Finance Finance News Why the Trump ‘hoax’ changes everything

Why the Trump ‘hoax’ changes everything

Donald Trump
Donald Trump has damaged race and gender relations, but may not end up wrecking the economy. Photo: Getty
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There is a lot of angst and debate in the community this weekend as people try to understand what has just happened in the US, and what it might mean for Australia.

The great problem is that the traditional lenses through which we view the political and economic landscapes aren’t much use.

The rise of president-elect Donald Trump is an unprecedented political rupture that is not about ‘left’ versus ‘right’. It is not primarily about gender politics or race. It is not fundamentally about foreign affairs and trade.

Policies relating to all those themes will be debated in the months ahead, but the cause of the rupture was something else.

As I wrote on Thursday, it was a coup aimed at the vested interests sucking the life out of middle America and the shameful performances of politicians and media owners who gave them cover to do so.

Hot off the press

The news media has been exposed for two great failures.

Firstly, for years it has given scant coverage to the economic hardships felt by the communities in the ‘fly-over states’ that elected Mr Trump – people who went to the polls saying they felt invisible and forgotten.

Secondly, the media failed to see the powerful bond between those people and Mr Trump.

As US journalist Salena Zito put it seven weeks ago: “The press takes him literally, but not seriously; his supporters take him seriously, but not literally.”

And so it was that when Mr Trump gave his acceptance speech, the ludicrous list of policies journalists had been debating was not even mentioned, replaced instead with a promise to work with all races, religions, nations and domestic political foes.

Practically the only policy priority mentioned was a sweeping infrastructure building splurge that would make American roads, bridges and hospitals “second to none”.

In that moment the Trump campaign was exposed for what it was – a hoax designed to break through established political structures, including the complicit news media industry.

Uniquely, voters have elected a president who owes nothing to the news media, almost nothing to the Republican Party and, for now, nothing to the powerful elites of Wall Street.

donald trump press
Journalists took Donald Trump literally, but not seriously enough. Photo: Getty

Reappraising Trump

Trump’s political strategy was an extraordinary outfoxing of the established political-media alliances – and readers will no doubt sense this writer’s excitement at the possibilities that opens up.

That is not the same, however, as arguing that Trump is a good man.

Nor is it an argument that anything Mr Trump decides to do from here on in is better than the ‘old regime’.

Trump has already inflamed racial and religious tensions, brought vile misogynists out from under their rocks, and has paid lip service to ugly and regressive social policies – particularly the potential winding back of women’s reproductive rights.

Fierce battles lie ahead to preserve or restore the progress made in those areas.

The economic earthquake

But what about the economy? Before the election many commentators – this one included – thought that Trump’s absurd policies might actually be attempted.

Markets would crash, we said, and the real economy would likely slip back into recession.

stock market crash trump
The ‘Trumpageddon’ stock market crash did not happen.

That’s was before Mr Trump’s acceptance speech was delivered at around 3am New York time, 8am in London or 7pm on Australia’s eastern seaboard.

The first major stock exchange to open after the speech was London – a major clearing house for international capital raising – which began trading just as Trump was giving his speech.

Where the Australian market had crashed almost 4 per cent when the Trump victory became apparent, what London traders heard that morning must have taken their breath away.

They saw through the hoax almost straight away, and share prices dipped just 0.6 per cent before rising to close up 1 per cent.

Trump’s economy-wrecking policies, they realised, would be modified or dropped.

All they did know – and pretty much all we still know – is that he’s planning a stimulatory, inflation-inducing infrastructure splurge.

A world in limbo

And that is where the world must rest for now. We simply don’t know yet what Trump is planning when he takes office in January, except that there’s very little chance of his most extreme plans seeing the light of day.

So far the markets are betting that a Federal Reserve interest rate rise is still likely in December, and the more rate rises than previously expected will occur in 2017.

If that happens, US dollars will wing their way home and the price of borrowing will rise across our region – probably damaging investment and economic growth in the process.

Even that prediction, however, is highly speculative. It depends on what kind of economic plans are rolled out.

The best we can say is that they can’t be worse, and are likely to be much better, than we thought pre-election. Financial and economic ‘Trumpageddon’ is off the cards.

donadl trump fans
Trump’s supporters are overjoyed, but the rest of the world is in limbo. Photo: Getty

Liar, liar

As for the desirability of a politician sweeping to power based on lies, it is important to recognise the extent to which every election is like that.

As I wrote on Thursday, Australia is living one almighty lie with regard to the housing affordability crisis and its causes – supported by a complicit media that derives a huge slice of its income from the real estate and housing finance industries.

negative gearing turnbull
Prime Minister Turnbull was rolled by his own cabinet on tax reform.

It’s a lie that has seen our current Prime Minister and Treasurer ‘rolled’ by their own cabinet on tax reforms that would significantly ease the problem.

It’s a lie that helps the big banks earn profits 6.5 times those earned by the nation’s biggest employers, Wesfarmers and Woolworths.

And it’s a lie that has created an historic transfer of wealth from younger to older, and from poorer to richer.

Alongside that, Mr Trump’s apparent fibs about launching a trade war with China, building a wall across the Mexican border and locking up Hillary Clinton look positively benign.

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