Why the economy will respond to US elections

Sunday expected to set a precedent for another volley of quantitative easing.
Most of the north eastern parts of the US have been devastated by the Super Storm Sandy, which left more than 100 dead and over three million homeless.
This week opened on a bearish mood for most of the world’s major financial markets, as the roaring US election began 48 hours ago.
Barack Obama won in most polls over his rival Mitt Romney, whose religion of Mormonism can only win a day in the Utah State, where 60 percent of the residents are of the same faith.
It is a decisive election for the US as the jobless rate is approaching 10 percent, housing prices are plunging and the life expectancy of the poorest state Mississippi is neck on neck with that of Eritrea.
Zimbabwean economy cannot be spared from the vagaries and forces of the incoming administration.
The US is one of our major trading partners and it contributes a greater chunk to our tourist arrivals.
It is also the host currency anchor, knowing well that economic fundamentals on the ground in Zimbabwe will see us holding onto the greenback for the entire duration of the new administration and US Government on Capitol Hill.
Since China is also our major investor, the continuous alleged manipulation of the Yuan, will potentially lead to trade wars with the Washington administration, which had been bemoaning a yawning trade deficit, between the two largest economies in the world.
An unfair monetary approach will see the US benefiting through its inflationary quantitative easing approach to handling economic malaise.
This has seen some economies exporting their jobs in the name of austerity measures.
Up to date, determining aggregate money supply in the US can only be wishful thinking, as the decentralisation of their central banking system, to 12 sub Federals, had made the biggest world economy a very opaque case to predict.
The continuous onslaught by the American government, both present and future, will suffocate Zimbabwe’s capacity to revert to its own currency.
Given the economic woes in the Trans Atlantic zone, the new political order in Washington, might not have an appetite to support countries outside the war zones.
This is in the full knowledge that the Republicans who have a chance of coming to power after the next four-years will create other convenient wars as US profligacy is unsustainable.
Obama’s victory will have to restructure the Wall Street mythology, where extreme capitalism is worshipped.
Most American companies have been receiving backlash in different host countries for their ultra profit orientation.
Active participation of the Chinese community in Zimbabwe and other African countries is foisting a win win partnership, ahead of the arrogant approach of the Western multinationals.
The US currency is losing its real value against a basket of currencies, one of the preconditions, for Zimbabwe to revamp its economy for it to accumulate foreign reserves that encompass the euro, the renminbi (the official currency of China), the South African rand and the US dollar.
A special bias to a single currency will not spoil a healthy state, as the world financial order, is changing in an unprecedented fashion.
For instance, China has accumulated more than US$2 trillion in currency reserves, but the subprime mortgage crisis has rendered the move unwise and costly in the long run.
Zimbabwe is sorely relying on resources for growth and expansion.
The relaxation of technical assistance controls by the IMF may not count, as the Brettonwoods institutions do not have a historical record of going against directives from Capitol Hill.
The Obama administration certainly cannot afford to fund economies outside their influence (eg the Indigenisation and Economic Empowerment Act will never be tolerated in the US, which ever shape or form it takes).
It is regarded as a threat to American foreign domination. Zimbabwe will remain a case study of how breaching fatalistic docility, which most African States suffer from, will be handled by the erstwhile colonisers.
This in turn implies that the just ended polls in the largest economy will neither bring economic nor political fortunes to the illiquid markets.
Failure by the Washington based financial institutions and the United Nations to stand out to American double standards will turn this election into a farce meant at hoodwinking the world, into believing that democracy entails public debates by the candidates, when in fact it should be about respecting autonomous debts.
For God’s sake, why would a small state like Luxemburg, receive US$25 billion from the IMF to solve a debt crisis, when South Sudan can’t even receive a mere US$6 billion, to bring to life the city of Juba.

Christopher Takunda Mugaga, is an economist, he is also the head of research at Econometer Global Capital, a regional finance and economics research firm. He can be conducted on: [email protected] or 0772340353/0776266062.