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Cruz’s market crash predictions blame Obama’s economic policies

June 06, 2016 / by / 0 Comment
  • SumoMe

Ted Cruz insists of an imminent market crash in today’s seemingly broken economic system. Amid news of assets and stock prices having driven higher over the past seven years, Cruz told CNBC his fears that the “real” US economy remains sluggish, and that the economy is just based on “playing games with money.” Furthermore, Cruz also puts the blame on President Obama’s corporate inversions, along with the Federal Reserve’s monetary policy,

Organic growth

Insights from Investopedia revealed that Cruz points to the inefficiency of the Federal Reserve’s policy as one of the major causes of this potential “market crash.” Cruz’s solution is to have asset prices move in an organic growth rather than through the Federal Reserve’s monetary policy. The Reserve’s policy is built on influencing the amount of money and credit in the U.S. economy that can affect interest rates.

In a company perspective, organic growth represents true growth for the core of the company. This can be achieved by increasing output and enhancing sales, excluding profits or growth acquired from any merger, acquisition or takeovers.

For this to happen with the US economy, there should be mandatory tax reform and regulatory reform to unburden small businesses. Cruz says that if small businesses flourish, it will attract more workers and potentially increase pay. In effect, there will be more consumer spending that would justify the increase in asset prices.

Corporate inversions

In relation to this, Cruz also spoke about Obama’s corporate inversion policy that lets US companies avoid the burden of paying taxes by declaring relocation on a foreign country, at least on paper.

As explained in an official press statement, the current corporate inversion policy allows US companies to acquire smaller companies based abroad— usually countries with lower tax rates. Consequently, when these companies combine, they declare their relocation only on paper, when, in fact, it still remains on US soil. This means that companies are still enjoying the perks of having access to the US market, the rule of law and intellectual property enforcement among others.

However, in 2014, Obama called on Congress to stop this practice and fully close the loophole that allows it. Unfortunately, the Congress failed to act on this but the Treasury Department vowed to make inversions more difficult for companies.

Investopedia reported that Ted Cruz insisted that instead of not allowing American companies to move overseas, there should be a framework that would not only make these companies stay but attract foreign investors such as the Asian and Indian companies, to move their business in the country.

Market conditions

Earlier this year, news of the rise in the global stock market spread with an emphasis on the Asian market, especially that of China. The Wall Street Journal reported that the Shanghai Composite Index was able to recover from a 7 percent plunge and finished up at 2 percent. On the other hand, the Hang Seng rose up 0.6 percent while South Korea’s Kospi ended the day with a 0.7 percent increase. Financial analysts from the WSJ report said that the strengthening yuan built a positive outlook following the bullish close.

India also boasts of its tech market boom thanks to the country’s Prime Minister Narendra Modi who spurred the people’s innate desire for financial education and to be entrepreneurs, reported NASDAQ.

India, which has experienced tech difficulties specifically on its poor network services, until the emergence of mobile network extender innovator 5BARz International (OTCQB: BARZ), has now become an emerging global tech market leader. India is poised for its tech market boom following its mobile market surge.

Beyond global stock markets and economic worries, the Iowa Electronics Market (IEM) in a Fortune article revealed that Ted Cruz’s “market crash” predictions were mere tactics to boost his presidential candidacy Cruz, who had been behind frontrunner Donald Trump in the nominations. Cruz was predicted to have no chance at winning the elections and has withdrawn from the campaign.

 

ABOUT THE AUTHOR

Desmond O’flynn is Irish but he’s not into boxing. He likes everything finance and investing, as well as world politics. He used to believe that he didn’t have the luck of the Irish since he failed his art class thrice, but this immediately changed after meeting his wife Katarina, a startup interior design consultant based in Dublin.