The financial system will not collapse, as major governments and relevant international institutions have learned from the past, but additional problems will arise as high inflation makes it difficult to manage the situation, evaluates Eurasia Group President Jan Bremer in an interview with K.

In particular, he believes that for the US, we are facing a credit crunch that will weaken the economy until the 2024 election, with all possible consequences for shaping the political landscape in the world’s largest economy.

At the same time, he notes that Russia, for its part, positively perceives any crisis that affects the capabilities of the West, and China, given its size and role in the global economy, does not want to violate stability, but at the same time sees opportunities in its weaknesses in the West. .

“Politicians have learned from the past, building on the experience of the global financial crisis and COVID-19 and preparing accordingly. The lesson is that they must act quickly and decisively to prevent panic and limit liquidity threats. But now there is a difference, as their trust is also tied to inflation control, making it harder to strike a balance and even more difficult to manage communications.

“I don’t think the financial system will collapse—reforms after the global financial crisis have strengthened its resilience—but I doubt it’s over, and I think there are definitely more problems that haven’t emerged yet.

The biggest risk is that these events will trigger a widespread reduction in credit and financial capacity, exacerbating the response to the recession and putting enormous pressure on policy makers, many of whom have limited policy flexibility after 4 years of the pandemic.

I do not think that the financial system will collapse, the reforms have strengthened its stability.

I don’t think so, but it’s still early. Banking crises are caused by emotions, and politicians must hide the fact that they have the situation under control. Both in the US and in Europe, the authorities understand this and are ready to do everything possible. This comforts me.

“They are less dependent on technology, but long-term structural problems with profitability make them vulnerable to shocks.

“For the Joe Biden administration, this is a chain of bank failures requiring multiple interventions and increasing costs for the taxpayer. It’s not their core value – it’s their fear. In addition, this is a serious credit crisis that will weaken the economy until the 2024 elections.

– I would say that the same applies to Europeans.

– For Russia, any strong economic blow to the West that can reduce the mood for imposing sanctions and providing support to Ukraine is in its interests. China lies between these two extremes – it wants overall economic stability, but it also sees the geopolitical opportunities created by Western weakness.