"The Month That Was - December 2016"

Sydney M. Williams

                                                                                                                                     January 1, 2017

“The Month That Was – December 2016”

“God gave us memory so that we might have roses in December.”

                                                                                                            James Barrie (1860-1937)

What a month! What a year! Christmas has come and gone, and so has New Year’s Eve, but the consequences of 2016 remain.

Looking back, two thoughts (among dozens) come foremost to mind. First, what stupendous change myriad elections in Western democracies portend for the future! We are, as described by Iain Martin in The Times (London), “swinging away from the fixation on supranational solutions and diminishing role of the state,” toward greater emphasis on self-government (Brexit) and individuals and the private sector (Austria, France, Italy and most important, the United States.) Populism is the term favored by mainstream media who provide it a negative connotation that doesn’t differentiate between good and bad. There are populists who seek personal power and who use hatred as a weapon, i.e. Rodrigo Duterte and Nicolas Maduro – but others who provide impetus for positive change, i.e. Beata Szydlo, Nigel Farage, Francois Fillon and Donald Trump. Brexit was necessary in Europe, with a Union run by self-entitled, unaccountable bureaucrats – a Union dependent on the United States for defense, and which spends money with no sense of its original source. The United States has been managed by a President using executive orders and with agencies unaccountable to Congress or the people. Cronyism, whose presence has become more pervasive, is a consequence of rent seekers and accommodating politicians. Their efforts add complexity to our tax code and increase our regulatory mandates.

The second observation is the incompetence and arrogance of (so-called) progressive Western leaders. Consider: An increase in debt that has not contributed to economic growth; trade agreements negotiated to primarily benefit trading partners; the failure of Monte dei Pascha di Sienna in Italy, the world’s oldest bank; a foreign policy failure that left Syria’s ancient and largest city, Aleppo, smoldering, with thousands dead and close to a million homeless; Russia looks to restore its Tsarist boundaries; an ascendant China, and the clash between a secularized, skeptical West and a zealous, missionary-driven Islam. Political correctness has destroyed civility, while creating a concoction of self-interested, self-centered groups.   

President Obama’s first term began with a Nobel Peace Prize; his second ended with the tragedy of Aleppo. It began with his pompously declaring “I won!” It ended with him arrogantly boasting he would have beat Trump, had he been allowed a third term. At home President Obama remains personally popular. However, his legacy is not kind to Democrats. In January 2009, Democrats controlled the Senate 57 to 41, with two Independents, Joe Lieberman and Bernie Sanders. They controlled the House 257 to 178. In terms of States, Democrats controlled both legislative bodies and governorships in 18 states. In 2017, as Mr. Obama leaves the White House, Republicans will control the Senate 52-48, the House 241-194 and all three components of State governments in 25 States (versus 10 in 2009). And Democrats will control both legislative bodies and governorships in only 6 States. Republicans will have 34 sitting governors. In short, Mr. Obama’s final bequest is one of the largest political losses ever for either Party.

Barring something unexpected, 2016 was going to be a Republican year, made easier when Democrat’s anointed the corrupt and feckless Mrs. Clinton. But that advantage was almost lost when Republicans nominated Mr. Trump. In the end (in my opinion), Democrats lost because of policy failures in three areas: The weakest economic recovery in 70 years, one that left millions of workers with no jobs or in part time jobs. The labor force participation rate is at 40-year lows – the result of punitive regulation, high corporate tax rates and a monetary policy that allowed government to borrow cheaply, but which discouraged small businesses. Second, a foreign policy that emboldened our enemies, worsened the situation in the Middle East, saw the rise of ISIS and all but abandoned our friends in Europe, along with a failure to take principled stands, i.e. the “Green Revolution” in Iran, the ‘red line” in Syria and and the recent abandonment of Israel. And, third, Mr. Obama left a country divided, in terms of race, creed and ethnicity – a result of identity politics. Democrats will resurface, but lies and righteous indignation will not help; it will take an admission of their principal wrong – a desertion of the principles that gave rise to the Democratic Party.

Donald Trump’s surprising success might be explained in a quote Arthur Laffer used last month in an op-ed for London’s The Daily Telegraph. He wrote: “The mainstream press and politicians take Trump literally but not seriously, while the electorate take Trump seriously but not literally.”

The Electoral College confirmed Trump’s victory, though two Trump and five Hillary delegates backed away from respective commitments. Republican John Kennedy easily defeated Democrat Foster Campbell in Louisiana’s run-off U.S. Senate election, giving Republicans their 52-48 advantage. A fire in an Oakland, California warehouse/nightclub killed thirty-three. Incredibly, Democrats voted to stay with Nancy Pelosi as House Minority Leader and, equally surprisingly, they nominated the flagrantly anti-Israel Keith Ellison to Chair the Democratic National Committee. Sergeant Bowe Bergdahl, expected to be tried for desertion, asked President Obama for a pardon. He may get it. Mr. Obama has been more aggressive than any past President in granting commutations and pardons. On December 19 alone, he granted 153 commutations and 78 pardons. Denzel Washington quipped during the month that if you don’t read the papers you are uninformed, while if you do read them you are misinformed. Russia was accused of interfering in our election; so President Obama told the press that he scolded Mr. Putin: “I told him to cut it out!” The former KGB agent must have been terrified! Later in the month, Mr. Obama finally announced real sanctions. Mr. Putin’s response: He invited all children of U.S. diplomats in Russia to a New Year’s party at the Kremlin. Which leader looks smarter?

In Europe, Francois Hollande decided not to run for re-election. In a close Presidential race, Norbert Hofer, the far-right candidate in Austria lost to former head of the Greens, Alexander Van der Bellen. Angela Merkel called for a burqa ban and announced she would run for a fourth term. An attack by a radicalized Tunisian immigrant that killed 12 and wounded 50 in Berlin may affect her chances. The perpetrator, Anis Amri, was later shot and killed near Milan. The UK’s parliament voted for Prime Minister Teresa May’s plan to trigger Article 50 on March 31. Italian Prime Minister Mateo Renzi resigned when the referendum he had sought was defeated. In Turkey, two terrorist attacks killed 77. Russia’s Ambassador to Turkey was assassinated by a Turkish off-duty policeman who shouted “Allahu Akbar” and “don’t forget Aleppo,” as he pulled the trigger. Negotiations regarding Syria were held in Moscow, a meeting that included representatives from Iran, Turkey and Russia. A cease fire was announced.

The United Nations Security Council issued a resolution condemning Israel over its settlements on the West Bank. In a morally low point, the United States abstained, allowing the resolution to pass. Trump then tweeted: “Things will be different after January 20.” Mr. Obama’s petulance allowed a personal animosity toward Mr. Netanyahu to supersede national ethics. John Kerry’s pomposity on the 28^th didn’t help. South Korea’s National Assembly voted 234-56 to impeach President Park Guen-hye over corruption. In Nigeria, a church collapsed, killing 128. A planned terrorist attack for Christmas Day at a railroad station and cathedral in Melbourne, Australia was disrupted. To the dismay of Leftists and the consternation of China’s leaders, President-elect Trump accepted a congratulatory call from Tsai Ing-wen, President of Taiwan. Dutch right-wing politician Geert Wilders was found guilty of inciting racial discrimination for leading a chant for “fewer, fewer” Moroccans in in the Netherlands. Cementing relations between their two countries, Shinzo Abe visited Pearl Harbor seven months after President Obama went to Hiroshima.

Michelle Obama told Oprah Winfrey: “We are feeling what not having hope feels like.” However, the American people appear to believe otherwise. The University of Michigan Consumer Sentiment Index registered 98.2 for December, up from 93.8 in November, the highest reading since January 2004. After rising 4.7% for the three weeks following the election in November, the Dow Jones Industrial Averages tacked on another 3.3% in December. The Economic Cycle Research Institute’s Future Inflation Gauge is foretelling an upturn in prices. It is at 113.8 versus 102.4 a year ago. As expected, the Federal Reserve raised Fed Funds twenty-five basis points to 0.75 percent. The yield on the U.S. Treasury 10-Year has risen 34% since the election, but prices and yields closed where they began the month. Despite higher mortgage rates, existing home sales nationally reached the highest level since February. This sense of confidence, if it is sustained, will be reflected in business investment in the weeks and months ahead. However, one should not expect markets to continue as they have. Two things I have learned about stocks over the past fifty years: One, markets do go up over a period of many years. Two, they do not go straight up.

The Center for Disease Control reported that, for the first time since 1993, life expectancy in the U.S. declined for men and women in 2014. Last year Nobel economist Angus Deaton wrote of the alarming trend in suicides among high school-educated white men – people at the core of Donald Trump’s support. Political correctness is alive and well: Bloomington, Indiana changed Columbus Day to “Fall Holiday,” and Good Friday to “Spring Holiday.” When they handed out brains, Elizabeth Warren was short-changed. She took to Facebook to condemn a “hedge fund billionaire” who is “thrilled by Donald Trump’s economic team of Wall Street insiders.” It turned out that the accused, Whitney Tilson, supported Hillary Clinton. Dozens of electors were threatened if they cast their vote for Donald Trump, despite instructions from the states they represent. Harvard Law School professor Lawrence Lessig even offered free legal advice to electors who changed their vote. “That borders on bribery,” retorted Patricia Allen of Tennessee, who was hounded with 2000 e-mails and dozens of phone calls bullying her not to vote for Trump.

The grim reaper appeared and carried off John Glenn, a true American hero. A fighter pilot in World War II and Korea, he earned six Distinguished Flying Crosses. In 1962, he became the first American to orbit the Earth. In 1978 he was awarded the Congressional Space Medal of Honor and the Presidential Medal of Freedom in 2012. And, from 1974 through 1998 he was a United States Senator from Ohio. John Glenn was 95. Zsa Zsa Gabor, married nine times and who once said “I never hated a man enough to give him his diamonds back,” died two-months shy of her 100^th birthday. Richard Adams, author of Watership Down, a delightful allegory of anthropomorphic rabbits, died at age 96. Carrie Fisher (aka Princess Leia), age 60, died a few days after being stricken aboard a flight from London to LA.  The next day her mother, Debby Reynolds, died at 84.  

As the old year ends and the new one begins, we should expect change. Markets and consumer confidence suggest people do have hope that the new Administration will be transformative in a positive way. But we should also recognize progress never takes the exact course we would proscribe, nor is it as fast as we would like. Not all times are best for all people. It is why we bounce from one political Party to the other; but that, too, is healthy. Regardless of a recent loss of freedom in some countries, we are, as Philip Collins recently wrote in The Times (London), “…living through a long arc of progress…” We may bemoan certain aspects of our politics and culture, but freedom is more widespread today and poverty is rarer than at any other point in history. We cannot shrink from criticisms, confrontations and/or advancements, nor will we; but we should always maintain civility.

Welcome to 2017! Now go out and make the most of it!