Last week, TradingFloor.com managing editor Martin O'Rourke argued that US presidential contender Donald Trump is unfit for office, citing his inflammatory rhetoric and unpredictable behaviour and policy shifts. This week, editor Michael McKenna weighs in on the opposite side, claiming that Democratic candidate Hillary Clinton is offering a "more of the same" approach that will lead the world into dangerous territory on multiple fronts.
Hillary Clinton offers many a reassuring, "status quo" alternative to the wild antics
of Donald Trump, but just how defensible is the status quo? Photo: iStock
By Michael McKenna
It is difficult to speak of this year’s US presidential election without getting sidetracked by the latest Donald Trump outrage, but difficult things are often necessary ones. Trump’s opponent is, of course, former New York senator and secretary of state Hillary Clinton. Because Clinton largely remains within the norms of contemporary discourse, her candidacy is generally covered as if it is the buttoned-down yin to Trump’s pro wrestling-style yang.
This is misleading.
A restrained personal style is not the same as a restrained political platform. While Clinton may be running on a “status quo” platform, the status quo is anything but static. In fact, it has led us into a toxic cloud of war, terror, and economic stagnation, and appears determined to continue on this path.
Like the Brexit vote, the Trump/Clinton contest has come to represent a referendum on the post-World War Two order. This is why the Hitler analogies are so prevalent. The postwar order derives much of its legitimacy from the horrors of that regime, and is not above employing them in its own defence.
There are times, lately, where financial media readers might assume that political history presents us with one continual, binary choice between Economist-style global liberalism
and 1939 itself.
When complex and varied phenomena are phrased as binary choices, I begin to suspect that someone is trying to sell me something.
When someone tries to sell me something, I wonder why it requires a salesman.
The sense of an ending
In April 2015, Saxo Bank chief economist Steen Jakobsen penned a TradingFloor.com editorial
calling our present circumstance a “new nothingness”. According to Jakobsen, the post-financial crisis economy is an apathetic and stagnant one in which the need for reform is ignored and monetary policy is used to obfuscate reality.
“Every country I visit has terrible macro policies, and features a political class who are mainly interested in maintaining the status quo,” said Jakobsen.
Just over one year later, when I sat down with Saxo’s head economist this past May, he reiterated this claim, stating that “the world has become elitist in every way
[…] people understand
that zero interest rates are a reflection of zero growth, zero inflation, zero hope for changes, and zero reforms.”
Beyond its repudiation of 1939’s horrors, the postwar western order derived a lot of its legitimacy from its wealth and economic opportunity. It is from this Cold War-era comparison that we get our half-apocryphal tales
of Nikita Khruschev being bowled over by the offerings of an average US supermarket or Mikhail Gorbachev flying over the swimming pools of suburban America
in stunned amazement: Westerners believed in their order because it provided personal freedom, wealth, and hope for the future.
As these things diminish, so too does faith in the worldview. Whatever the Marie Antoinette-like utterances of people like European Commission president Jean-Claude Juncker
(“EU leaders think too much about their voters”) and German president Joachim Gauck (“The elites are not the problem, the people are the problem
”), populist politicians are not the cause of the current unrest but rather a symptom.
While media outlets were incredibly quick
, in the wake of Clinton’s speech at the Democratic National Convention, to contrast her “upbeat” message with Trump’s “dark” message of an America in decline, I would propose that bland optimism is among the worst responses possible to “the new nothingness”.
When great minds think exactly alike.
It is not unhealthy to be fearful when one’s circumstances are frightening. It is not immoral to see darkness when major problems are continually ignored, or addressed with strange and unsustainable schemes. Instead, I propose, it is most dangerous of all to respond to the new nothingness with more… nothing.
Banking on more of the same
The fixity of the “new nothingness” comes from avoiding reform in favour of what Jakobsen termed “the worst monetary experiment in history”. When much-needed reforms are overlooked in favour of smoke, mirrors, and quantitative easing, one can only suspect that entrenched interests are to blame.
The spectacle of large-scale collusion between Washington and the banks whose subprime lending practices arguably caused the crisis has made “Wall Street” a dirty word on the 2016 campaign trail. Although the Republicans are normally considered the party of Wall Street, bankers have responded negatively
to Trump’s call to revive the Glass-Steagall Act, among other things.
"We believe the Obama-Clinton years have passed legislation that has been favourable to the big banks, which is why you see all the Wall Street money going to [Clinton]”, said Trump campaign manager Paul Manafort
Clinton, of course, faced calls to release the transcripts of multiple speeches to Goldman Sachs throughout the primaries, when she was being challenged from the left by Vermont Senator Bernie Sanders. In October 2013, reports Politico
, Clinton was paid $225,000 to give a speech to Goldman Sachs that an attendee described as follows:
“It was pretty glowing about us […] it was like a rah-rah speech. She sounded more like a Goldman Sachs managing director.”
According to the New York Post
, Clinton collected $21.5 million in speaking fees between April 2013 and March 2015. Glenn Greenwald’s The Intercept reports
that $2.9m of that total came from speeches made to big banks, including, says the Post, “multiple trips to Goldman Sachs, Morgan Stanley, Deutsche Bank, Kohlberg Kravis Roberts, [and] UBS Wealth Management.”
In his intro to “the new nothingness,” Steen Jakobsen stated that “we have zero growth, zero inflation and zero hope [and this has created] total apathy as zero rates are being interpreted as meaning that no reforms are needed”.
Given the above, Clinton’s Wall Street history cannot be encouraging to anyone desiring reform.
The fog of war
One of the stranger aspects of this election year has been watching my fiercely anti-war (during the George W. Bush era) contemporaries align behind a candidate who has pushed the regime-change line in Kosovo, Iraq, Libya, Ukraine, and Syria.
In Europe, conventional wisdom holds that Trump is a dangerous warmonger who cannot be trusted with control of the US military. But personal style is not the same as policy.
In fact, it is Trump that is calling for rapprochement with Russia, home of the world's largest nuclear stockpile. It was Trump who, when campaigning in the South Carolina primary, made the bold step of lambasting Bush’s Iraq war; “it was a big, fat, mistake,” he said to boos and hisses in the heart of what CNN called “Bush country”.
Trump won that primary, of course, and went on to win the nomination on a platform that critics and champions alike have termed “isolationist”. Clinton, by contrast, characterised her toppling of Libya’s government by chortling “we came, we saw, he died” on television.
While the authoritarian regimes of Gaddafi, Iraq’s Saddam Hussein, and Syria’s Bashar al-Assad were and are gloomy, unenviable, and brutal, Clinton/Bush-style “intervention” has managed in each nation to create something even worse.
The Middle Eastern wars of the 21st century have produced total chaos at civilisation’s ancient heart. The warlord groups that have emerged amidst this chaos, with ISIS being but one of many, have murdered tens of thousands of people, both in the region and in terror attacks across the West.
These wars are not isolated campaigns or intermittent reactions. They are a structural component of the current order and there are millions of voting-age Americans who have never known anything but continuous war in the Middle East.
Clinton has helped to create this situation, and her preferred policies would likely “progress” things even further in this direction. Her opponent, by contrast, stated Tuesday that "our current strategy of [...] regime change is a proven failure. We have created the vacuums that allow terrorists to grow and thrive."
But what about Trump?
Whatever the temperament of its inhabitant, the US presidency is not a dictatorial office. Its powers are limited and judiciously balanced against those of the Congress and the Supreme Court.
Were Donald Trump to be voted into office, he would face immediate and sustained opposition, not just from Democrats but also from establishment Republicans who often have more in common with Clinton than they do Trump on matters economic and military (indeed, the neoconservatives who enjoyed such prominence under George W. Bush have largely defected to Clinton’s camp
There is no legislative scenario in which it would be possible for Trump to pass “Trumpism” by fiat. In terms of the issues outlined above, from war to trade to financial regulation, any move to retreat from the status quo’s bleeding edge would instantly expose deep divisions among America’s elites and its people.
The ruined city of Homs, Syria: One of the status quo's many bleeding edges. Photo: iStock
The only way out of the new nothingness is for America and the western world in general to have a new conversation about war, a new one about trade and regulation, a new one about reform and growth and monetary policy.
These conversations would be loud, unruly, and bitter. This, again, would be a good thing.
While I doubt, and am happy to doubt, that “Trumpism” would emerge victorious an all fronts, its isolationism would force the architects of the Middle Eastern situation to justify the chaos they have created. Its economic protectionism would require free traders to address the “losers” of globalisation. Its nationalism would help members of transnational organisations to defy the haughty directives of people like Juncker and listen to voters at home.
The legitimacy of democracies comes from the fact that our votes are meant to connect us to our leaders. They are meant to lie at one end of a long string that signifies our consent to the policies enacted by our governments.
In a zero-bound world of endless central bank intervention, financial sector bailouts, and interminable war, though, it can sometimes seem as if these widely disliked policies have taken on lives of their own.
My view is not a popular one here in Europe, but I believe it is justified. Behind the bluster, Donald Trump’s platform is a rather unexceptional form of civic nationalism. The parts of it that overspill that container are largely the same as the ones that he could never singlehandedly bring to pass.
This November, I hope that Americans give the long string that is meant to be connected to Washington a good, hard, pull.
"Just give it a yank. See what happens." Photo: iStock