A Warning from Economist Alex Krüger: Trump’s Trade War Could Lead to Another Stock Market Meltdown
Economist Alex Krüger, with a substantial following on social media, has raised concerns that President Trump’s trade war policies may set the stage for a financial crisis reminiscent of the 2008 stock market crash.
According to Krüger, Trump’s tariffs are creating a situation where borrowers may struggle to access credit, potentially triggering a new credit crisis even for those willing to pay interest.
Referencing a tweet where he stated that a loss of lender confidence in issuing new debt amidst economic uncertainty could lead to a collapse in the S&P 500, similar to the events of 2008.
“This is how the 2008 bear market looked like, -50% in one year. Notice the extensive number of extremely positive news from October onwards. Sometimes, increasing liquidity is not enough.
Once credit markets break, it is very hard to stop the snowball.
We may be two tweets away from going in that direction. Europe retaliating in kind, and Trump losing it.
Of course, [we] would need more than that to have such a protracted bear market. 2008 was a credit crunch after all, which is not the case now.
But a trade war can trigger a credit crisis. Stagflation => consumer spending freezing => corporates blowing up => banks blowing up => dead.”
Additionally, Krüger believes that the tariffs imposed by Trump have increased the likelihood of a recession in the US within the next year.
“If this keeps escalating, yes, anything is possible now, that’s what’s changed in my opinion, there’s nothing off the table.”
As of the latest market close, the S&P 500 is trading at 5,062 points.
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