Ross Douthat and Tyler Cowen have a question for Trump-loathers like me: If Trump is so bad, why is there no evidence that (as Tyler puts it) “America’s intellectual and media mandarins have been busy liquidating their long positions and buying puts over the past two months”?
Okay, I guess I don’t really qualify as a mandarin, although I do do most of my writing in a fairly spiffy bathrobe. But I’ll take the Cowen/Douthat challenge and explain myself. Let other and better mandarins fend for themselves.
First of all, I have never knowingly placed either a long position or a “put” and don’t really know what either is, though I can guess. According to Warren Buffet, I am smart, because “dumb money is smart when it knows it’s dumb,” and I definitely qualify. In more than thirty years of passive investing, I have never engaged in even the most modest and sensible form of “market timing.” I don’t predict the future. At a broader level, I believe that if you can’t make money investing in America, you can’t make money. I’m not going to invest in gold, or vintage Ferraris. I’m not going to short the euro, although I think that would be a pretty good bet, or the rinminbi, although that might not be such a bad idea either.
I guess I could shift my balance to “moderately aggressive” to “desperately conservative,” but right now, what’s the point? Trump has basically handed over most of the government’s day to day interactions with the economy to Goldman-Sachs, the investor’s friend. It’s a (very) good bet that Trump will pursue an “expansionary” fiscal policy, aka Keynesianism, which the Republicans in Congress hysterically denied to Obama. Republican taxes and Democratic spending, what's not to like, for us rentiers/coupon clippers?1
Clearly, Trump has lots of seriously terrible ideas for screwing up the economy, but his blundering so far has reduced the leverage he had with Congress, at least as far as ideas that big business folks will aggressively resist. Sen. Majority Leader Mitch McConnell has shrewdly kept the filibuster intact, so he can blame everything on those goddamn obstructionist Democrats. And the beatdown Trump took from the Ninth Circuit Court of Appeals over his abysmal EO on immigration demonstrates that, absent a major crisis, the courts aren’t afraid of him.
Yeah, “absent a major crisis.” Keep your fingers crossed on that. You don’t have to rush out and buy a put right now. But it wouldn’t hurt to find out what one is. And I’ll bet both Tyler and Ross are familiar with the concept.
- “Rentier” was the classic French epithet for people living off their investments, back in the day when people took the “Revolution” seriously. “Coupon clipper”, an equally obsolete term, had to do with old-fashioned bonds, when you actually owned fancy pieces of paper that were “bonds”. As I understand it, every month you sent in a coupon and got a check. ↩︎
