It struck me this week how full of historic events the first weeks of November are. Guy Fawkes’ gun powder plot (1605), the end of WWI (1918), The German Revolution of 1918 – abdication of Kaiser Wilhelm II, the Reichskristallnacht pogrom against the German Jews (1938), the fall of the Berlin Wall 1989, etc. and then the election of Donald Trump (2016). This year’s US Midterm elections had historic significance but are less likely to feature heavily in future history books. Historic significance because their outcome would show whether Donald Trump’s 2016 election as president of the United States was an ‘accident of circumstances’ or a permanent shift of the US electorate towards more extreme political positions.
The 2% gain of the US stock markets in reaction to the result of Tuesday’s elections tells us that the outcome was acceptable for both sides and perhaps the best that could be hoped for the economy. As predicted (but with much less conviction than usual), Trump’s Republican party lost the House of Representatives (lower house of the US Congress) but gained seats in the Senate (the upper chamber of the US Congress). Both sides were therefore able to claim victory. More importantly for the economy, the loss of full control of Capitol Hill means that Trump will be subject to increased congressional scrutiny, which should prevent some of his more outrageous policy initiatives from becoming law (the border wall with Mexico for example). On the other hand, confirmation of his government appointments through the Senate should become much easier, which will appeal to his ‘The Apprentice’ style high staff turnover approach. The risk is that he might quickly dispose of the remaining ‘adults in the room’ which, in the case of defence secretary Jim Mattis and White House Chief of Staff John Kelly, could be destabilising.
