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Larry Summers: Trump Presidency Would Be 'Unsettling' for Financial Markets

Image: Larry Summers: Trump Presidency Would Be 'Unsettling' for Financial Markets

By    |   Tuesday, 28 Jun 2016 11:54 AM

Former Clinton Treasury Secretary Larry Summers predicted that a Donald Trump presidential victory would be "unsettling" for financial markets.

Summers, who served in two Democratic administrations, told CNBC that the nationalistic forces that led to the vote in Britain to leave the European Union make the "the possibility of a Trump victory more real" because his supporters share similar world views.

"[But] Trump has behaved in so bizarre a way [post-Brexit] it's made those risks less salient than they could have been" for financial markets, Summers said.

The way Trump has conducted himself on the Brexit issue and past controversial remarks he's made about women and minorities makes his candidacy "look deeply disturbing," said Summers, a former economic adviser to President Barack Obama.

Meanwhile, Summers called the British vote to leave the European Union the worst political misstep in Europe since World War II.

The EU won't crumble, but it becomes a "less sound experiment" without the influence of the United Kingdom, the Harvard professor told CNBC.

The controversial vote also has a 50 percent chance of plunging Britain into recession.

World central banks have little firepower to throw at potential global economic unrest created by a Brexit, CNBC reported Summers as saying. Summers called the current environment the "moment of least capacity" for policymakers to make a difference.

While many prominent business figures have been choosing sides in this contentious presidential race, one investment icon bluntly says it doesn't really matter who becomes the next president.

For one, Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc, has said a Trump presidency wouldn’t be the blow to U.S. business that some fear, Bloomberg reported.

“If either Donald Trump or Hillary Clinton becomes president, and one of them is very likely to be, I think Berkshire will continue to do fine,” Buffett, 85, said at the company’s annual shareholders meeting in Omaha, Nebraska.

The outcome of November’s presidential election is unlikely to change the fact that the U.S. is a “remarkably attractive place in which to conduct a business,” said Buffett, who endorsed Democrat Clinton at an Omaha rally in December. U.S. companies have enjoyed “terrific” returns on equity despite a sustained period of ultra-low interest rates, he added.

Buffett, who has criticized Trump in the past and scorned politicians’ pessimism about the country, looked past the current voter angst for a longer view of U.S. economic prospects.

‘Far More’

“Twenty years from now, there’ll be far more output per capita in the United States in real terms than there is now. In 50 years, it’ll be far more,” Buffett said. “No presidential candidate or president is going to end that. They can shape it in ways that are good or bad, but they can’t end it.”

Asked how a Trump presidency might affect Berkshire’s business, Buffett replied, “That won’t be the main problem.” He didn’t elaborate.

(Newsmax wire services contributed to this report).

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Former Clinton Treasury Secretary Larry Summers predicted that a Donald Trump presidential victory would be unsettling for the financial markets.
larry summers, donald trump, presidency, markets
Tuesday, 28 Jun 2016 11:54 AM
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