Jair Bolsonaro did not visit Wall Street this Thursday. “Coincidence or not”, the owners of the world’s money were nervous about the war or what the US government calls the “very high risk” of “imminent invasion”.
As is well known, with that attempt at cleverness of his own with “cognitive limitations”, Bolsonaro had said that “coincidence or not”, part of the Russian troops had left the border with Ukraine, a withdrawal that may otherwise be just a lie.
For a week now, financial asset prices have been bumping up and down in the center of the rich world (yes, say you’re on a roller coaster). Things weren’t going well for other reasons, mainly because there is a debate in the United States about how quickly and how big will be the blow to interest rates there, because inflation is still rising. But on this farm there was the smell of burning from war.
There were ugly tumbles in US stock markets and a slight drop in the interest rate on US government debt (ie, the market balance was for the purchase of these securities, people looking for some security). The bearish move hit the markets here as well.
Is there any evidence that the risk of war has increased? There are statements from the US government, from its embassy at the UN and in Joe Biden’s speech. No, you can’t believe the US government — least of all Vladimir Putin. Russians and Ukrainians accuse each other of having bombed Lugansk, in eastern Ukraine (in civil war, with a pro-Russian part). Russians accuse Ukraine of genocide of Ukrainian Russians and have expelled the US deputy ambassador in Moscow.
Be that as it may, the panic-start atmosphere or at least the torrent of nervous propaganda was spreading through the Anglo-Saxon financial media, as the French say, through traditional journalism and the markets. If it is not true, it is very likely that the threat of war was bought by those who break the news and trade money.
As always, the question remains: so what? Tomorrow could be another day, for starters. Furthermore, Brazil has so many domestic problems, so much self-inflicted damage, that one additional disgrace may not make a difference, least of all to the splintered and helpless mass of Brazilians. Any sensible adult person who has read newspapers in recent years should know that this is not the case.
If we don’t even know the real probability of war, it is even more difficult to imagine what the sanctions of the United States and, perhaps, of its allies against Russia would be. Thus, we will not know where the price of oil is going or how big is the “risk flight” (from currencies such as real), which is the most humble example of the impact of an international crisis on Brazil (on inflation) . But the risk is serious.
Depending on the size of the war, if there is any war, the impact on economic confidence could be large, a jolt of at least a few months. As we have water up our noses in terms of GDP and inflation (still out of control), any wave chokes us.
It should be noted that a break with Russia would leave the European Union without much of its oil and gas, with a greater impact on Germany, which happens to be the fourth economy in the world. Germany wouldn’t be in the dark, of course, but the price of fossil fuels would go up, barring blatant help from Saudi Arabia, which shouldn’t get into that reel.
In the 2014 crisis (annexation of Crimea, civil war in eastern Ukraine, with Russian intervention), nothing happened, not even the slightest stir in nervous financial markets. An “official” Russian invasion would provoke a “West” reaction. “This time is different.”
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.