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MarkGB 

"Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world" - Henry Kissinger

and yet...

"Sooner or later everyone sits down to a banquet of consequences" – Robert Louis Stevenson

Don't blame your last drink for the blackout

In response to an FT article by Martin Wolf on 15th November 2016, entitled ‘Donald Trump’s false promises to his supporters’

https://www.ft.com/content/31b062e8-a842-11e6-8898-79a99e2a4de6

“Will Donald Trump benefit the enraged white working class that brought him into the White House? To answer this, one must examine his plans and the desires of congressional Republicans. One must also consider how these plans might affect the world economy. The conclusion is straightforward: some people will indeed benefit but the white working class will not be among them. Republicans have long stoked rage they do not assuage. Mr Trump has taken this approach in new directions…

Mr Trump promises a burst of infrastructure spending, regressive tax cuts, protectionism, cuts in federal spending and radical deregulation. A big rise in infrastructure spending would indeed help construction workers. But little else in these plans would help the working class. Overall, his plans might indeed generate a brief economic surge. But the longer-term consequences are likely to be grim, not least for his angry, but fooled, supporters. Next time, they might be even angrier. Where that might lead is terrifying” – Martin Wolf

The one thing that Trump has got going for him is that he's hated by the political, financial, academic and editorial elites that have presided over the mess that made his rise possible...AKA the a$$holes who got us here. It may not be much, but it's a contrarian indicator in his favour...

But on a slightly more serious note, whoever won the election would have inherited the same global debt overhang, which, despite being ignored by the majority of politicians, economists and analysts...does not care whether the election has caused rednecks to celebrate with another round of beers and ammo, or that young liberals have headed in droves to their safe spaces in order to Facebook their angst.

The US, along with the rest of the world, has been borrowing from the future to fund the present for decades. We’ve created the absurd pretence that these debts are ‘assets’ rather than ‘liabilities’, and leveraged them to the sky. This ‘sleight of mind’ has worked, after a fashion, because of a thirty-five year bull market in bonds. That is all starting to change, as witnessed by the $1 trillion that has been wiped off the notional value of bonds in the last week.

Now, you can blame this on Trump if you like, and many will. But, to my mind at least, that is as dumb as a drunk blaming his last drink for the blackout.

You may be right about Trump not fixing the world for the people who voted for him Mr Wolf. Why anyone believes a politician of any stripe is a constant mystery to me…but none of that will matter much as the cycle of debt heads towards its climax.  We are heading for rising bond yields, falling collateral values, tanking currencies, panicked capital flows, and banking crises. Is Donald Trump to blame for this? No. This is the financialization of the economy moving into its final stage – the return of risk to the mindset of an economy put to sleep by low interest rates and QE.

The 'point-missing' moves on to France

A tale of two FTs