A Precarious State

That the global economy is in a precarious state seems self-evident. Take your pick of the systemic risks: debt bubble and slowdown in China, banking/political crisis in Europe, negative interest rates and stagnation in Japan, ongoing meltdown in emerging markets and currencies, oil prices that threaten mayhem if they go up and if they go down, and a downturn in global trade that is usually associated with recession.

Other than that, everything’s great. How about those summer Olympics? Seriously, what isn’t in a precarious state?

If the global financial sector isn’t precarious, then why is capital flooding into negative interest bonds? Why are money managers willing to accept a guaranteed loss of capital if things are going great and opportunities for low-risk profits are abundant?

The political realm is also in a precarious state. No matter how you interpret Brexit–as a Kabuki play by Deep State insiders, as a political ploy that went off the rails, as an ugly outburst of xenophobia, as a rebellion of the Forgotten Class that lost out in the Great Financialization boom, as a resurgence of nationalism–whatever interpretation or combination of factors you favor, the net result is the same: Brexit reflects a precarious state of shifting political tectonics that threatens the status quo.

It isn’t just political certainties that are giving way beneath our feet–the global “recovery” narrative is crumbling like weathered sandstone on the edge of a cliff. No wonder institutional money managers, hedge funds and punters are all either fleeing to safe havens or entering trades with their thumbs twitching nervously on the “sell” button.

If the global banking sector isn’t precarious, then why are bank stocks tanking? If these banks are minting profits and accumulating well-collateralized capital, why are investors selling them?

If everything’s so solid, why is hot money chasing the bubble du jour? From copper to rebar to bitcoin to iron ore to silver, hot money is sloshing from one casino-sector to another on a daily or weekly basis–what’s next? Bat guano? Disney collectibles? Is this a sign of a healthy, sustainable market?

If you think so, I have a containerload of hot bat guano to sell you–I guarantee it will be the next bubble du jour, you’ll get rich overnight…

If the U.S. economy isn’t precarious, why has the growth rate of new businesses collapsed to Depression-type lows? If everything is going great, why aren’t entrepreneurs jumping in to mint all those easy profits?

The global political/economic state feels precarious for a good reason: it is precarious. Being told everything’s rock-solid while the ground beneath us is rumbling isn’t terribly persuasive, and some talking head reassuring us that the economy is still “growing” won’t stop the tremors.

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  • cstahnke

    I have been hearing tales of doom since the last crisis but it hasn’t happened. Instead we’ve had a slow decline for most of us so that we don’t notice it. The major markets are fixed and manipulated by a combination of Sovereign funds, big banks, international organizations that will lessen risk by buying up securities when the markets get soft. The fact this is well-known is what keeps markets always bouncing back like the markets did after the immediate aftermath of the Brexit. Now things in at least the stock market in the U.S., back to where they were. As soon as investors sense a big buy in to the market the climb back on the bubble. One thing critics of the system forget is that it may be possible to keep blowing up bubbles indefinitely. The old economic fundamentals are no longer in play–everything is “notional” or fictional from money to security instruments. Arbitrary values can be assigned to anything. I don’t know how it works but it does–demand is coming from somewhere.

  • JosephConrad

    The foundation of the current economic and political situation is the WILLFUL IGNORANCE & COWARDICE of the 320 MILLION citizens who own over 380 MILLION licensed firearms.

    An aspect of the 2nd. Amendment Americans disregard is it was added to the Bill of Rights to provide citizens protection from government abuse. Since the 2000 Bush Jr. Coup, the government has
    abused its citizens with IMPUNITY. False Flags and the election PROCESS are but two examples.

    Thus, today, it is appropriate for an armed citizenry to oppose and replace its government.

  • Brockland A.T.

    So, what if China is really OK economically…

    https://www.rt.com/op-edge/348909-chinese-dream-guangzhou-development/

    … and the neoconned West is just being screwed out of a place in Eurasia?

    http://www.timesofisrael.com/israel-and-china-enter-talks-over-establishing-free-trade-zone/

    Eurasia is the future. If the West is playing bad cop, who’s playing good cop?

    http://www.tomdispatch.com/blog/175903/