"Investor confidence key to end market doom and gloom"
This comes as the US’s three major banks have warned of the possibility of a looming global recession.
Jason Johnson, an author and professor of political science at Hiram College, thinks the US recovery will largely depend on reestablishing investor confidence.
“One of the things you have to remember is that much of these assessments are based on what people believe, as opposed to the realities on the ground,” he told RT. “The companies that have lost value over the last two days or two weeks, these companies are magically not working anymore. It’s just the people’s confidence that is at an all-time low. If confidence stays low, we will see another recession. If confidence improves, the economy will improve.”
But Johnson said there is still a catch.
“The only problem with debt is when someone actually wants to call it in,” he said. “Most of the US debt right now is owned by China. China is not about to reclaim the State of Virginia, they are not about to reclaim New York City by calling in their debts. They primarily want to see America improve. So if legislation can be passed in the US, if the president can restore some control and instill some confidence in our future economy, the debts are less of a problem then people’s inertia and inability right now to get the economy moving.”
Johnson said US Vice President Joe Biden’s recent visit to China might have a chance of restoring Asian investors’ confidence in the US economy.
“It depends on what kind of deals he is going to offer,” he stated. “The fact of the matter is right now, the US is 14 months away from a presidential election. This is the time when markets tend to get skittish anyway because they don’t know who the new leadership will be. If Joe Biden can convince China that Barack Obama is going to get reelected and therefore will actually be able to enact some of the promises in any deal that Biden presents, I do think China will buy in.”