Donald Trump on economics: Deal or no deal?

Donald Trump's odds of becoming president are impossible to allocate at more or less than 50:50. That means we have to start taking this economic simpleton seriously

Ted S. Warren/AP Photo file

As the prospect of a Trump presidency looms over the 4th quarter of a year when the most noteworthy development is the simultaneous rise of precious metals and the fall of G7 sovereign debt as the preferred safe haven asset classes, investors contemplate what risks such an eventuality might imply.

First, what are the odds of a Trump victory, and how reliable are those stats?

A site called puts the most likely outcome of a Clinton/Trump matchup at a Clinton victory by a 6.2 per cent margin. Meanwhile a live poll running at CNN indicates Trump’s chances of victory are a less likely 21 per cent.

Nate Silver, a baseball statistics analyst now revered as one of the best American political odds-makers, was quoted on CNN as suggesting that Hillary’s chances of winning were at 75 per cent. Silver correctly predicted the outcomes in voting in 49 of 50 states in the 2008 presidential election, and was subsequently named one of The World’s Most Influential People by Time magazine in 2009.

None of the above mentioned forecasts, however, predicted that Trump would be the Republican nominee with any degree of certainty, until of course he was the last horse in the race. In terms of a statistical margin of error for polls relating to presidential elections, none are reliably closer than Silver’s calls. Silver in particular was quoted as saying “Trump has no chance,” in late 2015.

That arguably puts the odds of a Trump presidency closer to 50/50, and it is that spread that has investors nervously eyeballing their retirement portfolios wondering how to prepare.

Trump’s economic literacy is elementary

The inconvenient truth about high rolling deal-making billionaires is that their success is often the outcome of character deficiencies that they desperately try to overcompensate for by amassing wealth, combined with good old fashioned luck. Being in the right place at the right time, as luck would have it.

We can discern from Trump’s shoot-from-the-hip financial proclamations a pretty glaring absence of sophistication in his perception of how the world financial system actually works. His proposed mega-simplification of the U.S. tax code, for example, into three tax brackets from seven, would be a welcome development, if he could get it through Congress.

But his statements that he would offset the diminished Treasury revenue by forcing corporate repatriation of deposits in tax-free foreign jurisdictions on American companies makes everyone wince, considering the formidable legal battles that would ensue should such a plan actually be attempted.

An analysis of the plan by the Urban-Brookings Tax Policy Center found that the “Trump plan was disproportionately beneficial to the wealthy, and would greatly increase the national debt,” according to

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Far more alarming however, is Trump’s semi-delusional view of how debt can be managed. On CNBC earlier this month, Trump said, “I’ve borrowed knowing that you can pay back with discounts. I would borrow knowing that if the economy crashed, you could make a deal.”

That statement coming from the U.S. commander-in-chief should be causing warning bells to go off around the world. By even just making that statement, and without actually defaulting on a debt, which is what he is advocating, he sets a leadership-by-example precedent whereby homeowners might expect they have a right to re-negotiate their mortgages should their own economic circumstances make that preferable to repaying the debt.

But most frightening from the perspective of a global economy still weak from the 2008 recession, and being made incrementally weaker by unbridled government borrowing, are his statements in reference to China.

On his presidential campaign website, referring to the January 2000 deal welcoming China into the World Trade Organization, he says “None of what President Clinton promised came true. Since China joined the WTO, Americans have witnessed the closure of more than 50,000 factories and the loss of tens of millions of jobs. It was not a good deal for America then and it’s a bad deal now. It is a typical example of how politicians in Washington have failed our country.”

He goes on to vaguely accuse America of “being afraid to protect and advance the American interests.” While there’s no denying that China has grown to dominate global manufacturing, and many jobs that used to be done by Americans have been exported, it’s a little bit worrisome that the guy with a 50/50 shot at being president is acting like he can unilaterally reorder the global economic terrain to put American interests far and above what might be considered fair and equitable.

One could argue that, economically, Canada, as the U.S. largest trading partner, is the most at risk from Wild West economic policy from the likes of a president whose mantra has now emerged clearly as “America first.” It’s far from a done deal, and if the odds-makers are right, there’s only a very slim chance that the Donald becomes Mr. President. Fingers crossed.



