Dear Reader,
With the world now in a full-blown depression, Trump’s chances of re-election aren’t looking good — especially when he’s still using old tactics to win the game, despite an entirely new set of rules…
In today’s edition of The Daily Reckoning Australia, Jim Rickards outlines the case for Joe Biden as the next president of the United States.
Read on for more.
Until next time,
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Shae Russell,
Editor, The Daily Reckoning Australia
REVEALED: The Pandemic Market Crash Is Far from Over. Find out more.
The Case for Joe Biden
The case for Biden begins with the dismal state of the economy. Only three US presidents in the past 100 years have lost a re-election bid: Herbert Hoover in 1932, Jimmy Carter in 1980, and George HW Bush in 1992. What they had in common was a recession close to the election. All presidents who sought re-election and did not have a recession won.
Trump was in the ‘no recession’ category and headed toward an easy re-election until last February. That’s when the COVID-19 pandemic hit the US hard and the stock market crashed. Now Trump is in the same category as Hoover, Carter, and Bush 41 — and is possibly headed toward a recession-related defeat.
Saying you can’t lose without a recession is not the same as saying you can’t win with a recession. Still, it’s definitely an uphill battle for Trump. The fight is made worse by the fact that we’re not just in a technical recession (in fact, the recession may be over already), but we’re in a depression that may last for years.
Jobless voters
Trump has been touting the fact that unemployment fell from 14.7% in April to 13.3% in May, and recently to 11.1% in June. That’s progress, but it’s not the whole story.
As shown in the chart below, the official unemployment number ignores individuals without jobs who were subject to misclassification in the statistic gathering, and those who don’t have jobs but are not actively looking. There’s also a category of those working part-time involuntarily, who would prefer full-time jobs.
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| Source: Sober Look |
When all of those without jobs (or working part-time) are included, the unemployment rate is 22.3% in June (down from 31.6% in April). Those are depression-level numbers.
Over 50 million Americans have applied for unemployment benefits in the past five months. When you include family members of those losing jobs, the adverse impact of unemployment has hit more than 50% of the US workforce directly or indirectly. This is an economic disaster and feeds the perception that Biden can do better on the economy than Trump.
A head start
Biden has now announced his choice for vice president on his ticket, Kamala Harris. We were sure it was going to be a woman candidate because Biden had already promised that.
Biden also has huge leads in the polls. Using the RealClearPolitics poll (which averages numerous other polls), Biden leads Trump in the national poll by 49.3% to 40.7%, a significant 8.6% spread in favour of Biden.
We don’t put much weight on national polls since the US does not have national elections (we have state-by-state elections for Electoral College votes) — but 8.6% is a huge lead. This result is borne out in the swing state polls.
Biden leads Trump by 6% in Wisconsin, 6.4% in Florida, 7% in Pennsylvania, and 2% in North Carolina. The Pennsylvania lead is the most telling. It’s almost impossible for Trump to win re-election without winning Pennsylvania. Biden also leads Trump 60.1% to 36% in betting odds, although betting odds are set on the weight of money rather than the number of bets, so there’s less there than meets the eye.
Despite numerous flaws in media polls, Biden’s advantage is well outside the margin of error and it’s impossible not to make Biden the clear favourite at this stage, based on these polls.
Trump is behind in more than the polls
In addition to polling results, here are several factors that all weigh in favour of a Biden victory.
The world has changed, but Trump has not.
The impact of the pandemic (soon to be the sixth highest in fatalities of 15 major pandemics since the Black Death in 1353) is not merely physical, it is also psychological and will have intergenerational effects. Interest rates are not expected to normalise until 2050.
Trump doesn’t get it. He’s still running around talking about ‘Sleepy Joe’ and ‘Crooked Hillary’, and ‘Dirty Cop James Comey’, and nobody cares. Trump talks about the stock market and nobody cares.
All people care about today is the virus and their jobs or businesses. They’re barely even focused on the election yet because your health and your job come first.
Trump is trapped in the White House bubble and is isolated. He has lost touch with the American people. The people have noticed.
Trump has not articulated a vision for his second term. The first thing I learned when I was a Washington lobbyist is: ‘You can’t beat something with nothing.’
Biden may be a weak candidate, but at least he puts out policy positions on a regular basis. You may agree or disagree, but he keeps articulating what he wants.
Where is Trump’s policy for a second term? What will he do on taxes? Will he make friends with China or reignite the trade war? What happened to The Wall?
Beaten at his own game?
Recently Biden announced a ‘Buy American’ campaign. That’s a major embarrassment for Trump. Buy American is supposed to be one of Trump’s bread and butter issues. How on Earth did Biden beat Trump to the punch in terms of announcing a Buy American plan? Trump should own the issue, but now Biden does. Trump’s sleepwalking through this campaign. That’s a good way to lose.
Trump’s big campaign innovation in 2016 was the stadium rally. He did them all over the country to huge audiences and they worked. The impact was felt not just by the attendees but by their families, friends, and neighbours who heard about it the next day. But that tactic is now neutralised by the COVID-19 lockdowns. Trump is whining about it. He should just get over it and try something new.
Television town halls can be a partial substitute. Media interviews help also. Again, Trump is trying to run the 2016 playbook, but it’s not 2016 and it’s not even the same world we lived in last February. Everything has changed; Trump hasn’t. He’s playing small ball picking fights with reporters instead of leading the nation through a crisis. He had a chance to attain the stature of FDR in the Great Depression or Ronald Reagan at the end of the Cold War. Trump missed his chance because he did not understand the historical change that has taken place in the past six months.
In summary, the world has changed but Trump has not. He’s out of touch with the American people. He’s not responding to their needs — he’s not offering comfort, confidence, or leadership. Trump is headed for defeat unless he can execute a 180-degree turn in a matter of days, not weeks. The outlook is not promising for Trump. It is for Biden.
All the best,
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Jim Rickards,
Strategist, The Daily Reckoning Australia
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