US Under Threat of Financial Instability Due to Deteriorating Global Relations

After the US elections of 2020 and the subsequent defeat of the Republican president Donald Trump, the office was handed over to the Biden administration of the democratic party. Joe Biden became the 46th US president to hold office.

The elections witnessed a highly polarized response from the public that instigated political instability. In order to cement their position, presenting a strong political front, the democratic party had to devise a plan to combat the hostility posed against their administration.

On January 6, 2021, an angry mob of supporters of Donald Trump, stormed the United States Capitol in hopes of overturning the defeat of the 45th Republican president Donald Trump. The Biden administration was faced with the challenges of facing this backlash head-on and establishing its image as a firm and strong party that will not be dislodged.

Trump supporters riot at Capitol Hill

As the political tenure of the democratic party paces through 2021, the US government is already facing hostility on the international front.

The deteriorating relationships of the country with other nations signal an uncertain future that anticipates a weakening financial standing of the country.

The Biden administration is caught amidst declining international relations with China, North Korea and Russia. The tensions between China and the US grew exponentially in the previous term of Donald Trump when various trade sanctions, visa restrictions and technology bans were imposed.

Currently, the US considers China’s intention towards Taiwan, South China, Honk Kong and Xinjiang as a potential threat to the United States.

US Admiral Philip Davidson, Commander of US Indo-Pacific Command addressed the Assembly and warned of the manifesting threat to the security of the nation that stems from the ambitions of China’s Military and their intentions in Asia.

He further claimed that their involvement in these countries could pose a threat to the United States which may be China’s ‘next target’ after Taiwan.

In order to discuss the situation and move towards possible reforms, the Alaska summit was called. China’s top diplomat Yang Jiechi and State Councilor Wang Yi will meet with US Secretary of State Antony Blinken and National Security Advisor Jake Sullivan later this month in Anchorage, Alaska to discuss the future of the countries.

There is no particular agenda set for the meeting but both sides paint a pessimistic picture. China’s ambassador to the US, Cui Tiankai, stated in an interview that the Chinese government didn’t “expect to solve all problems in one dialogue.” “We don’t have high expectations or fantasy,” he added.

The US administration is also not ready to budge on its requirements. The US already announced the decision to sanction 24 Hong Kong and Chinese officials which prompted Beijing to retaliate. Being two of the biggest economies, this tension can great huge waves in the financial market as trade and exports experience the brunt of this rivalry.

Similarly, Russia is also posing a serious threat to the United States with the severity of the situation being unknown at the current time period.

In an interview with ABC Network on the broadcast of “Good Morning America”, the 46th President of the United States, Joe Biden, stated that Putin will “pay a price” for undermining the elections. Joe Biden believes that the Russian government tried to interfere with the US elections with the aim of ensuring that Joe Biden did not win the elections.

Joe Biden further stated that Putin has ‘no soul’. When asked by the interviewer if Joe Biden believes Putin to be a killer, he replied with a firm nod and a “Yes”.

Joe Biden and Vladimir Putin

This was met by swift action from Russia who pulled their ambassador from the United States and although no official statements were made from Russia’s side, it was evident that the future relations between the countries are becoming bitter.

Furthermore, The US Intel reported potential long-range ballistic tests being conducted by North Korea after Biden took office. North Korea has always been considered a threat by the US and the increasing threat of a nuclear war adds to the risk and uncertainty of the financial market of the United States.

The US Bureau of Labor Statistics already indicates a rise in unemployment throughout the various states and the deteriorating global relations just catalysis this crisis, causing the financial markets to take a serious hit.

Unemployment rate in the U.S. – forecast 2019-2030

With sanctions placed on trade activities among the nation and the frail global conditions, the next decade is full of uncertainty when it comes to the financial stability of the country.

The declining trust of citizens and businessmen in the current government could adversely affect the financial markets of the country. The current political instability is developing doubt and hesitation in investors and traders.

VIX index March 2021

If the government is not able to tackle these rising issues, soon the effects will start to appear in the coming years.