Remember Murphy’s Law?? Maybe You Should!! The Global Economy Sure Does!!
The Global Economy right now is a perfect illustration of Murphy’s Law. If anything can go wrong, it will. From the “return of history” with all the wars as a metaphor for the “revenge of history”, to the “lurking threats” of a debt crisis in the making, and not to forget, the big “IF” of the Chinese economy going into a tailspin.
The first thing which comes to mind when I think of the potential “hazards” is a Grenade with the pin about to go off. Look around for “evidence”. Sticky Inflation, a bit like a zombie that refuses to “go away” making Central Banks nervous, the lingering supply chain bottlenecks adding to the woes of businesses and bankers alike, and the commodity “casino”, resemble a game of Russian Roulette being played on the world.
Russia, since I got started, is the ultimate “wild card” here, even more than China, as under Putin, Russia is not as “bound” to the West as China under Xi is. Perhaps, Thomas Friedman’s theory of nations that trade with each other not warring with each other, holds here.
Of course, Biden and other Western leaders should also “play ball” with Xi, without testing each other’s patience, as otherwise, the MAD ( Mutually Assured Destruction) doctrine would take over the game. This is something that Putin “leverages” to the hilt, and
, Xi too, is “learning the ropes” here. Bottomline: All the “key” players are Nuclear nations, and so, the margin for miscalculation is “thin” indeed.
Moving from geopolitics, Murphy’s Law works for Italy as well, the real “I” Ego problem, as I’m not sure how long the EU would keep “ignoring” the “debt bomb” lying in its midst. Indeed, much like the metaphor of the grenade, the “fuse” can go off sooner than later, taking the Eurozone into perilous territory. The last thing Messer’s Macron and co. would want another “Euroshock”, much like what Greece did in the 2010s.
While we’re on the topic of debt, the Black Swan in the distance is the “unsustainable” Fiscal situation in the United States. Coupled with the “unpredictability” of a Trump victory, and the increasing trepidation that the nation has over such an outcome in November, we have the possibility of a “meltdown” in the Bond markets, mirroring that of the “near death” of the UK economy in 2022, when the “disastrous” Liz Truss was in charge. Already, the wires are full of “chatter” over China “divesting” its Dollar-denominated bonds and securities, and there you are, it ain’t pretty anymore.
Last, but not least, is the real risk of erosion of the Democracy Dividend, as 2024 is the year when more than 40 countries worldwide hold their elections. Here in India, we’re almost inching closer to the “Day of Reckoning” on June 4th, when the votes are counted. Already the VIX or Volatility gauge, is feverish, and we certainly can’t let the outcome send it to the ICU, a feat which can only be avoided with “maturity” all-round.
So, dear readers, keep good old Murphy in your thoughts and prayers (for the believers) and let’s hope none of these “extreme” events transpire. As an aside, I am neither a doomsayer nor a Cassandra. Just that this summer is beginning to resemble that of 2008 when such similar “warnings” were unheeded right up to the “Implosion” of Lehman Brothers. Amen!!
Originally published at https://rammohansusarla.substack.com.
