Llevo 31 años subido al andamio de la industria financiera, los últimos 25 gestionando patrimonios. He vivido en Nueva York y en Londres, donde he tenido la gran suerte de conocer y trabajar con algunos de los mejores inversores de nuestro tiempo. A ellos y a mis socios les estaré siempre agradecido por la formación que he recibido.
The long Twitter nightmare may soon be over. In just a few weeks, the leadership of the free world will once again be in the hands of a conventional politician from central casting. The infatuation of the American electorate with an outsider populist has turned out to be short lived. The Bannon Revolution that gave candidate Donald Trump the presidency in 2016, had been fizzling since soon after inauguration, and has now come to an abrupt stall. This when Bannon, who is facing criminal charges for fraud in federal court in Manhattan, lost his lawyer after he suggested on Twitter this week that both the F.B.I. director and Dr Fauci’s heads should be put on pikes. Perhaps he believes that the investigations and the lockdowns are responsible for both Trump’s and his demise, yet the best news is that, if we’re lucky, we will not have to care what any of those two sorry and angry men think on any subject ever again. The voters have spoken and they have elected a consummate Beltway insider who has served 36 years (1973-2009) in the United States Senate representing Delaware, and who, as Obama’s two term Vice President, lorded over that august legislative body for an additional eight years.
Many in the Republican Party, who had come if not to respect, at least to fear Trump, have quickly shunned him. It has taken no time for many of his supporters in the party to be delighted to watch his back as he leaves town. For Senate Majority leader Mitch McConnell, Trump was useful to pass his tax reform Bill and little else, as he does not seem to be heartbroken with Trump’s departure. Yet, Semper Pugnacious will not go away quietly. He has instructed lawyers to contest every close election. Since not even Trump can be wrong on everything, we would have to agree that the result of an election with so many mail in votes might be different from one conducted in person. The inviolable privacy of the polling booth may not be respected in the home or in the workplace when people vote by mail. Many voters may have received undue pressure from spouses or employers to vote in a way that was different from their wishes. On average, these unduly influenced voters may cancel each other out, but we will never know. However, this problem, as unfortunate as it may be, does not constitute electoral fraud.
The questions we should ask ourselves today are who is Joe Biden? What is his vision for the US and for the World? What should we expect of him in his presidency?
Biden holds by far the longest tenure as a Senator of any of his predecessors; for example, both Obama and Nixon served just one four-year terms. What we may conclude from his record is that here is a man who generally hugged the centrist positions of his time over the years. He has been no maverick or taken any career ending risks. As such, he supported arms control negotiations with the Soviet Union in the 1970s or tough crime and sentencing laws in the 1980s. He was against gays in the military as recently as 1993, but later rattled the Obama administration by supporting same-sex marriage before the President had taken that position.
When necessary, he pandered to his electorate, as when he was one of the leading opponents of race-integration busing in the 1970s, conveniently and self-servingly splitting hairs over a legal point to distinguish de jure and de facto segregation. As the Chairman of the Judiciary Committee, he presided over two landmark hearings. He about faced on his initial support of Robert Bork’s candidacy, and conversely, suppressed some testimony that would have been damaging to the nomination of Clarence Thomas. He has also been a long time member and chair of the Senate Foreign Relations Committee. His positions were liberal internationalist, and his direct involvement in European affairs and NATO (decidedly in favour of enlargement) give many European politicians a sense that the worst is over in transatlantic relations.
Biden does not purport to have the intellectual stature of some of his predecessors. In some ways, he will resemble Trump as he has no filter either when speaking in public or on TV interviews, and thus he is also prone to putting his foot in his mouth. He has been characterized as a street-smart salesperson, again a similarity. Clearly, the American electorate wants a change from Trump’s deconstruction of the Federal Government, but they are not very comfortable with the pivot to the left taken by the Democratic Party as evidenced by the latter’s loss of seats in the House, which our Democrat friends will surely attribute to Gerrymandering. If the run-off-election for the two senators from Georgia ends as expected one thing is for sure, the local media owners will be far wealthier by Christmas. Whether the GOP retains a Senate majority is still to be seen, but it might be desirable, as this outcome would once again reflect the expression of the will of the people who seldom leave one party in full control of both the executive and legislative branches. Financial markets do not seem to be unhappy either, but keep in mind that there are hints of an imminent vaccine authorization in the background as well.
Those politicians in Spain that cheer Biden’s victory in ungrammatical English may just be expressing their relief. They probably believe that the new administration’s Attorney General will not have the same impetus for investigating Podemos foundation’s Venezuelan money laundering connections. As many other EU politicians, they also expect better outcomes on trade negotiations with the EU and some respite on the pressure to increase defence spending to the agreed upon 2% of GDP floor. Germany in particular is likely to expect assent to the construction of the Nordstream gas pipeline from Russia, which the Trump Administration rightly denounced for creating an even higher reliance on Russian gas for Germany’s basic energy balance.
We surmise that many of these people should probably get better intelligence. First, the Democratic Party needs a new strategy for making inroads with the Latino electorate. They have lost Florida again because they had no support among Hispanics in that State. As it turns out, the allegiance to the GOP of Cuban and Venezuelan Americans in Florida stems from their frontal opposition to the communist regimes that have sunk their homelands into abject poverty and autocratic and repressive regimes. The only way Democrats can court their vote is by showing the same resolve for regime change that these voters hold as a life mission. A Biden administration will be as supportive of the US Shales Gas industry as its predecessors, thus if Germany wants Natural Gas, it should procure it in the US. Secondly, since the Obama Administration, the focus of US foreign policy has decidedly pivoted towards the Pacific, China in particular. The Biden administration may prioritize rebuilding the Trans pacific partnership over making politically costly concessions on a new trade agreement with the EU. In any case, some or all of these treaties may need Senate ratification with a two-thirds majority (this is the case when they do not fall under the executive agreement exception and we are afraid the technical differences are beyond our understanding of US constitutional law). While President Biden may wish for the US to join the Paris Agreement on a personal level, the Senate may decide this issue as well.
Other European politicians hope that a Biden administration may retake the 2015 Joint Comprehensive Plan of Action with Iran, we would not bet the farm on that either. Finally, Trump losing the election and Bannon facing prison will not mark the end of American Nationalism and Isolationism, this movement was alive for many decades before them, and will continue to flourish under new leadership. Those who forget that Trump just received 70 million votes will do so at their own peril. To make any forecasts on the fate of the nationalist right wing parties in Europe based on this election, may also prove dangerous. We surmise that it is far more likely that populism will continue to thrive in the EU than in the US, because the fiscal response to the economic downturn has been far tamer over here, especially in the worst affected countries. While the unemployment rate in the US is quickly falling, it has just started its upward climb in countries such as Spain or Italy.
The introduction of the euro on January 1, 1999 was to be a promethean moment in European history. A sleeping juggernaut was to awaken thanks to the single currency and a shared political ambition to advance towards a more perfect political union. Soon thereafter, the US suffered the terrorist attacks of 9/11, engaged in long and expensive land wars in Afghanistan and Iraq, suffered a financial crisis, and ended up electing Trump. In spite of all these hurdles and challenges, the US economy has flourished. As a result, the stock and real estate markets have acted accordingly. Indeed, US GDP per capita has doubled since 1999 to $66,064. while that of Germany, arguable the EU’s most successful large economy is up just 70% to $43,300.
Conversely, it is difficult to see what has been achieved in the EU. The single currency ideal ended with capital controls in Cyprus and Greece. The Schengen Agreement on borders did not pass its first litmus test, the Pandemic emergency led to border closures and restraints of trade inside the EU. The banking union remains elusive. A fiscal union is a pipe dream as we have just seen with the paucity of the recovery fund. Moreover, a much taunted and desired political union is still a non-starter. The UK is leaving on December 31st and many of the new members remain involved reluctantly and further demand exceptions to the Treaties in order to accommodate their authoritarian bent. The periphery is largely insolvent as are most of their banks; there is no fiscal room to nationalize them without a comprehensive bailout from the EU.
The shocking lack of entrepreneurship in the EU has failed to deliver a single new global company in the 21st century. With all this in mind, it is comical to listen to the leaders, and many of their followers, of this failing theme park for adults express repeatedly that it is the US, and the US alone, that has huge problems. We would expect the schism to continue and the impoverished, overleveraged, over regulated, and rapidly ageing EU to continue its decades’ long under-performance and for the US to continue to thrive economically as their unbeatable combination of an enormous domestic market, an excellent educational system, incentives to entrepreneurship, and second to none capital markets will continue to work their magic. A more progressive tax system will alleviate some inequities as has been since the New Deal and the Great Society’s programs, two chapters of US history largely ignored in Europe. Conversely, the EU faces another decade of low growth and failed promise, political strife, and no leadership.