The Uncertainty That Could Cause an Economic Crash 2017 Has Begun
There is a distinct possibility, if not an actual probability, that the world will soon analyze the causes of the great economic crash 2017 or economic crash 2018. Indeed, the keyword is economic crash. The point is that the next two years are mired in uncertainty. Investors would be wise to review the general causes of economic depression or the Great Depression itself.
No economic depression, stock market crash, or economic collapse are exactly alike. But they share points in common which fall in one of two categories: exuberance or socio-political disruption. Exuberance and socio-political disruption have already stamped their marks this year. Thats why no keen observer could simply dismiss the chance of an economic crash 2017.
The combination of factors is easy enough to identify, but analyzing the various aspects of an economy crash can take decades. For example, determining the causes of the Great Depression of 1929 continues to keep analysts as busy as understanding the causes of the Wall Street crash of 2007/08.
If we had a complete understanding, we might better determine the chance of an economic crash 2017. But we dont because there are still contradictory positions. There are also different ways to interpret the causes of a stock market crash, especially one that leads to economic depression.
The more recent the crash, the more complex and intertwined the causes. The effects are always global, and if theres any difference, for example, between 1929 and 2008, its the speed of the domino effect. One of the keys to understanding the ever more complex system is that no market exists in risk isolation.
That means that the current market includes a substantial amount of risk resulting from the social, political, economic, and financial interplay between the United States, the European Union and the Big Asian economiesincluding the Tigers.
The gloomy outlook had more to do with the economy and the markets than politics. Now, barely two weeks into Donald Trumpspresidency, the Dow Jones is at record highs. But the risk of a total economic collapse and an implosion of the current world order seems almost inevitable.
The Trump policy, mainly focused on infrastructure investments, the recovery of the domestic economy, and tax relief for businesses, could yet have positive effects on the American economy. Economists expect GDP to exceed 2.2% in 2017. There are even those who believe the United States can resume its role as the locomotive of the world economy.
This would certainly benefit from an accommodating monetary policy. But the market is not betting on this now. The Fed seems determined to increase the nominal interest rate. Shy of charging like a bull, last New Years Eve, the realistic trader could have expected an initial rate hike and a subsequent stabilization in the face of predictable but moderate growth.
But that was before Trump played his hand. It was also before the media, and an entire hardly ad-hoc protest machine, revealed itself. Indeed, 2017 promises to be a very interesting year not only from the economic point of view, butand most of allfrom its political developments and repercussions.
So far, Trump has done what no other politician has dared try before. Hes done exactly what he promised during the campaign, diluting or softening none of his radical stances. This has caught pundits by surprise. The chances of the elections in four major European states (Germany, France, Holland, and probably Italy) going to parties espousing Trump-like views has increased.
But how shall these and other events influence the markets and financial investments? More significantly, how will these events spark a stock market crash of such proportions as to leave an economic collapse in its wake?
Its a chance of timing that all the likely turmoil of 2017 comes on the centenary of the October Revolution of 1917 in Russia. Thats an anniversary like no other. Surely, the socialist forces of the world are preparing to remember it. They could not have asked for a better 2017 to mark the occasion.
To many liberalsand conservativesTrump must appear like a veritable combination of Lenin and Czar! The centenary will take place in a world that, apart from the market euphoria, is still experiencing a profound socio-economic crisis. Nobody has yet to show the solution and the possible ways out.
Part of the problem is that the media has masked the extent of the crisis. Its more than simply economic, there are deep sociological effects. Indeed, the sheer value of wealth amassed through the markets defies the imagination. There are more billionaires than ever. But the disparity of wealth is equally flabbergasting.
Its not even an issue of the fabled one percent. The entry fee to that club is an income of no less than $350,000/year in the United States. (Source: The .1 percent are the true villains: What Americans dont understand about income inequality, Salon, April 14, 2016.)
However, the one percent is nothing compared to the 0.1 percent. They own as much wealth as the bottom 90% of America combined. (Source: Ibid). These include some of the Silicon Valley tech CEOs and a few speculators (George Soros comes to mind) who have championed the anti-Trump cause so vociferously.
Thats a key to predicting just how disruptive the anti-Trump protests could become. Indeed, a rough estimate of the 0.1 percent suggests Trump has at least half of those billionaires against him. Therefore, they have plenty of funds to keep the protest and disruption machine running. Trump will push his agenda, but he could end up like the captain of a ship that lost its rudder.
The reason why Trumps contested administration can affect the markets and prompt an economic crash is the unknown. Former U.S. defense secretary Donald Rumsfeld once attributed the difficulties of the Iraq campaign to the difference between known unknowns and unknown unknowns.
Many pundits made fun of the seemingly nonsensical statement, but Rumsfeld was brilliant in his description. There are risks you can expect and risks you never even considered. The Trump era has brought us the latter situation. Markets thrive in volatility, but markets dont like uncertainty for long. Global economic growth has depended ever more on a stable America.
The U.S. political scene will play a key role in determining whether global growth will accelerate. Trump has proposed a mixed bag of policies; they are both pro-growth and anti-growth.
The fact that the new president has started from day one trying to actuate some of his more radical proposals has frightened the world. He has launched the Wall, blocked immigration from seven countries, put Iran on notice, stripped Americas participation in the TPP, and reversed over fifteen years of hostile politics toward Moscow in a matter of days.
It remains to be seen if Trump proceeds with tax reform and reducing regulations. But the markets seem to believe him on that front. Indeed, hes done nothing if not keep what he promised his voters.
But while investors like some of the policies, its unclear what effect they will have in the medium term. For example, Trump will, by choice, focus on restricting global trade and deporting illegal immigrants. Inevitably, this policy will catch up with basic economics, such that the economy will start slowing down. It may even enter a phase of recession.
Trump will essentially take America away from global pro-growth policies. These have sometimes helped counter the effects of misguided government policies. Now, America will have to endure a bigger slice of the risk.
And what risk indeed: President Trump wants to lift or significantly revise the Dodd-Frank Act. This was a cornerstone of President Obamas mechanisms to reduce the risk of another Lehman Brotherscollapse and economic depression. The new president has already announced steps to roll back the rules that have ostensibly reduced market risk but reduced gains since 2008. (Source: Trump Moves to Roll Back Obama-Era Financial Regulations, The New York Times, February 3, 2017.)
Apart from the risk, its telling that Trump is moving like a peregrine falcon on his prey on this policy, which benefits the one percent. Indeed, Trump appears to have forgotten the forgotten man of the campaign that earned him so many votes from the less privileged Americans.
The Dodd-Frank Act was one of the cornerstones of the Obama administration. Trump wants this to revive the spirit of entrepreneurship, but it might prove a surprise that could catch all of us unprepared.
At first there will be growth. But speculation-based growth produces surprises, not all of them of the good kind. Risky investments might appear to be safer than they are. Investors tend to see the risk of a stock as a potential deviation from the expected level of profits. They pay little attention to price in the sense of the P/E ratio.
Trump has other priorities; he has preferred the banks to the common man. But financial deregulations could produce veritable fireworks. The Dodd-Frank Act has limited the extent that banks can speculate. Soon, they will be back in the financial Wild West, reviving the conditions that led to the subprime collapse.
Finally, Trump has started to sound the first salvos of a potential intervention in Iran. Of all the risks, this is the biggest. Iran is a unified nationalist country with a patriotic military. It wont be a cakewalk like Iraq. Getting bogged down in Iran would be far costlier. Its not clear where Trump wants to go by taunting Iran, but so far, it appears like the kind of risk that could cause economic collapse 2017.
The rest is here:
Economic Crash 2017 and How the Next Financial Crisis Could Be Worse Than 2008 - Lombardi Letter
- Modern Survival Manual Surviving the Economic Collapse - December 18th, 2016 [December 18th, 2016]
- What Explains the Collapse of the USSR? - E-International ... - January 13th, 2017 [January 13th, 2017]
- Where Should the External Priorities of the Visegrd Lie? - Visegrad Insight - February 7th, 2017 [February 7th, 2017]
- PH gov't, communists urged to pursue talks even without ceasefire - Inquirer.net - February 7th, 2017 [February 7th, 2017]
- New Texts Out Now: Helga Tawil-Souri and Dina Matar, eds. Gaza as Metaphor - Jadaliyya - February 7th, 2017 [February 7th, 2017]
- Kazakhstan Going Into Soft Power Overdrive - EurasiaNet - February 7th, 2017 [February 7th, 2017]
- Mass incarceration and the perfect socio-economic storm - OUPblog (blog) - February 7th, 2017 [February 7th, 2017]
- Give peace a chance, not 'all-out' war, say solons, Leftist Cabinet members - InterAksyon - February 7th, 2017 [February 7th, 2017]
- Celebrating Black History: Detroit Techno icons - Mixmag - February 7th, 2017 [February 7th, 2017]
- Why 'financial inclusion' may be the wrong terminology - NewsDay - February 8th, 2017 [February 8th, 2017]
- 'Conspiracy' in peace talks collapse seen - Inquirer.net - February 8th, 2017 [February 8th, 2017]
- 2017 and beyond: Future unpredictable - Zimbabwe Independent - February 10th, 2017 [February 10th, 2017]
- Zuma's interventions will deal with white monopoly capital - Office of ANC Chief Whip - Politicsweb - February 12th, 2017 [February 12th, 2017]
- Lobster crash erodes West Coast way of life - GroundUp - February 13th, 2017 [February 13th, 2017]
- Hopes remain for revival of peace talks - Manila Bulletin - February 13th, 2017 [February 13th, 2017]
- Lobster crash erodes West Coast way of life - News24 - February 15th, 2017 [February 15th, 2017]
- Financial Black Swans Could Rock 2017 Stock Market Forecast - Lombardi Letter - February 16th, 2017 [February 16th, 2017]
- Zimbabwe: A Crisis Unfolding - Zimbabwe | ReliefWeb - ReliefWeb - February 16th, 2017 [February 16th, 2017]
- 'Bumper harvest to stop aid politicisation' - Nehanda Radio - February 16th, 2017 [February 16th, 2017]
- Zimbabwe: A Crisis Unfolding - New Zimbabwe.com - New Zimbabwe.com - February 17th, 2017 [February 17th, 2017]
- Who We Play For saving lives through athlete heart screenings - Tallahassee.com - February 18th, 2017 [February 18th, 2017]
- Terrorist resurgence - Daily Times - February 18th, 2017 [February 18th, 2017]
- Seeing Sabon Tasha in new light - Daily Trust - February 20th, 2017 [February 20th, 2017]
- Facing tragedy with courage - The News International - February 28th, 2017 [February 28th, 2017]
- Socio-Economic Collapse | Prometheism.net - Part 3 - March 1st, 2017 [March 1st, 2017]
- Rethinking Nonviolent Resistance In The Face Of Right-Wing ... - Huffington Post - March 3rd, 2017 [March 3rd, 2017]
- Vladimir Putin Isn't a Supervillain - Foreign Policy (blog) - March 3rd, 2017 [March 3rd, 2017]
- First ceiling collapse at Charlotte Maxeke in January already, claim staff - News24 - March 3rd, 2017 [March 3rd, 2017]
- Rethinking Nonviolent Resistance in the Face of Right-Wing Populism - The Wire - March 4th, 2017 [March 4th, 2017]
- Historical Materialism Versus Historical Conceptualism - Dissident Voice - March 6th, 2017 [March 6th, 2017]
- World Bank, Sokoto Govt commit N9b for rebuilding of collapsed ... - THISDAY Newspapers - March 8th, 2017 [March 8th, 2017]
- Nigeria: Sokoto Govt and World Bank pledges $28.8million for rehabilitation of collapsed Dam - Ecofin Agency: Economic information from Africa - March 9th, 2017 [March 9th, 2017]
- Time for a rebirth of Zimbabwean politics - Bulawayo24 News (press release) (blog) - April 8th, 2017 [April 8th, 2017]
- This Brexit battle is cold, hard capitalism vs. civilised, co-operative order - The New European - April 8th, 2017 [April 8th, 2017]
- Swet Shop Boys: Why white skin is no longer a safety net - Deutsche Welle - June 6th, 2017 [June 6th, 2017]
- Impact of Prez Akufo-Addo's W/A tour on economy - Graphic Online - June 6th, 2017 [June 6th, 2017]
- Important meeting for our nation's future | Deniliquin Pastoral Times - Deniliquin Pastoral Times (registration) (blog) - June 8th, 2017 [June 8th, 2017]
- Creating a Better Economy with Data Science - Stanford Social Innovation Review (subscription) - June 8th, 2017 [June 8th, 2017]
- TB Joshua : 'Investigate Fani-Kayode's claims on Synagogue building collapse' - Analyst - Pulse Nigeria - June 11th, 2017 [June 11th, 2017]
- Integration and security: Estonia's Russian-speaking minority - New Eastern Europe - June 12th, 2017 [June 12th, 2017]
- Late Matanzima celebrated as a visionary- Education, development described as his legacy - Daily dispatch - June 16th, 2017 [June 16th, 2017]
- Prof. Guy Standing: Every country can afford Universal Basic Income - EURACTIV - June 16th, 2017 [June 16th, 2017]
- Climate, social equality also behind collapse of govt formation talks: Green leader - NL Times - June 17th, 2017 [June 17th, 2017]
- Country needs USDA Rural Development - Iowa Farmer Today - June 17th, 2017 [June 17th, 2017]
- The downgrade and retirement funds: what does it mean? - African Independent - June 18th, 2017 [June 18th, 2017]
- National priorities defy convention in St Lucia - St. Lucia Times News - St. Lucia Times Online News (press release) - June 20th, 2017 [June 20th, 2017]
- Use of harmful chemicals for fish preservation harmful to consumers - Ghana News Agency - June 20th, 2017 [June 20th, 2017]
- Use of harmful chemicals for fish preservation harmful to consumers ... - BusinessGhana - June 22nd, 2017 [June 22nd, 2017]
- Op-Ed: South Africa's central bank row points to dangerous levels of intolerance - CNBCAfrica.com - June 22nd, 2017 [June 22nd, 2017]
- Collapsed bridge cut off over 5000 residents in llorin - National Accord - June 22nd, 2017 [June 22nd, 2017]
- The Wonderful World of Binary Categorizations - Geopoliticalmonitor.com - June 23rd, 2017 [June 23rd, 2017]
- Dangerous levels of intolerance exposed in Reserve Bank row - Independent Online - June 23rd, 2017 [June 23rd, 2017]
- South Africa's central bank row points to dangerous levels of intolerance - eNCA - June 24th, 2017 [June 24th, 2017]
- Reserve Bank battle points to dangerous levels of intolerance - Mail & Guardian - June 26th, 2017 [June 26th, 2017]
- There is a strong economic case to preserve future of traditional fishing - Alfred Sant - Malta Independent Online - June 27th, 2017 [June 27th, 2017]
- Empowering Women in Developing Economies - HuffPost - June 30th, 2017 [June 30th, 2017]
- Is this the end of Daesh? - Arab News - July 2nd, 2017 [July 2nd, 2017]
- Nkomo could have saved Zim: Zapu - NewsDay - July 3rd, 2017 [July 3rd, 2017]
- Govt completes inspection 1.6 lakh bridges, plans new tech - Zee News - July 3rd, 2017 [July 3rd, 2017]
- Centre claims to have completed safety audit of 1.6 lakh bridges; to work on 147 dilapidated structures - Firstpost - July 3rd, 2017 [July 3rd, 2017]
- Collapse of UT and Capital banks A case of a collective national failure (Article) - Citifmonline - August 24th, 2017 [August 24th, 2017]
- UNZA vice-chancellor lays down marker - Zambia Daily Mail - August 24th, 2017 [August 24th, 2017]
- What Makes a Terrorist? - The New York Review of Books - August 24th, 2017 [August 24th, 2017]
- How the Collapse of Venezuela Really Happened - The ... - February 18th, 2018 [February 18th, 2018]
- Socio-Economic Collapse in the Congo: Causes and Solutions - October 3rd, 2018 [October 3rd, 2018]
- Sick Bees Part 18F8: Colony Collapse Revisited ... - April 25th, 2019 [April 25th, 2019]
- Classic Maya collapse - Wikipedia - April 25th, 2019 [April 25th, 2019]
- Great Civilizations Aren't Murdered, They Commit Suicide ... - May 5th, 2019 [May 5th, 2019]
- Dollar Collapse Predictions: What Will Happen When It Happens? - May 5th, 2019 [May 5th, 2019]
- 10 Steps to Prepare for Americas Economic Collapse - May 31st, 2019 [May 31st, 2019]
- Do you really think NDC faithful would ever condemn a coup dtat? - Modern Ghana - October 1st, 2019 [October 1st, 2019]
- Economic and Institutional Restructuring for the Next Nigeria - Soludo - Proshare Nigeria Limited - October 1st, 2019 [October 1st, 2019]
- ET CEO Roundtable: Build a wealthier nation with state help, industry execution - Economic Times - October 1st, 2019 [October 1st, 2019]
- Ghanaians could well face the wrath of God should they betray the Free SHS provider! - Modern Ghana - October 1st, 2019 [October 1st, 2019]
- The Return to Power of Local Hotel Brands? | By Robert Govers - Hospitality Net - October 1st, 2019 [October 1st, 2019]
- Brexit: Systemic Risk and a Warning - Resilience - October 1st, 2019 [October 1st, 2019]
- Why is Poland's Law and Justice party still so popular? - EUROPP - European Politics and Policy - October 1st, 2019 [October 1st, 2019]
- Presidential elections in Tunisia: who are the globalists betting on? - United World International - October 16th, 2019 [October 16th, 2019]
- Kevin Taylor, youre a reporter, not an opinionist; youre guided by the rule of impartiality! - Modern Ghana - October 16th, 2019 [October 16th, 2019]
- The Unholy Mess of US Middle Eastern Strategy - Valdai Discussion Club - October 16th, 2019 [October 16th, 2019]