The sudden turmoil in the financial markets is a reminder that when the preliminary hoopla is over and voters actually begin to select their presidential nominees, competence and cool will probably matter.
If the global swoon in stock prices were to turn into something more serious, which candidates would benefit? Could it give a boost to the billionaire developer who has a degree — as he constantly reminds us — from the prestigious Wharton School? Or would his four corporate bankruptcies and “ready, shoot, aim” approach to life make Donald Trump’s supporters think twice?
I’m reminded of a story I’ve heard House Minority Leader Nancy Pelosi (D-Calif.) tell. You may recall that when the financial crisis struck in the fall of 2008, Sen. John McCain (Ariz.), the GOP candidate, melodramatically suspended his campaign and demanded an all-hands summit meeting at the White House. Democratic candidate Barack Obama was invited, as were the leaders of both houses of Congress and the frantic, sleep-deprived members of George W. Bush’s economic team. Bush was a reluctant but gracious host.
The president offered McCain the floor, as Pelosi recounts, but it turned out that the senator had nothing of substance to say. Attendees were dumbfounded. Then came Obama, the constitutional lawyer, who gave an academic lecture on finance to a room littered with MBAs, including the former head of Goldman Sachs. Bush, who had no patience with meetings that wasted his time, leaned over to Pelosi and whispered, “Y’all gonna miss me when I’m gone.”
In the end, voters decided that sang-froid, perhaps with a touch of arrogance, was better than cluelessness. The financial crisis alone didn’t swing the election Obama’s way, but it helped.
This sharp decline in stock prices is in no way comparable to the meltdown of 2008, which threatened the global financial system with ruin. Venerable investment houses are not failing. Big banks are not clamoring for emergency infusions of cash. There is no subprime bubble to burst.
But the current market losses, which began in China, are not happening in a vacuum. China’s growth rate, which for years was about 10 percent a year, is down to a relatively anemic 7 percent, according to official figures — and the true growth figure is probably much lower, according to independent economists. A slowdown of this magnitude in the world’s second-biggest economy inevitably ripples across the rest of the globe.
Oil prices, meanwhile, are lower than we’ve seen in years at about $45 a barrel. This should be good news for consumers. But remember that the United States — not Russia or Saudi Arabia — is now the world’s biggest producer of oil and natural gas. The domestic fossil fuels industry is bound to suffer.
How might all of this affect the presidential race? I’m guessing it could make voters pay more attention to the candidates’ records on economic and financial management — and might give a boost to those with experience, as opposed to promise.
On the Democratic side, I would expect Hillary Clinton to get a bump. Polls consistently say that voters see her as the most experienced candidate in either party. Steady economic management is part of the Clinton brand. Sen. Bernie Sanders (I-Vt.) has plenty of bold economic ideas, but I wonder if voters might look at their shrinking 401(k) balances and become more risk-averse.
The Republican side is where things get really interesting. Jeb Bush, as I’ve written before, was supposed to be the adult in the room, the consummate grown-up, the steady helmsman. But there’s the slight matter of his brother, who let the 2007-08 crisis get out of hand before finally reacting with a huge bank bailout that many conservatives saw as corporate socialism.
Governors such as Scott Walker of Wisconsin and Chris Christie of New Jersey have already been pressed to defend their management of their states’ budgets and credit ratings. Sen. Marco Rubio (Fla.) has had to answer for his precarious personal finances. Businesswoman Carly Fiorina did run a massive corporation, but there is disagreement over how well. Ben Carson was a tremendously gifted neurosurgeon but has never really run anything.
And then there’s Trump. Many of his policy prescriptions are, to put it mildly, far-fetched. Round up and deport 11 million people? Somehow force the Mexican government to pay for a border wall? Take back jobs from China?
Logically, it seems to me that market craziness ought to be bad for Trump. But while his candidacy is about many things, logic isn’t one of them.