The intersection of politics and business is rarely good for anyone. Too much money corrupts governing and too much governing can get awfully expensive – as can haphazard, capricious, and ego-driven governing.
Which is why the question has to be raised now that a certain person appears to be cruising to the Republican nomination – and his name ain’t Cruz. We have a policy at Barataria of never mentioning his name, something like Voldemort, as he gets enough oxygen for being obnoxious (noxygen?) already.
But is his rise part of the reason why markets have been somewhat panicked? It’s hard to tell, but there is reason to believe that markets in general, as well as faith in the US of A from abroad, are starting to react badly to the rising prospects of the greatest nation ever being run as the largest and most powerful ever set for a reality show.
It’s been a bad year for stocks and a bad year for the establishment. It’s natural to assume the two might be related as the great Powers that Be quiver in fear of the barbarians at the gate. Or, perhaps, you may prefer the less romantic vision of a bunch of boorish idiots in charge of the highly complicated machine that is a modern economy.
The rise of the Republican front-runner is probably more of a worry than the bank-busting healthcare-providing platform of Sen Sanders. While Clinton has had a reasonable scare the betting money is still on her to win the Democratic nomination and eventually the Presidency with about a 52% chance.
The Republican race? No one has believed what’s been happening so far. On Feb 11th this piece asked, “When will financial markets panic?” Two weeks and a few blistering wins later, including 46% in the Nevada caucus, it’s more of a question of how the panic will set in. That certain person has gone from about a 20% chance to 37%.
Sanders, who should scare them more, is given only an 8% chance by the betting money.
It’s not as though his support is really that deep, after all. Running a consistent 30-something percent of a party that makes up a third of the electorate gives the frontrunner a 10-12% base, hardly a majority. The big win in Nevada was much scarier, but 35k votes is still just a bit over 1% of the population of the Silver State.
For all this noise, a successful businessman would be good for stocks in general, yes? Not one who is running on a “Screw China” platform or looks likely to cause friction with our less blusterful allies (ie, all of them). Populist risings of any kind are a good reason for establishment money to be afraid – even if not always for the right reasons.
Howard Marks of OakTree Capital said on Bloomberg that he is “Scaring the Hell out of people,”, but Nick Colas of Convergex said on the same show that the odds still favor Clinton and there’s no reason to go nuts.
Over on CNBC, Managing Director and Chairman at Standard & Poor’s Investment Advisory Services Mike Thompson said “I think markets are in a kind of a state of disbelief. I don’t think they’ve ever seen anything like this. The extreme between the two parties is really striking,” On top of worries about global stability and the potential for default in the oil patch this is not what the market needs.
Whether or not there is a panic on Wall Street now, most agree that more wins by the frontrunner will gradually become a problem. More and more calls are rising for the Republican Party to do something, anything, to derail this prospect. It seems that most investors are perfectly fine with the idea of Clinton as president.
Go ahead and be smug, Sanders fans. Go ahead, you win this one.
It is certainly worth keeping an eye out for worry about the next president to influence stock markets, but it does not seem like a critical factor – yet. A lot depends on the reaction after Super Tuesday when the juggernaut may trigger a general upheaval in the party.
The rough ride is far from over.
I see no merit in this post at all.
Well, sorry about that. I think the next one will be more to your liking – a busy life made me have to take a bit of a pause as I evaluate the array of progressive proposals and reactions to them – which I plan to work on over the weekend.
Super Tuesday is really the name of the game right now.
I tell you, we are scared to death, in Canada. I understand he’s a business man but didn’t he go bankrupt several times?
His businesses went bankrupt four times. They are all independent operations, and he has many, so his side can claim they were inconsequential. I think it’s very important.
He isn’t averse to risk even if it is on the wild side.
As long as it’s with other people’s money, yes.
And other people’s lives.
The above article was originally published in The Nation.
But the anger of American voters isn’t unfounded. This economy still doesn’t work for most Americans. Most households haven’t recovered from the financial collapse. The median household wealth of black families — now a bleak $11,000, according to a 2014 Pew Research Center report — was cut almost in half by the collapse and hasn’t recovered. Working families know that they have been savaged by ruinous trade policies that Obama supports. Banks got bailed out, and they are bigger and more concentrated than ever, but homeowners were abandoned. Insurance and drug companies and private hospital complexes still force Americans to pay obscene sums for their health care.
And this economy could get worse before most Americans feel the recovery. Gross domestic product growth last quarter was estimated at 0.7 percent. Across the world we see Japan in decline, China slowing, Europe stagnant at best and Russia and Brazil headed into depression. Whether the United States can remain an island of slow growth in a troubled world remains to be seen.
What Democrats better learn — and learn fast — is that more and more people get that the rules have been rigged for the very few. They see the corrupted politics, the revolving door between Wall Street and Washington. They see that entrenched interests clean up while average Americans get cleaned out. And increasingly, Americans are in revolt against the establishments of both parties that have led us down this road.
There is a slowdown in the United States and Europe is being negatively affected.
The question is how long this pause continues for – and how big of a correction does is cause. Two questions, really.
China is restricting travel to Taiwan.
China is building radar in the South China seas.
The Dark Valley a Panorama of the 1930s
“Dark Valley” as a phrase was coined first by the Japanese to refer to the desperate years of chaotic depression that followed the 1929 slump. But, as Piers Brendon’s epic history of the same name vividly demonstrates, it was apt to describe any of the world’s leading nations of the time–the crippled, traumatized European powers, a moody, solitary U.S., Stalin’s outcast Soviet Union, and volatile, upstart Japan–with varying degrees of severity and fascinatingly contrasting outcomes. With no dishonor to those who endured the unspeakable traumas of the First World War, reading Brendon’s scholarly tome leaves little scope to argue with the assertion, made by Leon Blum, among others, that the economic crisis and its effects were as traumatic as the “war to end all wars.” Worse was to come, for sure, but the events that led to the “chasm” of the Second World War still boggle the mind–from our safe distance it is difficult to comprehend that this actually came to pass, yet at the same time the whole era seems to be engulfed by a fatalistic air of inevitability. In many ways, the insane dance of rampant ideological forces and economic desperation unleashed across the sphere make for the more gripping history, and in Brendon’s hands, the cast of thousands is skillfully evoked, while the facts are judiciously evaluated, in a rolling narrative through the tribulations of the era. This is first-class historical writing, but certainly not for the faint-hearted.
OECD calls for a stronger growth plan
Good link. This lines up with what I saw at Davos, which is that the highest level leadership is consistently calling for fairly radical change.
I don’t get this post either. Are you trying to tell us that the establishment is about to take on Trump? Rubio is certainly trying but its all a day late and a dollar short.
I guess I did a bad job. This is a setup for what I do expect to come, which is an all-out assault on Trump. He has to scare the market movers before the resources to perform the operation will come in. That may be happening.
Yes, I agree that it’s late in coming.
It is all a show & everyone loves it. Even you. https://www.youtube.com/watch?v=BUSqyfDKAQQ&feature=youtu.be
Excellent! This is a must-watch (warning – lots of bad language, but it has to be done that way!)
Trump is scary as hell & we should all panic by now.
I agree, but let’s see how the establishment responds
Some very astute observations, Erik! You and I share basically the same point of view as regards “he-who-shall-remain-nameless” … we just tackle it from different perspectives. I have sworn off posting about him until at least Sunday … we shall see if I can stay true to that oath 🙂 Great post!
Ode to the lost Republicans
I miss you George HW Bush
I miss you Bob Dole
I miss you John McCain
I miss you Mitt Romney
All of you lost presidential elections
The democrats thought you were evil
But you were honorable
Compared to Donald Trump
They whipped John Boehner
When he said nothing racist or merciless
Erik made fun of you
And now we have Donald Trump
Do Minnesotans remember the high they
Had when “maverick” Democrats elected
Yes they liked it
But they hated Norm Coleman more
They remembered seeing Norm Coleman with
Long hair and how he switched parties
That is not to be forgiven in MN uff da
MN nice filled with limousine liberals
And now we have Donald Trump
“According to USDA’s Economic Research Service (ERS), national net farm income—a key
indicator of U.S. farm well-being—is forecast at $54.8 billion in 2016, down 3% from last year.
The 2016 forecast represents the third consecutive year of decline and would be the lowest since
2002 in both nominal and inflation-adjusted dollars. Net farm income is calculated on an accrual
basis. Net cash income (calculated on a cash-flow basis) is also projected lower in 2016, down
2.5% to $90.9 billion.”
We not only have 2016 business recession but also we have had for a couple of years a farm recession.
–I want to add that the oldest baby boomers were born in 1946. The average age at retirement is 62. So baby boomer retirements have been going on for a while. The thing is that a retirement may open up a position. On the other hand it might not. Depends.
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