Donald Trump was never going to win. As stated here long ago. Weekend events confirmed the obvious. The most unqualified person ever to stand for the world’s most important office didn’t have a chance, no matter how many ‘deplorables’ filled stadiums to cheer on their quixotic, unhinged hero.
The contest isn’t about left against right. Nor is Hillary Clinton any prize. Both candidates suck, but one has a proven track record of governance. The other one tweets, makes money and divides. Trump, so imperfect, is the empty vessel into which a disenfranchised American middle class poured so much hope.
That’s the story. Financial markets always assumed a Clinton win, so expect a post-debate bounce on Monday. (Update here.) But traders, investors the elite often don’t comprehend the depth of anger that created Trump – making this unlikely, vulgar, self-possessed billionaire into a working-class saviour. Yep. That’s it. Brexit, all over again. TPTB ignore it at their peril.
I’m writing this pre-Sunday night debate, assuming he shows up and confirms the election’s outcome. The Republican party’s been torn down the middle, with the cheering malcontents on one side and the evangelicals plus soft-right fiscal conservatives on the other. Trump’s now toxic, could cost the GOP a slew of seats plus end up making millions of Americans feel they’re utterly voiceless when he’s thumped on the 8th.
So why’d it happen?
Simple. Trump became the nominee of a major party because Republicans saw the torrent of support he engendered and feared standing in its way. The bigger question is why a deeply flawed guy like this got so far. Unless addressed, the leader who comes next could be a far worse choice for America, and the rest of us.
As with Brexit, in which disentitled and angry voters struck out in what they saw as naked self-interest, the enemy is ‘them.’ The elites, central bankers, corporations , 1%ers, Chinese, Muslims, career politicians, terrorists and immigration. All of this flowed from globalization, in which the dismantling of trade barriers led to the efficient utilization of capital and labour, plus a serious lowering of overall costs.
What that means to the Trumpians and Brexit voters: they took our jobs.
Making it worse have been the low inflation and rock-bottom interest rates central bankers created. That means savings pay nothing (forcing people to take more risk), loans are too cheap (so debt is epic and houses unaffordable) and the rich get richer. Ten thousand Boomers retire in the US every day. Their average net worth is $102,000, with an average of 22 years to live. Pensions are scarce. This is not going to end well. Seems everyone but the political leaders gets that.
Trump has offered simple solutions to a structural problem. Rip up trade agreements. Bring the jobs back from China. Build a wall across the border. Ban Muslims. Punish corporations and Wall Street. Oppose Washington. Make America great again. It’s a narcotic to millions on the outside. The last thing they want are political dynasties, like above-the-law Clintons.
Trump’s electoral defeat will be good for the markets, investors and the one-percenters. It will facilitate the Fed raising interest rates on December 14th and then into 2017. Hillary will pose no threat to the status quo, despite the campaign rhetoric and the silly promises she made to shut Bernie Sanders up. The tepid but relentless US recovery will continue. Global growth will not be arrested by an isolationist American leader. People sitting on balanced, globally-diversified portfolios will do just fine. Those who’ve been hiding in cash, fearing the election or expecting a recession will wish they’d received better advice.
The immediate future looks fine. The next few years, ditto. But when a populist firebrand comes long who’s not a bigot, racist, egotist fake, look out.