US policy triggers global financial crisis

The daedollarisation era is blooming

Source: mirtesen.ru

“The crisis of the U.S. financial system will hit hardest those who only focus on it. The victims of the recent bankruptcies have already been ordinary citizens of other countries. We are talking about pension funds in Sweden, Norway, South Korea and others. No one will pay them back. The United States will continue to live off others. Problems will escalate and go beyond U.S. borders,” said Vyacheslav Volodin, Chairman of the Russian State Duma, describing the situation in the United States.

The situation is paradoxical. Contrary to all expectations and obvious logical conclusions, Russia, which is under the yoke of the most severe economic sanctions, in 2022 shows a GDP decline of only 2.1%, significantly less than the fall that was observed during the pandemic. Such statistics allow us to say that Russia has survived almost painlessly the reorientation of markets, the withdrawal of foreign corporations, the closure of borders to a number of domestic products and the attack on the national banking sector.

Even more paradoxically, the well-planned and calibrated measures of economic and political impact on Russia hit first and foremost those who “generated and set them in motion”. Today it is quite obvious that not only the economy of the European Union countries was hit, but also the US economy, which seemed to be as protected as possible from all sorts of “stresses and shocks”.

The crisis of the U.S. financial system that Vyacheslav Volodin talks about broke out quite unexpectedly. It broke out amid the open bravado of a number of officials and statesmen claiming that the US will help Ukraine as much as it needs and will not be a burden on the national economy.

The collapse of Silicon Valley Bank, followed by the collapse of two other US banks, Signature and Silvergate, was the second biggest bank failure in American history. We saw something similar in 2008, during the world’s worst financial crisis. During the global economic crisis in 2008, the combined assets of the banks that went into bankruptcy were estimated to be around $375 billion, while Silicon Valley Bank had total assets of around $209 billion as of 31 December 2022, Signature Bank stood at around $110.4 billion and Silvergate Bank at $11 billion. The situation is quite complicated, which in turn has already affected the economies of a number of countries that have close economic ties with the United States. This is not the only reference to past history describing a series of economic shocks caused by ill-conceived foreign policies of countries wishing to play the role of “hegemon.

The situation in the global energy sector, once again caused by the United States deciding to radically rearrange the hydrocarbons market, strongly resembles the events of the first oil crisis 50 years ago caused by the fourth Arab-Israeli war.

Today, with the consequences of the pandemic leveled off and a widespread increase in demand for energy caused primarily by attempts to return to pre-pandemic production levels, it was extremely reckless to limit the supply of both oil and natural gas produced in the Russian Federation. The restrictions hit not only European countries but also Japan, causing a drop in living standards due to rising prices and falling incomes.

It is obvious that American politicians, who dragged the whole world into an adventure to protect the territorial integrity of Ukraine, have opened a kind of “Pandora’s Box”, provoking serious processes that in the future will change the very basic model of the world economy beyond recognition. And it is not even about competition between two vectors of power, one of which is China together with Russia and a number of allies, and the other is the Western coalition led by the United States and Japan which has joined it.

It should be understood that in the current realities, the alliance of Western countries deprived of a serious resource base will be very contingent, allowing for internal competition. In the near future, the United States, Europe and Japan will begin to share not only markets but also scarce resources and agricultural products. Of course, such competition will not make the collective West more united and sooner or later the growing internal tensions will inevitably call into question the continued existence of this alliance.

In the light of these developments, it is only logical to ask the question of Ukraine’s future. What will happen to this quasi-state, the viability of which depends entirely on “Western investment”? It is quite logical to suppose that the developing world crisis, provoked, among other things, by the crisis of the American financial system, will nullify the interest of ‘western investors’ in this ‘project’. A project whose fate depends entirely on the outcome of the West’s planned spring offensive against Russian positions, designed to create the “right” ground for negotiations with Russia.

In general, a protracted bargaining over Ukrainian territories, without Ukraine’s participation, of course, global reformatting of the geopolitical space, a long process of global economic stabilization and dedollarization of national economies of a number of states are ahead of us. Such is the price for the USA’s desire to become a global predictor. Although, on the other hand, if such a situation did not exist, it would have to be created. Today we see a complete transformation of Russia, both politically and economically, which in the light of “partnership relations” with Western countries would have been impossible in principle.

Alexey Zotiev, Analytical Service of Donbass

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