Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

What If Clinton Wins US Presidential Election 2016

ElectionOracle / US Presidential Election 2016 Sep 22, 2016 - 02:14 PM GMT

By: Dan_Steinbock

ElectionOracle According to polls, the race to the White House is over. Clinton has won, Trump has lost. If that proves the case, US economic erosion will slow but imperial foreign policy may escalate, which has critical repercussions in Asia.

The polls reflect the new status quo. Despite her high unfavorability ratings, Clinton now has the support of every second registered voter, whereas Trump, with his high unfavorability ratings, can rely only on every third. As a result, Clinton’s likely voters nationwide amount to 45-50 percent, as against Trump’s 35-40 percent.

Campaign financing tells the same story. By early August, Clinton had raised $365 million in big money financing, almost a third of it outside money. In contrast, Trump had barely $100 million, only a tenth of it outside money. Four of every five dollars in the Clinton campaign has come from large corporations and Wall Street, big lobbyists and big unions, not ordinary Americans.

How did we get here?

Questionable choices
By suppressing the dissent of Bernie Sanders’s center-left opposition in the Democratic convention, Hillary Clinton consolidated leadership, while attracting some dissatisfied Republicans and Reagan Democrats who favor hawkish foreign policy but progressive social policy. But afterwards, Clinton faced huge political headwinds as FBI Director James Corney testified that she had shown “reckless” disregard with highly-classified emails, while multiple FBI investigations (which the Obama administration sought to deter) are underway into the Clinton Foundation.

The rising public storm paved way to a triumphant Republican convention in which Trump could have sustained a semblance of unity. Instead, he stumbled on his mouth by quarreling about a US Muslim soldier killed in action and with the Speaker of the House Paul Ryan, lost voters in several swing states and polarized division among Republicans.

The pessimist take is that the Trump campaign is amid a meltdown, while Trump seeks to save his face and might withdraw. In turn, Republican leaders such as Mitch McConnell are considering a replacement. According to party rules, it would be a logistical nightmare, but technically possible. In that case, Trump would have to remove himself; or the GOP would have to remove Trump. That would pave the way for Trump’s Vice President Mike Pence, or Paul Ryan. While conservative Ted Cruz might try, he would not get majority support. There would also be many dark horses.

Of course, die-hards cannot believe that Trump could be fired. Besides, Trump shows no signs of resignation. Consequently, they expect Trump to stage a “fantastic” comeback.

Intriguingly, the shifts in the polls do not reflect voters´ perceptions about America’s direction and priorities. Most Americans believe that the top priority in the 2016 election is economy, while two thirds believe that America is heading in the wrong direction.

Here’s the contradiction in a nutshell: In November, most Americans will knowingly vote for a president they do not particularly like, don’t really trust and who they believe will continue to take America in the wrong direction.

If this scenario will materialize, what kind of economic and foreign policies will the Clinton administration opt for?

More economic erosion
Clinton has promised to create 10 million new jobs in America in the next four years. In reality, that does not require miracles. Thanks to demographics and output potential, US economy should create some 200,000-250,000 new jobs on a monthly basis, which means 2.4-3 million annually; that is, 9.6-12 million new jobs in four years. Ironically, it could be undermined by the kind of assertive foreign policy that Clinton supports.

Clinton has promised to expand programs for poor Americans and to increase contributions from the prosperous. Her discretionary spending relies on $1.1 trillion for infrastructure, universal pre-school and tuition assistance, paid family leave and so on. To alleviate America's income polarization, she advocates 4% surtax on incomes above $5 million, raising rates on medium-term capital gains and estate tax rate to 45%. It is a centrist plan that will not overcome US inequity.

Today, US economy faces a massive sovereign debt burden, which amounts to $19.4 trillion (105% of the GDP). Nevertheless, Washington still lacks a credible, bipartisan, medium-term debt plan. Clinton believes that rising debt is a national security risk and her economic program would reduce it in relative terms by 2026. Like Sanders, she would probably reduce the deficit through tax increases, with limited cuts to discretionary spending; unlike Sanders, she would not challenge the Wall Street’s financial aristocracy or reduce military spending.

In view of consensus projections, by 2026 US debt will soar by half to $29.3 trillion (106% of GDP), assuming fairly ambitious real GDP growth rate of 1.7% next decade. But it does not include downside risks, such as monetary exhaustion, immigration decline, recession, or geopolitical crises. Instead, a less ambitious growth rate of 1.2% would cause the debt-to-GDP ratio climb to 115-120%. In relative terms, this is comparable to the Greek burden at the eve of its sovereign crisis in 2009. The tiny Greek crisis shook Europe; the huge US debt crisis would rock the world.

Toward military friction
After his Nobel Peace Prize in 2009, President Obama was widely expected to scale back America’s commitments overseas, particularly George W. Bush’s long wars in Afghanistan and Iraq, and shift responsibilities to allies. Instead, the Obama White House has authorized deployments in Syria, is rethinking troop drawdown in Afghanistan, considering sending more troops to Iraq and Syria, expanding the fight with ISIS to North, West and East Africa (e.g., Nigeria, Libya, Somalia), and spending more for sending heavy weaponry to Eastern and Central Europe to counter Russia. The US military is now actively engaged in more countries than when Obama took office.

In the Clinton era, US military policy would be more costly, assertive, and global. She is unlikely to cut military spending even though the US already spends $600 billion on defense – more than the next seven countries combined, according to SIPRI.

While the US pivot to Asia began in Obama’s first term, it was first framed by Clinton, as foreign secretary. In that role, she promoted the Trans-Pacific Partnership (TPP); but to beat Sanders, she turned against it. As president, she might flip-flop again and support it. She also supported the shift of 60 percent of US military ships to Asia Pacific; a decision that has toughened attitudes in China and contributed to increasing rearmament and conflict escalation in the region.

That’s why neoconservative leaders, led by Robert Kagan, have rushed behind Clinton´s campaign. That’s also why 50 former GOP national security leaders recently slammed Trump who would like to renegotiate US pacts with its allies.  They wanted to ensure the continuity of US “military-industrial complex” and the expansive foreign policy – but Clinton will reap the political benefits.

Even after the global crisis and China’s growth deceleration, Asia may have generated wealth amounting to twice the size of Germany into the world economic map. In the 21st century, the world’s economic future relies on peace in the region.

If the massive US military transfer is really meant for stabilization, it would contribute to peace. If not, it will split the region, slow China's rise and the catch-up of emerging Asia. That, in turn, could undermine the promise of the Asian Century.

Dr. Dan Steinbock is an internationally recognised expert of the nascent multipolar world. He is the CEO of Difference Group and has served as Research Director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Centre (Singapore). For more, see   

© 2016 Copyright Dan Steinbock - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in