December 5, 2016
But not readers of last year’s Bloomberg Pessimist’s Guide, which warned that the unthinkable could happen in both cases. Now the authors are turning their attention to 2017.
From social breakdown in the U.S. to a nuclear crisis in North Korea to the defeat of Angela Merkel in Germany, the potential for chaos is just as great.
These aren’t predictions. But they show what your social-media news feed could look like if things go wrong.
Trumplandia
Trump’s popularity soars in his first weeks in office as an energized Republican Congress passes a huge fiscal stimulus.
Breaking News
However, new waves of protests rise after he’s inaugurated and signs executive orders reversing Barack Obama’s legacy.
Breaking News
A movement emerges combining college
students, Black Lives Matter activists, former Occupy Wall Street
protesters and anarchists. Trump attempts to impose emergency
restrictions and curfews in major cities.
Breaking News
California emerges as the center of
opposition to Trump, with some branding the movement “Calexit.” The
state defies Trump’s rollback of environmental regulations. Billionaires
Elon Musk and Sheryl Sandberg emerge to lead a progressive alliance
against Trump in 2020.
Politics
All of this causes deep divides in Trump’s
ruling coalition. The GOP splits in Congress and Trump’s team of White
House mavericks are soon at each other’s throats.
Markets
Shares in banks, steel and security firms
surge in the first months of the Trump era. But then the Trump stock
boom fizzles early and Treasuries soar. Shares in Google, Facebook and
Apple take a hit as the faceoff between Trump and Californian
billionaires worsens.
Joel L. Naroff, Naroff Economic AdvisorsLet’s
say everything gets passed. All that fiscal stimulus in an economy
that’s already at full employment causes massive labor shortages, wage
pressures that build sharply, forcing the Fed to deal with rising
inflation, crashing the housing market and sending banks and the
financial system into another tailspin.Yalta 2.0
Trump’s isolationism and Vladimir Putin’s
aggression force Germany’s Merkel into a difficult choice: to lead a
military buildup in Europe against Russia. Or heed Trump’s advice and
strike a grand bargain with Putin to agree on spheres of influence in
Eastern Europe.
Breaking News
Putin calls off his hackers and rogue
fighter jets and agrees to stop interfering in the affairs of the U.S.
and the European Union.
Politics
In return, Merkel and Trump recognize
Russia’s sway over Ukraine, Belarus and Syria. For Putin, Russia’s
prestige is finally restored 26 years after the collapse of the Soviet
Union and he starts to talk openly about his retirement after one final
presidential term.
Markets
The ruble rises as Russia comes back into
the global fold. Defense stocks lose some of their luster amid
disappointment that the EU doesn’t arm up.
David Bohuněk, Comsense CapitalThe
growing influence of pro-Russian political parties can be a big threat
for global political stability in 2017. This threat includes Bulgaria,
Moldova or Estonia.China and America Go to Economic War
Slamming what he calls #CrookedChina, Trump
tweets at 3:17 a.m. on the morning of his inauguration that he’s
planning to label the country a currency manipulator and slap “huge”
tariffs on incoming imports.
Breaking News
By the time he’s on his way to the Capitol,
China has already started to retaliate by devaluing the yuan, canceling
orders for Boeing jets and blocking iPhone sales.
Breaking News
As the year goes on, Chinese officials,
distracted by political jockeying ahead of November’s reshuffle of the
Communist Party’s Standing Committee, split over how to revive an
already debt-laden economy.
Breaking News
China falls into its deepest recession of the modern era.
Markets
Domestically oriented Russell 2000 equities
soar on anticipation of tariffs. In Asia, a 1997-style currency crisis
and recession ensue.
Alasdair Cavalla, Center for Economics and Business ResearchProtectionism
will be the biggest point of contention in a Trump government. Most of
the Republican Party, and its business backers, will be strongly against
raising trade barriers, while for Trump it is a rare point of
consistency. Without it, he also has little economically to offer a core
group of supporters in post-industrial towns and cities.Kim Trumps Trump
Trump spends his first months in office
calling into question U.S. commitments around the world. First, he
suspends U.S membership in NATO, then in the United Nations. America’s
traditional foes thrive in the vacuum.
Breaking News
Islamic State, exploiting U.S. disengagement
from the world, runs its drug operations out of Afghanistan and
radicalizes Central Asia.
Breaking News
Worried about living outside the American nuclear umbrella, Saudi Arabia and Japan start developing their own capability.
Breaking News
Finally, the world is shocked when North
Korea proves it can fit a miniaturized nuclear device on a missile
capable of hitting the U.S. West Coast.
Politics
Trump’s entire Asian strategy is thrown into
disarray, forcing him to kowtow to China and beg for their help in
reining in their rogue neighbor.
Markets
Shares in defense companies surge and east
Asian stocks plunge amid a broader flight to safer assets such as
Treasury bonds and gold.
Alison Graham, Voltan Capital ManagementRussia
and China have interpreted the Trump election as an opening to pursue
their regional interests more aggressively… Trump’s tendency to
personalize and escalate conflicts, while failing to see the vast
benefits to the United States of maintaining a world order reflecting
U.S. values, will create a sense of ongoing global crisis.Heads Roll in Europe
Legitimized by Trump’s victory, voters
across Europe, starting with the Netherlands, usher in populist leaders
who want to tighten borders, tear up free-trade agreements and even
break away from the euro and the EU itself.
Breaking News
Anti-immigration candidate Marine Le Pen becomes president of France, then holds a referendum on leaving the EU.
Breaking News
In Italy, comedian Beppe Grillo’s Five Star
Movement comes to power in snap elections and immediately calls a
referendum to reinstate the lira.
Breaking News
Germany’s Merkel loses the election. In the U.K., Theresa May is ousted by a hard-liner after Brexit talks go awry.
Breaking News
In Eastern Europe, a newly right-wing Czech
Republic cozies up to Russia and calls a plebiscite on NATO membership.
Under the shadow of Frexit, the passport-free Schengen Area is
dissolved.
Breaking News
Greece blows up again and this time there is no bailout.
Markets
The euro goes into a tailspin as the
political support that saw the currency through the 2009-2012 debt
crisis starts to unravel.
Alan McQuaid, Merrion CapitalEurope
remains the biggest threat next year. If Marine Le Pen does what
Hillary Clinton failed to do and becomes her country’s first female
president, then all bets are off.The Internet of (Bad) Things
Amazon, Apple and Google reveal widespread
government wiretaps of the passive listening software on smartphones and
Echo-like connected home devices, while Wikileaks turns on Trump with a
series of embarrassing leaks.
Breaking News
State-sponsored hackers disseminate panic
when they shut down critical infrastructure like power plants or target
Internet-connected medical pumps and self-driving cars.
Breaking News
While no foreign powers will claim
responsibility, evidence points to possible Russian or Chinese
involvement, precipitating open cyber warfare among the superpowers.
Markets
Shares in technology companies take a beating.
Birgir Haraldsson, NightbergTo
be taken seriously. Cyber insurance would get a boost as a new
dimension in cyber-war gets escalated via more active state-sponsored
hacking activitiesCuba—Back in the U.S.S.R.
Trump backtracks on the Obama-sponsored
rapprochement between Cuba and the U.S., nipping in the bud a chance for
the Socialist island to throw its economy a lifeline.
Breaking News
As money dwindles—at a time when regional
allies Brazil and Venezuela are reducing financial assistance—Cubans
turn their attention to the two other major players still interested in
the region: China and Russia.
Breaking News
Given their historical ties, President Raul Castro lets the Russians reopen an intelligence base in Havana.
Breaking News
A Russian spy agency just 90 miles away from
Miami turns out to be a bit too close even for Trump, straining his
budding relationship with Putin and bringing back memories of the 1962
Cuban Missile Crisis.
Markets
Tourism and shipping, especially cruiseliners, take a hit
Lynn Reaser, Point Loma Nazarene UniversityWill
there be a slowdown or retreat in thawing of U.S.-Cuban relations?
Will more market-oriented policies continue in Argentina and spread to
other countries, such as Brazil? Will the current regime in Venezuela
survive?Mexico Meltdown
Trump pulls out of NAFTA, boosts tariffs on
Mexican exports and heavily taxes remittances from workers in the U.S.
to pay for the infamous border wall.
Breaking News
Mexico plunges into a deep recession and loses its cherished investment-grade rating.
Politics
Mass deportations from the U.S. force the desperately unemployed arrivals into drug trafficking.
Breaking News
As hostility toward gringos reaches fever
pitch, a populist from the left—Andres Manuel López Obrador—emerges as
front-runner for the presidency in 2018 on a platform that includes the
revision of oil exploration contracts previously awarded to private
companies. Nationalization beckons.
Markets
The peso continues on its downward spiral,
fueling inflation and pushing borrowing costs higher. Led by a plunge in
Pemex paper, Mexican corporate bonds are sold off, bringing back fears
of a wave of debt restructurings.
Arthur Jurus, Mirabaud Asset ManagementWe
think Donald Trump will focus on internal policies, firstly with a
potential cut in U.S. tax rates, then with regularization for less than 2
million illegal immigrants. Withdrawing from NAFTA could be an issue
end-2017Saudi Arabia’s Golden Boy is Sidelined
Deputy Crown Prince Mohammed bin Salman’s
effort to diversify the world’s largest oil producer away from fossil
fuels goes nowhere in its second year.
Breaking News
As Yemen turns into the kingdom’s own costly
Vietnam, new taxes replace generous subsidies and lead to growing
discontent over declining living standards.
Breaking News
At the same time, the delicate balance of
power in the region tilts toward arch-enemy Iran, as Shiite sympathizers
make gains in Iraq and Syria.
Breaking News
A Saudi palace coup brings to power a new royal family member, who pushes the deputy crown prince aside and shelves reforms.
Politics
With Trump deciding the Middle East is just
not America’s problem anymore, tensions between Saudi Arabia and Iran
lead to direct armed confrontation.
Breaking News
Massive disruption hits oil and gas exports through the Strait of Hormuz.
Markets
Oil spikes, investors flee and plans to
privatize national oil company Saudi Aramco are derailed. After burning
through its reserves, Saudi Arabia devalues its currency, forcing the
rest of the region to follow suit.
Bernard Baumohl, Economic Outlook GroupOne
scenario that really concerns us greatly is the destabilization of
Saudi Arabia and there are various factors at play (Yemen, Iran
financing terrorist attacks on Saudi oil fields, Al Qaeda inciting
protests) . These could mark a turning point for the House of Saud and
create the circumstances that lead to triple-digit oil prices.
