Header Ads

Breaking News

A Wall St. Giant Says Sanders Would ‘Ruin’ the Economy

Bernie Sanders has proposed a wealth tax on the richest Americans, criticized big businesses for turning huge profits while paying little in taxes and said he believed billionaires should not exist.

His win in Tuesday’s Democratic primary in New Hampshire has made plausible what Wall Street has for months considered a worst-case scenario: the inauguration of President Sanders.

An avowed socialist whose plans include disemboweling the private health care system and cracking down on lending and other banking activities, Mr. Sanders is considered by many traders, investors and bankers to be the only candidate less desirable than the widely loathed Senator Elizabeth Warren.

Late Tuesday, as Mr. Sanders was pulling out a close win in New Hampshire, Lloyd Blankfein, the former Goldman Sachs chief executive, wrote on Twitter that the Vermont senator would “ruin our economy” if elected president.

He succinctly summed up Wall Street’s feelings, calling Mr. Sanders just as polarizing as President Trump, while being worse for the country. “If I’m Russian, I go with Sanders this time around,” he wrote.

The post quickly attracted thousands of comments from Mr. Sanders’s supporters — some of whom invoked Goldman’s position at the center of the 2008 financial crisis.

“This is what panic from the Wall Street elite looks and sounds like,” Faiz Shakir, Mr. Sanders’s campaign manager, responded in a tweet on Wednesday morning.

Mr. Blankfein, who once said that he was looking forward to “unrestrained tweeting” in retirement, did not respond to messages seeking comment on Tuesday. But his tweet — his latest tussle with a progressive candidate from his own party — was read by many as a direct manifestation of big money’s growing unease with the self-described democratic socialist.

Others on Wednesday brushed off Mr. Sanders’s victory, saying he would be an untenable nominee in a race against Mr. Trump, one that could make people do the unthinkable: vote to re-elect the president.

Mike Novogratz, a Goldman Sachs alumnus who runs the merchant bank Galaxy Digital, said Mr. Sanders’s oppositional nature had prompted “too many friends” to say they would vote against him in November. “And they hate Trump,” he said.

Mr. Sanders’s narrow victory in New Hampshire has helped position him as the candidate with the most enthusiasm from the party’s most liberal wing. Former Mayor Pete Buttigieg of South Bend, Ind., who finished just behind him, and Senator Amy Klobuchar of Minnesota, who surged to third, split the centrist vote on Tuesday.

Mr. Sanders’s surge has come at the expense of Ms. Warren, who some on Wall Street have warmed to. Ms. Warren, a self-described capitalist who says she wants to work within the system to affect change, appears to many to be more malleable: In recent months, she has already walked back aspects of her “Medicare for all” plan, a universal health care initiative similar to Mr. Sanders’s. She also has a history as a onetime Republican who wrote scholarly research on bankruptcy law as a professor and adviser to big corporate clients.

But either candidate would represent a stark reversal from Mr. Trump’s economic agenda, which has been centered on cutting taxes and rolling back regulations. Perhaps as a result of that, their campaign contributions from finance-industry workers have fallen well short of more moderate peers, like Mr. Buttigieg and Ms. Klobuchar, according to year-end figures collected by the Center for Responsive Politics.

Last year, Mr. Sanders proposed the creation of a wealth tax on the richest Americans to help pay for his own “Medicare for all” health program, universal child care and an overhaul to the housing market that would include big subsidies for first-time home buyers. The proposed tax on the assets of households with a net worth above $32 million — about 180,000 households in total — is projected to raise $4.35 trillion over a decade.

He pairs those proposals with a combative tone.

Frustrated over what he views as an “outrageous” degree of inequality in the United States, Mr. Sanders has said billionaires should no longer exist here. And a recent Sanders campaign ad took particular aim at Jamie Dimon, the chief executive of JPMorgan Chase, calling him “the biggest corporate socialist in America today,” an overpaid executive who embraces a brand of socialism “that has eroded our society.”

Vin Ryan, founder of the venture-capital firm Schooner Capital and a supporter of Ms. Warren’s, said he believed Mr. Sanders’s unrelenting approach would hurt his chances against Mr. Trump.

“Bernie Sanders, I think, is a lightning rod,” Mr. Ryan said. “And he’s going to be killed with the socialism by the Republicans.”

As much as many independent voters don’t like Mr. Trump, he said, they could be motivated to vote for him anyway by “pocketbook issues” and the relatively healthy economy that has marked his first term.

That has some in finance expecting that a general election involving Mr. Sanders would result in the president’s largely pro-business policies extending for four more years.

“The lack of any stock market reaction to Sanders’s surge suggests that investors either still don’t believe he can win the Democratic nomination against the more centrist candidates or, alternatively, that Sanders will win the nomination but, in doing so, his lack of appeal to independents makes it even more likely that Trump will be re-elected,” Andrew Hunter, senior U.S. economist at Capital Economics, wrote in a note to clients.

That could change, however, if Mr. Sanders shows signs of having a broader appeal as the primary season continues.

“If Sanders is the Democratic nominee and polls show a reasonable chance of him winning the election, then we expect a sharp market sell-off, especially for financials,” said Brian Gardner, an analyst at Keefe, Bruyette & Woods. “Part of the reason is that investors have discounted Senator Sanders’s chances. At some point investors might reassess this scenario and it is not, in our view, priced into the market.”

Mr. Blankfein, who left the top job at Goldman Sachs in 2018 after a 12-year tenure, has sparred with Mr. Sanders before, including over corporate stock buybacks, which Mr. Sanders wanted to limit.

The antagonism goes back years: In 2012, Mr. Sanders targeted Mr. Blankfein in a speech from the Senate floor, labeling him the “face of class warfare” for supporting cuts to Social Security, Medicare and Medicaid.

Mr. Blankfein, a registered Democrat, supported Hillary Clinton in the 2016 presidential election and has donated to Republicans in the past. At a CNN conference in October, he said he did not see himself reflected in the current party.

But as unloved as Mr. Sanders currently is in the finance industry, not everyone agreed with everything the former Goldman boss had to say.

Mr. Ryan, the Schooner Capital founder, said he didn’t think Mr. Blankfein’s suggestion of Russian favoritism — tongue-in-cheek as it was — invoked the right issue.

That notion is “nuts,” Mr. Ryan said.

Source link

No comments