Experts predict that the second Cold War has commenced, with economic weapons being the primary means of conflict.
- Experts say the next Cold War might already have started.
- The ongoing conflict between Russia and Ukraine presents a fresh obstacle for a market still grappling with the aftermath of the pandemic.
- The future of the market hinges on the direction of the crisis in Ukraine.
The Cold War between the U.S. and the Soviet Union nearly resulted in nuclear warfare 60 years ago. Experts predict that the U.S. and its former enemy, now Russia, are on the brink of another Cold War, but this time it will be different.
Jason Schenker, president of Prestige Economics, stated that he believes the second Cold War has already begun.
Angela Stent, a senior advisor at Georgetown University's Center for Eurasian, Russian and East European Studies, stated that while they believe the world is heading towards a 21st century version of the Cold War, it will be distinct from the one that occurred between 1949 and 1989.
The economic sanctions imposed on Russia due to its invasion of Ukraine suggest that the upcoming Cold War will primarily be fought through economic means.
According to Alan Gin, associate professor of economics at the University of San Diego, it is unlikely for a shooting war to occur between Russia and the U.S. Instead, he believes that Russia will continue to impose sanctions and seek out other world partners, such as China and OPEC countries, and the battles will mainly take place on the economic front.
The ongoing crisis in Ukraine presents a new challenge to a market that has been recovering from the uncertainties of the pandemic.
Gin stated that the market dislikes uncertainty, which in turn adds uncertainty to the global economy.
The future of the market hinges on the direction of the crisis in Ukraine.
If Kyiv or Ukraine were to fall, equity markets would suffer significant losses, according to Schenker. The use of tactical nukes would result in an immeasurable downside.
Discover how a new Cold War could affect the U.S. economy by watching the video.
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