China, the Fed and Obama: U.S. presidential candidates lay blame for stocks rout

Reuters News
Posted: Aug 24, 2015 10:22 AM

By Lisa Lambert

WASHINGTON (Reuters) - As China's stock-market plunge spread to the United States, presidential candidates on Monday laid on blame and pushed their policy ideas from the sidelines, with Republican Donald Trump saying he had warned about U.S. exposure to China.

"I've been talking about China for years. Because China's going bad it's going to bring us down, too, because we're so heavily coupled with China," said real-estate mogul Trump on Fox News. "I'm the one that says you better start un-coupling from China because China's got problems."

Trump also pointed a finger at hedge funds and said that if he were elected president in 2016 he would raise taxes on the wealthy and specifically target those working in high-stakes finance.

The rhetoric was reminiscent of the final months of the 2008 presidential election, when Republican nominee John McCain suspended his campaign in reaction to the massive financial crisis.

The lack of new measures from Beijing to support Chinese stocks following an 11 percent drop last week sparked a free-fall in global equities and a selloff in oil and commodities. Wall Street's rout continued on Monday, with the Dow Jones Index down more than 1,000 points, or about six percent, shortly after the open.

Following Trump on Fox News, fellow Republican candidate and former Hewlett-Packard Co chief executive Carly Fiorina said she had expected a market correction for "some time."

"The market has been way too high, given the fundamentals. Our economy is not particularly strong - 2 percent growth is very lackluster. China's economy has been slowing down for some time. Europe's economy is in trouble," she said.

But Fiorina mostly blamed the Federal Reserve.

"I think the stock market has hit record highs over and over again because the Federal Reserve has ensured, through its easy-money policy, that the stock market is the only place you can earn a return," she said. "I think this is warranted honestly."

New Jersey Governor Chris Christie, also a Republican candidate, told Fox News the government under President Barack Obama had borrowed too much and with China a major buyer of U.S. debt a market correction in the Asian superpower is "going to have an even greater effect because this president doesn't know how to say no to spending."

"What you need to do in the Oval Office is rein this government in. Stop running up so much debt," he said.

(Reporting by Lisa Lambert; Editing by Andrea Ricci)