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U.S. President Donald Trump before leaving the White House, March 3, 2020, in Washington.

Manuel Balce Ceneta/The Associated Press

Charles Lewis is a former managing editor of the Financial Post.

Donald Trump’s first major economic crisis may have exposed his greatest weakness once and for all: a fundamental lack of understanding of how financial markets work, and a crude-at-best comprehension of economics.

Last week, the Republican who sits in the Oval Office blamed the stock markets’ coronavirus-sparked swoon – the worst week for U.S. stocks since the 2008 financial crisis – on the Democrats. “I think the financial markets are very upset when they look at the Democrat candidates standing on that stage, making fools out of themselves, and they say, ‘If we ever have a president like this,’” Mr. Trump said. “When they look at the statements made by the people standing behind those podiums, I think that has a huge effect.”

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This is not comforting. Investors and markets are considering the likelihood that COVID-19 could become a global pandemic, and the Dow Industrial Average and the S&P 500 – major bellwethers of both the U.S. and world economy – have declined steeply, even after a Monday market bounce. This charged response, along with his cajoling of the Federal Reserve to lower interest rates, appear to be the best he can come up with. He has also put Vice President Mike Pence in charge of dealing with the coronavirus file, setting him up as the fall guy if things get really bad. Mr. Trump is known to shift blame, after all.

What he is not known to do, however, is avidly read his briefing notes. But he should have at least skimmed a recent memo from investment bank Goldman Sachs before casting blame on the Democrats.

“U.S. companies will generate no earnings growth in 2020,” wrote David Kostin, Goldman’s chief strategist for U.S. equities. "Our reduced profit forecasts reflect the severe decline in Chinese economic activity in 1Q, lower end-demand for U.S. exporters, disruption to the supply chain for many U.S. firms, a slowdown in U.S. economic activity, and elevated business uncertainty.”

Ignoring these factors is to ignore the real problem. The Fed slashed the benchmark interest rate on Tuesday, but that may not even help, given the Organisation for Economic Co-operation and Development’s predictions that global growth would be half what it initially projected, and that Japan, Europe and the U.S. were at risk of recession.

This isn’t about the Democrats – it’s Markets 101. No profits mean stock prices fall. People tend to invest in companies that do well or have great potential, rather than stocks in free fall.

And the reasons for the fall should be obvious: The world economy is starting to seize up.

Whole cities in China are closed. Japan has cancelled school for the rest of the month. Major Asian auto companies have stopped shipping, and there has been talk that the Tokyo Olympics could be cancelled. That’s just a sampling.

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Entire countries are in a panic, and while it may not be warranted, it’s taken hold regardless. The results can be seen in the plunging markets, as investors worry about the erosion of their stocks.

Mr. Trump was a businessman – dealing in real estate – and he wasn’t exactly a good one. Still, he’s brought that approach to the U.S. presidency. Mr. Trump and his former real-estate colleagues love low interest rates because they spur sales, even though many economists cited low rates, which pushed Americans to buy without the means to sustain mortgages over the long term, as one of the main culprits for the housing crash of 2008.

This should be the time for Mr. Trump to take the helm. But he refuses to even take serious advice and actually read reports. He goes by instinct. And this time, his instinct is dangerously wrong.

What he should be doing is talking honestly about the potential impact of coronavirus, and reminding Americans and the world that U.S. markets have been roiled many times before, and they have bounced back. He should be assuring those investing for the long term, because there is plenty of time for a recovery. If he actually read history, he could even cite examples.

But he has not, and will not. This is the man, after all, who allegedly did not understand the infamous events at Pearl Harbor.

This past weekend, Mr. Trump held a press conference to once again blame the Democrats for politicizing the coronavirus; on Tuesday, unsatisfied by a rate cut of half a percentage point, he urged the Fed to “LEAD”.

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Americans would be forgiven for thinking that was the President’s job.

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