British voters recently ignored the economists suggesting that a Brexit will harm their own economic situation. Similarly American voters seem to ignore the economists suggesting that Trump might be a catastrophic choice for the US economy; why people these days ignore economists? Are political believes more important? Have people lost their trust to economists and anything related to the global economic establishment? There is no easy answer but it seems that people are looking for something completely different perhaps exotic, something unconventional; they also seem uninterested about the warnings coming from different directions of the political, financial and media establishment.
Think about carefully, Le Pen in France, Pepe Grilo in Italy, Brexit and perhaps Tump; Are all these the last setbacks before the globalization moves forward? Maybe, but we don’t know how much these phenomena will delay the process and what level of uncertainty and damage they might create.
Islamic extremism as expressed via terrorism causes upset and uncertainty to the western societies and is an important setback for the globalization process. It feeds nationalism and populist anti- elite politicians. Trump has built his campaign on the Islamic threat. He touches very sensitive chords of the American voters but he does this with a very inappropriate way. He ignores intentionally the balances that always need to be kept within the multicultural American society.
Hilary on the other hand, is unquestionably very well connected. She has a lot of sponsors, she enjoys the support of the strongest lobbies not only in US but outside of it. She is also experienced and has an ability to survive politically after difficult incidents like the humiliating assassination of the American ambassador in Beghazi while she was foreign minister or the scandal with her personal email account. She is definitely the favourite of the political, diplomatic and financial establishment. But this might be her big Achilles Heel. Voters seem ready to punish anything related to the establishment. Is this because they feel that the American Dream has fade away? Perhaps, and there is no sufficient time for corrections.
Social media- a key factor to USA elections
Are we living in the age of populism? Not only; have we also lived in the age of social media! USA had always a magic ability to elect the presidents that would be suitable for its current needs and the image of the country. The switching between Democrats and Republicans was always so felicitous, moving the right time with mastery from soft to hardcore and vise versa. The American establishment and the Wall Street had that magic touch and when things were going wrong they had the ability and the power to retract them on the right way. USA with Obama has tried hard to reconstruct its image after Bush’s administration.
Now, with Trump, something seems to go wrong! Did USA stop caring about its image? Probably not. Social media have changed the game. The American establishment seems unable to control them and their power seems to overrun by far that of the traditional media. Americans want someone who speaks and behaves differently; Trump knows that; he is promising the renaissance of the American dream which is fading.
The ruder and more “unconventional” he gets the more convincing for the average American he becomes on the other hand Hillary into the eyes of a USA voter represents probably the old but also the stability . Markets naturally are risk averse so it seems logical to favor more Hillary as supported Remain vote too during British referendum. I do not expect turmoil and sell off if Trump wins USA elections.. Unquestionably some uncertainty and irritation can occur during the first days however this will be far away from a major sell off.
USD in a short time frame will lose value if Donald Trump becomes president and will gain value if Hillary Clinton win elections.. however in a long timeframe the differences will not be large for USD. Markets also recently have shown us that can stay calm even from bigger shocks ( terror attacks, Brexit) at least as soon as ultra-expansionary global monetary policy keep going.