Columnist debunks Wall Street barons’ doomsaying that a Warren or Sanders presidency would crash the

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  1. OckyDub

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    In their presidential campaigns, Sens. Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) have proposed a massive transformation of the American economy to shift power to workers and middle-class families, from single-payer health care to a wealth tax to restrictions on predatory private equity to requirements that corporations give workers a vote on the board of directors. All of these proposals have Wall Street terrified of their candidacies, with some — like billionaire investor Steve Cohen and RBC Capital Markets strategist Lori Calvasina — offering dire warnings that financial markets will collapse if they are elected.

    Writing for the Washington Post, columnist Helaine Olen pointed out that these sorts of doomsday predictions have been made before, and are rarely accurate.

    “I am so old I remember when this stuff was said about another candidate for president. His name? Donald Trump,” wrote Olen. “Bridgewater Associates, the monster hedge fund founded by Ray Dalio, predicted a more than 10 percent drop in the stock market in the event of a Trump victory in 2016. The forecasting outfit Macroeconomic Advisors made a similar claim, pointing to an 8 percent falloff. Economists Eric Zitzewitz and Justin Wolfers published a paper with the Brookings Institution, also claiming the stock market would stumble in the event of a Trump victory. Tony Roth, chief investment officer of Wilmington Trust? A Trump victory would result in ‘a big sell-off.'”

    “Funny how that worked out,” continued Olen. “The stock market, after a sharp drop in after-hours trading, surged the day after Trump’s election. It ultimately increased 8 percent between Trump’s victory and the end of that year. It has gone up from there, as the big money realized that Trump’s anti-regulatory agenda served its short-term bottom line quite nicely indeed, even as it has made life harder for the rest of us. Why worry about increasing air pollution and shoddy consumer financial protections when there is money to be made? It has all gone so well for Trump, he now claims ‘a Market Crash the likes of which has not been seen before’ should he lose. I doubt it. The stock market has done quite well on days when some of the most damaging information about Trump’s actions in Ukraine have come out, suggesting that Wall Street is hardly worried about a post-Trump world.”

    “All of this is stuff that should remind you that predicting the stock market is a fool’s game, and it’s usually done by someone with an agenda,” wrote Olen. “And we know the majority of folks on Wall Street — and many who make their living from them — are none too happy about the strength of Warren and Sanders in the polls. There’s no question the pair have big money in their sights.”

    None of this, however, should be taken very seriously by the average voter, concluded Olen.

    “Only about half the population has any money in the stock market at all,” wrote Olen. “The wealthiest 1 percent of the population owns half of all household equities, according to research by Goldman Sachs. If there is a hit — and that’s a big if — they’ll take the vast majority of it. No wonder the 1 percenters want to scare you into thinking their economic priorities should be your economic priorities. Think about that the next time you hear a bloviating Wall Streeter complaining about Warren or Sanders.”

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