October 6, 2022

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Hot Autumn / The American Crisis That Could Shake Europe Too

If in Italy we are experiencing a summer in very high temperatures (from a meteorological and political point of view), then it cannot be said that the United States has outdone it. In the midst of a faltering economy, political disagreements and the approaching midterm elections, the internal debate is raging in the United States and it is expected that between now and November it will be even hotter.

Let’s start with the economic issues that, as has been known at least since the time of Bill Clinton (who coined the phrase that went down in history “It’s the economy, stupid!”), are critical to determining the electoral success (or failure) of a presidential candidate. So far, in general, it cannot be said that Biden has missed the goal of reviving the US economy after the pandemic, recording an excellent + 6.2% in terms of GDP growth in 2021. But the forecast for this year is deteriorating quarter by quarter: as of today, it may Growth is up to 3.2% according to the International Monetary Fund. Because? The main reason is inflation, which is the highest in the last 40 years, although it is showing some signs of slowing down with the price of gasoline dropping to four dollars a gallon after hitting five dollars. However, inflation differs from that affecting Europe, as it is generated from the demand side also due to the massive liquidity injection that has been favored in the past two years as a response to the pandemic, first by Trump and then by Biden himself. And the increase in the prices of energy sources and not because of the scarcity of supply. The aggressive monetary tightening by the Federal Reserve in recent months through continued interest rate increases could therefore have the effect of an “emergency brake” that could save the United States from a more difficult downturn but in the short term would certainly contribute to reducing prospects the growth.

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The expenses may be Biden and the Democrats, given the midterm elections scheduled to take place in less than three months. A Republican victory so far appears to be the most likely scenario given that Republican candidates have recovered even in largely Democratic self-imposed states such as California, Oregon and Colorado. This means that if both houses of Parliament return in favor of the Conservatives, Biden will turn into a “lame duck” after only two years in office with many negative effects. First of all, the work of the government will be severely weakened, at a very sensitive moment at the international level; Hence the US political debate may become more and more “poisoned”, with Trump being divisive and polarizing in light of the 2024 presidential election.

Provided that the former president is not disqualified from the race for the White House, also in light of other events in the past few days that have seen FBI searches at his private residence in Florida. The statements of the attorney general (our attorney general) in full support of the work of the FBI and the strong reactions from the Republican Party that had to support Trump at all costs at this moment, led the opinion polls to advance in the conservative camp even after his victory. By questioning them before US judges in another course of investigation, they provoke an unprecedented institutional and political struggle in the United States with unexpected consequences and most likely not in the Democratic Party’s favour.

In short, the next few months will be eventful in the United States and it is very likely that the difficulties for Joe Biden will increase. From the international situation (with the possibility of a crisis with China increasingly likely after Nancy Pelosi’s surprise trip to Taiwan) to the domestic situation (with the increasingly fierce Trump, feeling trapped, raising the bar even more), the work of the White House can be weakened. And we Europeans could suffer the consequences, too, in light of a winter that promises to be complicated by the now pandemic economic crisis.

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After the “crazy” summer heat from all points of view, we can expect the cold due to the energy crisis, if a way out is not found from the conflict between Russia and Ukraine, the slowdown in the distribution chain of products around the world caused by multiple international crises from Asia, the Middle East, Africa and a wave Migration towards our coasts is at much higher levels than in the past.

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