that this would create huge loopholes 2/ nytimes.com/2017/11/13/bus…
Also, any time you try to promote some kind of economic activity with differential tax rates you create the potential for abuse, which only very careful drafting and enforcement — neither forthcoming from Trump etc — can contain 3/
Read 6 tweets
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Paul Krugman
@paulkrugman
By now I shouldn't be shocked at Trump's insecure narcissism — everything good is to his credit, everything bad is someone else's fault — but it still amazes, as does the fact that millions of people actually admire him 1/ nytimes.com/2019/08/30/us/…
I mean, remember "the buck stops here"? Trump is the anti-Truman. But in this as in other things, he's just the culmination of where his party has been going for a while. The Bush people were notably unwilling to accept responsibility for anything 2/ nytimes.com/2006/02/20/opi…
I do think, however, that blaming business for the economy's troubles is something new. And it reinforces a point I've been trying to make: billionaires who think Trump's their guy are in for a rude shock 3/ nytimes.com/2019/08/12/opi…
Read 3 tweets
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Paul Krugman
@paulkrugman
People are talking a lot about the inverted yield curve but not, I think, enough about the reason the curve inverted: the incredible plunge in long-term rates, from 3.2% last fall to just 1.45% this morning. That represents a huge shift toward economic pessimism 1/
The yield curve inversion is because the Fed hasn't followed long rates all the way down (yet); but it's the rate plunge that's telling you about economic sentiment. So what's going on? 2/
I think we have to be fair and acknowledge that it might be a bubble: people buying bonds bc others are buying bonds. But I think it's more about investors finally capitulating on the reality of Trumpism 3/
Read 6 tweets

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