US political crisis next black swan? Possible panic on markets
More and more disturbing signals regarding a potential political crisis in the US (unprecedented in history) are being published by media (so far online). The scenario in which neither Donald Trump nor Joe Biden will be sworn in as a president of the United States seems to be not so much plausible, but at least possible. Let me just remind you that a year ago none of us would have believed that some virus spreading at one of the many municipal fish markets in eastern China would lead to the most rapid economic and social changes in over 100 years. The black swan may once again affect global markets and, taking into account our experience to date from 2020, it is worth considering the possible panic caused by it.
Possible scenario of a political crisis in the US at the turn of the year (culminating on January 6-20):
As we know, Trump's lawyers have already filed state lawsuits about irregularities in the counting of votes in state courts (including Arizona, Nevada, Georgia, North Carolina, Wisconsin, Pennsylvania, Michigan). The courts are to respond to the claims within the next 14 days. Trump will probably appeal to the Supreme Court (the highest instance in the US), which is currently controlled by an absolute majority of Republicans, against the anticipated unfavorable judgments of state courts (those states that are currently controlled by Democrats). Regardless of the appeal to the Supreme Court (which will take some time to resolve), the state committees are likely to announce the final results of the elections in states controlled by Democrats. Based on the election results, all states will be required to nominate their electoral representation by December 14 - even if the Supreme Court fails to hear Trump's appeals. It can be assumed that Democrats will send state delegations based on the original election results. After the next Supreme Court judgments ordering the recount of votes, the elected electors will be found illegally. The electoral college will (possibly illegally) elect Joe Biden as president.
Importantly, the elections must be approved by the congress of both houses at a joint session on January 6. The chairman of the meeting will be Vice President Mike Pence, who has the exclusive right to declare the election of electors illegal and thus to challenge it (this is not subject to a vote by congress). If some of the electoral votes are found illegal and neither Biden nor Trump receive 270 votes after recalculation of those deemed legal, we would enter the biggest political crisis in US history. None of the candidates will be able to be sworn in as president until January 21 (the deadline). If congressmen do not reach a consensus by that time, the acting president of the United States may be a speaker of the House of Representatives (which is in the hands of Democrats) elected by the majority. We can only try to imagine how large riots and panic in the stock market could spark such events. At the same time, the global and so far unquestionable confidence in the dollar as the safest haven could be so severely undermined for the first time in history.
I would like to emphasize that I estimate the probability of such a serious crisis at the moment at only a few % In the coming weeks we will be able to verify where this is going, as the situation is still developing. Our privilege is to use the awareness of the possibility of the described events and to confront them with the coming reality on an ongoing basis. I will update this thread as soon as there is new information.
Possible scenario of a political crisis in the US at the turn of the year (culminating on January 6-20):
As we know, Trump's lawyers have already filed state lawsuits about irregularities in the counting of votes in state courts (including Arizona, Nevada, Georgia, North Carolina, Wisconsin, Pennsylvania, Michigan). The courts are to respond to the claims within the next 14 days. Trump will probably appeal to the Supreme Court (the highest instance in the US), which is currently controlled by an absolute majority of Republicans, against the anticipated unfavorable judgments of state courts (those states that are currently controlled by Democrats). Regardless of the appeal to the Supreme Court (which will take some time to resolve), the state committees are likely to announce the final results of the elections in states controlled by Democrats. Based on the election results, all states will be required to nominate their electoral representation by December 14 - even if the Supreme Court fails to hear Trump's appeals. It can be assumed that Democrats will send state delegations based on the original election results. After the next Supreme Court judgments ordering the recount of votes, the elected electors will be found illegally. The electoral college will (possibly illegally) elect Joe Biden as president.
Importantly, the elections must be approved by the congress of both houses at a joint session on January 6. The chairman of the meeting will be Vice President Mike Pence, who has the exclusive right to declare the election of electors illegal and thus to challenge it (this is not subject to a vote by congress). If some of the electoral votes are found illegal and neither Biden nor Trump receive 270 votes after recalculation of those deemed legal, we would enter the biggest political crisis in US history. None of the candidates will be able to be sworn in as president until January 21 (the deadline). If congressmen do not reach a consensus by that time, the acting president of the United States may be a speaker of the House of Representatives (which is in the hands of Democrats) elected by the majority. We can only try to imagine how large riots and panic in the stock market could spark such events. At the same time, the global and so far unquestionable confidence in the dollar as the safest haven could be so severely undermined for the first time in history.
I would like to emphasize that I estimate the probability of such a serious crisis at the moment at only a few % In the coming weeks we will be able to verify where this is going, as the situation is still developing. Our privilege is to use the awareness of the possibility of the described events and to confront them with the coming reality on an ongoing basis. I will update this thread as soon as there is new information.