While governments around the world are investing in the green economy Donald Trump is providing massive corporate tax breaks. Trump’s inept economic policies now appear to be wreaking havoc as evidenced by unprecedented stock market declines and the subsequent ripple effect around the world. The Dow’s 1,175 point plunge on Monday February 5th was the biggest decline ever and on February 6th markets around the globe are being pummeled. Trump’s tax scam, his only legislative accomplishment, may be the cause of this market volatility.
As explained by CNN’s Matt Egan, Trump’s tax cuts, “may be playing a role in the recent market trouble”. Months before the precipitous stock declines, Morgan Stanley warned that tax cuts could “overheat” the economy and backfire by causing stocks to, “boom then bust”. This is precisely what we are seeing and it is only the beginning. An overheated economy will buoy inflation and interest rate hikes.
Trump’s tax cuts are related to the bond market as the Treasury needs to take on more debt to pay for Trump’s giveaways. Strong jobs market and heavy selling in the stock market are also driving up bond prices. The 10 year Treasury rate hit a four year high recently and this makes stocks look less attractive.
“Trump failed to appreciate the impact of all the stimulus on the bond market,” said Greg Valliere, chief global strategist at Horizon Investments. “I think the bond market is going to be an irritant for this White House for the foreseeable future.”
Under the leadership of former President Barack Obama
the green economy flourished in the US and we saw steady economic improvement. Despite the dysfunctional, climate denying “leadership” of Trump, the rest of the G20 or the world continue to invest in the green economy. If we can survive Trump’s rule, science and reason may again inform economic policy in the United States. In the interim other nations are investing and reaping the benefits.
America’s neighbor to the north is a prime example ejoying 3.1 percent growth in 2017. In 2016 Canada’s federal government signed an historic deal with the provinces designed to both grow the economy and combat climate change. The agreement includes a national carbon pricing scheme and support for energy efficient buildings.
China and European nations are also investing in climate action. The EU including countries like France and Germany are models of climate leadership. Despite Brexit, the UK is also investing in the green economy.
In 2015 the UK began investing in low carbon innovation with investments that will total £2.5 billion by 2021. In October 2017 the UK released its green growth strategy with billions worth of government investments in energy efficiency. The plan seeks a 57 percent reduction in carbon emissions between 2020 and 2032. The plan will cut emissions from buildings, transport, electricity, and heating. The plan also allocates £1 billion in offshore wind energy and nuclear power. An additional £265 million will be invested in electricity storage and demand response technologies.
UK Prime Minister Theresa May said: “Clean growth is not an option, but a duty we owe to the next generation, and economic growth has to go hand-in-hand with greater protection for our forests and beaches, clean air and places of outstanding natural beauty,” adding, “there is no conflict between this aspiration and our plan to create an economy that works for everyone”.