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Trump Takes Risks That Do Not Pay Off

The finger-pointing related to the spread of the coronavirus in the US is starting to accelerate. President Trump is not willing to say the buck stops with him concerning the US’s response to the coronavirus pandemic.
David Becker

This comes despite President Trump disbanding the Obama created department within the White House that was geared to deal with pandemics.

Taking Risks

President Trump took risks, and up until mid-February, the rewards looked like the risks were worth taking. On February 19, 2020, the S&P 500 index hit an all-time high. Fast forward nearly 1-month and the large-cap index is off by approximately 30%. In fact, at the same time during the last 6-Presidential terms, the performance of the S&P 500 is the 2nd worst in the last 40-years. Only George W. Bush has a worse track record as far as stock market performance. The risks that Trump took were to deregulate, lower corporate taxes and dismantle departments that he believed were not pertinent to the growth of the US economy.

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The Buck Stops with the President (some of the time)

What is clear from recent press conferences is that President Trump is the godfather of all positive outcomes and orphans all bad news.

President Trump this past Friday denied that he was in any way responsible for his administration’s failure to make coronavirus testing widely available. He also now claims to have absolutely no idea who had disbanded the White House pandemic response team two years ago. Trump denies that he had any knowledge that his national security team unwound a department that was set up to deal with a pandemic and takes no responsibility for the lack of testing available for coronavirus in the US.

How You Treat a Trader

This issue is faced by trading managers all the time. A trader takes risks and is rewarded if he/she speculates correctly. This scenario is the same in politics. President Trump took risks. He deregulated the government, cut taxes, and dismantled departments to streamline the government. When everything is smooth this technique works well as was seen in early February. This management style only works if there is no bump in the road. Unfortunately, the bump was the coronavirus and his neglect for a way to deal with catastrophes was a risk that is now coming to roost. On the trading floor, a trader that lost a huge gain and created an enormous loss would be fired. The US stock market has shed 10-trillion dollars from its highs. This does not include the potential loss of life that will be generated from this neglect. The question is whether the American people will fire Trump for his transgressions.

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