2016 elections - because it's never too early

[CountDeMoney]

Isn't most of US debt still held domestically, too? Looks like he likes loading hollow points when shooting himself in the foot.

Best person to owe money to is always yourself.

[Martinus]

This is insane.  US government debt is widely considered the safest bonds possible.  That reputation is invaluable as it allows the US to borrow huge amounts of money at low interest.  This is a fantastic asset for the US, one that generations of Americans have enjoyed, and this man wants to destroy it?

Arguably, the question is what alternative would lenders have? It's like during the crisis, the US economy was tanking but the dollar and US bonds stayed bullet proof, mainly because there was no safer alternative for lenders and investors to put their money in.

[Martinus]

To me Trump seems pretty centrist. He is definitely more centrist than Cruz.

Meowtf?

In what way is cancelling trade deals, deporting all illegal immigrants immediately, building a giant wall with Mexico, and banning Muslims from entering the US, centrist positions?

He has a mix of far right and far left policies that average out to the middle.

Yeah. I kinda concede that under that definition Hitler would be a centrist too.

[Zanza]

This is insane.  US government debt is widely considered the safest bonds possible.  That reputation is invaluable as it allows the US to borrow huge amounts of money at low interest.  This is a fantastic asset for the US, one that generations of Americans have enjoyed, and this man wants to destroy it?

Arguably, the question is what alternative would lenders have? It's like during the crisis, the US economy was tanking but the dollar and US bonds stayed bullet proof, mainly because there was no safer alternative for lenders and investors to put their money in.

That's a circular argument. There was no safer alternative because investors knew no US government would ever be so stupid to default on its bonds. Once a state starts talking about defaulting on its debt, there are lots of better alternatives.

Trump does not seem to understand that. The people lending him money for his casinos are not the same people that lend money to the US government.

[Martinus]

Politico article analysing how Trump could win:

Unless the #NeverTrump people have been hiding a mad scientist with a DeLorean in a warehouse somewhere and haven't gotten around to telling anybody, Donald J. Trump is now the certain Republican nominee for president of the United States. True to form, having learned nothing from their yearlong string of overconfident and embarrassingly wrong predictions about voter behavior and preferences, the D.C. pundit class has already proclaimed him a general election loser.

Not so fast. For the handful of polls that have Trump losing by double digits, there's one or two that foretell a much closer race. And if enough major chips fall the tangerine billionaire's way, he may get his shot at repainting the White House metallic gold. Want to know if you should join Lena Dunham on a house-hunting trip in Canada? Here's a month-by-month guide of the signs of a looming Trump victory.

MAY-JUNE

Sign #1: Bernie Sanders keeps winning primaries, while Trump eggs him on.

Sanders' surprise victory in Indiana almost certainly guarantees that Hillary Clinton will be battling the Vermont Democrat all the way to the convention. And it's not at all unlikely that Sanders will win other states on the road to California (such as West Virginia or Oregon). This is a big opportunity for Trump. Imagine: He echoes Sanders' talk on trade while amplifying the idea that Sanders' supporters are being cheated by a "rigged" process, paving a road for Sanders' fanatics that leads directly into the Trump camp. In Indiana, 30 percent of Sanders voters said they wouldn't support Hillary Clinton if she were the nominee. If Trump can take even half of them in Indiana and beyond, that's a major advance.

Sign #2: #NeverHillary Takes Off.

It's not at all clear how large the #NeverTrump contingent is. But more worrying than its size is that the crowd
consists of writers and professional talking heads who have lots of contacts with producers, pithy quotes and earpieces at the ready. Trump needs some counterprogramming—and good news for him, if there's one thing Donald Trump is a master at it's creating new, shiny Internet memes. Why not make #NeverHillary his own? He might even peel off at least a few of these #NeverTrumpers to focus on #NeverHillary instead, like Reince Priebus did last night. In any event, if #NeverTrump is still a "thing" by mid-June, he's in for some trouble.

Sign #3: No other prominent Republican is accused of conspiring in the Kennedy assassination.

I mean, what was the point of that? Trump, already a likely winner in Indiana, didn't have to mention a kooky National Enquirer conspiracy to keep things interesting. And in the end, the tactic did even more damage to his party—giving a number of Trump haters a convenient excuse to abandon the GOP. Which means that for the next two months, the presumptive nominee will have to resist every urge and impulse to troll his fellow Republicans. If he can do that, he'll go far in bringing his party together—setting the GOP up for a solid general election performance. Even the moderate Senator Susan Collins said she could support Trump if he avoids "bizarre" behavior and "gratuitous personal insults." Good luck with that.

Sign #4: Trump hires campaign veterans.

He's already started this with people like Paul Manafort and Ed Rollins (who's joined the pro-Trump SuperPAC), but he'll need a few more hires to show he's really serious about winning. That's not to say he should bring in all the geniuses, as he calls them, who led the GOP to defeats in the past two elections. But he will need to bring on board people who know the basics about organizing in 50 states, arranging GOTV efforts, monitoring recounts and negotiating media advertising rates. Also it wouldn't hurt to have a few more people around who understand the daunting electoral math ahead.

Sign #5: The Third Party effort languishes.

Currently a not insignificant number of spurned Republicans think running as a third-party candidate is a good idea—as long as someone else does it. Trump should hope that the effort is all talk, and no action. (You know, like what's gotten D.C. Republicans into this mess in the first place.) If a serious third-party contender fails to materialize by the end of spring, then Trump has had a good first month or two as Republican standard-bearer.

JULY-AUGUST

Sign #6: Trump targets the Rust Belt.

The electoral math is not difficult. Trump, or any Republican for that matter, can't win the election unless they turn some Obama blue states red. For Trump, with his populist economic message, his best chances are places like Michigan (which Obama won by 9 points in 2012), Ohio (which Obama won by 2), Pennsylvania (which Obama won by 5), and Wisconsin (which Obama won by 7). None of those victories was by an insurmountable margin. A telling sign of Trump's prospects for electoral success is if he shows he understands that, spending the bulk of his time campaigning in places like Pittsburgh or Toledo, or even Flint. Perhaps he can even chip in to replace lead-infested water pipes there.

Sign #7: Trump's vice presidential pick is not a complete, mismanaged disaster.

The best-case scenario: Contrary to expectations that he'll have his potential VP sit across a table in a boardroom doing demeaning tasks while audience members vote on the winner, Trump instead arranges a methodical, professional, low-key process to vet and interview potential running mates. There will be many people advising Trump to pick a solid Republican officeholder who will soothe the wounds of Trump opponents. Others will urge a woman in the foolish belief that will magically solve his gender gap issues with Clinton. If those are his top considerations, he's asking for a summer disaster.

Trump needs a running mate who can assure nervous Republicans (and independents) that this guy—how shall we put it?—isn't a few Trump steaks short of a full cow. All of which means it's probably not in Trump's interest to pick someone who'll pull a Kasich ("I may be on the ticket, but it's not an alliance") or who will only half-heartedly support him ("I don't think he's that bad. Probably.") He needs someone who can make the case for Trump with sincerity.

On paper, Marco Rubio might be a good fit (Obama won Florida by a single point in 2012, and both Trump and Rubio have significant ties to the state), but only if there's a way that he can convince himself Trump is able to do the job. That likelihood grows with every news cycle that moves us away from memories of "Little Marco."

Sign #8: Hillary Clinton stays the course.

Trump's prospects would be strengthened if by midsummer, Clinton, worried about her Sanders supporters, has shown little more than a half-hearted effort to reach out to Republicans. In short, Trump needs to hope for Clinton to stay the safe, conventional candidate who lost to Barack Obama. Her speeches need to remain anodyne and uninspiring, with pandering, focus-group language that screams "career politician." (A sample line from her last memoir: "From the moment I first held Chelsea in my arms in the hospital in Little Rock, I knew my mission in life was to give her every opportunity to thrive.") Her policies stay conventional; she enunciates support for, say, tax increases and bigger government programs. Her VP choice proves dull and idea-deprived.

In short, if a majority of voters remember what they don't like about Clinton in the first place by the time the conventions come around, Trump may be poised for a November surprise.

Sign #9: FBI-email scandal grows, or the mainstream media takes Juanita Broaddrick seriously.

These are the sort of "wild cards" that undoubtedly will be keeping Clinton campaign advisers up at night—like for the next six months.

SEPTEMBER-OCTOBER

Sign #10: Trump overperforms in first debate with Clinton.

Trump will head to the debate with Clinton with expectations so low that if he shows up with matching shoes on, pundits will call it a win. If he actually demonstrates that his knowledge of foreign policy isn't limited to countries where members of the Mar-a-Lago staff were born, and refrains from using the National Enquirer as a fact-checking source on the national debt, then he may well emerge from their confrontation a far more credible commander in chief. Think that's impossible? Just ask Sarah Palin.

Sign #11: Polls show Michigan or Pennsylvania in play.

If a number of polls show at least one or two of the key Rust Belt states in play—like within the margin of error—then Trump really could pull this off.

ELECTION WEEK

Sign #12: Someone (Ivanka?) changes Trump's Twitter account password.
And she doesn't tell him what the new one is.

[Martinus]

This is insane.  US government debt is widely considered the safest bonds possible.  That reputation is invaluable as it allows the US to borrow huge amounts of money at low interest.  This is a fantastic asset for the US, one that generations of Americans have enjoyed, and this man wants to destroy it?

Arguably, the question is what alternative would lenders have? It's like during the crisis, the US economy was tanking but the dollar and US bonds stayed bullet proof, mainly because there was no safer alternative for lenders and investors to put their money in.

That's a circular argument. There was no safer alternative because investors knew no US government would ever be so stupid to default on its bonds. Once a state starts talking about defaulting on its debt, there are lots of better alternatives.

Trump does not seem to understand that. The people lending him money for his casinos are not the same people that lend money to the US government.

I think what he is talking about is not a unilateral default but a negotiated debt haircut. I know it's anathema to a German but until global finance took over politics in most of the democratic states, that was a pretty common occurrence, including for countries that were not on the brink of an economic disaster at the time.

And unlike Greece, the US has a much better chance of getting such a deal without damaging its credit rating too much - I repeat, where the investors are going to go if not the US? Russia? China? The Eurozone? The US would still be the safest bet.

[Admiral Yi]

Corporate mid grades and the shadow finance market, that's where.

[Zanza]

Can you give an example for this pretty "common occurrence" among first world countries that were not on the brink of disaster or had just lost a war? The countries with the best credit, e.g. US or UK never did it.

How would the US be the safest bet if you would not know whether you get 100 cents on the dollar? That's junk bond level.

[Martinus]

It would be the safest because everybody else would still be less safe. You realise that the word "safest" is relative, right? With the largest and best performing economy in the world, the US would be the safest bet, because everybody else is so shitty and/or small.

[Admiral Yi]

Marty, you were playing a brilliant Castilian defense focused on the black squares.  It was a fatal flaw to switch to a logic based defense.  Mate in 7.

[Martinus]

Corporate mid grades and the shadow finance market, that's where.

I don't think you understand what you are talking about. These are considered some of the unsafest (if most profitable) debts.

Secondly, one does not invest in the shadow finance market - the shadow finance market entities are investors. And their job is to finance things that the regulated financial institutions cannot touch because they are too risky.

Most institutional investors are prohibited or heavily restricted against investing in such schemes, and most of them need to hold a certain percentage of their assets in government bonds.

[Zanza]

I realize it is relative, but even if it is the biggest fish in the pond, the US government bond market is only one of many. It makes up maybe a third of the global public debt market, but it is dwarfed by private debt markets. It is extremely liquid, but only because it is seen as virtually risk free. Which would no longer be the case after a default.

[Admiral Yi]

I don't think you understand what you are talking about. These are considered some of the unsafest (if most profitable) debts.

Secondly, one does not invest in the shadow finance market - the shadow finance market entities are investors. And their job is to finance things that the regulated financial institutions cannot touch because they are too risky.

Most institutional investors are prohibited or heavily restricted against investing in such schemes, and most of them need to hold a certain percentage of their assets in government bonds.

That's not true to the best of my knowledge.  Banks have been holding sovereigns because they're counted at par when calculating cap/asset ratios, because of legislative and regulatory fiat.  If their counterparties start assessing risk using a formula that doesn't assess sovereigns at par, it won't matter what the people in Basel say.  They're not putting capital at risk.

[Zanza]

Most institutional investors are prohibited or heavily restricted against investing in such schemes, and most of them need to hold a certain percentage of their assets in government bonds.

Certainly not in government bonds undergoing haircuts.

[Martinus]

Incidentally, Trump seems to have as usual been somewhat misreported - I saw the interview and he is talking about renegotiating the debt in the event the economy tanks and interest rates start to go through the roof where, as he said "we no longer have a country".

I think one should never debate Trump's words as reported by the written media...