Donald Trump made blustery comments on Puerto Rican debt that caused millions in losses on the financial markets. Then his budget director had to clean up the mess.
Donald Trump made an idle comment about wiping out Puerto Rican debt that rippled through the stock market, causing millions of dollars to be unnecessarily affected just to satisfy his ego.
Appearing on Fox News, Trump told the propaganda network that with regard to Puerto Rico's debt, "We're going to have to wipe that out."
Trump does not have the power to cancel the island's debt, but markets reacted to his use of the bully pulpit to make the dangerous assertion anyway.
Larry McDonald, head of U.S. macro strategies at ACG Analytics, found the way in which Trump attacked the financial markets to be alarming. He told CNBC that Trump's assertions were "just noise" that are "pretty far removed from reality." He pointed out that Trump does not have the power to make the changes he alluded to because "this is not a dictatorship" because "we have bankruptcy judges and the rule of law."
The Trump dump continued, affecting other companies that have exposure to Puerto Rican debt. MBIA's stock dropped 7.8 percent, Ambac Financial was down 5.9 percent, and Assured Guaranty lost 3.1 percent in value. Combined, those companies are worth over $6.1 billion on the stock market — and a slip of the tongue from Trump dropped their value by millions.
The next morning, Trump's budget director had to come out and clean up the mess.
Appearing on CNN, Mick Mulvaney conceded that Trump had simply lied. He told anchor Chris Cuomo, reacting to Trump's uninformed rambling, "I wouldn't take it word for word with that."
Mulvaney did not clarify whether this was one of those situations where Trump's comments should not be taken literally, or whether he was simply "making a joke," relying on "alternative facts," or perhaps just had no idea what he was talking about.
The topic came up in the first place because as part of Trump's bullying of Puerto Rico's population, he has been bellyaching about costs associated with the island as part of the post-hurricane recovery effort.
He never spoke about the billions of dollars the United States has spent in Florida and Texas when he was leading the recovery planning there. Of course, those states have electoral votes, while the American citizens in Puerto Rico have no such sway over elections.
So, to mitigate his abuse, Trump threw out gibberish, and it generated losses in both the stock and bond markets. The economy is in recovery, thanks to many of the policies enacted by his predecessor, but more outbursts like Trump's could have a devastating effect.
The reckless incident illustrates that nine months into the job, Trump still doesn't understand the carefulness required to be president of the United States.