A plethora of political risks threatens the global economy. One of them is the potential US presidency of Donald Trump. Opinion polls indicate a 46/43 division to the benefit of Hillary Clinton, but she too, is not very popular with voters, as a result of which it is not unthinkable that Trump may overtake her.
It is telling that in matchup between Bernie Sanders and Trump Sanders would beat the tycoon by a much wider margin than Clinton would: 51% of the votes versus 39%. Clinton's favourability rating must also worry the Democratic Party: 42% of the people have a favourable opinion of Clinton whereas 55% hold the opposing view. The only relief for the Clinton-camp is that Trump is even more disliked: his numbers are 37% favourable and 59% unfavourable. Whoever wins in November, the US will have a leader who isn't very much liked.
The financial markets will not wait with their responses until election day. If opinion polls start leaning towards Trump, this will already be sufficient to elicit a negative response.
An ambiguous world
Whatever rational arguments you could make against Trump, the words of the CEO of Nestle in a reaction to a big scandal spring to mind: "This is a case where you can be so right and yet so wrong. We were right on factual arguments and yet so wrong on arguing. It's not a matter of being right....We live in an ambiguous world. We have to be able to cope with that."
Not that long ago, all 'sane minds' knew for sure that Trump wouldn't stand a chance against his competitors and that his inflammable rhetoric and his incoherent, irrational, offensive proposals and pledges would drive the electorate away. Those pundits, journalists and politicians could be forgiven for their conviction that Trump would tumble and fall considering that the rabble-rouser went against every rule in the political book. Just like the 2008-2009 financial crisis didn't fit into the models of banks and economists, the Trump rise was almost impossible to square with all that you could find in campaign handbooks.
Indeed, it is an ambiguous world we live in and the stars - anti-establishment sentiment, rising inequality, the ever-present (social) media etc - were aligned to light up a possible path towards the White House for Trump.
Already, the GOP establishment is (trying to) come to terms with the almost inevitable Trump nomination. Many a Congressman has stated that he will back Trump and all is done to project a unified image of the Republican party. Although the embrace of Trump by the party is far from a warm embrace. Guarded, wary, grudgingly, reluctantly are better words to describe it.
Goldwater or Reagan?
If Trump worries about his disapproval ratings, he should take a closer look at the campaign of Bill Clinton in 1992. By June 1992 Clinton looked like he would be trounced by his Republican opponent and incumbent President George Bush in November. Only 13% of Americans thought he could be trusted and his favourability rating was at a shockingly low 16%. Nevertheless, Clinton grabbed the presidency.
So it is not impossible for Trump to surprise the world by being handed over the keys to the Oval Office. Of course, we cannot rule out a spectacular failure like in 1964 when GOP nominee Barry Goldwater lost 44 states during the presidential election. On the other hand, Ronald Reagan was an actor who many discarded as way too lightweight and he also had a tendency to go off the rails: as a presidential candidate, he called those on public assistance welfare queens, and said anti-war protesters reminded him of the story of Tarzan because they looked like Jane and smelled like cheetah.
The unpresidential president
The real question is whether Trump is willing and able to turn 'presidential'. Recently it looked like he was toning down his tug-of-war campaigning style. But it wasn't too long before he started again with the very 'un-presidential'-like behaviour. In his own words: "If I was presidential about 20% of you would be here, because it would be boring as hell."
However, even if Trump recalibrates, I still have great doubts about a Trump presidency. His history doesn't bode well. His business career is full of examples in which his ego trumped sound judgment. He puts his name on everything he owns, he doesn't stop boasting about his - severely exaggerated - wealth and he is convinced that he is great at everything. He could amass very competent, intelligent, experienced people around, but if he thinks he is his own best Foreign Secretary, trade negotiator, general etc. the country is in for trouble. Moreover, Trump may be boasting that he would reign in massive US debt, he himself has been very well skilled in piling on debt recklessly, with sometimes disastrous results.
All this together with his pledges like building a wall along the Mexican border, banning Muslims from entering the country and opposing trade deals, bode ill for the US and the world.
However, we should emphasize that the political system of checks and balances would keep Trump from completely driving the US and its reputation down the drain. Congress, the Supreme Court, Republicans like Paul Ryan and even his cabinet will be able to mitigate Trump's actions. This doesn't mean that Trump couldn't do a lot of damage to free trade, public finances and international relations of the sole superpower. This unpredictability - which Trump likes so much - will keep international politicians and financial markets on edge.Suggest a correction