Time magazine’s cover story this week posed a simple question, “Is Steve Bannon the Second Most Powerful Man in the World?” In case you didn’t already know, Bannon is President Trump’s controversial Chief Strategist who, among other things, co-authored the 45th President’s Inauguration Day speech.
Time recounts a story of a party guest who overheard Bannon say that he was like communist revolutionary and Soviet leader Lenin, eager to “bring everything crashing down, and destroy all of today’s Establishment.”
Bannon was also “captivated” by a book called The Fourth Turning written by Hedgeye Demography Sector Head Neil Howe and the late generational theorist William Strauss.
As Time writes:
“The book argues that American history can be described in a four-phase cycle, repeated again and again in which successive generations have fallen into crisis, embraced institutions, rebelled against those institutions and forgotten the lessons of the past–which invites the next crisis.… During the fourth turning of the phase, institutions are destroyed and rebuilt.”
In the exclusive video above, Neil Howe and Hedgeye CEO Keith McCullough discuss the current political climate stoked by Bannon and Trump, how that could affect markets and more.
As Howe points out, every two-term U.S. president since 1900 has come into office with a recession directly before, while or within a few quarters of taking office. Given the Bannon/Trump worldview, Howe thinks:
“Trump would glory in a bear market in his first year in office. He would have fun with it. This bear market is the feeling of corruption leaving the body. And what gains, the GOP leadership’s high and dry Tory libertarianism or Steve Bannon’s populist fury? Who wins on that exchange with every tick down in the Dow? I think it’s clear. Trump wins.”
Christopher Wylie, the whistleblower from inside Cambridge Analytica, and author of Mindf*ck: Cambridge Analytica and the Plot to Break America, talks about his new book, promising revelations about partisan data misuse.
Steve Bannon has been propelled over the last year from fringe media outlier to top propagandist of the U.S. Empire as Trump’s Chief Strategist. From his Wall Street roots and apocalyptic film career to his cultivation of alt-right bigots at Breitbart News, Abby Martin exposes Bannon’s true character in this explosive documentary. Dissection of Bannon’s ideology of “economic nationalism” and desire to “Make America Great Again” reveals the danger of his hand in Trump’s agenda.
The Epstein case is a reminder of the depraved milieu from which our president sprang.
On Monday, Donald Trump disinvited the then-British ambassador, Kim Darroch, from an official administration dinner with the emir of Qatar, because he was mad about leaked cables in which Darroch assessed the president as “insecure” and “incompetent.”
There was room at the dinner, however, for Trump’s friend Robert Kraft, owner of the New England Patriots, who was charged in a prostitution sting this year. Kraft was allegedly serviced at a massage parlor that had once been owned by Li Yang, known as Cindy, a regular at Trump’s club Mar-a-Lago. Yang is now the target of an F.B.I. inquiry into whether she funneled Chinese money into Trump’s political operation.
An ordinary president would not want to remind the world of the Kraft and Yang scandals at a time when Jeffrey Epstein’s arrest has hurled Trump’s other shady associations back into the limelight. Epstein, indicted on charges of abusing and trafficking underage girls, was a friend of Trump’s until the two had a falling out, reportedly over a failed business deal. The New York Times reported on a party Trump threw at Mar-a-Lago whose only guests were him, Epstein and around two dozen women “flown in to provide the entertainment.”
Epstein, of course, was also linked to the administration in another way. The president’s labor secretary, Alexander Acosta, was the United States attorney who oversaw a secret, obscenely lenient deal that let Epstein escape federal charges for sex crimes over a decade ago. On Friday, two days after a tendentious, self-serving news conference defending his handling of the Epstein case, Acosta finally resigned.
Even with Acosta gone, however, Epstein remains a living reminder of the depraved milieu from which the president sprang, and of the corruption and misogyny that continue to swirl around him. Trump has been only intermittently interested in distancing himself from that milieu. More often he has sought, whether through strategy or instinct, to normalize it.
This weekend, Trump National Doral, one of the president’s Florida clubs, planned to host a fund-raiser allowing golfers to bid on strippers to serve as their caddies. Though the event was canceled when it attracted too much attention, it’s at once astounding and not surprising at all that it was approved in the first place.
In truth, a stripper auction is tame by the standard of gross Trump stories, since at least the women were willing. Your eyes would glaze over if I tried to list every Trump associate implicated in the beating or sexual coercion of women. Still, it’s worth reviewing a few lowlights, because it’s astonishing how quickly the most lurid misdeeds fade from memory, supplanted by new degradations.
Acosta, you’ll remember, got his job because Trump’s previous pick, Andrew Puzder, withdrew following the revelation that his ex-wife, pseudonymous and in disguise, had appeared on an Oprah episode about “High Class Battered Women.” (She later retracted her accusations.)
Steve Bannon, Trump’s former chief strategist, was once charged with domestic violence, battery and dissuading a witness. (The case was dropped when his former wife failed to appear in court.) After Bill Shine, a former co-president of Fox News, was forced from his job for his involvement in Fox’s sprawling sexual harassment scandals, Trump hired him.
The White House staff secretary Rob Porter resigned last year after it was revealed that both of his ex-wives had accused him of abuse. The White House speechwriter David Sorensen resigned after his ex-wife came forward with stories of his violence toward her.
Elliott Broidy, a major Trump fund-raiser who became the Republican National Committee deputy finance chairman, resigned last year amid news that he’d paid $1.6 million as hush money to a former playboy model, Shera Bechard, who said she’d had an abortion after he got her pregnant. (In a lawsuit, Bechard said Broidy had been violent.) The casino mogul Steve Wynn, whom Trump installed as the R.N.C.’s finance chairman, resigned amid accusations that he’d pressured his employees for sex. He remains a major Republican donor.
In 2017, Trump tapped the former chief executive of AccuWeather, Barry Myers, to head the National Oceanic and Atmospheric Administration. Then The Washington Post discovered a report from a Department of Labor investigation into Myers’s company, which found a culture of “widespread sexual harassment” that was “severe and pervasive.” The Senate hasn’t yet voted on Myers’s nomination, but the administration hasn’t withdrawn it.
And just this week, a senior military officer came forward to accuse Gen. John Hyten, Trump’s nominee to be the next vice chairman of the Joint Chiefs of Staff, of derailing her career when she turned down his sexual advances. “My life was ruined by this,” she told The Associated Press. (The Air Force reportedly cleared him of misconduct.)
Trump will sometimes jettison men accused of abuse when they become a public relations liability. But his first instinct is empathy, a sentiment he seems otherwise unfamiliar with. In May, he urged Roy Moore, the theocratic Alabama Senate candidate accused of preying on teenage girls, not to run again because he would lose, but added, “I have NOTHING against Roy Moore, and unlike many other Republican leaders, wanted him to win.” The president has expressed no sympathy for victims in the Epstein case, but has said he felt bad for Acosta.
Trump seems to understand, at least on a limbic level, that the effect of this cavalcade of scandal isn’t cumulative. Instead, each one eclipses the last, creating a sense of weary cynicism that makes shock impossible to sustain.
It was just three weeks ago that E. Jean Carroll, a well-known writer, accused Trump of what amounted to a violent rape in the mid-1990s, and two friends of hers confirmed that she’d told them about it at the time. In response, Trump essentially said she was too unattractive to rape — “No. 1, she’s not my type” — and claimed that he’d never met her. That was a provable lie; there’s a photograph of them together. It didn’t matter. The story drifted from the headlines within a few days.
Since Epstein’s arrest, many people have wondered how he was able to get away with his alleged crimes for so long, given all that’s publicly known about him. But we also know that the president boasts about sexually assaulting women, that over a dozen have accused him of various sorts of sexual misconduct, and one of them has accused him of rape. We know it, and we know we can’t do anything about it, so we live with it and grow numb. Maybe someday justice will come and a new generation will wonder how we tolerated behavior that was always right out in the open.
BERLIN—To win voters lost to an anti-globalization backlash, Europe’s mainstream parties are going back to the 1970s.
In Germany, the U.K, Denmark, France and Spain, these parties are aiming to reverse decades of pro-market policy and promising greater state control of business and the economy, more welfare benefits, bigger pensions and higher taxes for corporations and the wealthy. Some have discussed nationalizations and expropriations.
It could add up to the biggest shift in economic policy on the continent in decades.
In Germany, Europe’s biggest economy, the government has increased social spending in a bid to stop the exodus of voters to antiestablishment, populist and special-interest parties. Reacting to pressure on both ends of the political spectrum, it passed the largest-ever budget last year.
“The zeitgeist of globalization and liberalization is over,” said Ralf Stegner, vice chairman of the 130-year-old Social Democratic Party, the junior partner in Chancellor Angela Merkel’s government coalition. “The state needs to become much more involved in key areas such as work, pensions and health care.”
The policies mark the end of an era in Europe that started four decades ago, with the ascent of former British Prime Minister Margaret Thatcher and her U.S. ally, President Ronald Reagan.
After Thatcher abolished capital controls in 1979 and began selling off state companies in the 1980s, other European governments followed suit, embracing supply-side policies, deregulation, market liberalization and tax cuts. Revenues from privatization among European Union member states rose from $13 billion in 1990 to $87 billion in 2005, according to Privatization Barometer, a database run by consultancy KPMG Advisory S.p.A.
Today, concerns about growing inequality, stagnating wages, immigration, the debt crisis and China’s rising power have fueled the recent political shift. European businesses and governments also worry about potential changes in U.S. policy, amid looming threats of trade sanctions.Smaller State Governments across Europe retreated from many economic sectors and sold state companies starting inthe 1980s.Privatization proceeds in EU countriesSource: Privatization Barometer reports00.billion1980’85’90’952000’05’10’150102030405060708090$100
This erosion of the old technocratic consensus about how to run an economy, even in countries where populists aren’t getting any closer to power, could be one the most lasting consequences of the recent antiestablishment surge.
Even in countries where populist parties are already in government, such as Poland, those parties have shifted their focus from nationalist and anti-immigration rhetoric to championing generous welfare policies and state aid.Bigger BenefitsGermany’s government has increased socialspending in a bid to win over voters. Germany’s government spendingSource: Germany’s Federal Ministry of FinanceNotes: Data through 2017 are actual; 2018 and 2019are targets. €1=$1.14.billionSocial and welfare benefitsOther spending2012’13’14’15’16’17’18’19050100150200250300350€400
Germany’s SPD has embraced additional welfare spending, paid for by tax revenues, to combat a retreat of voters so rapid it threatens to turn the once-dominant force in German politics into a niche player. The party is now pushing for policies such as unconditional pension for people who have worked for a certain period but didn’t make sufficient contributions into the pension pot.
In the U.K., Jeremy Corbyn, leader of the opposition Labor Party, has proposed renationalizing railways, public utilities, the postal service and the Royal Bank of Scotland ,the country’s second-biggest lender. It’s effectively a reversal of the privatization spree initiated by Ms. Thatcher. The party is also toying with policies such as universal basic income for all and a four-day working week for public-sector employees.
Labor has been polling ahead of the ruling Conservatives in opinion surveys for most of the past two years.
The re-nationalization plan would cost around $210 billion, according to an estimate by New York-based consulting firm S&P Global. Labor has said it would issue treasury bonds to finance nationalizations. Thames Water, the U.K.’s largest water company, added a clause to its bond to make sure holders are repaid immediately should it be nationalized.
In France, President Emmanuel Macron reacted to weeks of violent street protests by abolishing plans to increase fuel prices and announcing measures to boost the incomes of low earners. The estimated cost of the spending is more than €10 billion ($11 billion). In a symbolic concession to the antiestablishment yellow-vest movement, Mr. Macron declared he would shut down the university École Nationale d’Administration, his own alma mater, because it instigated elitism.
Mr. Macron reversed a decision to eliminate 200,000 civil-service jobs and announced a tax increase for companies that overly rely on short-term contracts, which his government blames for creating an underclass of workers. In addition, monthly pensions of less than €2,000 have been pegged to the rate of inflation.
He also embraced the idea of holding referendums on certain policy issues, a key demand of populist leaders. The first major referendum will decide whether the sale of the state’s majority stake in the company that runs Paris’s airports should go ahead as planned.
Denmark’s Social Democrats, who had been out of government since 2015, won a general election on June 5 following a policy makeover that included going further left on economic policy, while sharply turning right on immigration. They pledged to increase public spending and taxes for companies and the wealthy, and to enable early retirement by rolling back some recent pension changes. Their far-right rivals the People’s Party suffered a major loss in the election.
The reaction from European economists is decidedly mixed.
Some have greeted the shift as a welcome correction to years of pro-business and free-trade policies they think have dug deep rifts in Western societies.
“The lesson from Germany is: Strong growth and a generous social welfare system alone are insufficient to satisfy voters. Globalization and technological change are putting pressure on many people,” said Marcel Fratzscher, head of the German Institute for Economic Research, a Berlin-based think tank. “Europe’s social welfare state needs a fundamental overhaul as it has to focus on empowering people and on stopping the market abuse of firms and lobby groups.”
Others are concerned Europe is deviating from proven economic recipes just as growth is wobbling, or that the policies are outdated.
“We are indeed seeing a kind of return to the pre-Thatcherite approach, but it is doubtful that policies from the era of closed markets and capital controls could work in a globalized world. A vision of the past can’t be implemented in the present,” said Branko Milanovic, a New York-based Serbian-American economist who studies income distribution and inequality.
In Germany, despite a decade of robust economic growth and near full employment, almost four million working people receive welfare benefits to supplement their income. Around one-quarter of all employees work in the low-wage sector, according to government statistics and research by Mr. Fratzscher’s group.Low Wages Increased competition put downward pressure on wages, while shrinking unemployment benefits increased incentives for Germans to take lower paying jobs. Share of German workers who are low paid*Source: German Institute for Economic Research*Those who make less than two-thirds of the country’s median earnings%1996’982000’02’04’06’08’10’12’14’1614161820222426
Subsidies to Germany’s mandatory pay-as-you-go pension scheme almost reached the €100 billion mark for the first time in 2018. Earlier this year, Ms. Merkel’s government adopted a new industrial strategy that centers on protecting German companies from foreign competition, including by enabling the government to buy stakes in businesses to shield them from foreign acquisition.
Peter Altmaier, economics minister and author of the industry strategy, said it was designed in part to address the anxieties of Germans who have been drawn to far-left and far-right parties in recent years.
Germany’s SPD, the junior partner in Germany’s government coalition, is now debating whether large real-estate investors should be expropriated as a way to stabilize rents. In Berlin, where they preside over the local government, the SPD announced a freeze on rent prices. The head of its youth wing recently called for car maker BMW to be nationalized, earning grass-roots plaudits and some support from SPD ministers and mayors.
The SPD scored its worst result ever at last month’s European Union election. Polling around 12% to 14%, it is a shadow of its 1998 self, when it gathered 41% of the vote.
The environment-focused, center-left Greens more than doubled their votes between the country’s last general election in September 2017 and the EU election. It is now polling at around 26%. At least two polls since early June showed the Greens had become Germany’s most popular party for the first time since its creation in the 1980s—ahead of Ms. Merkel’s Christian Democratic Union.
Twenty years ago, the German Greens co-wrote with the SPD the country’s last big tax cuts and a deeply unpopular overhaul of labor-market legislation. Today, the party is toying with an unconditional universal income and seizing real estate from commercial landlords as a way to stop rent increases.
The far-right Alternative for Germany, known as AfD, lost ground in last month’s EU election, and is now polling around 13%.
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The AfD has campaigned on immigration in recent elections. Party leaders recently consulted with Steven K. Bannon, President Trump’s former chief strategist and now an adviser to nationalist and populist parties in Europe. In a meeting in Berlin on May 13, he advised the leaders to tone down their anti-Islam fervor, purge radical members, and refocus their message from identity politics to economics.
“The real message is the economy,” Mr. Bannon said in an interview. “Populists need to talk to the workers.”
Jörg Meuthen, the AfD co-chair who met Mr. Bannon, said he agreed, but questioned the timing of the message. He said Germany’s economy—with record low unemployment and slowing but still positive growth—remained too healthy for an immediate policy shift.
“When the recession kicks in and people start worrying about their jobs, then we can roll out economic campaigns and show our competence. Populists must look at what is affecting people emotionally, and at the moment that is migration and the climate,” Mr. Meuthen said.Globalization BacklashProtest parties focused on denouncing the economic, cultural and security impact of globalization have drawn more attention across Europe.Populist party poll performance in selected countries Source: NomuraNote: Weighted averages of national polls.%GermanyFranceSpainU.K.2015’16’17’18’19051015202530
In Spain, Pedro Sanchez, acting premier and leader of the Socialist Party, won the national and the EU elections this year after sharply raising the minimum wage and announcing a boost in social benefits and corporate taxes.
Mr. Sanchez’s bet on wooing working-class voters lost to protest parties paid off, said Daniel Diaz Fuentes, professor of economics at the Spanish university of Cantabria. Mr. Fuentes said that the rise of populism could trigger a re-nationalization wave.
“I think that the state will become a much more active entrepreneurial actor via venture capital and involvement in investment via the banking system,” Mr. Fuentes said.Two TrajectoriesThe income of low earners has decreased since 1980, while that of top earners has grown.Income shares of the top 10% in European regions*%NorthernWesternSouthernEastern1980’902000’102022242628303234Income shares of the bottom 50% in European regions*Source: Thomas Blanchet, Lucas Chancel and Amory Gethin, World Inequality Database*Population-weighted country averages%NorthernWesternSouthernEastern1980’902000’102022242628303234
Wolfgang Schmidt, deputy German finance minister and one of the strategists behind the SPD’s new approach, said the success of socialists in Spain, Britain and Denmark, in elections and opinion polls, shows that voters have turned against economic orthodoxy.
“As a society, we need to stop looking down on people. Anxiety about the future of work is driving voters to populists. People read about automation and self-driving cars and they ask themselves what will happen to their jobs in the near future,” he said.
Many European politicians and economists say the swing away from markets and back to the state misses the point of many voters’ anxiety, which is rooted in politics or culture. An annual poll about the fears of Germans conducted by the R+V Versicherung AG insurance group found that nine of respondents’ top 10 fears focused on politics, security and health. Economic concerns dominated between 2004 and 2015.
Paul Ziemiak, the second most senior official in Ms. Merkel’s conservative party, opposes what he says is an SPD-driven spending spree. “These policies have never made any country successful. Countries that have [tried them] have ultimately failed—politically, but also economically,” he said.
Protectionism would destroy a German economy built on exports and cross-border supply chains, said Clemens Fuest, an economist and adviser to the German government. Ambitious redistribution programs such as pension increases, early retirement or a universal income would collapse as soon as tax revenues fall in the slowdown. Companies were privatized 30 years ago because the state is generally bad at managing businesses, he said.
“Established parties are taking over the populists’ agenda to show voters that they have heard their message,” Mr. Fuest said. “But they are making big promises that cannot be kept.”
Many of the tales of controversy to emerge from the Trump administration have been abstract, or complicated, or murky. Whenever anyone warns about destruction of “norms,” the conversation quickly becomes speculative—the harms are theoretical, vague, and in the future.
This makes new Washington Post reporting about President Donald Trump’s border wall especially valuable. The Post writes about how Trump has repeatedly pressured the Army Corps of Engineers and the Department of Homeland Security to award a contract for building a wall at the southern U.S. border to a North Dakota company headed by a leading Republican donor.
The story demonstrates the shortcomings of Trump’s attempt to bring private-sector techniques into government. It shows his tendency toward cronyism, his failures as a negotiator, and the ease with which a fairly primitive attention campaign can sway him. At heart, though, what it really exemplifies is Trump’s insistence on placing performative gestures over actual efficacy. And it is a concrete example—almost literally—of how the president’s violations of norms weaken the country and waste taxpayer money.
The Post reports:
In phone calls, White House meetings and conversations aboard Air Force One during the past several months, Trump has aggressively pushed Dickinson, N.D.-based Fisher Industries to Department of Homeland Security leaders and Lt. Gen. Todd Semonite, the commanding general of the Army Corps, according to the administration officials, who spoke on the condition of anonymity to discuss sensitive internal discussions.
It may be a not-very-subtle sign of the frustration in the Army that the news leaked to the Post the same day that Semonite was called to the White House and Trump once again pressed him.*