Evan Osnos of The New Yorker guides us through an imagining of what a Trump presidency would be like by considering President Trump's first term.
"With the polls virtually tied, the possibility of a Trump victory is no longer the stuff of dark comedy or fan fiction. It is fair to ask: What would he actually be like as President?"
The answer is to be found in Trump's campaign: "His campaign tells us a lot about what kind of Commander-in-Chief he would be."
The article is quite long but is a "must read." I'll illustrate what to expect by focusing on just the US and world economy reacting to Trump.
Let me bring this close to home by asking "What's in it for us retirees?" In a word, lots.
The Economist Intelligence Unit, an economic-and-geopolitical-analysis firm, has ranked the prospect of a Trump victory on its top-ten risks to the global economy. Larry Summers, the Harvard professor and former Treasury Secretary, predicts that, taken together, Trump’s economic and trade policies would help trigger a protracted recession within eighteen months. Even if Trump stops short of applying tariffs, Summers told me, “the perception that we might well be pursuing hyper-nationalist policies would be very damaging to confidence globally and would substantially increase the risk of financial crises in emerging markets.”
If Trump followed through on tariffs, the effects could be larger still. Mark Zandi, a centrist economist who has advised Republicans and Democrats and is now the chief economist at Moody’s Analytics, a research firm, forecasts that Trump’s trade plan could trigger a trade war that would put roughly four million Americans out of work, and cost the economy three million jobs that would have been created in Trump’s absence.
But Trump would not need to take any of those steps to have an abrupt effect on the economy. His belief in the power of the threat, which he has used in private business, takes on another meaning if he is the leader of a country with national-debt obligations. In May, Trump, whose businesses have declared bankruptcy four times, said, “I’ve borrowed knowing that you can pay back with discounts,” and “if the economy crashed you could make a deal.” The notion that he might try to make creditors accept less than full payment on U.S. government debt caused an outcry. Under criticism, he clarified, to the Wall Street Journal, that U.S. “bonds are absolutely sacred,” but the incident left an enduring impression on the financial community.
Trump has done that before by refusing payment to contractors for one of his casinos and then dragging the legal process out until the plaintiffs settled for pennies on the dollar. Here he's talking about doing the same thing on an international scale.
Anthony Karydakis, the chief economic strategist at Miller Tabak, an asset manager, told me that a Trump victory is now generally regarded as “a major destabilizing development for financial markets.” He went on, “If he ever even alludes to renegotiating the debt, we will have a downgrade of U.S. debt, and that event will cause a massive exodus of foreign investors from the U.S. Treasury market.” In 2011, when feuding in Congress delayed raising the debt limit, the stock market fell seventeen per cent. This would be a far larger event. “The rating agencies could not ignore the comment,” he said. “The cornerstone of the right to raise sovereign debt is the willingness and ability of the government to service it normally and fully.” He added, “The markets have no patience for stupidity or ignorance. They get scared.”
And scared markets are not a good place for retirees.
h/t Jana Eaton