Trump Wants To Make A Deal With President-Elect Biden

 

The Sound Of Music by Nancy Ohanian

I always just mention it in random posts but for the last couple of months I've been saying that Trump, who fancies himself the master deal maker, knew he wasn't going to win a second term and that all his threats and bluster and carrying on are just part of a pre-negotiation strategy. No one knows better than Trump what crimes he's committed. And he doesn't want to end up in prison-- and probably doesn't want his family to either, though I doubt he cares that much about most of them.

It must have chilled him to the bone during the campaign when Biden vowed to not pardon him. That's the context for all the bullshit about not peacefully leaving the White House the way Herbert Hoover, Jimmy Carter, Jerry Ford and George H.W. Bush did when they lost their reelection bids. Or most of it-- there's also the megalomania, authoritarian and narcissistic personality disorders, but that's a separate story. Trump would think nothing about the historical consequences of starting a Civil War to keep himself out of prison. Biden is taking over a profoundly sick country-- the worst COVID situation in the world-- by far-- a deeply divided country, each side irreconcilably antagonistic to the other, and an economy on the brink of Depression. He will be pulled in opposite directions no matter what he wants to do and has a divided Congress that won't let him do anything anyway. Trump can make it much worse. Yesterday, stocks went up a lot at the prospect of a gridlocked and incapable government. Good for people who gamble in the market, but not for the working class or even for the economy.

Late yesterday, Heather Long did a piece for the Washington Post, What a contested race means for the economy-- and your wallet. She noted that today, the FED "will hold a news conference [and] is widely expected to keep interest rates near zero for years, which should continue to make it attractive for relatively well off Americans to keep buying stocks and homes. The uncertainty could even push the Fed to attempt more of its own stimulus for the economy. But it’s a much more pessimistic outlook for jobs, which are barely half-recovered. Hiring has been slowing, and the latest Labor Department jobs report that comes out Friday is expected to show more loss in momentum for job growth. More than 22 million people remain on unemployment, a figure that has fallen little since the summer. Jobless benefits have been scaled back sharply for the unemployed. Measures aimed to help those facing student loan debt and evictions are set to expire at the end of the year. The struggles are growing for millions unable to get back to work."

McConnell will have every incentive in the world to do everything in his power to sabotage anything Biden tries to do to address the country's problems. Here's where Trump comes in:

The future of the economy-- and to some extent markets-- depends heavily on three key questions, many analysts say: What happens with the virus and stimulus; How quickly Americans start spending again on services like travel, restaurants and entertainment; And whether the hotly contested election sparks social unrest.

If the political situation triggers more social unrest, that could have long-lasting consequences for the nation and economy, weighing on consumer spending and potentially hurting businesses, especially restaurants and stores in downturn areas. In preparation for this election, stores across the country boarded up in anticipation of marches and protests that could turn ugly, and companies like United Airlines moved their flight crews out of hotels in urban areas.

The United States is “even more divided than it was in 2016,” said Peter Atwater, founder of Financial Insyghts and a professor at the College of William & Mary. “The conditions are ripe for outrage.”

The U.S. economy still depends heavily on consumer spending. That’s already heavily depressed because of the coronavirus, but protests and, especially, rioting would probably dampen it even further.

The biggest problem for the economy for months now has been the deadly coronavirus. It remains far from under control, and Americans are staying home and spending only a fraction of what they used to in the pre-covid era. Until that changes, the service sector will remain anemic and the recovery is likely to stall, said Constance Hunter, chief economist at KPMG.

“Until we get a handle on the virus, the economy will remain in a world of hurt,” Hunter said.

Hunter points out that spending on services typically makes up more than 45 percent of economic growth. But in the third quarter — when the United States saw a big rebound-- spending on services like restaurants, travel and entertainment remained sluggish, at below 43 percent of economic growth. That might not sound like a big difference, but it amounted to over $500 billion less flowing through the economy in the third quarter of 2020 versus the same period last year.]

There’s hope that if the virus gets under control, there will be a flood of spending again, but businesses have to survive until that point. Small businesses, in particular, are on edge. It’s unclear if that rebound will happen summer 2021 or much later than that.

What’s shaping up for the economy and markets was perhaps best summarized by JPMorgan in a note Wednesday morning: It’s “unclear on the next President but fairly clear that he’ll face Congressional resistance on anything transformational, whether on the budgetary or regulatory front.”

The gridlock might be good for markets and investors. But a lot of pain remains for small business owners and the unemployed. For them, much is still highly uncertain.

Trump can't do anything to help matters, except by not making them drastically worse, which he can do. And which he wouldn't hesitate to do if he thinks it will protect him from Justice.