2016 sowed the seeds of change. Now what?

As 2016 draws to a close, I am one who thinks the year has been monumental for the change it will bring to the world both economically and politically in the near future.

Historians will begin to see the import probably ten years from now, but the seeds were sown for a dramatic shift towards nationalistic politics in an attempt to pull these economies out of the decade-long malaise.

You could start with Iceland’s treatment of bankers and the enormous debt the island nation took on to pull itself out of the financial crisis as the possible ignition switch.

Then in 2016 you have Brexit. The surprising vote from the UK, where the British people approved the leaving of the European Union. Whether it was right or wrong, the exit party played on the fact that the unelected EU regulators had too much control over their daily lives.

The fear that Brussels could dictate policy more than Parliament, played to the voter fears that hordes of immigrants would be coming ashore because of these continental dictates.

Brexit — you could say — greased the skids for President-elect Donald Trump’s win over Hillary Clinton. Trump’s focus on keeping jobs in America and draining the swamp of life-long political hacks directing policy regardless of who occupied the White House, also resonated with voters in the same way as the British felt with Brussels.

History tells us that a turn to nationalism is generally seen as a negative, as countries turn to look inside generally leads to bellicose attitudes by the leadership. However most of the nationalistic warring leaders are far left-wing politicians.

Over the last 75 years with Germany, Russia and China the moves towards a socialistic society have had dramatic effects on their people and for the planet. Generally speaking a right-wing leadership takes on a globalist view, so these moves under the UK with Prime Minister Theresa May and in the US under a Republican Trump is something of an anomaly.

How 2017 will play out with all the developments, which happen this year is still too early to tell, but as the Chinese proverb states: May you live in interesting times, seems to have come to fruition.

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What does the Donald Trump win mean in the greater world economy?

First you had Iceland in 2008 telling the London banking system to go to hell, we are not crippling our nation to pay tribute to them with IceSave for rigged bets that City of London fostered upon the national bank of the tiny nation and backed all the savings accounts of depositors in a new bank.

Secondly, we had Brexit earlier this year. The British people voted to begin exiting the European Union.

These two nationalistic moves set the table for a Trump campaign. The campaign’s planks of secure borders, trade pacts and tariffs to bring jobs back to the country and immigration reforms all play into a move away from globalist’s agenda.

As an aside this huge nationalistic bent in the US can be witnessed by stories on the decline of the NFL ratings due to San Francisco 49er’s quarterback Colin Kaepernick’s taking a knee in protest¬† during the National Anthem. Now whether that is the reason for diminished viewership is not the question, it was the sentiment expressed by people questioned in many stories, which shows the changing intent of the people.¬†

Moving ahead, we may see more movements towards nationalism. A further break up of the EU could be on the table as southern tier countries and regions. Yes the PIGS could rise up, but there are regions in these countries such as Catalonia in Spain are already actively seeking succession after years of rhetoric and hand wringing over the idea.

So the markets are reacting to this move in the quickest way it can. Sovereign bond prices have crashed as the yields climbed to yearly highs. According to bond market stats, there was $1.2 trillion in price losses last week after the election. While most people look at stocks prices going up is good for the US, this bond rout will have far more lasting effect.

The strengthening dollar is also playing havoc on Asian markets. The strong dollar will allow the Fed to raise rates in December, which means we could see a repeat of last year where markets are buoyed by year-end window dressing by Wall Street and then cratering stocks come January.