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USA: MAGA and BBB on the road to nowhere!

Last night’s US local elections threw out some interesting signals as to where gridlock, polarisation and the apparent decay of American Democracy are headed next. Its maybe not all as bad as we fear, but the outlook remains risky!

Blain’s Morning Porridge November 3rd 2021 – USA: MAGA and BBB on the road to nowhere!

“They can tell you what to do, but they’ll make a fool of you… ”

This morning: Last night’s US local elections threw out some interesting signals as to where gridlock, polarisation and the apparent decay of American Democracy are headed next. Its maybe not all as bad as we fear, but the outlook remains risky!

I’m afraid it’s one of these days I dread.

It’s time to write about US politics and what they might mean for the path of global markets, the mighty dollar and geopolitical stability. Whatever I say, I will receive lots of spectacularly ignorant emails telling me I have no right to comment on ‘Merica, and that I’m a god-damn communist for even hinting Trump might not be God incarnate.. but hey-ho and on we go…  

So, let’s start with some facts:

It’s just short of a year since Joe Biden won the US Presidency with a majority of 74 of the 538 electoral college billets and 81.3 million votes versus Trump’s 74.2 million votes. Yet, last night, the Democrats lost a 10-point lead and the Governorship of the Commonwealth of Virginia to political newbie, former Carlyle hedge fund boss; Republican Glenn Youngkin. The Dems nearly lost New Jersey. These were not the only Republican improvements across mayoral, governor and state functionary elections across the USA.

What’s important is how global perceptions of the USA influence trade and markets – and how these change over time. For those of us brought up believing in the legacy of the US as the “Arsenal of Democracy”, post-Camelot, and America’s undisputed primacy among nations, the last few years of confrontation demonstrate the USA is no less venal and as likely to disappoint as any other nation.

I don’t give a hoot about what the trolls will say, but the Republicans lost the 2020 election because the people preferred the hope of Biden to the reality of Trump. 4 years of Trump darkened illusions about US democracy and shifted expectations America will always “Do the Right Thing”. The subsequent Trump denial of the ballot and the events of Jan 6th stunned the world. The World was collectively shocked.

No nation is perfect. Some show their imperfections more than others. Memories and the consequences of the Trump era will take years to be resolved. That said… if there is a global crisis tomorrow, I’m pretty darn sure everyone will pile into US Treasuries as the flight to safety trade, and US stocks will remain the ones to follow.. For now..

The Biden presidency is in deep trouble. Generally, the charge against him is he promised competency and failed to deliver. From Vice President Harris, the border, the bungled Afghan exit, rising inflation, and the failure to execute promised policies – everything he does seems to go against it.

The mud has stuck because Republicans have run one of the most successful political deflection campaigns of all time, reversing the “actualitie” by claiming credit for their reasonable approach to infrastructure and R&D spending, while negating the Dem majority by buttering up Democrat Senators Joe Manchin and Kyrsten Sinema and convincing them to stand against Biden’s “Build Back Better” spending plans. These two democrats (deliberate small “d”) have gifted the Republicans a win, and effectively destroyed the Biden presidency. Such self-serving grandstanding makes no sense to political observers outside the US.

The question this morning – might US politics be stabilising and showing signs it can move forward? If so… that’s a good thing.

My Republican chums are ecstatic about last night’s gains. They point to the Virginia election as proof voters reject the hard-left agenda of the Squad and Bernie Sanders – into whose malicious control they say the Democrats have stumbled into. They say last night was a rejection of hyper-woke sensitivities and ideologies being rammed down the throat of the educational system (such as it is). The point to voters increasing disappointment with Biden on crime, and especially higher taxes.

I had a message this morning from one chum, albeit a foaming-at-the-mouth college republican reptile, who equates the loss of the Virginia governorship as proof positive the American people utterly reject Biden’s reengagement with the Paris Accords and Climate Change legislative proposals that will “destroy the American way of life.” Whateva…

All bollchocks. What happened last night in Richmond was a just a local election won by the candidate who focused better on local issues. Fact.

BUT! The critical takeaway is Governor Youngkin won without mentioning Donald Trump.

Youngkin did accept Trump’s endorsement and then riled the former president by not mentioning him in speeches or campaigning with him. Rather than paying court to Trump, it’s the election-denying ex-president that’s been forced to try and associate himself with the candidate’s win. Trump has been forced to roll back earlier comments about Youngkin not being pro MAGA enough.

The Democrat strategy was to connect any strong Republican candidate to Trump. They argue how Republicans who voted against Trump are being forced out the party. That backfired this week. Youngkin won on local issues and education while letting the Dems whitter on about Trump, Trump and Trump.

Both US political parties suffer from similar perceptional problems: The Democrats are suffering from the charge they’ve been hijacked by the Hard-Left. The Republicans look like the political tool of Hard-Trump. These are the points defining US politics at present – and the source of the apparently unresolvable gridlock and political polarisation.

Every serious US politician knows the US needs to build better infrastructure, rebuild its education system, address inequalities, and healthcare if it is ever going to convince the World it is great again. But their political system has become adversarial and divisive it cant deliver – and won’t in the immediate future. Be prepared to write off the next 3 years. To move forward one party has to clearly win the next election cycle with a functional majorities (as opposed to the Dem’s current dysfunctional one).

My guess is the next election will be won by whichever party addresses its electability issues and moves back to the centre most effectively. It is probably already be too late for Biden to cement his 4 year term with a scaled back BBB programme. It looks likely he will lose his apparent majorities in Congress and the Senate at the mid-terms next year.

Last night’s success should be a wake-up to Republicans. The smart ones know Trump is too divisive, too old and likely to face increasing legal pressure. (Great story yesterday on Bloomberg about the recent SPAC of Trump’s pie-in-the-sky media empire broke every single SEC rule: Trump SPAC had a head start.) The Red Leadership watched Youngkin steal Democratic heartland by not playing the Trump card. The smart move would be to try and diminish the noise around their discredited former leader by quietly ignoring him in the hope he fades away.

It’s a risky strategy – the more noise Trump makes, the more the critical swing voters will be put off. But the longer they don’t act, the more Trump will be able to remove Republican leaders he perceives to be disloyal.

Where does that leave us? The possibility of US political sanity at the next election? Or larger risks through the next 3 years? China and the rest are watching.

Watch that space…

Five Things To Read This Morning

FT – Coal Miners profit from energy market turmoil

FT – Investors question green tint of Teva’s $5 Bln sustainability bond

BBerg – How Science Fiction and Midcentury Angst Shaped Elon Musk

WSJ – Financial System Makes Big Promises on Climate Change at COP26

Torygraph – Stagflation is coming: central banks and governments are right to be terrified

Out of time, and back to the day-job

Bill Blain

Strategist – Shard Capital

 

 

 

7 Comments

  1. Youngkin probably won because a local Virginia school board tried to cover up the rape of a 15 year girl in her school bathroom by a skirt wearing biological boy and then had the girls father arrested for speaking out about the coverup at a school board public meeting.

    I’ll give credit though to the Congressional Democrats for trying to ram through a unbelievably ambitious agenda while holding the slimmest political majority in modern times. They are nothing if not committed and determined to change America. That’s the Republican problem. Without Trumps base forcing the Republicans to stand for something they won’t. In British political terms what’s the point of electing Conservative governments if you just end up with Theresa May and now Boris Yelt er Johnson?

  2. Top of the Morning to you Bill,

    It is morning again in America in that we still spell with a “c” vice a “k” no matter how much the Looney Left hopes that “Democracy will die in darkness” with a Hat Tip to Jeff Bezos’s newspaper.

    I completely understand while you are so dour today. I would be too if they turned Glasgow into Glasblow with a giant carbon plume being sent Greta’s way.

    Youngkin in Virginia won (the Dems are still trying to steal it in “Lord” Fairfax County that I live) for one simple reason – America is still a free society vice being told what to do by the chattering class. The is why Speaker Pelosi wanted the infrastructure vote and the other vote for $5 trillion dollars before November 2nd since they all knew how it would go. Blame 2 Dem senators all you want but they probably saved their party and the country’s progeny a giant bar tab on the national debt.

    But yes let’s start with some facts:

    Joe Biden came in 5th in the 2020 Democratic New Hampshire primary behind Comrade Bernie, Mayor Pete, Sen Klobuchar and Pocahontas. Kamala Harris dropped out before January 2020 so that she could still run as a Senator in California. No one in American History has come in 5th in the New Hampshire primary and won the presidency. But Liberals being Liberals knew no one would elect them if they knew what they would do (just look at the UK Labor Party). Hence President Biden and Vice President Harris. While you are in Glasblow you should chat up the Dems and Liberals on Kamala becoming President so Joe can get a real nap. Just start chatting to see real fear in their eyes.

    I didn’t vote for President Biden, but C’mon Man cut the guy some slack on sleeping through the most boring stuff of our time. As I was finishing my undergrad in Physics my professor asked me if I had a medical sleeping condition since I couldn’t stay awake in his Optics class. I had to tell him quite embarrassed no with it having to do more with his class being right after lunch. Some things aren’t that hard to figure out.

    But on Glasblow, it had nothing to do on saving the planet but was just about generating some panic porn. If this was a serious discussion on global warming then they would have invited people like Bjorn Lomborg an others who believe there is global warming and want to discuss constructive ways to address. I believe it is all rubbish and humans just think they are more important than they are. Mother Earth will be fine.

    But Climate Change will kill a lot of people sooner rather than later as they sadly freeze to death as their governments solar panels and windmills don’t generate enough energy. I would have been all supportive of the COP-out if every night at 11 PM they shut off all power to the participants until 7 AM next day while they shivered in bed listening off in the distance to the diesel generators running to recharge all the Tesla’s. Hopefully that would focus their minds on improving the lives of everyone struggling to survive.

    I consider you a brilliant man with a lot of whit so why do you let Donald Trump live rent free in your head? I get it why US politicians do since he calls them out. But I believe at the end of the day it is because he is right on a whole lot of stuff which drives people on the Left mad. Before you say bollocks just remember the nickname Trump gave Biden – Sleepy Joe.

    Quod Erat Demonstrandum

  3. It’s not that you don’t have the right to comment on ‘Merica … there is free speech, even more so for you since this is your shindig that we are all crashing.

    So please continue to rattle on and reveal yourself for everything that you are.

    Tell any of the whinging yanks, poms or others to bugger off …

    The main reason I come here is to read another perspective – from a “chum” that seems like a decent, somewhat intelligent bloke … we don’t have to agree on everything in order to be mates … at least that is the hope!

    For the record, your comments on ‘Merica seem to me neither Wrong! nor Right! … more like a simple, caricature level understanding … lacking the level/depth of insight that can only come from living on the ground somewhere or actually having grown up as part of the ongoing American experiment.

    So while I truly enjoy and benefit from your commentary – and while I somewhat discount your proclamations on ‘Merica (I see them partly as shock value/ stirring the pot, partly having fun, partly helping ‘Mericans not take themselves so seriously, partly misinformed) I do wholly value them as an accurate and important window of how the outside world views America (sorry, I know you prefer ‘Merica 🙂

    Keep Calm Carry On … and Tally Ho good man!!!

  5. As a disaffected American resident, not certain that I wish to be identified as a citizen of the gun obsessed dystopia, the future direction of the country is clear. The Democrats will lose bot houses of Congress in 2022 and the Presidency in 2024.

    The gereatric leadership of the party is incapable of moderating the influence of the Woke, Critical Race Theory, Defund the Police zealots. As a result the now vocal majority, including blacks and Latinos are voting Republican out of self interest and self defense. The elite enclaves in the coastal metropolises and university towns are unable to comprehend that it is a class struggle that motivates the the non-elites.

    The only question is if Trump will return to the White House in 2024 or it it will be a Trump-Lite surrogate from Florida or Texas…Hobson’s Choice.

    I personally am exploring the practicalities of migrating to Oz. No guns, no gun nuts and a beautiful country.

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