Trump Wins!!!....Or Does He??

Professor Allan Lichtman has successfully predicted the last nine US presidential elections.  His model is simple - if any six of these questions are seen as False, the sitting president will lose. 

1. Party Mandate: After the midterm elections, the incumbent party holds more seats in the U.S. House of Representatives than after the previous midterm elections.
2. Contest: There is no serious contest for the incumbent party nominations.
3. Incumbency: The incumbent party candidate is the sitting president.
4. Third party: There is no significant third party or independent campaign.
5. Short-term economy: The economy is not in recession during the election campaign.
6. Long-term economy: Real per capita economic growth during the term equals or exceeds mean growth during the previous two terms.
7. Policy change: The incumbent administration effects major changes in national policy.
8. Social unrest: There’s no sustained social unrest during the term.
9. Scandal: The incumbent administration is untainted by major scandal.
10. Foreign/ military failure: The incumbent administration suffers no major failure in foreign or military affairs.
11. Foreign/ military success: The incumbent administration achieves a major success in foreign or military affairs.
12. Incumbent charisma: The incumbent party candidate is charismatic or a national hero.
13. Challenger charisma: The challenging party candidate is not charismatic or a national hero.

Let's see if Trump will be re-ected according to this model.

1. Party Mandate: After the midterm elections, the incumbent party holds more seats in the U.S. House of Representatives than after the previous midterm elections.

The Republicans lost control of the House of Representatives - False

2. Contest: There is no serious contest for the incumbent party nominations.

There are no serious competitors to Trump, however, some Republicans have organized media campaigns against him which is unprecedented - True/False

3. Incumbency: The incumbent party candidate is the sitting president.

Trump is the president - True 

4. Third party: There is no significant third party or independent campaign.

There is no third party or independent challenger of note - True

5. Short-term economy: The economy is not in recession during the election campaign.

The economy will be in recession - False

6. Long-term economy: Real per capita economic growth during the term equals or exceeds mean growth during the previous two terms.

The growth is above the mean for the two previous terms - True...however, the effects of COVID 19 may mask this entirely...a weaker than normal indicator.  

7. Policy change: The incumbent administration effects major changes in national policy.

There have been major policy changes - True

8. Social unrest: There’s no sustained social unrest during the term.

The George Lloyd's murder may result in sustained unrest, but we will not know for months - True

9. Scandal: The incumbent administration is untainted by major scandal.

The entire administration has been a scandal - impeachment will hurt Trump here - False

10. Foreign/ military failure: The incumbent administration suffers no major failure in foreign or military affairs.

The foreign policy pursued by Trump has seen no major failures - True

11. Foreign/ military success: The incumbent administration achieves a major success in foreign or military affairs.

Trump has launched no wars but renewing NAFTA was a major foreign policy success - True

12. Incumbent charisma: The incumbent party candidate is charismatic or a national hero.

Trump is a hero to tens of millions/a vagabond to tens of millions - no American president has ever worked so hard to divide his country - True/False

13. Challenger charisma: The challenging party candidate is not charismatic or a national hero.

Biden has charisma - False

The totals...

True - 9
False - 6

Trump will lose the next presidential election, but we are in uncharted waters as we are seeing opposition to an incumbent from within his own party, and the most divisive president in history, and we do not know how these will play out. Both of these indicators are negative for Trump.

Putin's Next Move?

The President of the United States is very likely a Russian stooge. This basic reality is Putin's opportunity, but the President is up for re-election in six months. This means that Putin has that amount of time to move against the Baltic States, which is surely where he will look next as he continues to push back the borders of his country in an attempt to restore the glory days of the USSR.

These countries, Lithuania, Latvia and Estonia, are NATO allies - they rely almost 100% on the alliance for their protection from Russia. But that alliance is led by a man who benefitted from Russian interference in the last US presidential election, and who meets Putin in private for hours at a time with no debrief provided regarding their conversations. This is totally unprecedented. Putin would be relying on Trump to do nothing of substance should he make a move against the Baltic States soon.

Russia would not out and out invade as there are small NATO forces in these countries and they would not want a face-to-face confrontation that could trigger a wider war.  

The Russian move could take the form of sowing instability in the Eastern ares of these countries, possibly by backing ethnic Russian enclaves, perhaps claiming that these enclaves are suffering from ethnic-based oppression - precisely what Hitler did to Czechoslovakia in the Sudetenland.  

Would NATO soldiers be willing to become internal police forces in these countries, suppressing illegal Russian sedition? If not, then such enclaves would slowly become a fait accomplis as they have in Eastern Ukraine. 

We are about to enter into a very dangerous time in NATO-Russian relations. Trump is not the man for the job.

 
 

V, U, or Hockey Stick?

The world's economies will recover after COVID 19. 

The debate now underway concerns whether there will be a "V" recovery, where we spring right back to where we were prior to the crisis; a "U" recovery where we get back only slowly over time; or a "Hockey Stick" recovery, where we never recover the economic growth that we are losing while we are shut down.

I think we are looking at a mini "V" followed by a "Hockey Stick W", perhaps for decades to come.

The world was on the cusp of a new Great Recession before COVID 19.  The yield curve had inverted in the United States of America three times in nine months last year. Yield curve inversions are followed by recessions an average of nine months after the first inversion, but this can take as long as 18 months.  The economic conditions that were driving this have been subsumed into COVID 19, but they will return after the post-COVID 19 recovery.

For consumers, businesses and governments, there will be a short-term "happy time" starting in about a year - when we get a vaccine and are able to end the crisis and get back to normal, but "normal" was an impending recession. 

When growth stumbles after this short-term sprint back to growth, we will see economies decline worldwide under the weight of debt that is simply unsustainable for hundreds of millions of people and many countries and sub-national governments (...hello Ontario.) Economic growth will then stumble, slowly wavering up and down until we bite the bullet and arrange for debt refinancings and defaults on a worldwide basis that clears the way for a new era in economic growth.

The key question going forward is not whether we will grow - we won't until we deal with debt. The key issue will be who will take the hit in world-wide debt defaults? More precisely, will private lenders - international financial institutions and the wealthiest 1% - get to convert the bad loans that they have made to nations throughout the world to public debt, and leave the public holding the bag when this mass of debt is written off? 

Not only is this the key economic issue, it is also the key political issue of the next twenty years, and it gets to the bigger question of who actually runs the world and for whom is the world run?