Where the great internal conflict occurs after the debate: it seems to me that now that President Biden’s condition is widely known to the electorate, the Democrats will either lose the election or replace Biden as their candidate, and in the process of replacing Biden, they will make it clear whether the Democratic side will be soft left or hard left. While it is now clear that the Red Team/Republican side will be made up of far right players (i.e. dictatorial capitalists like fascists), we will soon find out if the Blue Team/Democrats will be soft left (liberal-leaning socialists). values) or extreme left (closer to communists). While you may justifiably react to my use of controversially harsh words like “fascists,” “socialists,” and “communists” to describe the alternatives, I think these are relatively small exaggerations of what is happening and seeing things through this relatively harsh lens is better than seeing it in a more nuanced and blurred way. I hope you know what I’m trying to say: we are facing a classic confrontation between the extreme right and the soft or the extreme left.
As for markets, to understand their relationship to politics, it is necessary to understand that markets prefer capitalists – that is, markets are all valued based on the present value of their expected future after-tax cash flows, so whatever Whichever side supports these cash flows, flows will support the markets. Right now, investors around the world are asking themselves: 1) where they can be most confident that these cash flows will be better and 2) where these capitalist values are most strongly held and protected. This assessment will increasingly drive the markets.
To put it simply, what I’m saying is that we should think about 1) the choice between right or left and how far right or left they are, and the facts that 2) the Red Team will field a leader and a team that is far right (strongly capitalist, nationalist, isolationist with deeply conservative values), 3) in the coming months we will know to what extent the leader and players of the Democratic team will be on the left, 4) the markets will prefer those on the right about those on the left, and 5) unfortunately, those in the bipartisan middle (that is, those who respect the civil rules of engagement and cooperate to create bipartisan leadership, which would be best) are practically out of the question.
Of course, personalities and skills are also important – unfortunately, personality will be much more important than skill. As a result of all this, we are at the part of the cycle where the choice will likely be between extremists, so you will have to choose a side and fight for it, keep your head down or run away (see here). This leaves us with a very disturbing internal picture in a world in which the other four great forces (debt/money/economy, international conflict between great powers, acts of nature/climate, and new technologies) are also likely to be disturbing to the existing world. order.
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