MARKET PERSPECTIVE

By J Mulraj

JULY 13-19, 2024

American politics takes a dangerous turn

At an election campaign rally in Butler, Pennsylvania, a dastardly assassination attempt was made by a shooter on presidential nominee, Donald Trump. Thankfully, Butler didn’t do it. Trump survived, standing up, with a bleeding ear grazed by the bullet, to give a defiant fist pump. Had the attempt succeeded it’s likely that America would have seen a civil war, seeing how the country seems equally divided between the two warring parties. Trump had the mental acuity to drop to the floor to save himself from a further attack, an acuity not on display in Biden.

The deep state that governs USA (Biden evidently doesn’t) nominated Biden as the Presidential candidate, despite observing his deteriorating condition. Maybe the deep state was betting on Trump getting embroiled in the myriad suits filed against him by the Justice Department which has sadly become weaponized by the administration.

For many Americans their hatred of Trump is greater than their love for their country. Most of the legal cases filed against Trump have not succeeded in weakening, or stopping him. Trump continued to lead Biden in polls.

Then came the televised Presidential debate, where Biden’s fumbling responses and gaffe made it evident that he was, and would be, unable to lead America. The US Presidency must be the toughest job in the world. The subsequent NATO summit, followed by a press conference gave Biden an opportunity to prove he was mentally sharp and able to run the country for another four years, if elected. He flubbed the opportunity, inviting President Putin to talk, instead of Zelensky, who was waiting in the flanks.

Many are wondering if the assassination attempt was a desperate attempt to ensure a Biden victory. So certain was the deep state, earlier, that Trump would cave in to his several judicial assaults, that it had no ‘Plan B’ in place. After the debate performance and the brouhaha (no laughing matter) at the NATO summit, it was apparent he wouldn’t be able to defeat Trump. With only 4 months to go before the election, the Dems find it difficult to get a replacement. The attempt at the Butler campaign rally would, had it succeeded, made it easier for the Dems. But the Butler didn’t do it.

Given that the crowd had spotted the shooter 3 minutes before he shot at the President, the Secret Service, tasked to protect Trump, failed abysmally. Three minutes was enough to either take out the sniper (there were two counter-snipers at a higher vantage) or, at the very least, cover and protect Trump with security personnel, as per Secret Service protocol.

Significant events are occurring in the world’s two largest economies, USA and China.

Leaders of both are afflicted with illnesses; Biden with Covid and Xi rumoured to have had a stroke. Biden has, thankfully, agreed to step down as the Democratic Party nominee, if the party chooses an alternative candidate in an open selection soon, in Chicago. Meanwhile, the failed assassination attempt has boosted Trump’s popularity, and any candidate now chosen by the Dems, with less than 4 months to go, would face a daunting challenge to beat trump.

A Trump Presidency would see a swift end to the wasteful Ukraine war, and the stanching of Western aid to Ukraine which cannot succeed in helping it win the war but only serves  to perpetuate its agony. US- Russian ties should improve, and with it, perhaps, resumption of Russian energy supplies to Germany and other EU countries. Germany has, last week, halved its financial aid to Ukraine. It’s quite likely that Russian-Sino ties will weaken; Biden had foolishly brought America’s two major challengers economically closer by depriving Russia, through sanctions, the EU market for its oil and gas. Any weakening of their ties would be a geopolitical gain for the collective west.

A Trump presidency would also increase trade pressure on China through higher tariffs, or stricter enforcement of them, or both. If rumours of Xi having had a stroke at the Plenary session prove to be true, it would pose a bigger challenge for the CCP.

What one should pray for is that not further attempts are made on Trump; that is never how democracy works. Should one be made, worse still, succeed, America may well erupt into horrendous violence.

Besides its political issues, the US is also confronting a possible collapse of its CRE (Commercial Real Estate) sector, which will spill over into another banking crisis. Moreover, the fast expansion of AI and of cloud storage, has resulted in a spike in energy demand and the largest IT outage in history.

Here, too, paradoxically, both countries are facing similar problems. The US banks are expecting several community banks (like Silicon Valley Bank) to fail, and China has seen its banks consolidate, after being affected by the crisis in its realty sector.

Last week the BSE Sensex closed at 80604, for a weekly gain of 85 points.

The coming week will see the presentation of the Union Budget which should not spring any surprises. That is how budgets ought to be – a document outlining the Government’s priorities and  plans and how it expects to achieve them, and not something that finance ministers tinker with constantly. A budget should induce yawns, not palpitations.

India is fortunate to have a birth rate that can sustain its culture; most EU countries are far lower. Their culture and way of life is irreversibly doomed. India’s young population and favorable demographics will help propel its economy to $ 5 trillion. Historically when an economy grows from $3 to 5 trillion, its stock market rises sharply. So will India’s. It is not a given, though, and will depend on good governance and an ability to tackle the myriad problems like poor primary education, the abysmally slow judicial system, the endemic  corruption, and the political horse trading that destroys faith in democracy and respect, if any, for politicians.

Picture Source: https://www.zerohedge.com/news/2024-07-14/reactions-assassination-attempt-trump

Comments may be ent to jmulraj@asiaconverge.com