Only in few days, Americans will choose their new president. In my opinion, this election is one of the most important events in decades. Since Kennedy, you can see that the choice of candidates represented only the interests of the establishment – represented this time by Hillary Clinton. This time it may be different due to Trump’s promises to limit the dominance of the wealthiest 0.01% part of society. I do not believe he is the ‘saviour’ of the middle-class as he pretends to be. It is rather strategic of him to use growing discontent in the ever divided society. The drastic difference between 90% of American workers and top bracket is the main reason for dissatisfaction.
The chart below shows how big the chasm is between average Joe and S&P 500 workers.
Source: Economic Policy Institute
During the 1978 – 2015 period, the pay of the employee of the biggest corporations skyrocketed from 500 to 1000%. Most Americans barely saw any difference during this 37 year period!
This pay chasm quickly translated into wealth disproportions, see below:
Source: Washington Center for Equitable Growth
As a result of disproportions in earnings, wealth distribution and active attempts to save big banks and conglomerates we see something emerging for the first time since decades. Someone from outside of the establishment who does not represent the interest of said establishment has a chance to win the election.
This situation presents a threat to the power elite and the deep state and naturally the reaction is to discredit and stop non-establishment challenger.
All mainstream media uncritically chose to side with Hillary Clinton resembling more of propaganda machines working overtime just like in Third Reich rather than applying the same standards for both presidential nominees. Hillary Clinton and Trump are going head to head in this race, but you will not know this from the polls because practically every single one of them tells you that Clinton is leading. These polls are published by so third parties which already made headlines during the referendum in the UK in July when they were unequivocally showing Remain camp as a winner. Soon after Brexit won.
Independently of who wins we should be ready for both scenarios and policies they represent:
Hillary Clinton wins
In case next president of the US will be a Democrat we shall see a dangerous continuation of what we experience today. The US will continue fulfilling their role so characteristic for falling empires: provoke conflicts with potential enemies as long as there is a chance to hold onto the status of the only superpower in the world. The conflict resembles the Cold War – NATO on one side and Russia with China on the other. A destruction of the Middle East will continue.
The war in Syria is about two things. Firstly, it serves a purpose of cutting Russia from the Mediterranean Sea (Russian naval base in Taurus – Syria). Secondly, a takeover of Syria enables the US to build a pipeline from Qatar to Europe pushing aside Russian Gazprom as a monopolistic seller of energy to Europe. This battle will shape future of Europe and will continue until one side decidedly wins.
Similar battlegrounds are in India, Brazil, RSA and Iran. We should not expect military conflict there but rather an attempt of the US to dismantle the alliance of BRICS emerging as a significant threat at the international stage. Replacing democratically elected president of Brazil with a puppet selected by Washington is only prolog.
In terms of trade, the Clinton administration has to push for more deals like TTIP or CETA. In general, they do not improve the situation of most signatories and definitely not their citizens but priorities lobbied interest of international corporations and those who contributed millions to the Clinton campaign.
Citizens of the United States should see a continuation of a slow decay around them. The degradation of the middle-class is going to advance with big banks and corporations privileged with access to politicians will enjoy a passive administration ready to help them go unpunished if necessary. A huge budget deficit of 1.3 trillion USD for 2016 Clinton has to raise taxes. This will affect the middle-class and poorer people. In the US one of the top corporate tax brackets is at 35%, however, the biggest institutions from Wall Street pay an average of 1.8% thanks to their international structure. One of the biggest factor that limits the development of SMEs are overregulation and high taxes.
After so many scandals, Clinton has to clean up several federal agencies to continue her presidency. The FBI has enough material to lock Clinton in prison for years. I am thinking about the Clinton Foundation, private servers and mysterious deaths of people who were close to testifying against Clinton. The CIA has no warm feeling towards Hillary due to her private servers, resulting in several operations and a number of agents being burnt or eliminated. If not for Hillary privileged status she would have already enjoyed charges of treason – and punishment they entail. All in all, those two agencies must be reshuffled unless another Clinton presidency will end in impeachment.
b) Financial markets – the coming weeks
Clinton win leads to preservation of the status quo also in the financial market. Investors hate changes and uncertainty. Recently equities have fallen because chances of both candidates are tied. After possible Clinton win equities should react positively and give an additional few percent. The price of gold will fall below 1300 USD. I do not expect big changes because the financial markets have already discounted future turmoil based on the polls giving the win to Clinton.
In the beginning, I want to say that Trump is unpredictable. With that being said, he is a businessman who built an empire and knows how the economy works. Understanding that the resistance from privileged groups will be gigantic, will he have enough resolve to introduce at least one of his big changes he campaigns for?
One of the Trump’s flagship is to revoke deals which lead to de-industrialisation of the US in the last 20 years. While shipping of well-paid jobs to Mexico or China the middle-class was hit the worst.
Trump wants to cut taxes and increase competition among SMEs. It sounds very good, but I have to be sceptical because it sounds too good to be true. The real deficit is equal to 1.3 trillion USD (7% of GDP) and Donald wants to simultaneously increase infrastructure spending by another 250 billion USD.
Win of Trump increases the chances to end the conflict with Russia. In my opinion, this is one of the most important factors. This is not about the US or Russia but rather a possibility of a World War during which use of nuclear weapons is probable and not only possible. One of the first steps to de-escalate the situation is to remove Western sanctions on Russia. This improves the situation in Europe with the biggest beneficiaries – Germany and France. Both of them will again take the dominant role in Europe and improve relations with Russia at the expense of smaller players like Middle and Eastern European countries.
Potential improvement of relations between Russia and the US will hurt China which only gains from the situation today. This