The economy is in turmoil and making the future murky

This is a once over the top macro-analysis of the current state of world affairs.

The US has a debt bubble. China has a real estate and stock bubble. Russia has sanctions from Crimea and Ukraine. Saudi Arabia and Iran are pumping oil to fund conflicts in Syria and Yemen. Russia is pumping oil to keep the national budget afloat. So much shale oil reserves have been tapped in the US that new well construction has effectively flatlined and gas is generally below two dollars a gallon (something I thought would never happen again).

What this is doing is making energy cheaper which should stimulate the economy. But it is not. Why?

In America the answer is that the stimulus spending didn’t renew or invigorate consumer confidence or spending. A “jobless recovery” if you will.

In China the answer is that this is a correction that the official governing body can no longer put off, decades of artificially deflating the value of the currency and still having massive amounts of state owned businesses that are unproductive and drains of the budget.

In the middle east conflict ensures that governments dependent on oil for revenue will keep pumping oil to keep receiving revenue. Literally oil is their lifeblood right now. Even the Kurds are keeping the crude flowing. It hurts in the long run, but it is survival for tomorrow so this trend will continue until a spontaneous outbreak of peace happens.

Europe is in the midst of being threatened by Russia and Refugees at the same time. An external threat and an internal threat have people uncomfortable.

The level of stress and uncertainty that Americans, Europeans, and even the Chinese are going through is something more at home in Africa or the poorer parts of South America. This is quite strange for some people.

But what is the root cause of this? It is the end of the era of “Pax Americana” where the US Army stood watch in Europe and Korea while the US Navy patrolled the high seas and kept the shipping lanes open. A world full of peers, squabbling and politicking against each other is an inherently less stable world than a bipolar cold war, or even unipolar “peace dividend.”

The prosperity of the 1990s was squandered on downsizing the very instrument of prosperity, which was security leading to stability ensuring trade.

While I believe that Smedley Butler was quite the intellectual traitor (how do you obey the Republic for decades an once retired only then grow a conscience?) I do believe that his observation about the economic requirements for military action did have a basis in truth. Not a universal truth, but enough truth to say that without security or the ability to enforce order on an international scale everyone will suffer. I think the current situation makes that quite abundantly clear.

But who will be the crazy watchman with scars on his body and a life full of memories who preaches the truth to the unbelieving republic? “Do not reduce the size of the watch! Though these last years have been easy, the price of the ease was paid in the blood of the watch! If the watch cannot pay with blood, someone else surely must.”

But the Republic has a short memory, and the watch is expensive and produces no product, no service, only taking the strongest and brightest to unsavory places where they risk life and limb for a cause with very little to recommend it.

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One Response to The economy is in turmoil and making the future murky

  1. B says:

    Murky like a glass full of baby diarrhea… I contemplated posting that imagery but decided it evokes my feelings, although gross, perfectly

    Like

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