This “blue shift” syndrome has become a pattern of US elections, and vastly more so this year after 100 million people voted by mail or in advance.
Mr Trump has striven for weeks to taint postal votes and to impugn the credibility of the US electoral system – breathtaking chutzpah given that he controls the US Justice Department, and that Republicans dominate the executive machinery of swing states.
He urged his supporters to vote only in person, aiming to create an even greater cleavage between the party colouring of the two sets of ballots. This has been his strategy ever since Joe Biden pulled ahead in the polls.
It led to the spectacle that we have all just witnessed: an early Trump lead in several states evaporating later. It is an invitation to conspiracy theories, all assiduously amplified on social media, with militia waiting in the wings.
The situation is dangerous and has nothing in common with Al Gore’s demand for a Florida recount 20 years ago. Mr Trump has lost both the popular vote and the electoral college vote, yet he is pulling out all the stops to subvert the result.
A machinery for legal guerrilla warfare has been set in motion across the battleground states and will now cause weeks of havoc. Have markets understood the gravity of what is unfolding?
The autocrats will surely relish the spectacle of a US president behaving as they do. It is the ultimate propaganda coup.
America’s succession process relies on the virtues of Cincinnatus. “Our Constitution does not secure the peaceful transition of power, but rather presupposes it,” says Amherst law professor Lawrence Douglas.
He says there are inherent design flaws in the architecture of the Twelfth Amendment and in the Electoral Count Act of 1887 that make easy prey for an abusive president.
States are not obliged to follow the outcome of the popular election when they allocate their vote in the electoral college. If doubts can be sown about the validity of the election – or if enough street disorder can be rustled up – the state legislatures may appoint anybody they want.
As it happens, these bodies are mostly controlled by the Republicans in swing states. So what will Mr Trump’s allies in the Pennsylvania General Assembly do if the Democrats win a narrow victory (I write before knowing the outcome) given that he already alleges a stolen election? At what point do they tell their party leader that enough is enough?
It comes down to whether courts are willing to strike down votes because the ballots arrived late – though posted in time – or had a slightly smudged postmark, and whether the Republican 6-3 majority on the Supreme Court will validate such suppression. I doubt that they will, but upon this may now hang the fate of the republic.
At the least, Washington faces weeks of paralysis and legal fights until the “safe harbour” deadline for the electoral college votes on December 8, and before the new Congress validates the presidential count on January 6. This chaos will happen in the middle of an escalating pandemic.
Nothing like it has been seen since the four-month Interregnum in 1932, the Winter War, when Herbert Hoover denounced Franklin Roosevelt’s New Deal as a “march on Moscow” and sought to sabotage his reflation policy in advance by tightening the Gold Standard.
Confidence in the banking system collapsed. It was the closest that America came to political breakdown during the Great Depression. It was also the moment when Japan invaded China, and Hitler took Berlin.
What might Xi Jinping do to Taiwan while Donald Trump is in his bunker? The autocrats will surely relish the spectacle of a US president behaving as they do. It is the ultimate propaganda coup. Whatever happens over the coming weeks, the Blue Wave has sputtered out. The Democrats have failed to capture the Senate. They may even have lost seats in the House. Their mandate for a radical Leftward turn has evaporated.
It has long been an article of faith among Democrats that “demographics are destiny”, and that the party’s ethnic and sectarian coalition must eventually prevail by force of numbers. But this election has been a wake-up call. There has been revulsion against identity politics and corrosive segmentation, and above all against the “cancel culture” of Antifa statue-smashers.
The Democrats lost ground to Latinos in Florida and South Texas, despite the “Wall”. This may shock some but it should be no surprise given the business ethic of Latino immigrants, and their Catholicism, and their family ties to countries with Trumpian caudillo traditions.
Markets must now confront Washington gridlock and diminished fiscal stimulus, already reflected in the plummeting yields on 10-year Treasuries, but not so far on Wall Street.
For a brief moment Bidenomics had us all in thrall. It looked as if there might be a $US7.9 trillion ($11 trillion) Keynesian blitz to “run the economy hot”. The strategy was consciously modelled on Roosevelt’s wartime expansion from 1941-1945. It aimed to leapfrog supply-side constraints and achieve a virtuous circle of productivity growth, this time relying on the war against carbon as the catalyst instead of military-industrial mobilisation against fascism.
Joe Biden will not be able to push these vaulting plans through Congress even if he does make it into the White House. The green deal is largely stillborn. His front-loaded $US1.7 trillion Gosplan for 500 million solar panels, 60,000 wind turbines, and the like, will be torn to pieces by the Senate.
The equity markets had come to salivate over the exorbitant sums. Goldman Sachs, JP Morgan and Moody’s all concluded that Bidenomics would turbocharge economic growth. They will now have to settle for thinner gruel.
The planned $U2 trillion of pandemic aid to cover furloughs and insolvent states is for the birds. It is not clear what skinny version will emerge from a lame-duck Congress in this political climate. Don’t expect it soon.
All told, the markets face a harsher economic winter. The V-shaped rebound has faded. Investors must instead navigate the second dip of an enveloping “W” without much help from Washington.
Nor is it obvious that a Democratic White House eager to regulate and a Republican Senate less inclined to spend will do much for the animal dynamism of American capitalism. Bet on bipartisan comity and a business boom if you wish. I am fetching my tin helmet.
The Daily Telegraph, London