Treasury Secretary Steven Mnuchin made a bad stock market situation worse over the weekend, and now he may be the next Trump cabinet member to receive a tweet from the president saying “you’re fired.”
As the stock markets have dropped precipitously in recent weeks, Trump has been looking for scapegoats. He would like to fire the Chairman of the Federal Reserve, Jerome Powell, but he can’t do that just because he is not happy with the Fed’s moves to increase interest rates.
Of course Trump has caused his own problems, with a trade war, with a government shutdown, and with his own random and chaotic behavior. Financial markets hate uncertainty, yet that is what Donald Trump has given them as president.
And now, according to Bloomberg News, Mnuchin’s head may be on the chopping block. The news service reported that Mnuchin’s future as Treasury Secretary depends on whether the market continues to drop.
Mnuchin tried to solidify his position with the president by attempting to reassure financial markets over the weekend. As we reported yesterday,
“Treasury Secretary Steven Mnuchin has put together something called the “plunge protection team.” He also called the CEO’s of the six largest banks in the country and inquired into their overall strength and liquidity. Mnuchin called the banks on Sunday, speaking to the heads of Bank of America, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo.”
But Mnuchin’s moves backfired, and on Monday the stock markets experienced their worst Christmas Eve decline in history. And to make his situation more precarious, he does not have a lot of supporters within the administration.
“There are plenty of people inside the White House who are not fans of Mnuchin who are happy to throw him under the bus,” Stephen Myrow, a former Treasury official, told Bloomberg. “Up until now, he’s been protected by the fact that Trump liked him and he’s been a loyalist.”
Trump has made things much worse by his escalating attacks on Powell and the Federal Reserve. Early yesterday he tweeted “the only problem our economy has is the Fed” and shortly thereafter all market indices experienced steep drops.
We reported in November that Trump was unhappy with Mnuchin. It was also reported at the time that Trump was very unhappy that Mnuchin continued to support Powell while the president was attacking him for raising interest rates.
Trump has blamed both Mnuchin and Powell for the stock market declines. One anonymous White House source said that Trump had asked, “If he [Mnuchin] is so good, why is this happening?” But Trump later denied the report, saying about Mnuchin, “I am extremely happy and proud of the job being done by him.”
Reports of another cabinet secretary being fired by Trump is counter-productive to his attempts to calm investors. Instead, it will increase the sense of chaos and a government that is out of control, which will make investors more nervous.
The Trump administration has experienced major shakeups over the past few weeks, with Defense Secretary James Mattis and White House chief of staff John Kelly both leaving, apparently at the request of the president. The last thing Trump should do now is get rid of one of his top advisers, just because he is looking for someone to blame for the problems which have been caused by his own misguided actions.