Don’t throw the firecrakcers yet

If you’re one of those cheering for Steve Bannon’s getting fired and believe this will mean change inside the Trump administration, you’re probably not seeing the whole picture.

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Bannon’s presence inside the WH as Chief Strategist was always seen as the “source of evil” behind Trump’s policies. Others saw him as a troublemaker inside the WH, even going as far as accusing him of leaking insider info. However, truth be told, “evil” didn’t start with him.

Having been officially aiding Trump with his campaign only since August 2016 – after Trump got the Republican nomination, most of the controversial policies/statements had already been made before Bannon got in. The first of those ideas – which is now currently on hold, was the wall at the US-Mexico border to stop Mexican immigrants to come to the US – who according to Trump, were coming over “committing serious crimes like rape, killing and selling drugs”. By the end of 2015, the new flavour of the month was the Muslim ban, in which Trump proposed temporarily stopping all Muslims from entering the country “Until we know what’s going on“, something that is now being seen by the Supreme Court.

Bannon is no moderate, in fact he is a well know right-wing nationalist and the reason why Breitbart became what it is today; a website that spreads alt-right propaganda with immense exposure in doing so. His world views are no secret of his, he warns of an incoming apocalyptic war between Islam and Christianity and warns that if the US doesn’t act, China might outpace the US both in terms of economic and military capacity. Something that can be seen in his interview at ‘The American Prospect’.

This interview of his was quite scandalous because of the old “on-off the record” controversy, but also because of what he said in that interview, especially about North Korea:

“There’s no military solution [to North Korea’s nuclear threats], forget it. Until somebody solves the part of the equation that shows me that ten million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about, there’s no military solution here, they got us”

Something that might have not gone well with his former “chief”, but Bannon’s mistakes didn’t start here. If we go back to April we could see that clashes between Bannon and Trump’s most sacred treasure, his family, started to come up especially with Jared Kushner, who was accused of being a “Democrat” – aka soft republican, and a “Globalist”. Trump tax cut plan; typical of Republican establishment, might have been a stab in the back for Bannon – who’s a fierce economic nationalist and clearly saw the impact that would have on the electoral base that got Trump elected – leading to Bannon remarking in his interview at The Weekly Standard:

“What Trump ran on—border wall, where is the funding for the border wall, one of his central tenets, where have they been? Have they rallied around the Perdue-Cotton immigration bill? On what element of Trump’s program, besides tax cuts—which is going to be the standard marginal tax cut—where have they rallied to Trump’s cause? They haven’t.”

For those who are trilled and happy with Bannon’s getting fired don’t throw the firecrackers yet. There is more than meets the eye in this administration. Bannon might have gone, but if we can learn something with this is that Republican establishment and Trump’s nepotism are alive and well.

 

Luís Carvalho, Bsc graduated in Economics and proud 2015 graduate of democracy

Disclaimer: This might not reflect the whole group’s opinion

 

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Is Trump boosting the Economy?

US June Jobs report has come out, and unlike the previous mistrust from Trump  regarding the official numbers of unemployment rate he and his supporters seem to be astonishingly happy for a unemployment decrease that according to experts is just an extension of the trend that was observed in 2016 under the Obama administration in terms of Job Creation.

According to data, in June nonfarm payroll employment, which is any job with the exception of farm work, unincorporated self-employment, and employment by private households, the military and intelligence agencies, increased by 220,000 in June. The unemployment rate suffered little changes, considering the 2 previous months (4,4% in April and 4,3% in May) being now at 4.4 percent. Special highlight for the Health Care, Social Assistance, Financial activities and mining, in terms of jobs creation.

Many Trump supporters, and specially his vice president Mike Pence believe this Jobs report just show Trump’s commitment to create “tons of jobs” is being delivered. At the same time there is an urge by some people to believe investors and economic agents are confident on the economy and the way things will evolve.

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Employment by Selected Industry, source: US Labor Statistics

Taking into consideration the chart above we can clearly see that the Education and Health Services was the industry that had added more jobs to the economy in June, around 59,100, not the type of industry that depends on business owners feelings but more on the needs of the population. Retail Trade which only added around 8,100 jobs in June and Utilities, which added 1,800 jobs, this past month are betters examples of industries driven by economic feelings and weren’t that much expressive as it was Education and Health Services, even if take into consideration their added jobs together.

This happens for a reason, optimism towards the economy is seeing a decline, referring to pre-election levels, as we can see in the chart below.

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Source: New York Times, Neil Irwin’s article

This decline in optimism between consumers can be expressed in their practically stagnant wage. As the June Jobs reports states, in this month average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.25 in comparison to May. However if we look from June 2016 to June 2017 average hourly earnings rose only 63 cents, around 2.5 percent. This is an important factor to take into consideration because if consumers don’t have a reasonable disposable income or aren’t pretty confident on their future economic conditions they won’t consume which won’t create a Demand for business owners to invest and hire more people to meet the demand for more products/services.

In the end a question still has to be answered, “Is Trump boosting the economy?”

Not even 6 months have passed since his inauguration and even though there is a urge to say this economic evolution is due to the “Trump factor” to justify the argument that “He isn’t so bad after all” I do believe it’s really early to make such assumptions. Yes he already signed legislation to roll back some regulations to promote jobs creation and expressed his intention to cut taxes, even though trickle down economics has proven to be mislead, but some things take time to start affecting the economy this is just one of them, we’ll probably have to wait the first year or two to see if he is really boosting the economy or just continuing the trend that started under the Obama administration.

 

 

Luís Carvalho, economics bachelor student and proud 2015 Graduate of Democracy

Catalonia: A new state in Europe?

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Localization of Catalonia in Spain and Europe

On the next first of October it will be held in Catalonia the referendum to its independence. This referendum was considered illegal by the Spanish government but the outcome of this referendum can be very important for the future of Spain and of the European Union. To better understand this referendum we need to understand the reasons that are behind it.

Catalonia is an autonomous region located in the Northeast of Spain, bordering both France and the Mediterranean Sea as you can see in the map above. It has several distinctive factors from the rest of Spain most notoriously the Catalan language (that is also spoken in other regions of Spain, Andorra, and in small parts of France and Italy), and several cultural traits like building a human tower, called castell (meaning castle in catalan) or the ‘sardana’, a type of circle dance. Historically the region was part of the Crown of Aragon, which even had a Mediterranean empire including a Corsica, Sardinia, Sicily, Southern Italy and even a portion of Greece. However in 1469 the Aragon and Castilian crowns united under Ferdinand the first, and this led to a centralisation of power in Madrid that led to the Catalan Revolt in 1640-1652. Afterwards in the War of Spanish Succession (1702-1715) they supported the Austrian Habsburg pretender Charles VI against Phillip V from the French house of Bourbon. Eventually they lost the war and the region became under Spanish or more exactly Castilian control. During the XIX century Catalonia endured a process of industrialization while Catalan nationalism developed. Later, during the Spanish Civil War (1936-1939), Catalonia fought alongside the republicans that eventually lost the War against the fascist Francisco Franco. His dictatorship was particularly harsh for Catalans since their culture was heavily repressed and Catalan language banned from public use. Despite that, industry and services developed a lot during this period attracting many migrants from other regions of Spain. Since 1975, after Franco’s death, Catalonia recovered its autonomy, restoring the parliament in 1977. It’s also important to note that Catalonia, and the Catalan countries, are not the only regions of Spain with important differences from Spain, like the Basque Country and Navarra, two regions in the North of Spain with a language that has no other known relative as well as other cultural differences. They have also been fighting for independence and more autonomy, including violent acts done by the terrorist organization, ETA.

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The ‘estalada’, the flag of catalan separatism

There are two many reasons that justify the independence of Catalonia, the economic reason and the sociocultural reason:

Regarding the economic argument, Catalans state that they are being treated unfairly by the Spanish state. The region has 16% of the Spain’s total population but accounts for 19% of its GDP. Data from 2011 showed that the region paid €8,5bn more in taxes than what it got back, a tax deficit from the Spanish state of around 8%. State investment in Catalonia is also decreasing, from nearly 16% in 2003 for 9,5% in 2015. They also have the third largest trade surplus in EU being Luxembourg and Ireland. So despite Catalonia being the fourth Spanish region with an higher GDP per capita and the richest Spanish region in terms of total GDP, many Catalans feel that the region could be even better economically if it was not integrated in Spain. Public infrastructures that are under central government jurisdiction are also in worst conditions than others in other regions, like it happens with the connections to Barcelona Airport, that don’t have a metro connection, has a poor train service and old roads while Madrid Barajas Airport has a metro and train connections and more recent roads. So there is a feeling that Catalonia is being forgotten by the central government.

Regarding the sociocultural argument, Catalonia is indeed a territory with unique characteristics when compared with the rest of Spain. The Catalan language is spoken by 9,5 million people the majority of them in Catalonia. Unlike what many people think, this is not a dialect of Spanish but rather a true Romance (Latin) language that is the brother language to Occitan, a minority language spoken in the South of France. Catalans have a lot of pride on their language, the 14th most spoken in European Union, specially because they were forbidden of doing so during Franco’s dictatorship, and they think an independent Catalonia will make it easier to protect it as well as other traditions like the castell or the sardana. Catalonia has also some quite distinctive aspects like the fact that Bullfighting, a big tradition in the rest of Iberian Peninsula, was banned in 2010.

Politically Catalonia autonomous community is governed by the Junts per Si (Together for yes in Catalan), a coalition that joins centre-right (the Catalan European Democratic Part, the biggest party and the Democrats of Catalonia) and leftist parties (like the Republican Left of Catalonia and the Left Movement). All of this parties favor, albeit with some differences among them, the independence of Catalonia. In the last regional elections they gained a total of 62 seats and a percentage of 39,6%. In second place it came, the Ciduadanos ( Citizens) with 17,9% and 25 seats, a liberal party that is against the independence of Catalonia, but curiously founded by a Catalan, Albert Rivera. In third place, came the PSOE (Socialist Party) with 14,4% and 16 seats won, in fourth the Catatlunya Si que és Pot, a leftist party linked to Podemos, with 8,9% and 11 seats won, in fifth the Partido Popular (Popular Party), the right wing party that governs Spain had 8,5% and 11 seats. Finally in fifth place it came the CUP, with 8,2% and 10 seats, a radical left part that defends the idea of a Great Catalonia which means not only the independence of Catalonia but also of other Catalan speaking regions (Països Catalans), the Valencian Community and the Balearic Islands.

Among the main Spanish political parties, the Popular Party is clearly against the independence of Catalonia as well as the referendum and also giving more autonomy to the region, they rejected a proposal of fiscal autonomy by the Catalan government. The socialist party also rejects the independence and the referendum to the independence of Catalonia but they are willing to give them more autonomy, integrated in a federalist Spain. The Citizens is anti-independence and anti-federalist as it can be seen is this statement from its leader Albert Rivera: ‘Catalonia is my homeland, Spain is my country and Europe is our future’. They also defend strengthening the powers of the Spanish central institutions and decreasing the powers of regional administrations. Meanwhile Podemos does not officially support the independence of Catalonia, although some members are in favor like their Catalan wing, the Catalunya Si que és pot, but they support the referendum to the independence and more powers to autonomous governments across Spain.

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Map of the Catalan speaking regions

Regarding the possible outcome of the referendum the Yes and the No seem to be neck and neck on the last polls. Out of the four polls done this year, three of them give the victory to yes and the other gives the victory to the no, although the maximum difference between the two outcomes is just 4,6% and there are still a sizeable amount of undecided voters that can change the final outcome, so the final result should be very close. Some important remarks that are important to make are the following: the Catalans that have a Catalan origin tend to support more the yes independent Catalonia while the Spanish origin people that live in Catalonia, tend to support more the no and the yes tends to have more support in rural areas where live older people that still remember the oppression their culture suffered under Franco’s dictatorship. Another interesting thing is that the refusal of the Spanish government, unlike the UK one, to accept this referendum is probably increasing the number of people that wants to vote yes because Catalans can see that Spain is a democracy with many flaws. However, even if the yes wins in this referendum that will not automatically mean an independent Catalonia, because this referendum was considered illegal by the Spanish state. If the yes does indeed win, this can lead to Catalan institutions trying to separate the region from Spain which could mean, Spanish central government giving more autonomy to Catalonia, like the long-sought fiscal autonomy or if central government doesn’t yield this can end with the Spanish military being used to suppress the Catalans will to self-determination which would be a grievous attack to the international law.

Another very important question is that if an independent Catalonia would have to apply to EU membership or if because it’s already a region of European Union, it would still continue to be a part of the European Union, now as a country. It’s important to reach a conclusion about this because this question could be decisive to the final outcome of the referendum, having in consideration that the vast majority of Catalans are pro-EU. Unlike what some international press says the self-determination process in Catalonia as in other nations like Scotland is not a danger to Europe, and not a sign of its division, but a clear demonstration of healthy democracy. This referendum, especially if the yes wins can also give more strength to other pro-independence /self-determination movements like the Basque, the South Tyrolean, the Northern Irish, the Flemish and the Bavarian.

 

Wrote by Pedro Diogo, Economic’s Bachelor graduate

 

Bibliography

Texts

La Vanguardia

http://www.lavanguardia.com/politica/20170514/422577266884/europeos-independencia-espana-catalunya.html

El Món

http://elmon.cat/noticia/209219/el-40-dels-espanyols-vol-que-sapliqui-larticle-155-si-es-convoca-el-referendum

BBC

http://www.bbc.com/news/world-europe-29478415

The Guardian

https://www.theguardian.com/world/2017/jun/09/catalonia-calls-independence-referendum-for-october-spain

The Telegraf

http://www.telegraph.co.uk/news/2017/06/09/tensions-grow-spain-catalonia-independence-referendum-confirmed/

Images

Catalonia in Spain and Europe

http://www.bbc.com/news/world-europe-34787795

Catalan independence flag

https://en.wikipedia.org/wiki/Estelada

Catalan speaking territories

http://politica.e-noticies.cat/la-cup-encara-creu-en-els-paisos-catalans-71916.html

 

 

The Left needs to dump YOU!

Each left-wing movement in Europe has its own intricansies, but almost all of them were born of the Labour movement. After the industrial revolution, poor people, working class rallied together in center-left parties for more rights like paid sick leave, Universal Healthcare, social benefits. Social democratic parties were the party where the masses rallied in hope for a better life. Now the masses couldn’t be more detached from Social democratic parties. In Britain, the Labour Party is just the third most popular party among the working class, in France, the Front National also leads by a wider margin among working class while the socialist party drowns in popularity with this group of people and the same story happens in the Netherlands, Austria and many other countries. Center left parties are, in some cases, more popular among rich people than with poor people. Why this is happening? Very simple: Center left parties were once the party of the poor, unemployed, the factory worker, the uneducated, disaffected the one who was against the establishment. Now Center left parties are the party of the well connected, the rich, the college professor and the corporate lawyer.

Center left parties had once a clear agenda because they were made by working class people and for working class people; they knew clearly what they want and what were their priorities. They knew their struggles and their problems and wanted to solve them. Now, center left parties aren’t made essentially by the same people as before. They are leaded by elitist people who don’t have a clue how life is outside college campus or big cities. For some of these elitist people, going to a disaffected community or a desindustrialized area may be a field trip or a campaign stop but it will be never be their reality, their struggle, their problems, so working class or people in those communtities will never see them as their own representative.

 

18012659_1947625368794495_426899917_o Continue reading “The Left needs to dump YOU!”

The Budget of Fear and Individualism

An overview

Trump’s first budget proposal is out, one of the most expected budgets ever in american history that symbolizes Trump’s campaign motto: “Make America Great Again”. In case people doubt about it he made sure people would really see that on this budget by labeling it as “America First: A budget blueprint to make America great again”. As promised during his whole campaign he will do everything in his capabilities to shift priorities in Washington to make the American society safer, stronger and prosper while making other nations fear his administration. Does this budget represents this?

Yes, the most absorbing fact of this budget proposal is the fact that there will be a $54Bn. increase in the defense department with the goal to buy more jets, warships, and boost the military activity against ISIS. That will also be of the like of the Defense Industry that has ties to the Republican party. To balance the budget this massive increase in defense and military will be offset by a huge decrease across all others departments

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(US Gov Departments expenditure, source: Washington post)

As we can clearly, Trump’s administration represents an inversion in what has been American policies in the last 8 years during Obama presidency. Cuts for almost every department except the Defense, the Homeland Security and Veteran Affairs departments. This ultra conservative and anti government intervention is clearly emphasized in this budget, specially when looking at the EPA department that will be the most affected one (in %) according to this administration hardline stance on global warming. Another way to look at this is seeing the decrease of nearly $10.1 Billion at the State Department which goes along the isolationist mindset that is reshaping american politics.

Proposals and a new paradigm in American policy

As we can see in the table above, Trump administration will do several large cuts in some key departments like the State, Labour and Education departments.

Among the major program cuts implemented by Donald Trump we have:

-The elimination of the USDA Water and Wastewater loan and grant program, a reduction of $498 million.

-The reduction or elimination of 20 programs within the Department of Education including Striving Readers, Teacher Quality Partnership and Impact Aid support payment for federal property and international education programs.

-Cuts FEMA state and local grant funding by $667 million, including the Pre-disaster Mitigation Grant Program and Homeland Security Grant Program.

-Eliminates funds for Section 4 Capacity Building for Community Development and Affordable Housing.

-Ceases payments to the United Nations’ climate change programs for the Green Climate Fund and other funds.

-Scales back funding for the World Bank and other international development banks by $650 million over three years.

-Shrinks the Treasury Workforce by an unspecified amount

-Stops funding for the Clean Power Plan.

These measures like the elimination of funds for affordable houses and education show that Trump will do major cuts in several traditional welfare sectors contradicting his electoral promises of giving better living conditions to the American people being not so different of many traditional Republican proposals that refuse the government intervention in these key sectors. Another sector in which this can be seen is in health with the removal of the Patient Protection and Affordable Care Act, known as Obamacare, which will mean that many Americans will become unable to pay health insurance meaning they cannot be assisted if they have an emergency health problem and will also become unable to pay treatment for oncological and chronic illnesses. Despite Trump’s promises that Obamacare will be replaced by something better until now, no concrete proposal was made.

Less surprising is the decrease in funds for Climate, Development and Migration issues. On these subjects Trump presents a populist evolution of the Republican stances by ignoring or in some cases, even denying the existence of some of World’s major problems, in a contrast with a more internationalist and interventionist position taken by the Obama administration.

As it is typical in a nationalist budget proposal this also marks a shift is the balance of the United States policy that will give now less importance to Global Affairs and more importance to Internal Affairs following the concern of many Americans that worry about their living conditions and jobs but not about a war in some Middle East country or a big natural disaster in Asia.

In the limit this could mark the return of an isolationist America. This can appear surprising if we consider the United States policy after the Second World War but in fact if the US was quite isolationist and protectionist during the XIX century and most of the first half of the XX century. However unlike in the XIX century this position is now much more irresponsible because some problems like the Climate Change, Islamic terrorism and the Migration crisis are global and require agreements between the World’s most powerful nations, among which is included the United States, in order to overcome them. There is also a moral imperative because the United States has responsibilities in some of this problems specially in Climate Change and in the instability in the Middle East.

Economic prospect

Above we’ve seen how the budget might be for the next year, but numbers alone don’t mean anything, however if we take into consideration its implications for the american economy now that’s something even more interesting to think and look at.

One of the most famous economists ever, that is still a reference in our days, John Maynard Keynes said that Aggregate demand, in other words, a country GDP is represented by the below equation:

Y= C+G+I+Nx, where Y is the country output (we refer it as GDP most of the times), C is private consumption, G government spending, I is Investment and Nx is Net Exports ( Exports – Imports).

Taking into consideration the proposed budget G will decrease in 2018 due to government slashing some expenditure on social programs, as a consequence many poor families will lose their subsidies which will make them poorer, and since Investment is divided between private and public, we see that it might have a negative variation (seeing for example the Transport Department projected expenditure variation). With this in mind we could already see that, all things remaining constant, American 2018 GDP might degrow a bit, however there is still one thing to take into consideration, which is Net Exports, for that we need to take into consideration the effect of the Interest Rate and Exchange Rate.

Last week, we saw an announcement by FED’s president Janet Yellen stating that FED interest rate will rise from 0,75% to 1%, which has its economic consequences.

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(Exchange Rate, Rate of Return, source:University of Colorado Boulder)

Represented in the image above, we have the vertical line which is the domestic interest rate, the horizontal line the foreign interest rate, the vertical Axis the Exchange Rate level and the horizontal Axis the expected rate of return. We see that an increase in the american interest rate (From left to right) will mean an higher expected rate of return of american investments. This means that the dollar will be more desirable and demanded which will trigger it’s value, that is to say, it’s exchange rate goes up, a dollar now is worth more Euros, Kwanzas, etc.

This interest rate hike and consequently Dollar appreciation might deteriorate American Net Exports, since the dollar is now more expensive and so are the american products.

This combination of raising interest rate while cutting government expenditure can lead to a deceleration of the american economy in 2018.

In the end, we should bear in mind that this is just a budget proposal and needs congress approval to become a reality. Even though it is creating some divisions among republicans this proposal seems a plausible budget and it seems likely to be approved by a congress in which Republicans have the majority of the seats. This is a budget proposal that represents fear, individualism and isolationism focusing on military activity, instead of supporting social, education and healthcare programs that can be a social uplift for many poor families and improve the living conditions of many americans. Sectors like the environment are also ignored by this budget proposal. These measures will not only be negative for the economy because it lacks enough of a stimulus, but will have the likely result of dividing and polarising even more the American society which can create more social unrest special among the poor and minorities.

 

Luís Carvalho, economics student and proud 2015 graduate of democracy

Pedro Diogo, economics graduate

Disclaimer: This Post reflects solely the author’s opinion it does not represent the whole platform

The advance of economic patriotism

The last few days in Europe’s business community have been turbulent. For once it was not about the impact of the new American administration on the European economy, but about acquisitions. Big ones. Where many of us were worried about “America First”, it now seems that in Europe something similar is happening. Not Europe first or Brussels first, but the UK first, the Netherlands first, and Germany first. The developments of last week might prove to be characteristic for the future of Europe’s economy.

The most important news of last week was the failed attempt by American food giant Kraft Heinz to buy its Anglo-Dutch rival Unilever for the price of 143 Billion USD, which would Continue reading “The advance of economic patriotism”

Third Way is Kaput

Third Way

In the 1980s, Neoliberalism dogma was still underway, but according to author Stuart Hall, another movement was being created, it was “New Times”.

The “New Times” that would become one of the causes of the Third Way, consisted in the transition from industrialized economies to tertiary and IT-oriented economies. In addition to economic changes, these “new times” also reflected the decline of the political class, the expansion of people’s individual choices in terms of consumption and lifestyles, as well as the beginning of the debate on the issue of sexuality that began to emerge as a “hot” topic at the time. Continue reading “Third Way is Kaput”

How Neoliberalism Influences Immigration Policies in Modern Western States

In nowadays’ society, governments and political elites are influenced by the neoliberal thought: The influx of public money into banking industry, the collaborations between national governments and private corporations, the divergence of public funds into the private sector, accumulation of capital, and the dominance of corporate sectors, are typical attributes of a neoliberal behaviour1 . Governments often act according to this ideology: They emulate corporations and work according to the market logic of efficiency, competitiveness and profitability.2 Continue reading “How Neoliberalism Influences Immigration Policies in Modern Western States”

2017: A practical guide for the worried voter

The year 2016 has ended, for some a terrible year where we have lost dozens of famous people. From football legend Johan Cruyff to legendary singer Leonard Cohen. People who were not only great in their profession but who also influenced the world around them. Take Olympic champion and anti-war figure Muhammad Ali. A hero and inspiration for many who showed us we should never give up on our dreams despite our social background, religion, or race. Continue reading “2017: A practical guide for the worried voter”

The rage against the Establishment

November the 9th, 6:30 Am

I woke up quite early to hit the gym, I started my daily routine packing up things, had a quick breakfast trying to avoid the inevitable, checking who had won the elections or was predicted to win at that time. It was with no surprise that I saw Trump with 244 electoral votes against 215 from Hillary.

I must admit I wasn’t shocked at all, the night before I went to bed with the feeling the next morning I would wake up with Trump being the winner and that was what happened.

How did a guy accused of sexual assault, who filed for bankruptcy more than once, who proposed to build a wall, bring back waterboarding and torture[i], ban Muslims coming in, with no political experience and all his sexist, homophobic and racist interventions manage to be seen as the most fit for the job at the oval office? Continue reading “The rage against the Establishment”