The real uncertainty starts now, after the US elections

Two days ago, the US mid-term elections took place. The Republicans were hoping for a ‘red wave’, and Trump was hoping to ride it as the big winner of the battle. The results are not quite what was predicted, but however much the Democrats may say otherwise, they are far from having emerged victorious. We now face two years in the midst of a crisis, which, at least in Europe, is set to be extremely severe. Two years of turmoil as we seek to pass economic legislation that affects us all, and during which both parties must select their next candidates. On the one hand, a President with very worrying lapses of memory and a Vice-President who seemed his natural successor but has now disappeared; and on the other, a strong candidate who may well choose not to stand for fear that Trump will overshadow him.

11 November 2022 Reading time: 3.30 mins

Four years ago now, coinciding also with the results of the 2018 mid-term elections in the US.and following a thorough analysis – not just state by state, but even district by district (there are 435 of them) – I predicted that Trump would lose the 2020 election and stated where and why this would happen.

No, don’t expect me to do the same now, because at that time there was a combination of factors that haven’t arisen this time round, the most important being that Trump, who was president at the time, treated those elections as a referendum – something that hasn’t happened in the slightest this time.

Nevertheless, I wanted to write this article because we are becoming increasingly aware of the importance of what is happening on the other side of the ‘pond’, and I am constantly being asked questions about how that strange electoral system works. And, of course, as if I were some sort of fortune-teller, about what is going to happen. I can answer the first and second questions, and although I do have a crystal ball on my desk, it really only serves as a paperweight.

“Four years ago, I predicted that Trump would lose the election two years later; making such a prediction is not an exercise in science”

The US is an extremely complex country, because it has functioned in the same way since its inception. The country is the result of the union of territories or states, each with its own laws and regulations, which, by mutual agreement, decided to share certain laws. In Spain, for example, the country came first and the autonomous communities followed.

It’s incredible that in states like Iowa we still see candidates being chosen as if we were at school; in fact, they do it in school halls. “Those who support one candidate stand here, and those who support another stand there.” Or that in some cases voting begins up to a month before election day, whilst in others there is a second round, whereas in most there isn’t. So explaining the American electoral system in detail would require a whole course, which I don’t think most readers would be interested in, and which isn’t really necessary to understand what has happened.

“The NYT’s prediction algorithm is so good that, even if not all the votes have been counted, we can still know the result”

Not all the votes have been counted yet, but the results can be predicted with a very high degree of accuracy, thanks in part to an algorithm perfected over many years and owned by *The New York Times*. Ah! An anecdote – or perhaps more than that – the body announcing the results is not an official authority but the Associated Press. Yes, the news agency. And by this I don’t mean to imply that this is a bad thing, but rather to highlight the high regard in which the press is held there.

Well, according to that algorithm – which, I repeat, has been extremely accurate over the years – the ‘status quo’ in the Senate would remain unchanged, whilst the Democrats would lose the House of Representatives by 12 seats. In short, the chambers would be divided, given that, although there is a 50–50 tie in the Senate, such a tie is resolved, when it occurs, by the vote of the Speaker of the House – since this role is held not by a Senator but by the Vice-President of the country, in this case Vice-President Kamala Harris.

The interesting thing about this electoral system is that it aims for stability: the term of office for a Senator is six years, but the Senate is renewed in thirds every two years. Surely you can’t deny that this seems like a sound system? In contrast, however, the House of Representatives is completely renewed every two years, which means you’re always campaigning. This is the opposite of the stability sought in the Senate.

“The USA, the most advanced and modern country in the world, does not have a single voting system but 50 – one for each state”

And this is very important in the President’s term of office, because the chambers do not operate as they do here, where one has a great deal of power and the other is a mere figurehead. There, both chambers operate independently, with some laws being dealt with in one and others in the other, and sometimes both are involved. Well then, most of the laws relating to finance are dealt with in the House of Representatives – the chamber which is now controlled by a party different to the one in the Oval Office. And it is these laws that have a critical impact on us Europeans. In a globalised world where large companies that drive investment are what matter, this affects us. And if anyone has any doubts about this, just look at where the chairman of Iberdrola has announced his main focus for investment will be: the US. And to top it all off, he announced it from London.

Well then, all that remains for us now is to try to get a glimpse of what is going to happen over the next two years, given that our particular outlook could not be bleaker: a government propped up by anti-Spanish blackmailers, excessive public spending, a brutal tax burden, inflation that seems to be spiralling out of control, a Euribor in free fall, and the prospect of a year-long election campaign. Whatever our country decides, it will be the worst-case scenario for any domestic or foreign investor.

“It is always important to understand what is happening to our allies, but now, in the midst of a crisis that is set to be very severe, it is even more so”

For all these reasons, it is crucial to look across the Atlantic. Let’s not forget that Trump even went so far as to hit the table olive sector with tariffs. It seems unbelievable!

The Democrats have an elderly president, which in itself means nothing, but who, for whatever reason, is experiencing dangerous public lapses of memory. Let’s hope they are merely lapses, for his sake and for the sake of the whole free world, but in politics, rumours spread faster than the truth.

Never in modern history have either of the two major parties failed to put a sitting President forward for re-election to a second term, unless the President himself wished otherwise due to ill health. But at present, the natural successor, Kamala Harris, is proving to be a complete disaster. And this is coming from someone who had such faith in her that two years ago I said she “would be the first woman to sit in the Oval Office – and not just as a guest”.

In this climate of uncertainty, no Democratic politician would dare to put themselves forward as a candidate; it would be political suicide.

“Unfortunately, Kamala Harris is proving to be a real fiasco, and the polls only serve to confirm this”

But things are no better on the Republican side. Trump took it for granted – based on his success in securing the nomination of candidates to his liking – that this ‘red wave’ – red being the colour of the Republicans – would act like a tsunami and that he would ride it like Slater – the legendary surfer and staunch Trump supporter– but that hasn’t happened, and more than one of his ‘candidates’ has lost the election to the Democrat they were up against.

And then there is a figure who has been the talk of the town: Ron De Santis. De Santis has been Governor of Florida for the past four years and it is only fair to say that he has done a very good job, a fact that has been rewarded by the electorate with a lead of almost 20 points over the Democratic candidate.

However, in the seven polls conducted in October amongst Republicans ahead of these elections – asking whether they would prefer Trump or DeSantis – Trump has come out on top in every single one, with a lead of more than 23 points. What might this mean? Well, if Trump does eventually announce his candidacy, DeSantis will probably withdraw from the race, despite being the better candidate.

And why would he do this? Because he has a prime example right on his doorstep: Florida Senator Marco Rubio, the early favourite in the primaries for the 2016 election, which Trump went on to win. Rubio was crushed by Trump and his political career was ruined for good.

Personally, I think Trump is a toxic president for the world; his policies have only served to cause the West to lose influence globally, leaving more and more room for the Chinese. And now the conflict between the blocs is not military but economic.

If investors do take this on board – and it is highly likely that they will – then, if Trump stands for election, we will once again have a turbulent election campaign, preceded by chaos over the next two years, at a time when what the economy needs is a great deal of stability.

The answer will be revealed shortly, as a certain Hollywood star has said they will reveal the secret in the coming days.