‘Trump must lure overseas capital back to US to appease Wall Street & Main Street’
RT: A wobble, initially, things seem to have stabilized a bit. Is that going to be the picture going forward?
Patrick Young: Isn’t it very interesting? I mean last week it looked as if it was Armageddon for markets: nine days in a row where the Dow Jones was down, we hadn’t seen that for a generation, 1980. This week we actually get the news.This is classic financial market behavior: sell the rumor, buy the fact. What we’re looking at, at the moment, is the marketplace has gone, “well OK, the old-fashioned Obamaian-Clintonian concept of stability, that’s gone out-the-window.”
What do they see coming in with Trump? Well, he might not suit the Goldman Sachs view of the world in some ways because they supported Hillary Clinton, but at the same time, what are we hearing as the messages that Trump wants to bring forward that he had on the stump? They were classic, old-fashioned Republican virtues: the concept of low taxes, a competitive economy, that’s catnip for markets, and therefore if he continues in this way it could be very, very promising for investors.
RT: How’s it going to go with his relationship with the banks? He’s called himself an anti-establishment candidate, but he’s also a billionaire businessman who’s done very well for himself along the way. What’s his future relationship with Wall Street and the financial establishment going to be?
PY: Look, it’s very, very interesting because we are on the cusp of the world changing, I mean the moment around me in Lisbon we’ve got 55,000 people at a thing called 'Web Summit' which is the future of technology, and within that technology Fintech is very important. Banks reached their peak in 2009 and 2010.
Therefore, Donald Trump is in a very interesting [position] in that he realizes that in one way, banker power may be declining but the power of Wall Street remains very strong. The interesting line is can he work his way around in order to be a friend of the markets, say by bringing back the capital that sits overseas? Trillions of dollars in American corporate accounts… can he get that money back? Can he at the same time relocate and re-energise the relationship with Main Street?
RT: How much power has he got to do that? What’s he up against?
PY: Well, he’s up against huge entrenched values within Wall Street itself, but bear in mind this: he is the first man in the Republican party since when, 1928, before the historical Great Crash, to actually have the Congress, the Senate and the Office of the President with him. Now surely, he must be able to deliver some sort of reform therein. Oh yes, many banks are going to go down, they are going to be fighting like mad, but again I say to you, finance is much more than pure banking, and it’s the banks that have been trying to manipulate so much of Wall Street’s culture over the last decade, and they are losing power over time to financial technology and other upshots.
RT: How will the banks be greeting his election? Will they welcome it or not, do you think?
PY: The banks are clearly going to be very cautious, because we saw a great deal of them broke for Hillary, they broke rather strongly for Hillary. Some of the banks were even trying to kill off dissent, they were almost refusing people to donate to the Trump campaign! How undemocratic can you possibly become? Therefore, there is going to be a great deal of trepidation. Because actually in Trump’s manifesto, there are a lot of things that will bring finance closer to Main Street rather than keeping it in the rarefied world of Wall Street.
And as a financier, I think that’s wonderful, because that’s going to be better for the economy, but it’s obviously going to be a huge battle, because a lot of banks aren’t going to want to give up their oligopoly without a fight.
RT: Trump has promised to make America great again. That’s going to cost money. Can he deliver?
PY: There’s two things here. If we’re in the la-la-land delusional concept that government delivers economic growth, of course it’s not. But on the other hand, do we want to become North Korea or Venezuela? I certainly don’t think the United States of America does.What this is going to be about is delivering a fair deal that creates jobs. That’s been a huge problem of the Obama legacy: the economy grows barely a couple of percent per month, it’s really not doing anything on an annualized basis, but yet what you’re seeing is huge numbers of people have actually opted out of the workforce entirely and that’s why unemployment looks low in the USA.
Trump realizes he needs to get those people into jobs.I think one of his key tricks is going to be this whole idea: there is a wall of money overseas from American corporations. He is going to want to entice that back, and if that can start can start investing in America, the multiplier effect is vast. We’re talking about well over a trillion dollars and that’s big money, even for the financial world, and that could be a lot of jobs. That could deliver the upswing that allows people to have a better standard of living, a better job, a better future, and I suppose it would, it would make America great again.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.