WSJ asks: Liquidationist?

Investment Analysis Clubs Macro Economic Trends and Risks
1

I’ve never seen the word “liquidationist” before but it doesn’t sound good.

It especially doesn’t sound good when the conservative, usually bullish Wall Street Journal uses “liquidationist” in a headline about the economy.

https://www.wsj.com/economy/is-trump-taking-a-liquidationist-approach-to-the-economy-dc06d544?mod=hp_lead_pos10

Is Trump Taking a ‘Liquidationist’ Approach to the Economy?

The administration’s view that damaging the economy now could help it later comes with little upside for investors

By Jon Sindreu, The Wall Street Journal, March 12, 2025

During President Trump’s first term, stocks rode high on the belief that he would always pull back on policies that led to a selloff. Now, the administration is making a much tougher pitch: that even if tariffs and budget cuts cause a period of havoc, there are unexpected gains to be made on the other side.

The problem is there isn’t much evidence to make investors believe that. Indeed, such views edge close to the “liquidationist” approach historically espoused by laissez-faire economists, and most infamously associated with former President Herbert Hoover’s Treasury secretary who advised him to let the economy fall… [end quote]

Meanwhile, Fidelity’s news page is showing today’s Reuters article. Anyone reading the news on Fidelity is bound to be an investor.

https://www.fidelity.com/news/article/top-news/202503120605RTRSNEWSCOMBINED_KBN3FP0SR-OUSBS_1

Analysis-Ominous market signals show more trouble could await US stocks

By Lewis Krauskopf and Suzanne McGee, Reuters - 6:09 AM ET 3/12/2025 Top News

NEW YORK (Reuters) - Investors are wary about worrisome market signs, after a steep U.S. stocks selloff that has wiped out more than $4 trillion in value and all of the gains notched following President Donald Trump’s election.

Among the signs are technical signals such as the S&P 500 on Monday closing below a crucial trend line, a key measure of the market’s internals weakening, a concerning pattern in volatility futures contracts, rising cash levels among investors and de-leveraging by hedge funds away from equities.

U.S. equities experienced a punishing drop this week, with the S&P 500 briefly falling into correction territory on Tuesday as uncertainty over Trump’s tariffs exacerbated worries about economic growth…

The ominous market signals add to growing anxiety about the economic outlook. A Reuters poll last week found 95% of economists across Canada, the U.S. and Mexico said the risk of a recession in their respective countries had increased following Trump’s chaotic tariff implementation…[end quote]

Of course, there may be differences of opinion. That’s what makes markets. The current dip may just be noise.

But the current drop is based on major tariff actions and deep uncertainty, not a few words from the Fed. The trade is deeply risk-off. That includes junk bonds as well as stocks, implying that traders are suspecting a coming recession may lead to corporate defaults.

Wendy

Wendy

9 Likes
2

Yep. There are people who believe these things.

Andrew Mellon, for one, a Hoover official

“ liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system. High costs of living and high living will come down. … enterprising people will pick up the wrecks from less competent people."

In other news, the market was up this morning long enough for a cup of coffee, now down 350. Sucker rally.

It’s working great, eh?

8 Likes
3

You win another pump seal company story.

Every couple weeks, my boss would decide to go out and visit a field rep for a while. He always had a “trouble job” on his desk. When he decided to get out of town, he would drop the “trouble job” on my desk.

I would review the file, and find that everything had been progressing well, until someone made the mistake of CCing my boss on some correspondence. My boss would then start providing his “input”. In short order, people became confused about what was going on, and the project became a “trouble job”. All it took to straighten the project out, was to remove my boss’ involvement.

That is my takeaway for the current situation. All TIG has to do is stop agitating, and everything will get sorted out.

These last few weeks have been giving me flashbacks to the 80s. I worked for people like TIG. I have seen these attitudes and these tactics before. This sort of nonsense swirled around me for years.

Steve

1 Like
4

Not much volume in this bounce, seems tepid to me.

Nasdaq

image
image1920×1215 313 KB

S&P500

image
image1920×1215 291 KB

5

Ok, I’ve got a story to match yours.

We had visits from corporate on a regular basis. I would escort them through the plant. One-time corporate manufacturing said “It looks like everything is running really smooth. Do you have any problems you need help with?” I looked at him and said “Do you think I’m dumb enough to tell you my problems? You’ll make a simple problem into a major issue. I have some problems here, but they have all been tucked away for the next 2 days while you are here. If I get into a jam and need your help I’ll call you.” He just laughed and said ok.

6 Likes
6

I have seen the word in some form. It makes the Jewish side of my family nervous.

7

I would not dare say that to any of the honchos in the places I worked, because the immediate response would be “if you have problems, then you must not be up to the job”. Learned that pretty fast at the pump seal company. Some times, the VP Marketing would poke his head into my cube, and ask how things are going. If I said I was really pounded with work, he would say “if you can’t handle it, I’ll find someone who can”. If I said it was a bit slow, he would say “then it’s hard to justify having you here”. Takeaway: never, ever, ever, tell management the truth.

Steve

4 Likes
8

As mom used to say, “Talk is cheap”. If a VP says anything to me it is only talk. Remember s/he is over their head if the talk is rough. It’s a PITA but talking rough makes them feel like the good ol’ boy’s network is at work. LOL So give it back to them.

I finally figured out to tell mom, “I use talk with women because it is cheap”. I think she was proud of me.

9

Bingo. I got called in to companies by the top people (Pres, owner, board, etc) to “fix a problem they couldn’t fix”. Always, the problem was caused by top mgmt. Usually, after one hour of them explaining the problem, I would tell them that fact–to their faces. They were not happy, but the problems went away once they stopped being idiots and interfering where they did not have a clue about what needed to be done.

10

We have a new boss in my division. Second word with him I asked about a small situation we both had experience in years ago. He went over to that manager and asked about it. The manager put in his two week notice.

Turned out four or five people were quitting or being fired because we had a new boss.

Not so fast. The plot thickens. The manager’s department had serious complaints against it. I was just a needed useful word.

When the manager quit we got someone better into that department. The entire exercise may have revolved around that. But as in baseball don’t ask questions just work as a team.

11

That is the way the honchos at that company rolled. A daily diet of abuse, threats, and jive. The company circled the drain, until it was bought by Durco, to be their in-house seal vendor. When Durco was rolled into Flowserve, the seal company honchos were not invited to move to Flowserve HQ in Houston.

Steve

1 Like
12

We are DEI. No one is supposed to ever get treated that way.

But the underground exists.

I skirt the underground.

In reality the underground does not exist. Males say stupid things to each other. I just go with the flow when we are having some fun.

The few people doing these things are lower IQ. Even though a few of them are over me in rank. I tell them how it really is and they agree. Reality is not the strong suit. You are saying that much as the bottom line.

Its a bonding exercise. Unofficial.

13

No DEI at that company. There was one token African American in the offices. No females above secretary.

Look at the way TIG treats anyone he wants something from. Same playbook. Abuse, threats, and jive.

Steve

14

The term is still used in modern, ideological discussions of the communist left.

Comrades, we read with interest your document “Opposition formed in the Fourth International,” published on 3 February 2017 on the website of Socialist Action, the American affiliate of the “Fourth International” (FI)…
‘Broad Parties’: Liquidationism of the 21st Century
The document focuses its critique on the strategy of participation in “broad parties” of the left (the Anticapitalistas in Spain, Syriza in Greece and Lula da Silva’s ruling party in Brazil), a policy it characterizes as a “catastrophe.” It describes how the sections that liquidated into these reformist formations began by abandoning any pretence of a revolutionary perspective and ended up supporting capitalist governments in their attacks on the working class.

DB2

1 Like
15

Interesting so you are saying Trump is a communist?

2 Likes
16

hahahahaha
Bob,

I have no clue what the right does. But it does not make sense.

17

No, the Wall Street Journal. :slightly_smiling_face:

DB2

1 Like
18

eww you are reading communist propaganda?

I will call ICE before its too late.

19

That is interesting. I would have never thought the Journal would go there.

1 Like
20

If you look up the word you’ll find two quite separate meanings. I was having some conflation fun.

DB2