Lord of the Flies
My old man used to say: “Every person on earth should have the right to vote in the US presidential election. Everyone is impacted by the result of this election.” There is no doubt that the 59th election would have comforted him in that opinion.
While Democratic primaries kick off in Iowa, Wall Street consensus seems to give a high probability to Trump reelection. Supporting arguments are numerous: strong employment figures, a skyrocketing stock market, high consumer confidence, etc.
Moreover, his main opponents fail to impress. Indeed, Joe Biden is regarded as an establishment figure, Bernie Sanders and Elizabeth Warren sound too radical to win a majority, and Michael Bloomberg might have entered the race a bit late.
However, recent political events have shown that betting against the odds can be very profitable. For instance, few people believed in Trump’s chances to win the GOP primaries in 2016. And even after that, there was still a higher probability for Hillary Clinton to win the election.
In Europe, the Brexit referendum was another stunning example of a political black swan event. And France 2017 presidential election also came with a lot of surprises. In other words, don’t count your chickens before they’re hatched!
Whatever happens next November, America is likely to remain a deeply divided country with a political landscape skewed to the extremes. And the President will have to deal with an economy characterized by higher deficits, and more and more dependent on wealth effects. What’s more, he/she will have to work on building a consensus on the climate change issue.
The New Cold War
In my opinion, another critical challenge for the US is the rise of China as a superpower. Despite Nasdaq record valuation, significant breakthroughs have been recently achieved by Chinese tech companies in fields like fintech (WeChat, Ant Financial), 5G (Huawei) or social media (ByteDance). What’s more, their geopolitical influence has kept growing thanks to the One Belt One Road initiative and to Donald Trump’s rejection of multi-lateral agreements like the TPP.
Before the end of this year, China might release the first version of a yuan-pegged stablecoin, paving the way for the first nationwide blockchain infrastructure, but also for a real technical alternative to US dollar monetary system.
In a world that has become bipolar again, America and Europe should start to question themselves, addressing structural issues like demographics, debt and wealth inequalities. Otherwise, social fragmentation and economic decline will become serious threats for the old Western Bloc.
This article was originally published on LinkedIn February 3, 2020.