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9/11: How America’s withdrawal from Afghanistan is affecting Australia’s economy

The end of the lockdowns should signal an upturn in the Australian economy, but a surprising combination of factors could spell disaster.

The global headlines and the wider geopolitical landscape are currently dominated by the haphazard withdrawal of the Americans from Afghanistan.

The move contributed to the collapse of the Afghan military, leaving behind thousands of foreign citizens, including Americans, as the Taliban easily regained control of the country.

The timing couldn’t be worse, as the 20th anniversary of the September 11th attacks this Saturday highlights the small successes the US has achieved in its two decades of engagement in the Middle East.

But as the world begins to grapple with America’s self-inflicted foreign policy disaster, there are potentially far-reaching consequences that could extend well beyond the confines of global geopolitics.

Towards the end of the year, Australia is expected to take the first tentative steps out of lockdown and into its second major economic recovery in as many years. Since the support from the federal government is only a fraction of the previous year’s figure and global economic growth is showing signs of upheaval, the world that welcomes us on the other side will be very different from the end of 2020.

But what has Australia’s economy to do with the American withdrawal from Afghanistan?

Believe it or not, pretty much.

Even the official, supposedly heavily “massaged” statistics show that key sectors of the Chinese economy are shrinking, with the world’s eyes turning to the United States as the engine of global growth for this economic cycle.

But as the effects of the trillion dollar government stimulus and aid programs wear off, the US economy is already showing some worrying signs of significant slowdown.

President Joe Biden – America’s very own radioactive man

In the course of the disastrous American withdrawal from Afghanistan, the approval of US President Joe Biden collapsed and a rapid recovery is barely noticeable.

It was reported on Monday that at least six passenger planes chartered to evacuate Americans, other foreigners and refugees were refused entry by the Taliban.

Given the possibility that this de facto hostage-taking took place on Jan.

It looks like Mr Biden’s approval has fallen further due to the botched Afghanistan withdrawal than Donald Trump’s after protesters stormed the U.S. Capitol.

Until his political destiny changes, Mr Biden will remain politically radioactive.

This makes it difficult to pass more stimulus laws to support the US economy, to say the least, as some Democrats become increasingly concerned about their own political survival ahead of next year’s midterm elections.

The elephant in the room – inflation

In recent months, consumer confidence in the US has fallen despite the reopening of the economy. While there are a number of different theories about this, perhaps the most obvious is the impact of inflation on households.

US consumers have seen the sharpest spike in food and energy prices in decades as prices for used cars and homes have risen to the moon.

As a result, Americans are increasingly putting the brakes on their spending intentions.

Americans’ stance on inflation can be summed up in the words of former President Ronald Reagan, who led the nation through part of one of the worst periods of inflation in modern US history.

“Inflation is as violent as a mugger, as scary as an armed robber and as deadly as a hit man.”

As US household inflation worries mount, key politicians in Biden’s own party sit down and take notice.

West Virginia Democratic Senator Joe Manchin recently penned a comment for the Wall St Journal criticizing his own party’s leadership.

“Democratic leaders in Congress are proposing to pass the largest single-spending bill in history regardless of rising inflation, crippling debt, or the inevitability of future crises,” he wrote. “If we ignore the fiscal ramifications of our policy choices, it will create a disastrous future for the next generation of Americans.”

As a major swing vote in the US Senate, without which laws cannot be passed without the support of Republicans, Mr Manchin’s vote will be key to passing further support to the US economy.

How will that fit together in the future?

As President Xi Jinping’s China increasingly seeks to tighten its belts and prepare for tough economic times, the future of the global economy may depend on the Biden administration’s ability to provide further substantial support to the US economy.

While this sounds good in theory, in reality it could present a potentially impossible challenge for global supply chains. This can lead to further inflation when households around the world are least able to cope with the increased costs.

From a political point of view, further impulses are possibly controversial.

If Mr Biden remains politically radioactive because of the events in Afghanistan and the return of high inflation remains a risk, the adoption of further large-scale short-term stimulus programs remains in doubt.

Between what appears to be a far more conservative China and the potential for a lack of further US incentives in the future, Australia could face a particularly difficult time in the future.

It is said that Australia catches a cold when the Chinese economy sneezes, but one can only speculate how things will play out for our country in the Great South if the two most powerful engines of economic growth in the world don’t fire enough.

Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator

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