Carl Icahn, who served for a short while as an economic adviser to Donald Trump before the U.S Attorney’s office in New York dumped a subpoena on him for information he has on the administration’s energy policy, called into CNBC Tuesday afternoon with some bad news for the White House: The stock market is getting ready to crash.
Icahn, who has made billions in the stock market, was asked about the gigantic one-day loss on Monday, and while he said that was a blip, he painted a very bleak portrait for the Dow Jones:
“You have way too many derivatives. It is not really a place for the average person to be playing around in derivatives.”
Derivatives are financial instruments whose value is backed by assets such as mortgages, currencies or commodities. They’re what led to the economic crisis and market slide in 2008 which wound up causing a worldwide recession.
Icahn said he thinks the market will regain most of its recent losses, but warned that the recent downturn was merely “the beginnings of an earthquake.” And he added:
“I think eventually, you get through this little panic thing, but one day, this thing is going to implode because you have too much leverage with too many people buying these things. And Wall Street sells them these products, and it’s extremely dangerous.”
If and when that happens, Trump will be fully to blame due to several moves he’s made since becoming president:
- Appointing as Treasury Secretary a man, Steve Mnuchin, who made millions foreclosing on mortgages and also worked for investment house Goldman Sachs.
- Rolling back regulations on banks and investment firms that protect middle-class Americans.
- Pushing a massive tax cut for the rich that adds trillions to the debt and will wind up costing most Americans more in the long run.
Trump has been claiming credit for the boom in the market since he took office. But a crash will also be his. And that alone could spell doom for him — and his party — with the midterm elections less than a year away.
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