INSUBCONTINENT EXCLUSIVE:
By Conor Sen
Stock market losses and volatility, particularly in financial stocks, have people worried about, well, everything.
This recent
selloff is historic in scale but strange because so far, it's hard to identify a specific culprit behind it
The jitters could be chalked up to the hawkishness of the Federal Reserve, the flattening of the yield curve, trade wars, the relationship
He is certainly at the center of investors' crisis of confidence this time, as the financial system was during the slump of 2008.
The best
way to think about this confidence juxtaposition might be Treasury Secretary Steven Mnuchin tweeting Sunday afternoon that he had calls with
the CEOs of Wall Street banks to make sure they had enough liquidity in light of recent market conditions
This was bizarre for a couple of reasons
First, with memories of the financial crisis still relatively fresh in the minds of market participants, nothing spooks investors more than
a high-ranking official saying there's nothing to worry about in the financial system
Second, the banking system has dramatically reformed over the past decade
The Federal Reserve now puts out an annual report in June called the Comprehensive Capital Analysis and Review, which dictates the extent to
which banks return capital to shareholders
This isn't like 2007, when regulators were fumbling in the dark about the risk exposure and stability of the nation's largest banks.
It
would have made more sense for the bank CEOs to be calling the White House to check in on the state of affairs there.
The next triggering
event like the collapse of Lehman Brothers is not likely to look like the collapse of Lehman Brothers
crisis of confidence like a run on a bank.
What has prevented such a spiral so far The one area in which Trump has maintained relatively
decent approval ratings: the economy
That public support has kept his own party strongly in his corner.
But cracks have been forming
The struggles of the administration to replace Trump's chief of staff, attorney general and secretary of defense show that party
luminaries are increasingly reluctant to tie their fortunes to the White House
January will be a key test to see whether Democrats taking control of the House of Representatives, plus the impact of the stock market
slump, do further damage to the administration.
Here's the scenario that should keep the White House up at night: First the stock market
fails to recover, which negatively impacts the public's view of how Trump is handling the economy
Trump's approval among Republicans drops, especially plausible as they may be more sensitive to the stock market than the public at large
is.
Then the conversation in the media starts to shift
Already, in response to the stock market drop, New York Times columnist Thomas Friedman says Republicans need to consider removing Trump
Next, retired Republican officials start to say the same
So do the Republican members of Congress who face competitive elections in 2020
The conservative media starts to come aboard, saying that Trump will be a drag on the party's fortunes in 2020 and threaten a whole host
of conservative priorities, from tax cuts to immigration restrictions to reshaping the judiciary to redistricting in the 2020s
Eventually, Republicans in the Senate join their Democratic colleagues in voting to impeach.
This may sound implausible when so much of the
past two years has been defined by Trump's base sticking with him, with expressions like "fake news" and "nothing matters" coming to
define an era of entrenched partisanship
But the Democratic takeover of the House, the stock market crash, a new level of turmoil in the White House, and the dawn of a new
presidential election cycle might spell the end of Trump's immunity
