America is in crisis, but ‘the biggest casino in the world’ is open for business

Pandemic economics is proving the wisdom of the savvy investor who once called the New York Stock Exchange “the biggest casino in the world.”

Nearly 40 million Americans have lost jobs, but Wall Street is on a tear. On Tuesday, the S&P 500 index was about back to where it was before the coronavirus crash. The Nasdaq hit a record high. Airline and cruise ship stocks are soaring, though no one knows when world travel will be safe. And the savvy investor — one Donald J. Trump — is at it again.

“Big day for Stock Market. Smart money, and the World, know that we are heading in the right direction. Jobs coming back FAST. Next year will be our greatest ever!” he tweeted Monday.

The US President never stops claiming credit for a bull market, though he goes AWOL when the bears are prowling. And his faith in the Dow Jones Index as a barometer of general prosperity is misplaced. Optically, it’s positively indecent that while so many are suffering, greed is still good on the Street. There might be no better sign of the economic inequality that Trump’s presidency has exacerbated.

There are technical reasons why stocks are up. Central banks are pursuing exceedingly loose monetary policies to support crisis-hit economies, so there’s plenty of cheap money around for bargain hunters. There is also the kind of hope that boosts always forward looking traders: a surprisingly good US jobs report and the opening of European economies.

But this apparent recovery is fragile. A resurgence of Covid-19 cases and new lockdowns could force a new crash. The US jobs report might not be quite as good as it seems. New data shows the recession actually started in February — which suggests the economy was hardly the world beater that Trump proclaims. And while more than half of Americans own stocks — largely thanks to pensions invested in the markets — many of the people hardest hit by layoffs and furloughs don’t.

Booming Wall Street may be less a symptom of Trump’s promised “transition to greatness” than it is what another stock market sage, former Federal Reserve Chairman Alan Greenspan, might call a sign of “irrational exuberance.”