An American political analyst believes that the recent downturn in the US stock market was “inevitable,” noting that the country has a “bleak” financial future amid the worsening coronavirus pandemic.
Charles Dunaway made the remarks in an interview with Press TV when asked about US stocks that fell on Wednesday.
Wall Street's main indexes slumped at the open. The Dow Jones Industrial Average fell 1,048.69 points, or 4.94%, at the open to 20,188.69, while the S&P 500 opened lower by 92.69 points, or 3.66%, at 2,436.50. The Nasdaq Composite dropped 432.47 points, or 5.90%, to 6,902.32 at the opening bell.
This comes as growing signs of coronavirus damage to corporate America overshadowed optimism about sweeping official moves to protect the economy. Market analysts say the slump marks the investors’ lack of optimism about the positive impacts of a potentially massive US government stimulus.
Dunaway said, “The recent downturn in the stock market is inevitable because we have a bubble that was created at the end of the 2008 recession as the federal reserve began to pump money into the banks and into the stock market and this money all went to the highest income people, so what we ended up with was an inflation of asset prices.”
“It was inevitable that at some point this bubble would burst and then we end up with a problem where the federal reserve now has no more tools to try to address this problem and correct it,” he added.
He went on to say that “the financial future of the United States at this point is rather bleak at least in the short term” for some reasons.
“One is that we have through the large trade agreements globalized our supply chain and there has been a loss of manufacturing capacity within the United States with corresponding loss of jobs and loss of the skills necessary in manufacturing.
“The other thing we’ve done is waste tremendous amount of our resources on the military on trying to be the world’s policemen and to be the hegemonic power and we’re wasting a trillion dollars a year or more on the military and getting nothing of value to the economy as a result. Another factor is the extreme polarity in our political life where we have two groups who have almost completely different outlooks, different sets of facts, different media sources and it would be very difficult to reconcile that.”