Presidential 2024: Neither Trump nor Biden

Men at some times are masters of their fates/ The fault, dear Brutus, is not in our stars, but in ourselves/ That we are underlings.

William Shakespeare (1564-1616), Julius Caesar (1599)

Biden’s Woes

At a press conference in Hanoi, Vietnam on Sunday (10 September) President Joe Biden announced that he was “going to bed”. Perhaps fortunately, he was cut off mid-sentence by his press secretary who declared the proceedings closed. Just before that, the US president, 80-years old, was asked a question about what he had discussed with Li Qiang, the Chinese premier, at last weekend’s G-20 summit in New Delhi, India. He replied:

“We talked about what we talked about at the conference overall. We talked about stability. We talked about making sure that the Third World, the, excuse me, Third World, the, the, the southern hemisphere had access to change…”

Senator Tim Scott, who is running for the Republican presidential nomination, was not alone in describing Mr Biden’s performance in Vietnam as “embarrassing” – although at least the Commander in Chief didn’t fall asleep as he did at the COP-26 Conference in Glasgow the year before last. But Mr Biden’s evident cognitive decline is not the only reason why I judge that he will not run for a second presidential term next year.

First, there is the curious case of Hunter Biden’s laptop. In 2020, the New York Post obtained and then published some of the contents of a laptop which purportedly belonged to the president’s second son. The US establishment’s reaction was extraordinary. Twitter and Facebook and a swath of US media effectively suppressed the story to the extent that many Americans are still not aware of its significance.

Quite apart from a batch of embarrassing photographs – which Master Investor readers will wish to pass over – the Post’s substantial allegation was that Hunter had monetised his influence when his father was Barak Obama’s vice president. Supposedly – such things remain unproven allegations – certain payments were made in Hunter’s direction from entities in China and Ukraine. Some reports referred to a certain “Big Guy” who benefitted from kickbacks.

This all might have remained a historical footnote to Joe Biden’s more than half century-long political career. But now a Congressional committee is looking into the financial activities of the Biden family. On Tuesday (12 September) the Speaker of the House of Representatives, Kevin McCarthy, announced that the House would open a formal impeachment inquiry which would focus on “allegations of abuse of power, obstruction and corruption”. He said that the House committee had uncovered “serious and credible” evidence of abuse of power on the part of the president. Hunter Biden is already under federal investigation for possible tax crimes related to his foreign business interests.

Of course, many Trump-supporting Republicans in Congress want revenge. The first impeachment of President Donald Trump was precipitated by his request that Ukrainian President Volodymyr Zelensky investigate Hunter Biden’s involvement with a Ukrainian gas company Burisma. The Senate exonerated Trump of all charges. In practice, it is unlikely that any vote to impeach Biden would obtain the necessary 218 votes in the House of Representatives where the Republicans hold 222 seats.

The second reason why Biden will likely not run is a man by the name of Robert F Kennedy Jnr. (widely known as RFK). Kennedy is, of course, from a Democratic dynasty, still sprinkled with stardust. But in many ways his traditionalist instincts resonate with Republicans as well as more conservative Democrats. He is anti-lockdown and a vaccine sceptic – meaning that having a vaccine for Covid or whatever should be a personal choice in any future pandemic. He is anti-war, also like Trump – meaning that he believes the USA should only deploy military force to defend its own borders. And his is against the “Deep State” – meaning that Federal agencies should be placed on a short leash. He thinks the government should provide a “safety net” but that people must take responsibility for their own actions. He is suspicious of America’s creeping socialism. He is disturbed by the agenda of wokery.

So anxious are some Democrats about the prospect of Biden being nominated next year, that they are casting around for a saviour. One name that has been advanced is that of Michelle Obama. No doubt, Mr Trump would love that: Ms Obama is a shibboleth of the woke left and has never been elected for anything. And there is an unfolding (and frankly sinister) scandal unfolding about Mr Obama’s sexuality. RFK may yet emerge as a safe bet.

Mr Biden’s third woe is that Bidenomics will most likely come undone before the general election on 05 November next year. The fiscal stimulus signalled by the Inflation Reduction Act (discussed last week) is much bigger as a proportion of GDP than President Roosevelt’s New Deal in the 1930s which ultimately ended the Great Depression. But the upshot is that the US budget deficit surpassed $1.6 trillion over the first 10 months of this fiscal year – much higher than forecast. (The US federal government fiscal year runs from 01 October to 30 September). That is nearly eight percent of GDP. Seemingly, the two largest economies in the world – the USA and China – are vying for the role of the world’s largest debtor.

Harvard economist and former US Treasury Secretary Larry Summers has described Bidenomics as “the least responsible macroeconomic policy we’ve had in 40 years”. He thinks that only a pronounced recession will put the genie of inflation back in its bottle. Meanwhile, the cost of servicing America’s debt pile could hit 10 percent of total tax revenue by 2025, according to Fitch Ratings, as interest rates and therefore borrowing costs rise. The yield on the 10-year Treasury bond is 4.288 percent as I write – that’s back to 2007 levels. It’s very near the yield to maturity on the 10-year gilt – 4.351 percent on Wednesday (13 September).

The US government will have to refinance $7.6 trillion of debt over the next 12 months – about one quarter of the total stock of government debt outstanding. This at a moment when the Chinese are selling Treasuries. That means that rates are likely to rise further and, as they do so, the default rate across corporate America will rise, increasing the likelihood of recession.

As America heads into the critical election year of 2024 my best guess is that the economic outlook will be deteriorating and that this will impact the markets. As Bill Clinton once said about winning elections: “It’s the economy, stupid”.

The Trouble With Trump

Ex-President Donald Trump is now the subject of four different sets of indictments and 91 felony counts (where a felony is a crime that could merit more than one year’s imprisonment). He stands accused in Florida, Georgia, Washington DC and New York. The grounds for indictment range from paying hush money to interfering in the 2020 presidential election. One of the most recent indictments brought by Fulton County, Georgia, accuses Mr Trump and 18 others of attempting to overturn the 2020 election result in that state. Mr Trump’s glowering police mugshot has been broadcast across the world. The owner of that contumacious face even took to X (formerly Twitter) for the first time since he was banned in January 2021 to share the picture, together with a link to a campaign donations page. Reportedly, campaign funds have been flowing in.

Last week, the Grand Jury in Georgia said it was considering indicting 39 other people, including a sitting senator – Senator Lindsey Graham of South Carolina. Senator Graham’s alleged crime is to have expressed doubt about the legitimacy of “mail in” ballots which were submitted in unprecedented numbers in 2020. In reality, Senator Graham was a vocal opponent of Donald Trump’s claim that the election had been “stolen”.

Some Democrats and conservative-inclined legal scholars argue that Trump’s alleged attempt to overturn the 2020 election, culminating in the storming of the US Capitol on 06 January 2021, render him ineligible to hold office again under the Section 3 “insurrection clause” in the 14^th Amendment to the US constitution. Enacted in 1888. Electoral officials in several states including Michigan, New Hampshire and Arizona are weighing up whether this clause might give them the right to remove Trump’s name from the ballot papers next year. If they were to take such action that would be explosive. But do Republicans really want an explosion?

Despite all this, Donald Trump remains far and away the favourite candidate for the Republican nomination amongst registered Republican voters. He is about 50 percentage points ahead of the next contender – Governor Ron DeSantis of Florida. These hardline Trump supporters don’t seem to mind very much that Mr Trump may be distracted by appearances in court next year as he negotiates the campaign trail.

Rather, the blizzard of indictments seems to have reinforced Mr Trump’s popularity. This is because a substantial part of the Republican core believes that the indictments are politically motivated – in fact, they see him as the victim – nay, martyr – of a political witch hunt pursued by the very liberal elite whom they despise. Interestingly, that is also the view of President Putin, who told an audience in Vladivostok on Tuesday (12 September) that Trump’s legal ordeal was “politically motivated persecution”.

It would take a brave psychiatrist to unpack the true nature of Mr Trump’s personality. For his enemies he is an egotist, a liar, a narcissist and a cheat. He is not only not an intellectual: he is anti-intellectual. He has zero understanding of economics, and it is disputed that he is even a good businessman. He has absolutely no philosophical or ideological core – he shoots from the hip.

That said, for his supporters he is an anti-hero who speaks truths which others are too afraid to mouth. He is also undoubtedly charismatic, charming, energetic (despite being 77) and very funny. All his opponents fear his nicknames and put-downs because they can be lethal. He is an outsider who is also a traditionalist. There is no one quite like him. And he is not going to retire to the golf course because now he has absolutely nothing to lose. And yet, and yet…He may have unleashed forces he can no longer control.

Vivek Ramaswamy, a Republican outsider of Indian parentage, wants a second American revolution. He wants to abolish the Department of Education, the FBI and IRS (the equivalent to our own unloved HMRC). In fact, he wants to reduce the job count in Washington by 75 percent and would not allow under-25s to vote unless they pass a civic exam. He believes that fossil fuels have an essential place in the economy and would issue licenses to drill, mine and frack. He talks disparagingly about “climatism” and “transgenderism”. He would broker a deal between Russia and Ukraine whereby Russia will keep most of the territory it has occupied, as he thinks that America’s real enemy is not Russia but China. He would deploy the military to guard America’s southern border against illegal immigrants. His convictions are founded on “ten truths”.

In traditional Hindu theology and mythology (how relevant it has become in the modern world) Shiva is the creative destroyer who inspires transformation; and Vishnu is the maintainer or rebuilder. Vishnu has ten avatars. They are complimentary deities which maintain the balance of the heavens and the Earth. Only Vishnu can displace Shiva.

Make of that what you will.

Trump Versus Biden? Really?

If the 2024 presidential election were to be a re-run of 2020 – that is to say, Trump versus Biden – then most recent polls suggest that it would have the same outcome. America’s political affiliations do not seem to have changed too much over the last three years; although if as I believe the economy will tank next year then that could change.

But if, on the other hand, Biden is shunted out of the way and Trump gets the Republican nomination then he (Trump) would very probably be the favourite. Vice President Kamala Harris’s speeches make Biden’s muddled orations seem like those of Cicero and Demosthenes by comparison. The leftie governor of California, Gavin Newsom, has presided over social disorder in the Golden State, where homelessness and fentanyl addiction are rife. Trump would probably get the better of RFK in debate.

Biden will turn 81 in November. If he runs and wins next year he will be 82 by the time he is sworn in for his second term, come January 2025. I am not ageist. Some 82-year olds are as sharp as tacks. And there is the argument that even if one’s energy level declines with age, experience makes for better judgment. Possibly. But the point is that Republicans think he never possessed much in the way of good judgment in the first place.

Foreign Affairs – a publication and portal which articulates the hopes and fears of America’s security and defence establishment – ran an article last week by Daniel W Drezner entitled Bracing for Trump 2.0. Drezner thinks that America’s friends are quaking at the prospect of Trump 2.0; while its enemies – not least Vladimir Putin – are rubbing their hands in glee. Mr Trump has said that, once back in office, he could solve the Russia-Ukraine conflict in a day. That probably means that America will stop supplying Ukraine with weaponry overnight. Although my instinct is that the war will be over by then – as I shall unpack shortly.

There is all to play for, but the prospects for both Biden and Trump are darkening. Fortune favours the brave. A contest between Robert F Kennedy Jnr. and Vivek Ramaswamy would make for the most scintillating presidential election of my lifetime.