The Global Guru: The United States in 2016: Obama vs. Romney

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

On today’s Election Day, U.S. voters will be deciding on the direction of the United States for much longer than the next four years.

Barack Obama promised fundamental “change” to the United States — and he has delivered on that promise. The United States is perceived as a very different place in 2012 than it was 2008.

How you feel about that will affect which lever you pull in the ballot booth today. I’ll be watching today’s election results roll in at the American Embassy in London.

I also wanted to give you a preview of my views from Eagle Publishing’s FREE online Post-Election Investing Summit that we will be holding tomorrow, Wednesday, Nov. 7, 2012, at 2:00 p.m. ET.

I. The United States under Obama in 2016
“The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.” – Thomas Jefferson

 1. Economy
Economic growth averages a “new normal” rate of 2%.

U.S. gross domestic product (GDP) in 2016: $16.2 trillion ($15 trillion today).

The United States drops from seventh to 18th in the annual Global Competitiveness report, after falling from first in 2008 to seventh in 2012.

2. National Debt

U.S. government debt hits $20 trillion by 2016 — Debt/GDP: 123% of GDP (Italy).

Assuming 5% interest rates, U.S. government debt hits $23 trillion — Debt/GDP: 142% of GDP (Greece).

S&P downgrades the U.S. government debt in 2013 from its current single “AA+” to “AA-“: the same rating as Japan today.

3. Taxes

Taxes rise across the board to pay for exploding government social programs.

Increase taxes on higher-income earners.

Increase in capital gains taxes starts January 1. 2013.

4. Employment Picture

Headline unemployment stays between 7% and 8% until 2016.

Labor participation rate remains near historic lows.

A massive increase occurs in the use of “part-time” workers by employers due to Obamacare.

The number of “contract workers” without benefits soars.

Tell your kids to become government workers: best salaries, best benefits.

5. Regulatory Environment

As in Latin America and Eastern Europe, U.S. businesses will focus more on finding loopholes to avoid regulations than on the production of goods and services.

One example is the hotel and restaurant industry, which already is hiring workers for 29-hour weeks (<30 hours) to avoid the requirements of Obamacare.

6. Energy

The United States becomes dotted with bankrupt, government-backed alternative energy projects.

Obama’s second term is the death knell for the coal industry.

7. Foreign Policy

The United States is less respected, with waning global influence.

Obama exercises the “flexibility” he promised to Russian leaders with all other countries.

An explosion occurs in regional conflicts like the Arab Spring, as it becomes clear that the United States no longer has stature to act as a global policeman.

Obama’s approval rating globally stays above 90%.

8. Stock Market

The S&P 500 closes 2016 at the same level it is trading at today.


9. Interest Rates
Interest rates remain low until 2014, when U.S. Treasuries nosedive and U.S. debt service costs soar.

10. Healthcare

Obamacare costs are 4x the original estimate of $900 million over 10 years.

Insurance costs rise 15% per year, with the average U.S. household paying 75% more in premiums compared with 2011.

Going abroad for healthcare procedures will become accepted, with booming healthcare businesses in Central America, Asia and Eastern Europe.

11. Political Culture

Prepare for more of the same vitriolic political infighting that has characterized the last four years.

Obama will push through his initiatives, circumventing Congress and Republican opposition.

12. Mainstream Media Assessment

“We’d be content and happy if Obama can stay president forever.”

– the late Libyan dictator Muammar Gaddafi

(You can read my predictions about Obama’s presidency four years ago HERE.)

II. The United States under President Romney
“The Americans can always be counted on to do the right thing… after they have exhausted all other possibilities.” – Winston Churchill
1. Economy

Policies will be pro-energy, pro-small business environment.

A period of initial pain will be followed by an economic boom beginning in 2014.

Growth of 3%=$16.9 trillion GDP; 4% growth=$17.54 trillion GDP by 2016.

The United States returns to the Top 5 in the Global Economic Forum Competitiveness report by 2016

2. National Debt

$17.5 trillion, up from $16 trillion in 2012; growing but under control.

Debt as a percentage of GDP steadies at 100%; still lots of work to do.

The United States regains S&P AAA rating in 2015, becoming only the second country ever to do so.

3. Taxes

Lower rates; tax reform cuts loopholes. Special interests grumble.

Increases in capital gains taxes suspended.

Government tax receipts will jump “unexpectedly,” despite reduced rates.

Hundreds of billions of dollars come back to the United States as it moves to territorial taxation.

4. Employment Picture

The number of new businesses grows; employers hire.

Unemployment falls to 5.5%.

Labor participation rises slowly as Americans benefiting from means-tested government aid remain at stubbornly high levels; “disability” culture is tough to reverse.

5. Regulatory Environment

Deregulation unleashes a spurt of business activity.

Business begins investing in atmosphere of greater certainty.

6. Energy

The Keystone pipeline project is approved.

A South Dakota-style energy boom is unleashed in Ohio and Pennsylvania.

The coal industry booms.

The United States goes far down the road to energy independence.

7. Foreign Policy

The “apologetic” tone of the previous administration changes.

Philosophy: “Better to be respected than to be liked.”

8. Stock Market

The S&P 500 closes 2016 at 2,250, up an average of 12.5% per year.

Private equity, energy and defense sectors outperform the market.

9. Interest Rates

Rising interest rates in a booming economy pose a challenge in financing federal budget debt.

10. Healthcare

Obamacare is replaced.

Market-oriented, healthcare reforms are introduced.

U.S healthcare costs continue to rise relentlessly. But the rate of increase slows as competition grows.

11. Political Culture

Romney’s pragmatic, solution-oriented approach to problem solving will irk Republican and Democratic ideologues alike.

12. Mainstream Media Assessment

“Romney is the biggest disaster to hit the U.S. since Reagan”


Nicholas A. Vardy
Editor, The Global Guru


P.S. With the U.S. presidential election tomorrow, your investments and personal wealth depend greatly on who wins. That’s why my colleagues and I have prepared a special investment report for you, absolutely FREE of charge. It’s called “Eagle’s 2012 Election Guide: 4 Winning Picks for the Next President.” You’ll learn about four investment recommendations for a Mitt Romney win and four plays for a second Obama term. I invite you to sign up to receive the free special report. But that’s not all we’re offering you. Join me for a FREE online Post-Election Investing Summit on the day after the election, Wednesday, November 7, 2012, at 2:00 p.m. ET.

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