Many have pointed to the surge in the stock market showing support for Biden among the educated/powerful. Yet like the Trump increase before the election, some serious concerns exist about the underlying reasons for the increase and its strength exist. The exact type of individuals who sent money into the market is unknown; however, the experts jumping into a market does not protect it from the fall. This belief that experts moving money in means that individuals are protected is flawed and a dangerous belief. Looking closer at the Biden policies and also the state of the market, the firm foundation is revealed to be uncertain mud.
Covid Crash Hid Normal Crash:
Before Covid19 exploded across the world, many have forgotten that despite the Trump boom that serious concerns where growing. Certain types of loans such as CMBS (Commercial Mortgage Backed Securities) were given out like candy once again, similar to before 08. Banking practices that need a major overhaul after the 08 crash did not occur. This includes the money printing and constant debt that has been collected by most nations. Holding back nations and their people has been an aspect of the modern economic systems. Even big corporations are experiencing serious problems. This is due to many of them having so many resources but not suiting the modern world. Retail is often what is highlighted, but other services and companies exist in their zombie state after earlier success.
While these have managed to limp along in the early 21st century, many are running fuel. Yet due to the buildup, it is not a slow reduction before the collapse. Doors are suddenly closed, and numerous locations close at once. Tones of jobs are lost. The inevitability of this happening is then talked about by the news and people. Shops you walked past every single day and have been a standard part of the economic landscape are now being expected to collapse. While certain losses should be expected, the large scale collapse of some areas industries and companies is unusual. They are not being replaced. Entire areas are collapsing into ruin.
Money Movements Concerning In Themselves
The stock market has been a highlight of good news around the business misery that has mostly been 2020. After the crash due to Covid19, it steadily rebuilt before reaching even higher. At the same time, this could be due to hope that a rebound is going to be even more powerful. Yet experts raised concerns that with a large number of people staying home that inexperienced trader were pouring money into the stockmarket distorting the rational side of the market. Due to some investments losing money, desperation has existed that has seen people throw money at a range of projects. This could mean that a large amount of the money that has been allocated to the wrong companies. A misplaced record level of money creates a possible house of cards.
Political movements of money are also in the background. The US election saw a large amount of money that moved across the country. With many now believing in a Biden victory that will fund large projects and spending, this has created a second surge. If President Biden takes office, then certain winners will follow with losers also growing. Spyware and some military focused companies have seen an increase since the results appeared to have shown a Biden win. International markets are also uncertain with Chinese investments remaining a large unknown as Biden’s stance on the country is less straightforward then President Donald Trumps.
Policies Themselves Are Dangerous
Biden has stated that his focus is going to be on the pandemic and that he is going to listen to the science. The science that Biden seems to be listening to is the school of thought that believes that lockdowns and restrictions are crucial to fighting Covid19. Biden has people around him who want roughly a seven week lockdown and other limits. These will cause a large amount of economic damage if they are done. Evidence of this can be seen in New York and other cities that have embraced heavy lockdowns. The effectiveness of these lockdowns also remains uncertain. The WHO itself has stepped away from recommending lockdowns and is pushing for other measures. In many nations, harsh lockdowns have not given the results that were wanted. Tensions between the citizens and the government also continue to grow in many countries. For the United States with more expected freedom then many nations it would be more challenging to put in place health restrictions and limitations.
Legally it would also be quite challenging to pass these laws. This would also see some conflict between the different levels of government. States verse the Federal government is a long battleground in American government. Biden camp seems to want to possibly use National Security laws. If these are used them, it should be expected that the market will freak out as these have not been used recently. It signals a time of crisis and also that extreme measures are going to be taken. Even talking about using these measures could spark panic.
If Biden takes the White House, then he is going to be left with a very rough looking economic situation. While under the Obama years, they faced a crisis. This one likely cannot be fixed with massive bailouts. Covid19 has shaken the entire economic systems; however, those systems themselves had issues. Dealing with these most likely will dominate the next term for whoever takes the White House.