Given the amount of cash flow in its financial markets, its huge consumer-driven economy and currency reserves, the United States remains by far the most developed market in the world, but its policies are increasingly similar to emerging market policies.
In a report published by the American Foreign Policy magazine, writer Mark Rosenberg said that the sharp political tensions ahead of the election date next month, and the negative signals that President Trump sheds through his adherence to power and his questioning of the integrity of the elections cast negative shadows on the American economy.
The writer mentioned that the situation in the United States is currently similar to what emerging markets are experiencing, and paves the way for deep economic problems and social unrest, as happened previously in countries such as Turkey, Nigeria and Argentina, and what is characterized by developed countries may become stable institutions of governance, peaceful competition for power and mutual recognition of the legitimacy of election results. Part of the past in the United States.
Threat to financial markets
Although the possibility of civil war or civil disobedience remains unlikely for the time being, it is clear that the current presidential elections in the United States will be different from any election in America’s recent history, and will profoundly affect the country’s economy.
Last September, the “Fix” index, or what is known as the “fear index”, showed that the upcoming US elections are the worst expected confusing event for financial markets since the index appeared in 2004, and hedge fund managers, or what is known as “preventive portfolios”, are looking at Wall Street views elections as the biggest threat to financial market stability in 2020.
The progress made by Joe Biden in opinion polls over the past few days has reduced fears that the elections will witness intense competition, negatively affecting financial markets, but the development of events in the coming days is still outside the scope of expectations, and reveals the recovery of US markets thanks to optimistic expectations of a smooth transition Power has the uncertainty hanging over the US economy, which is exactly the same as in emerging markets.
What the United States has achieved is partly due to the strategy pursued by US President Donald Trump to stay in power, which focused on fueling societal divisions and questioning the legitimacy of the elections.
The United States has witnessed during the last period a state of instability in the institutions of governance, and a sharp social polarization similar to what is happening in a number of emerging democracies such as Hungary or countries threatened by coups such as Thailand, the magazine adds.
According to GeoQuant data, the percentage of “enterprise risk” in the United States has risen to 29% in the last 8 years, a rate comparable to what countries like Hungary and Thailand have seen.
According to these data, the risks at the beginning of 2013 – when former President Barack Obama began his second term – were equivalent to the percentage of institutional risks in Germany and Canada, but today they are comparable to the rates of countries such as Uruguay and Taiwan, which are among the emerging markets.
The author stated that Geoquant data also shows that US lawmakers are becoming less rule-bound and less effective in making decisions, government agencies are less able to implement those policies, and US political parties have become weaker and more divided, while judges and prosecutors have become more politicized.
The writer emphasized that economic and social inequality has become more severe in the United States over the past period, as have educational, health and human development indicators deteriorated, manifestations of social polarization have increased, and the American dream has become more elusive than ever before.
All of these factors contributed to undermining Americans’ confidence in democratic institutions and the electoral process, which helped Trump win the 2016 elections.
It is expected – according to the writer – that this situation will continue even after Trump’s departure from the White House. Even if his Democratic opponent Joe Biden wins and American policy begins to gradually gain the characteristics of developed markets again, the currents that are pulling the country back will not completely disappear, and may continue. The oldest democracy in the world to operate according to the mechanisms of the latest emerging markets.