2016 Year in Review

Looking back on 2016 a LOT has happened, not all of which was necessarily bad.

December 26, 2016

By: Bobby Casey, Managing Director GWP

2016 year in review2016 was the year of the curveball. I dare say many people were shocked at some of the things that happened. I know I was.

Here are some observations about 2016:

  1. Obama presidency is coming to an end.
    1. His administration has added roughly 81,640 pages of new regulations in 2016 alone. With a total of close to 230 major regulations and costing nearly $108 billion per year, our regulatory system has seen quite a boost during his two terms.
    2. The national debt is poised to hit $20 trillion before he leaves office
  2. With #1 comes the dawning of a new administration: Donald J. Trump’s. He’s made some promises on the campaign trail: some of which would be helpful, others of which would be devastating, and a few of which he’s changed his mind on.
  3. The Brexit referendum passed and Great Britain will be leaving the European Union once all details are settled (not sure when that will happen yet).
  4. Venezuela is all but collapsed having lost one of its biggest creditors: China.
  5. Syria is in turmoil and US/Russian relations are not doing well… which may or may not change with a Trump presidency.
  6. Spain’s government is on hiatus and people appear to be doing fine for now.
  7. Bitcoin exceeded $850 toward the end of the year.
  8. Several jurisdictions in the US implemented a $15 minimum wage or a goal to hit it by a certain year.
  9. Global extreme poverty hit an all-time low.
  10. BONUS: everything is the fault of Russian hackers. (Okay, not really…)

For as disappointing as 2016 was, it’s not the worst year ever. I can’t bring myself to abandon all perspective and commit to something so hyperbolic. There were some serious low points. Some bad things happened, good things happened, and some interesting thing happened; and the truth is, we won’t know what the full implications are until at least next year.

So what am I going to be watching?

I’m watching the expiration of the suspended debt ceiling for one thing. It’s up in March of 2017. So now what, Trump? If his idea of cutting unnecessary spending is anything like his ideas about “draining the swamp”, it might not be very promising.

I’m looking at US/Russian relations. Regardless of where that relationship goes, I’m watching Russia and China’s relationship. I’m watching their trade and their monetary dealings in particular.

I’m hoping that Great Britain can start getting to the business of starting over. After reading about the possibility of them aggressively competing against the EUs tax regime, I will be VERY interested to see if that’s how they go about luring in foreign investment. I’m likewise wondering if, in addition to lighter taxes, if they are looking at lower tariffs on trade.

I don’t even know what to say about Venezuela. Short of overthrowing their “president” and switching entirely over to bitcoin, all I can do is hope they find a way out from under President Nicolas Maduro. The people seem to be on their own, with some neighbors willing to help.

Syria can be a problem. From what I could gather of Trump’s rhetoric, he wants to leave it alone and let the Syrians and Russians deal with it. Not sure where he’s at on that today however. We have over 150,000 troops stationed all over the world, approximately 9800 in Afghanistan still. We aren’t calling any of our aggressive acts or engagements “wars” so it’s hard to look for an exact number of active combat troops. If we amp up in Syria rather than draw back, this means more defense spending, which means the fiscal responsibility can gets kicked down the road.

I’m really rooting for Spain. I hope they go long enough without a government to where the majority are convinced it is unnecessary and they just get on with life. Perhaps that a little much, but they’ve done fine so far. They aren’t totally without a state, but they have a real minarchy right now compared to what they’ve had, and they might just like to keep it that way. I expect it will get resolved one way or another next year.

Bitcoin is something to watch. It’s a very interesting hedge against fiat currency around the world. It’s not by any means stable yet, but it’s not been in the double digits once this year either. While it doesn’t carry the same value as gold, it does signal similar patterns. Bitcoin and precious metals offer one very important lesson: the difference between deflation and inflation. What you can buy with one Bitcoin or an ounce of gold or silver has gone UP, while what you can buy with $1 USD has gone down.

I’m nervous for the markets with $15 minimum wage laws or goals. It will be interesting to see how that affects those markets, and I will be sure to share those findings with you as they unfold. I’m expecting a rise in unemployment among youth and entry level employees and a slowdown in hiring overall.

And while I know it’s easy to get caught up in our own city, state, or country’s drama, it’s incredibly important to know that capitalism has been dutifully improving the lives of people all over the world. So while the west tries to regulate it away, the developing world is embracing it and seeing magnificent results.

Dropping below the 10% mark on extreme global poverty is a big deal for several reasons. Despite the large growth in population, that number decreased, and this is largely linked to free markets and voluntary exchange.

Human Progress reports that there are three major reasons for this growing prosperity: “the fall of communism, the rise of trade and globalization, and the courage of those who stood up against tyranny.”

So I think the last thing I’ll be looking for is the emerging nations. Will South America continue with its tech incentive programs? With Africa become the new hot bed for manufacturing? And most of all, will that poverty number continue to drop in the coming years?

Despite how disappointing politicians and central planners can be, each year I remain hopeful that success emerges. 2016 was a wild ride. I’ll be interested to know what groundwork it laid out for next year.

Happy Holidays from GWP!

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