Candidate vs. Catalyst or “Virus Ex Machina”



WITH THE PRESIDENTIAL ELECTION less than nine months away, the plot couldn’t get much thicker. Trump’s approval hit a new high of 49%, and the Dems seem to be struggling to identify a candidate and agree on a platform. The pundits mostly focus on two things, namely a) who can get the Democratic nomination, and b) will that person be able to beat Trump.

Little of this is new information.

But really, the spoiler in the whole business may not be a candidate at all. As I pointed out in an earlier post, the economy has to hold for Trump to win;  without the economy, he would lose 20-30% of his current supporters. The candidate best suited to unseat the president might be the coronavirus.

The chances of it happening are tough to assess, but here’s the reasoning: While the virus itself could shock the global economy, it may not be able to roil the stock market here or last long enough to put the US in recession at election time. But the global economy has been driven by debt; global debt levels are now 3.2 times global GDP–a new record. In other words, the global expansion is long overdue for a pause or worse. During extremes of valuation, optimism, and complacency, it can only require a shock—a catalyst—to remind investors and decision-makers that risk has not gone away. Merely changing risk appetites or altering expectations can reduce economic activity.

My point is that the virus itself may not cause a recession, but it could be the catalyst to trigger one during conditions that are ripe for it. The epidemics of the last few decades have caused fear and hurt trade, but investors today have almost dismissed the coronavirus as a non-event. From where I watch, the deaths and infection counts are rising steadily and quite a few things are different. First, the Chinese travel is many times greater and faster than with the SARS epidemic. Secondly, China now contributes 250% more to global growth than the U.S.

If an economic slowdown reaches the US by October, it won’t matter which Democrat is running against Trump.


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  1. Avatar
    Lisa Hecht
    February 9, 2020 at 11:07 pm — Reply

    Rick Wilson’s most recent book, “Running Against the Devil: Saving America from Trump and the Democrats from Themselves” indicates that the Dems need to make the election a referendum on Trump–a guy who takes children from their parents, puts them in cages, gives $1.7T tax breaks to the rich and then wants to remove healthcare protections for the rest of us. It’s a great read if you want to see Democracy, not Tyranny and Kleptocracy, in the U.S.A.

    • Avatar
      February 10, 2020 at 12:10 am — Reply

      And he (Wilson) worked in the Trump whitehouse until he heard “You’re fired.”

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