The Trump Diaries: Day 12


I was having dinner last night with a very close friend G at a new upscale Japanese restaurant. He’s a private equity fund CFO, and yet an outsider both to the large Wall Street investment firms, banks, and well-known private equity groups. He has worked in each of these sectors, but prides himself on being a maverick who swoops in, gets the money, and moves onto another project. I’ve known him eighteen years.

I asked him what he thought of a Trump Presidency from the standpoint of someone in the financial sector.

“It’s going to be choppy waters,” he said with a chuckle between bites of uni, “but we’ll be fine. Here’s what you need to know…”

Stagflation. When tariffs are placed on imports from Mexico, China, and other nations where manufacturing is more profitable for companies, these nations will place tariffs on U.S. products. Their products will go up in price, about 30–40%, and there will be less demand for U.S. products. Higher prices and less demand means that U.S.-based companies won’t be able to expand, and that they will fire many employed because their work isn’t needed.

Market Growth. G pointed out that the financial industry is planning for stagnation and that people are investing in ways that will benefit them: Bonds, companies that do well in stagnation, etc. With far lower taxes under the new administration for those in the top 5%, private wealth will grow.

What Will Happen. When it becomes clear that there simply won’t be any return to manufacturing in the U.S., and as prices rise, people will turn against the new administration. In addition to stagflation, the costs of medication will go up in double digits, Medicaid will be a voucher system meaning that long-term care (dementia, chronic back pain, etc.) will be paid out of one’s pocket, and there will be fewer primary care doctors (who are currently subsidized in their residency training by the federal government).

“And, as it turns out, who cares? I’ll be fine. So will you. The rising costs don’t affect me. I don’t care if a shirt at Wal-Mart that cost $9.99 will cost $19.99. My taxes will be lower.” Laughter. “Oh? If things get out of hand? We’ll start a war and send the the sons of Trump supporters over to some swamp to fight it.”

We split the check.