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2017 Economic Forecast: Global Headwinds Look Like Mother of All Storms

2017 Economic Forecast is looking like the mother of all storms

Headwinds that are starting to assail deep structural flaws in the US and global economies form the basis for my 2017 economic forecast, which looks like an all-out economic crisis building throughout the world. Some of these headwinds are global; some more locally focused within the United States, but that which brings down the US economy wounds the world anyway. Ultimately, global concerns threaten the US, and US concerns threaten the globe. We’re all in this together, even as we seem to be flying apart in political whirlwinds everywhere and fracturing national alliances all over the world.

Even in the US where the Trump Triumph has ignited consumer and business hopes and inflamed the stock market, time is not on Trump’s side. Trump’s own key advisors — like Steve Bannon and Larry Kudlow — have stated unequivocally that Trump’s plans must happen quickly if they are going to save the US economy. Trump, himself, campaigned on the endless refrain that the US economy was rapidly approaching catastrophe. If we take the architects of these hope-inspiring plans at their word, 2017 is a make-or-break year for the US, and the clock is ticking against their success.

 

Seven headwinds in my 2017 Economic Forecast that will batter the global economy

 

(In no particular order of severity.)

 

1. 2017 starts with near-recession-level rates of growth in the US.

 

2016 US GDP fell to a lower barometric pressure than economists were expecting, skinning their noses for them at an annualized 1.9% rate of growth, and crashing hopes that the third quarter’s sprint to an annualized 3.5% proved the Fed’s economic recovery was solid. (The average expectation for the fourth quarter had been about 2.5%.) The fourth-quarter plunge brought the annual rate of GDP growth down to the lowest it’s been since the official end of the Great Recession. (Though, as far as I believe, the Great Recession is still a screaming vortex that lies underneath the entire global economy. Its ills have never been healed, only masked.) The services industries took a fall in February that was sharper than its January rise. That appears to mark the end of upward growth that began last September.

 

2. Trumphoria in the US stock market could run out of hot air

 

The euphoric rise of the US stock market has formed almost entirely from speculation about Trump’s tax cuts and infrastructure spending, so it is likely to lose steam now that postponement of those plans shows sentiment outpaced reality. The level of irrational exuberance in the market (which typically precedes a big crash) has trumped numerous records for its rate of rise, the duration of its rise, the overall height of its rise, and the number of days of uninterrupted record-breaking.  (See “Will Trump’s Talk Turn the Trump Rally into Lasting Gold or End in the Trump Dump?“)

In spite of the fact that the market’s uplift is built on warm thoughts alone, the US stock market could get a second boost if the Eurozone crumbles and euro capital runs for cover. (Already part of the rise in US stocks.) Ultimately, the collapse of Europe will be bad for trade, so non-European companies that do a lot of exporting into Europe will still suffer. In the event of a euro collapse, any boost will go toward companies that don’t have much European trade. Money fleeing to the US from Europe and China could be the United State’s salvation, but it all depends on who starts to blow apart first — who is seen is the safest harbor in the storm.

Trump may even succeed in getting all of his plans through, though the schedule seems to be shifting toward postponement now that, as Trump revealed, it turns out no one could have foreseen that fixing Obamacare would be this difficult. (Well, except almost all of us. Makes one wonder how much other changes will prove to be more difficult than Trump thought, once actually put before the nation’s most divided congress ever.)

 

3. China is ready to worsen the economic forecast of the entire world in 2017

 

We saw it happen a couple of summers ago. A low-pressure zone opened in China that was so big it sucked all the stock markets of the world into it. The yuan crashed, and China seized national control of its stock market to avert total collapse.

While China appears to have stabilized compared to that event, China’s economy today is worse than China says. Smart money has been fleeing China ever since that big scare, going to places like Vancouver, Canada, where it has created a huge housing bubble. About a week ago, we discovered one regional government in China has overstated its GDP by almost 20%. They had reported a drop in GDP of -2.5%, but the real drop was -23%. Since China’s businesses routinely cook their books, keeping one set for the government and one for the proprietor to know what he is really making, real business statistics are almost impossible to know. (See “Data Fraud At Chinese Province Suggests Local GDP Numbers As Much As 20% ‘Overcooked’“.) In truth, we never know when China is going to blow because even China doesn’t know, and what it does know, it doesn’t tell. Corruption will be its undoing, as corruption always is.

China has been blowing through its vast reserves at a rate of $80 billion a month to support the yuan, which it does by mostly dumping US treasuries in order to diminish the value of the competing dollar by increasing the supply of dollar-denominated assets. Some estimate China really only has about $800 billion in US treasuries left that it can actually use for such support, as it must maintain a certain level of holdings for other reasons, such as trade.

If China can no longer dump dollar-denominated bonds, the yuan may crash again in value, causing more capital flight from China. If it keeps dumping US treasuries (as the once largest financier of US national debt), China makes funding the US debt more problematic.

On the one hand, devaluation of the yuan would be good for Chinese exports, but it raises other troubles for China besides capital flight. One such trouble is that Trump (along with other world leaders) will likely accuse China of currency manipulation, saying they are trying to make their exported products more competitive. That would be bad for Chinese exports, as it would lead to a tariff-based trade war.

Federal Reserve interest-rate increases (see below) raise the value of the US dollar compared to other currencies, which also presses China to do more to support the yuan to maintain its credibility as a stable foreign-exchange reserve currency now that the yuan (also called the renminbi) has gained coveted status as one of five currencies used by the IMF for its special drawing rights. Keeping the yuan in that basket is vital to China’s hopes of reducing US hegemony in the world.

With three or more Fed rate increases anticipated for this year, China may have a lot of supporting to do and less than a year before it runs out of US dollars to provide that support. The last time China’s currency faced that kind of crash, the US stock market went into free fall, as did the rest of the world’s stock markets. Because there is no assurance that the flight of capital from China helps the US, China factors into my 2017 economic forecast as a great unknown, but one that has caused a lot of problems in the recent past while not clearly resolving any of its own problems.

 

4. The Eurozone is blowing up a massive economic storm for 2017

 

The anti-establishment success that burst onto the European scene with Brexit and that was reinforced by Trump’s anti-globalist victory is emboldening other nations to consider exiting the Eurozone. The UK was not part of the Eurozone, so its departure from the European Union has not created a euro crisis so far, but the breakaway of a single nation within the Eurozone could utterly doom the euro. That would certainly be a disaster for those Eurozone banks that are already teetering on collapse, and some of those banks are so big the euro crisis could develop into a hurricane big enough to envelop the world. The increasing probability of a euro exit by so many nations in the Eurozone has to factor into anyone’s 2017 economic forecast, now that Brexit and Trump-it have proven how real the possibility is and given how they have inspired the hopes of others to follow a similar path.

Frexit is disturbing markets more in the run-up to French elections than Brexit did because investors have learned from Brexit and Trump-it that the possibility of a national exit is far more likely than they thought — even when one is certain the odds are against it. National Front’s Marine Le Pen will likely win the first round in French elections. Le Pen has promised to remove France from the Eurozone if she wins.

Le Pen’s party has said it will redenominate its national debt from euros to francs on a one-to-one basis and then devalue the franc by issuing “helicopter money” in order to reduce its debt burden. If France goes that way, Standard & Poors and Moody have already said they will rate the nation as being in default on its national debt. An independent France has a second temptation toward devaluing its currency, which would be to make itself more competitive in the European world of exports that is dominated by Germany. The currency changes would take longer than 2017 to begin, but they could start a currency war within the Eurozone if they do happen.

France is big enough with so much interbank linkage throughout the Eurozone that the economic chaos of sorting out the divorce — and rising prospect of currency wars — could mean the end of the entire European banking system as depositors run for cover.

Experts say Le Pen won’t win the second round of votes. Experts also said Trump-it and Brexit didn’t stand a chance either.

Nexit is next. The Netherlands’ parliament is blustering with debate about exiting the Eurozone. The long-winded discussion focuses on whether it is possible for the Netherlands to withdraw and how withdrawal might be done. Concerns that the European Central Bank’s low interest rates are hurting Dutch savers, have raised questions over whether the ECB’s bond buying (done to drive interest rates down) is even legal under Eurozone laws. Nexit challenges the ECB’s ability to stimulate the euro economy through quantitative easing.

Italexit advanced from the far horizon last weekend when the leader of Italy’s ruling party, Matteo Renzi, formally did an exit of his own from the prime minister’s office (Rexit) due to his failure to stem the advance of Italy’s anti-establishment parties during the last referendum. This leaves Italy under a caretaker administration, which means elections will happen this year, not in 2018. (Europe has more exits opening up than the United States has gates — watergate, travelgate, emailgate, ad nauseum)

In January, Mario Draghi, head of the European Central Bank, along with other EU chiefs, threatened any nation that exits the Eurozone with economic armageddon, saying any nations that make such a move will have to immediately pay back all euro-denominated debt if they do exit. (You know things are falling rapidly apart when the central bank has to threaten its own nations to get them to stay in the club. Sort of like a host threatening those who are attending his party with the warning that he’ll pop their tires if they try to leave. Must be a great party!) Italy may just say, “Make me!” In that case, Draghi will find that being Italian makes it hard for him to carry out this threat when it turns against mia familia. If his courage fails there, he’ll find it harder to carry out that threat with any other nation as well. To do so would be discriminatory. Besides, what is he going to do? Raise an army to force repayment?

Germany’s Merkel would like to help him with that. Italy’s second leading political party, Forza Italia, says Germany should be the only nation to leave the Eurozone. Now, THAT’S creative destruction. That’d take us from Grexit to Gerexit.

Speaking of gurrs, Grexit is growling again as it slinks along Germany’s rear flank. The Germans continue to battle with the Greeks over additional debt restructuring. Everything Germany has done to resolve the Greek crisis has made Greece’s debt payments more untenable by driving the country deeper into recession, assuring that Greece will remain Germany’s indentured servant for the next fifty years. Even the IMF agrees that Greece’s debt situation “is highly unsustainable” and presses Germany for more debt forgiveness.

Germany holds the line on debt relief because most of it would come at a cost to Germans who believe themselves to have a far better work ethic than Greeks, so they have little sympathy for Greece. More importantly, though, Germans fear other struggling nations in the Eurozone would clamor for debt relief if Greece is given any more, heaping still more burden on those hard-working Germans. (Which is all one reason the euro was an ill-fated currency from the start.)

Back in 2012, I said that Greece was a gift that would keep on giving — that Europe had far from solved the problem it claimed, at that time, to have secured a handle on. So, it all fits my long-range forecast back in 2012 to see Europe now continuing to unravel as the EU keeps kicking the Greek grenade down the road, pin removed. Once again, farmers, unions, and others worn ragged by German austerity are storming the exits. Once again, billions of euros are being sucked out of exhausted banks by panic-stricken depositors while Europe endlessly pretends it can fix a mess that is created by a currency doomed from conception. (Decades ago, I asked, “What Irish farmer is going to let Brussels tell him what he can sell his hops for?” Or, for that matter, his brussels sprouts?)

You likely recall that Greece’s ruling liberal party, Syriza, came into ascendancy because it promised to tear up the bailout deal being pushed by Germany. Syriza overplayed its hand and wound up getting stuffed like a turkey with a far more toxic deal, which it has been tasked by Europe with enforcing for the past two years. How do you say “heil” in Greek? (Add sound of boot heals clicking as all Greeks march to German drums. Sooner or later, the Greeks will break ranks — guaranteed. I’ve been saying all along that it is just a matter of time because it is a problem that is not going away by any other path than default. So far, so true.)

A Eurozone breakup and euro crash could drive money on gale-force winds into US stocks and bonds, which is where the money leaving Eurozone banks is already fleeing. That could buy the US an economic extension, or it could just cause banks everywhere to cascade into failure, collapsing financial stocks everywhere. US banks, however, have had years to reduce their exposure to the euro

Ironically, the threat of problems in the “Club Med” nations that are struggling economically is causing some of the fleeing capital to escape into German bonds as a safe haven, resulting in German bonds hitting a low interest rate of -0.92 percent. Southern Europeans, in other words, are paying to store their money in German bonds as a place of refuge. That means it pays for Germany to hold a hard line with Greece and other nations because it gets other nations to pay for the opportunity to finance German debt — like paying tribute to the empire. Sieg Heil!

Here is how this plays out so that Eurozone tax holder ultimately takes the loss: Private investors who purchased sovereign bonds from hurting nations like Italy and Greece, sell their bonds to the European Central Bank. They make a profit and reinvest that for safe keeping in German bonds. The Germans win round one. The Italian and Greek banks that issued the first round of bonds now owe repayment to the ECB, so when the Italian and Greek banks default on the debt, they take the ECB down with them. The rest of the Eurozone loses as taxpayers bail out the central bank. And that is why Germany is not likely to flex.

Thus, you can see Mario Draghi’s threats of economic armageddon mean a losing war for the Eurozone. “What it basically shows is that monetary union is slowly disintegrating despite the best efforts of Mario Draghi,” said a former ECB governor. All of that leaves German tax payers well hedged because everyone in the failing Eurozone nations is paying Germany to hold their proceeds. Nice. And Sieg Heil!

 

5. Rebellion on the streets plagues the 2017 economic forecast for all nations

 

I think all of us can easily forecast for 2017 that the US counter-revolution, which developed around Trump’s inauguration, will get rougher as Trump actually carries out some of the things the Left most hates and fears. Obama has already created an organization to encourage, focus and empower those who protest the Trump movement. George Soros sees Trump as the greatest threat to globalization on the face of the earth. These organizations will assure endless protests, and they bring the advantage of vast mainstream governmental and media connections to the backing of the protests they choose to empower.

Trump’s executive orders and deregulation moves are certain to naturally galvanize protestors. With such potent ex-POTUS backing, protests could spin out of control to something that looks more like insurrection. Increasing violence and bouts of anarchy will have a negative impact on local commerce and sometimes on national commerce. Unpredictable times make for unsteady stock markets, too.

About a week ago, for example, major riots in Paris spread to other parts of France. The riots created signification economic impact, causing millions of dollars of damage in Paris alone. Parts of the nation have been officially declared “no-go zones,” further impinging on commerce, as have parts of other European nations recently. Some of the revolts are due to immigration tensions. Some are created by immigrants. Some are due to outrage over apparent social injustice. Some are mass hysteria over Trump, whom liberals equate with Hitler, though they thought it horrible when conservatives did the same thing with Hillary. Some are just excuses for anarchy.

The riots in France, similar to the kinds of riots seen in recent years in the US, broke out in response to allegations that police officers raped a young man. Police have been beaten, shot at and had Molotov cocktails thrown at them. One officer said the police are concerned this will turn into riots like France had in 2005 when a state of emergency was declared, 10,000 cars were burned, 300 buildings were destroyed and 6,000 people were arrested.

Marine Le Penn, as with Trump, is now basing part of her campaign in France on restoring the rule of law that France’s liberal government seems unable to accomplish. So, the riots strengthen her bid to take the reins of power and steer France out of the Eurozone.

 

6. Rising inflation and rising interest appear to be merging into the perfect storm for 2017

 

Higher interest is clearly in the 2017 economic forecast for the United States. With US inflation skyrocketing at 0.6% in just the month of February from an already high 0.3% in January, the Fed may be forced to raise interest rates even more aggressively than it had forecast in December. If high month-on-month changes like that are an emerging trend and not an anomaly, annual inflation will be well over 5%. The current year-on-year change (which includes many months of inflation that were below January and February levels) is already 2.5%, which is higher than the Fed’s stated target for raising interest rates.

Fed Chair, Janet Yellen, said last week that “waiting too long to remove accommodation would be unwise.” Comments by two other Fed heads last week stoked bond yields: New York Fed President William Dudley, among the most influential U.S. central bankers, said on CNN that the case for tightening monetary policy “has become a lot more compelling.”  John Williams, President of the San Francisco Fed, said that, with the economy at full employment, inflation headed higher, and upside risks from potential tax cuts waiting in the wings, “I personally don’t see any need to delay” on raising rates…. In my view, a rate increase is very much on the table for serious consideration at our March meeting.”  (Newsmax) Williams even said that raising rates in March would give the Fed room for more than the anticipated three increases this year.

All this hawkish talk sounds like the Fed may be fearing that it is rapidly falling behind the curve. The Fed’s words certainly telegraph that it will take its foot off the economic accelerator under the Trump regime faster than it had originally forecast. As I pointed out last fall, interest rates are already rising on their own ahead of any moves by the Fed, forcing the Fed to play catch-up, lest its nominal rate increases look like a joke to everyone. And, with inflation going up, the Fed has no room to move in order to stimulate the economy if GDP keeps going down as it did last quarter.

We could see a virtual thermocline in interest rates that could create turbulence for the housing bubble, which depends on low interest. Rising interest is likely to turn into big trouble for the US government in less than a year, too, due to its continual need to refinance its now astronomical 20-trillion dollars of national debt. The rise in rates also comes just as total household debt in the US has returned (at $12.58 trillion) essentially to its Great Recession peak ($12.68 trillion), a fair part of which is financed with adjustable-rate mortgages. At the present rate of climb, we’ll match that peak in maximum household debt by the next quarter.

How is the Fed going to have any power to keep a lid on any of those interest-based problems if January and especially February are true indicators of where inflation is going this year?

 

7. Wars and rumors of war all over the world

 

More than a desert storm is brewing now. It seems the further we go into the twenty-first century the more concurrent wars we have. Humanity is far, far far from learning to live at peace with one another. The world is embroiled in wars of all kinds — more than I’ve seen in my lifetime. Ukraine, Libya, Syria, Iraq, Yemen, Somalia are recent headline nations, and there are skirmishes in other places and several potential wars looking like they could erupt soon.

The Middle East, where global armageddon was predicted to take its center stage, looks every day more like it will fulfill that forecast. It’s a hell-hole that grew hot under Bush, hotter under Obama, and Trump promises to turn up the heat even more in order to incinerate ISIS. Twenty-three percent of all global arms sales are made to Middle-East dictatorships. That results from an 86% jump during Obama’s final term as president! (Obama, winner of the Nobel Peace Prize.)

Elsewhere, the borders between Nato nations and Russia are stocking up on arms on both sides, which Trump has also promised to increase, stating he wants to assure the US has the largest arsenal of nuclear weapons on earth. Russia is now frequently provoking Nato and the US military, by harassing ships with fly-bys and skirting US and Nato boundaries.

But elsewhere, still, North Korea continues to rattle its nuclear sabers against the West, begging for some action from Trump, by firing missiles vaguely toward Japan and Hawaii, flaunting the fact that it intends to ignore Trump’s warnings, bating him to take action.

Nearby, China continues to aim for dominance and control in the South China sea, pushing the US to exert its right and the rights of others to travel those routes that have long been recognized by all other nations as international waters. Conflict with China over Taiwan has started to look a little more likely, too.

Coming full circle to the Middle East, the Iranium Reaction, as I’ve called it, is heating up again and could melt down faster than the China Syndrome: During his campaign Trump made it emphatically clear (as he makes most things) that he believes the Iranian nuclear deal is a horrible deal. Trump has stated clearly that he will terminate or renegotiate the nuclear deal with Iran.

One of his first acts after his inauguration was to “put Iran on notice” because it tested a missile that is allowed under the new deal. Whatever Trump’s now re-retired General Flynn meant on behalf of Trump when he said that Iran was “on notice,” Trump, in retweeting it, made the statement his own and drew another red line in the sand. Israel’s PM, Benjamin Netanyahu, responded to the statement by saying, “Iranian aggression must not go unanswered.”

The problem with drawing red lines is that they challenge weaker parties to prove their strength, and Iran does not back down. It’s like picking a fight by drawing a line in the sand and saying you dare someone to cross it. Iran will try to show that it can wiggle its toe across the line. So, another fairly certain forecast for 2017 is that Iran will seek to prove its strength against Trump, and that, too, influences the economy in ways that cannot be easily predicted.

Secretary of Defense Gen. James Mattis has accused Iran of being the world’s leading “state sponsor of terrorism,” and Trump’s new CIA chief, Mike Pompeo, advocates invading Iran. Trump’s overtures to Benjamin Netanyahu have made it clear that Trump intends to prove himself to be a much stronger friend of Bibi than Obama was, and Netanyahu has repeatedly made it clear that he hates the nuclear agreement and would prefer to see Iran bombed in order to avoid getting the bomb. So, many vectors are pointing toward conflict with Iran.

The US and its NATO allies are beginning “Operation Unified Trident” in the Persian Gulf, a joint war game intended to simulate a military confrontation with Iran. Iran has also initiated its own wars games in mouth of the gulf (the Strait of Hormuz).

Riling the likelihood of more reaction from Trump, Iran placed an order for uranium with the body that oversees the nuclear deal between Iran and the West this month. Iran claims the nuclear pact said this shipment could happen in the first three years of deal, but with Trump wanting to renegotiate and Netanyahu preferring an attack on Iran’s nuclear plants, will either leader be inclined to allow Iran to obtain 950 tons of uranium?

Three-hundred tons of that is supposed to arrive in the form of yellowcake. You probably remember that the US considered yellowcake a short enough step from being bomb grade (in terms of the amount of time required for further enrichment) that it started a war with Iraq over it. While Iran has the right under “Joint Comprehensive Plan of Action” to enrich uranium to 3.5% purity and to sell it to other nations, that’s certainly a major part of the deal that neither Trump nor Netanyahu like.

In this superheated environment, House Joint Resolution 10 was introduced in January by a Democrat, so that it is one of the few bills likely to have some bipartisan support. I certainly cannot see how it will not be loved by neocon Republicans. It states, “This joint resolution authorizes the President to use the U.S. Armed Forces as necessary in order to prevent Iran from obtaining nuclear weapons.” If it passes with its present wording, it means Trump is preauthorized by congress to initiate pre-emptive war against Iran at his sole discretion.

Leaders going into war often underestimate what powers the other side may bring to its aid. In the event of war with Iran, China and Russia have indicated they will stand with Iran.

Coinciding with all of that, we have the perpetual Palestinian-Israeli conflict, which looks likely to intensify under hardliners, particularly as Trump sides more solidly with Israel. Of course, arms races are good for the US economy, but wars can create panic in markets, too. If the US gets involved in more and more wars, up soars the national debt.

 

 

Miscellaneous breezes that could blow into a storm in the longterm 2017 economic forecast

 

Those are the main events I see contributing to my global 2017 economic forecast, but there are also many likely events that are lesser at the moment but that could have a modest impact or could grow to considerable impact:

 

Housing bubbles are starting to pop again. This is actually a big one, but I so I already gave it a full article. (See “2017 Economic Headwinds: Housing Bubbles Popping up and Just Plain Popping Everywhere.”) I merely note it here as a reminder of how many force are now looking likely to start to batter the economy.

More retail closures are in the works. JC Penny announced last week that it will close another 130-140 stores, citing week demand and online competition. Macy’s recently announced it will be closing 100 stores, too. Macy’s said profit fell another 13%, and it expects a 3% decline in sales in 2017. Kohl’s and Nordstrom are keeping things in line by reducing inventory and cutting back on promotions.

In all, things don’t look good for major retailers. It’s not all due to online competition either. Some of the overall slowdown in growth of consumer spending is attributed to inflation. Adjusted for inflation, overall consumer spending fell in January, taking its largest drop in three years.

Health insurance in the US is a rampantly spreading its own economic epidemic. Having lost a lot of money in 2016, a few major insurance companies dropped out the Affordable Care Act, and others raised their premiums an average of 25% for 2017. A third of all the counties in the US now have only one insurance carrier, and more carriers are likely to drop out in 2018, raising insurance prices even more through the loss of competition. Rising healthcare benefit costs could freeze wages, which have only just begun to trickle upward. Now that the ACA is in place, 28.5 million Americans remain without health insurance because they feel insurance is too expensive already or because they can’t qualify.

The raging debate over Obamacare is delaying economic stimulus. Trump has stated publicly that it is impossible statutorily and infeasible to do tax reduction until the Affordable Care Act is sorted out because the administration has to know what the replacement plan will cost before it can enact tax reductions. The major stimulus those reductions would provide were really a dying economy’s lifeline that was needed immediately. Now they will not happen until August at the earliest.

If any ISIS or al Qaeda terrorists have entered the US by claiming to be refugees, as President Trump suggests, they are now pressed to act sooner than later because Trump is going to start to export illegal immigrants. While expulsion is intended to reduce the size of such risks and the possibility of their being carried out because sleeper cells won’t have time to build up their numbers and finish their plans, it does increase likelihood of a black-swan event moving into the 2017 economic forecast if any event is in the planning stages. For terrorist organization, border tightening looks more like now or never. (Not saying Trump shouldn’t do this, just saying it is a fact that it tightens schedules for terrorists from their perspective.)

We know the Republicans ran an entirely obstructionist government on their end for eight years (more so than anything I’ve seen in my lifetime); so we can be reasonably certain in forecasting that it is now payback time from the Democrats. Expect as much gridlock as Democrats can muster because they have never hated a president as much as the hate Trump.

A BRICS breakdown. The US dollar as reserve currency is eroding the new wealth of rising nations because loans have to be paid back in US dollars while local currencies are declining in value against the dollar. That leaves debtor nations scrambling for cash to repay these loans. I forecast, as do many others, that we’ll start to see nations, as well as individuals and corporations in developing economies, face bankruptcy problems in 2017 because of debts they owe in dollars while they make their revenue in falling currencies.

US auto debt is at a record high of $1.16 trillion, according to the Federal Reserve Bank of New York. That’s a situation we saw going into the Great Recession, and we know how badly it turned out then. The high number of sales back then was made possible by lowering credit standards and increasing the payment period to seven years and by calling leases, sales. That is also similar to tactics leading into the Great Recession when automakers found themselves teetering on bankruptcy. Delinquencies on auto loans are rising but are not as bad as student-loan delinquency.

 

And then there are major trends of great significance that are slowly going to get worse every year, which are just breezes in 2017, but they foretell what is coming like the gentle gust you feel before a sudden downpour of rain:

Hi-tech is eliminating jobs. This won’t be too much of a headwind for this year, but it will become increasingly a problem in years ahead. The threat to jobs will move from being off-shored to being robooted out the door. As one of this blog’s readers (QEternity) has pointed out in his comment to another article, “today’s Uber drivers will be eliminated, along with McD’s burger flippers, and a host of other jobs.” Amazon is already hugely robotic, and we may move toward “near worker-free grocery stores” and fast-food restaurants.

Rising costs of oil production as oil gets harder to access. The entire global economy depends on oil, and so far recent innovations in fracking have kept the economy afloat in cheap oil, which had its detrimental side when it got low enough to drive oil companies and their support industries out of business and imperil banks that went in too deep in financing the industry.

Fracking plays, however, play out quickly compared to the kind of reservoirs we used to be able to tap. There is lots of oil left in the world, but it becomes increasingly costly and dangerous to extract. Witness the Deep Sea Horizon to see how dangerous deep-sea oil drilling and pumping can be. Witness the massive increase in Oklahoma earthquakes and flaming well water and the USGS’s statement that the earthquakes are definitely caused by fracking waste wells to see how dangerous on-land fracking can be. (See “The OPEC Epoch is Over” to see how much the oil industry is changing.) No doubt, new technologies will draw this out some, but many of those technologies are more expensive, and our consumption-based economy demands fairly inexpensive oil to heat it up.

Baby boomers (also covered under housing) are retiring, and retirement funds are wrinkling up like dry leaves in the wind. The New York Teamsters just cut its promised benefits in half. Several other Teamster retirement plans are shriveling back to probably half of what they promised. This is symptomatic of the drying up of retirement benefits and social security and medicaid benefits as more people enter the beneficiary side and fewer productive people contribute.

This will be happening all over the nation from this point forward because retirement plans were grossly mismanaged just as the federal government grossly mismanaged Social Security by borrowing endlessly from it and never repaying what was borrowed. Everyone has knowingly ignored the reality they don’t want to deal with — the fact that demographics would turn against the cash flows of all these plans.

2017 is the year when we are starting to see this growing demographic kick in, and the cost of our delinquency will be felt for the next twenty years as more and more companies and governments seek to extricate themselves from the retirement benefits they promised (hence “entitlements” in that the main reason many people did this work was for the promised retirement, now suddenly pulled out from under their feet. But that is what happens when you spend the future’s money today. Someday, you are part of that robbed future.)

Municipal and state plans are also disintegrating. Previous stock market crashes and deregulation are largely blamed by those who oversee the funds. One more stock market crash would finish off a whole slough of them since it would be hitting just as numerous plans are in trouble. What you are actually owed or what you need is irrelevant. Math has no mercy.

 

Oh well. It’s better for Trump if the economy crashes sooner than later because it will give him a chance to try to put the blame where it belongs — on eight years of failed economic recovery plans that followed eight years of profligate war and trickle-down economics that created enormous debt and an ever-widening gulf between the rich and the rest.

As you question my 2017 economic forecast, ask yourself which of the above things seems unlikely to happen or improbable … and tell me about it below.

 

  • QEternity

    Sorry Dave, but I think you missed one.

    Even after the Fed stopped their QE, Draghi was still printing away. As was Japan. Now Draghi is set to turn off the spigot soon. I think Japan has thrown in the towel. No one is quite sure what China will do, but it can’t be enough. Given the global nature of capital, EU printing still helped support the entire globes cheap money fix.

    In the end, a world addicted to cheap and easy money is experiencing tightening coming from all directions soon. This is gonna play havoc everywhere. Especially in emerging economies who borrow in $USD (not like they have not been crushed already).

    Interestingly, the bond markets (smart money) are NOT signaling higher rates. I think they’ve priced it all in already. UST’s are off their recent highs. No one believes we get many rate hikes at all. And frankly credit contraction has been an effective hike already.

    The big tell for me comes from 2 directions: 1) Lacy Hunt @ Hoisington is still a bond bull. And 2) my small collection of BB to BBB bonds I’ve accumulated is still up in price. Though all short term, they should be moving down yet they are ‘steady as she goes’.

    I’ve been selling equities into every day of weakness for the last few days. If a stock is not holding its own its gone. We may yet see a speculative blowoff, but my personal feel is Trump is losing some momentum. The little guy is going in as the big money is getting out. The big money is losing faith. I’ll follow them.

    We tried to fix a bad debt problem with far more debt. Rising rates and shrinking liquidity are “bad Medicine” for bad policy.

    • You’re right. I did miss that one, and that’s an important one. The ECB shutting the spigot is important as the Fed shutting off QE near the end of 2014 and then starting interest-rate raises at the end of 2015. Who knows how much of the ECB’s new free money decided to chase US stocks as the safer haven?

      There is something in all of that that I may have missed last year, too. I said at various times last year that I missed my mark in predicting the onset of the “Epocalypse” and that it was probably because the Obama Admin. and the Fed conspired to do whatever it would take to keep the economy going after the big stock-market drop that I had predicted for January. I thought I had no proof to back that up. Then, yesterday, I read an article that said essentially the proof was sitting right in front of my eyes. It argued that the Fed did start another round of stimulus that it ran all year last year when it reversed on its course of interest-rate increases.

      I hadn’t really thought of that as being new stimulus because the Fed was maintained its first interest increase; so I was thinking of it as just “staying the course.” The article I read made the argument that, BECAUSE the Fed had already announced a course of continual gradual increases — stating a likely four increases — you have to really look at what they did as shifting into reverse and reverting to the old stimulus-on program … because for the entire year (until the last two weeks) that is what it was. The article stated that the shift to “new stimulus” came in what the Fed SAID. It suddenly changed from saying it was going off of stimulus mode (“accommodation”) to saying it would remain in accommodation mode indefinitely and any change from that would be data-dependent. The market heard this new telemetry and became buoyed again by the hope of indefinite stimulus at near-zero interest. So, the market went back to its “bad news is good news mode.”

      I had said the Fed wouldn’t be able to raise interest after its first increase without crashing their recovery, and apparently the Fed agreed with me for an entire year. That the Fed changed what it had indicated it would do on interest is no revelation, but it’s a different way of looking at it to see it as they didn’t simply “hold off” but they announced a clear change in strategy as soon as the market crashed. And their words are enough to drive the now Fed-dependent stock market. If you’ve been on plan A for years and then switch to plan B and then a month or two later downshift back to plan A and announce that you will remain there indefinitely (until economic data improves), that is more than just slowing down (how I saw it). It’s a change of plan.

    • Thanks, Eye.

      One can definitely look at that collection as an indicator that the clouds in my 2017 economic forecast are continuing to gather. I think, in the very least, Art Cashin, who has been intimately part of the NYSE for longer than anyone alive, was right in saying today that the market is showing signs of getting ready for a 7% correction. That’s not calamity, but what I see the Zero Hedge article as showing is that the economy is being peeled down like an onion.

      Today, Trump lost the the remainder of goodwill his congressional speech brought to the market that pushed it up the last few days on renewed hopes that maybe he can work with congress to get something accomplished. His tweets about Obamagate are the kinds of surprises markets don’t like, so the market nervously started peeling off its own layers and slumped back to where it was before Trump’s speech. I think there will be many Trump Slumps triggered by tweets.

      It’s Trump’s nature to kick the hornets’ nest and stir things up, so this kind of behavior will happen again and again. Stock markets don’t like surprises, especially from presidents, and especially bombshell revelations, so they shudder. I’m just speaking from a market standpoint here, not from whether Trump is right or wrong in what he’s saying or how he’s going about it. Behavior that appears this erratic in a president is going to spook an already precarious market.

      So, that’s another headwind for my 2017 economic forecast.

  • Benedict

    A financial crash will be the end of the Globalist movement. Even on Trump’s watch. But I feel like all sides and all powers don’t understand this, because they are only looking one move ahead. They think to themselves, “aha! If the economy crashes under Trump, then we can pin the crisis on Trump, and we can then assume power in his place. Which may be true, although it will be far harder to take him down then the Globalists think they will, now that Trump is the incumbent and the “fear factor” is absent because of Trump’s restrained governance.
    But in terms of “one-move ahead,” an economic crash would be stellar to dethrone the nationalist opposition and restore ‘order’ to the world.
    Yet I challenge you to think two-moves ahead now, David, instead of one. Here is the world for Globalism in a post-economic crash, when you think two moves ahead.

    1. The Great Society is Dead- The greatest problem for a Globalist world post-collapse is that the state will no longer be capable of providing for the Great Society anymore. The primary base of Democratic support has gone from Trade Unions to Entitlement programs. People vote Democrat to ensure that they have access to entitlement programs, and they continue to support Democrats to increase those entitlement programs. Without entitlement programs, the literal base of the Democratic party stays home, or worse yet, goes against the party. Therefore, in an economic crash, the Democratic Party is severely crippled because it can no longer provide for generous entitlement programs that it originally used to secure power. So in a ‘one-move ahead’ kind of thinking, having the economy collapse under Republican rule is great, but in a ‘two-moves ahead’ strategy, the Democratic party walks away permanently hobbled in its ability to provide. This complicates the situation for Globalists as their main vehicle of securing power, which is already weakened, becomes even more weakened when Great Society programs are no longer feasible. How will Democrats secure voters if the US government itself cannot purchase them anymore? (Likewise, how will Left Wing European parties secure votes if they cannot offer entitlement programs?)

    2. From #ResistTrump to #ResistCaptialism- At the same time that the Great Society no longer is capable of being provided for, there will emerge a “Bolivarian Left” that will primarily demand gratuitous welfare programs at the expense of Globalist bank accounts. And since there isn’t enough to go around anymore, the money will come from the Globalist bank accounts. #ResistTrump will become #ResistCapitalism and the stoogies that work under Globalism will inevitably begin to turn against their masters as their economic insecurity will compel them to turn against their wealthy masters. Imagine for example that a Bernie Sanders candidate does in fact win the 2020 primary instead of the Clinton equivalent. What will the Globalists do then? They’ll be compelled to back Trump, because a Strong Socialist would be far more of a threat to the system than a mere Nationalist. Globalism will lose control of it’s foot soldiers in favor of new forces.

    3. The Eagle Declawed- War with Russia effectively becomes moot the moment the economic crash occurs. No longer will the US have near-unlimited funds to build up its War Machine on an already difficult war to wage. Now the US will be forced to cutback on its defense spending, ultimately conceding major spheres of influence and giving Russia (though not China) a major advantage. The War with Russia becomes a non-effective option anymore now that the US cannot support its massive military strength. An opportunity is over.

    4. Collapse of Open Borders – This will be more present in Europe than the US, but without gratuitous welfare programs, immigrant populations effectively starve. What used to be a place of free money and prosperity no longer becomes a feasible option. The Turks in Berlin, for example, no longer get access to free money from Germans. What will they then do? Riot? That’ll only get them killed (at the expense of killing natives.) Outvote the government and seize control from the natives? That’ll only lead to Civil War and further death. But that’s missing the point. The real point is that without gratuitous welfare programs the dream of Open Borders no longer becomes feasible. Why immigrate to Sweden if Sweden doesn’t provide free benefits anymore and there are no jobs? To wage war against the Natives? That may be appealing to some, but the primary draw of the open borders society is effectively over without the ‘carrot’ of free benefits that comes from immigrating to first world nations.

    5. Rise of Islamism- When the Islamists realize that they cannot get free money from the Globalists, they will turn on them. The Globalists, from who I’ve talked to, have a very bad mindset where they are better at executing tactics than planning strategy. Or as Sun Tzu puts it, “Strategy without tactics is the hardest path to victory; tactics without strategy is the noise before defeat.” The Islamists will begin to resist control of Globalist agendas and will inevitably turn on their supposed ‘masters’ now that the Globalists cannot secure free prosperity for them anymore. Yes yes, the Globalists will tell me how powerful they are, and how socially skilled they are, and how much of an ant I really am. But their control over Islamism (or frankly militant minority groups) is far overstated, and the appeal of these Globalist groups will effecitively dissapper now that the powers at be can’t fix the economy. No more Jiyza means war by other means.

    6. Once broken, can’t be put back together- Perhaps the most damning things is that if the economy breaks, the Globalists can’t put it back together. It was their excesses which caused the economy to collapse, and it’s their very existence which is the obstacle to economic recovery. This means that symptoms of Globalism will eventually kill the system, while the Globalists themselves cannot fight the disease because they are the disease. As the economy spirals out of control, the forces of the status quo are torn down as well, leading to destruction unseen since World War 2.

    7. The Nationalists could win- Even in the scenario when the Globalists have all the cards, they still lost. If you think it’ll be easy now to defend Globalism now, imagine how much harder it’ll be to defend Globalism when London is screaming for a Caliphate, California is seceding for a basic income, Russia is making new aggressive moves in the chaos, and Globalism’s champion, America, is negotiating for a bankruptcy. The chaos will grow even greater from NEW factions that will emerge when Globalism can no longer provide free money for all. And yet. In the totally stable world of 2017, Nationalists won Brexit and America. The Nationalists could still win in the end because they’ve beaten the Globalists on stable grounds one their terms. The Globalists are one defeat away from being beaten (France, Netherlands, Italy, or Greece), and may not even live to see the collapse of their world order.

    Despite what you may have thought, the Globalists NEEDED to win against Trump so that they could wage their war against Russia before economic forces destroy them. And the Globalists MUST dethrone Trump because there is only a limited amount of time the Globalists have left before their major pillars of power collapse, and their entire structure becomes dethroned at all ends. They will be flanked by their former allies who will turn against them when the money ends, and the world will be plunged in terrible chaos from their bungling failure.

    So David, here is the one-move ahead thing the Globalists can do.
    -Economy collapses
    -Take power of the Presidency
    -Implement police state, and fight off the Socialists/Islamists and Nationalists at the same time.
    And that’s it. Despite what you may think, “Civil War” isn’t an option for Globalists in America because the Bolivarian Socialist faction, aka the Foot Soldiers, will only actually fight for the regime if they are given massive levels of welfare that will come at the expense of their Globalist masters. So although the US is primed for a Civil War, the Globalist faction is far less cohesive than it appears because of the structures underlying their political allegiance. And the immigrants in Europe won’t fight for George Soros, they’ll fight for Allah. A massive, massive, miscalculation that the Globalists have made.

    Realistically, I suspect this will be the future.
    -Economy collapse
    -A socialist usurps control of the Democratic Party from the Globalists.
    -The Globalists will support Donald Trump as the lesser of the two evils.
    You heard it hear first. CNN will be giving positive coverage of Trump after all, because when the Global economy goes to shit, so too will Globalist power wither away.

    Then again, if the economy survives until 2020, and the Globalists manage to fend off the Nationalists, then it will be Globalist victory.

    • Hi Benedict,

      You presume a bit much about what I think, going beyond anything I’ve said, but you are right that I’m not seeing much more than the next big step down the road. As with forecasting weather, the further out you go, the less reliably anyone can forecast anything because of the number variables (seen and unseen) and the fact that, even the things you lay out that seem predictable can surprise because people do not always attempt or accomplish that which is logical. Sometimes they accomplish the absurd.

      So, I keep my eyes a year or so down the road as far as the major things that I think are likely to dominate and acknowledge that black-swan events can change the timing of things (but I don’t think anything will be big enough to avert the collapse, as there is far too much weight already leaning in that direction).

      The one step further that I see is that people will seek a global answer to a global problem. (It is how the majority thinks.) The trends toward everything in human experience moving digital and the need for a global economic solution will eventually carry us into a global digital monetary system; but that won’t endure even as long as the past monetary system did because i’m sure it will still be a fiat system, rather than something like the gold standard and, being ripe for hacking (no matter how failsafe) and nearly infinite in enticement (being global if you can hack into it), and being most likely centralized, it will be highly prone to another global failure.

      I don’t think we have comprehended the strength and resiliency of localization and decentralization yet or learned that smaller might be better. (Some have, but many have not.) I don’t think we’ve grasped the concept that any economy that requires endless construction and growth is ultimately destined to failure (unless we colonize the universe) because space on the planet, fresh water, clean air and other resources are all finite. So, I think the system that will emerge will ultimately be more oppressive than what we have because we show no signs right now of having learned anything. Even Trump’s plans to not correct any of the underlying economic flaws; they are just stimulus. Our human hatred is only growing as the world becomes more polarized. The war between Islam and all others will certainly continue, as Islamic Fundamentalists have no intention of changing, regardless of whether globalists win or lose in the West. i doubt they even care whether or not globalists win or lose in the West.

      That’s not to say there is not worthiness in considering the prospects you lay out as some of the things that could happen; but how everything actually will play out, requires a wider frame of reference ( a higher perspective ) than what we can get from observing the facts at our ground level.

      –David

      • Benedict

        Fair enough. Perhaps the powers-at-be have some way of averting course, or perhaps I misjudged some of the characters. And I apologize if I put words in your mouth that you have wisely sought to keep quiet about. I just wanted to push the envelop and see how you would respond, because I take what you say seriously. I didn’t realize it was caution which caused you to not mention anything on the topic.

        I respect that. After all, I’m posting anonymously which gives me the luxury of being provocative.

        The only thing I’d add is that there is rumors that banks are working on a block-chain kind of solution to the collapse of the dollar. Think of a Gold Standard, but instead of being backed by Gold, it’s backed by Bitcoin. But take that as a grain of salt.

        In terms of globalists reaching out to create a further globalized solution, it’ll have to directly deal with some of the problems I’ve laid out otherwise the system goes belly up. For instance, a further ‘globalized’ solution would have to keep the American Military in-tact and keep the Great Society alive. Perhaps the Globalists have a trick up their sleeve to deal with economic collapse. But the problems we face can’t be solved globally, because our society lacks investment in the commons (IE: The stuff that makes up middle class.) If the plan was to rebuild our failing healthcare, housing, education, and infrastructure system, as well as control the growth of debt, then that regime would last a long time. But simply opening the doors to an even greater global system doesn’t deal with the lack of the commons, and so the system is doomed long term.

        I feel hopeless about our prospects, and the amount of good men grow less with each passing day. Only God can save us from ourselves, if such a God chooses to.

        • Thank you for this great response, Benedict. As I say, I think your original comments, which you must have removed as I no longer see them, still merit consideration as there may be elements in them that will happen. While I don’t think the world will go that way, there can still be elements that would go that way.

          For example, I mention that the world will go with a global digital solution, and you point out how and why that will fail and other problems the globalists will have that will cause them to fail, and I think you are right. Though, I believe the world will seek a global answer (or, at least, will accept one), I agree with your logic that the globalists’ answer will fail for all the reasons you give. (But the world often goes for answers that fail … even after they should have learned better … just as they are now going for another round of trickle-down economics, even though we’ve had two previous long rounds that failed to trickle down … and just as they bailed out banks, instead of letting bad debt get written off and then rebuilding from the rubble … because it seemed like it would be less painful. In the immediate future it was less painful, but now we will have to pay the pain all over again.

          So, until people are willing to accept hard truths they don’t want to hear, they will repeat their mistakes. Going for another round of trickle-down economics does not convince me they have accepted any truth they don’t want to hear. Letting big banks get bigger says the government didn’t even accept its own truth, which it proclaimed. That we constantly turn to more debt in order to re-inflate another bubble of unending wealthy and to avoid th pain of living within our means says we aren’t learning anything … so far.

          So, I think there will be another even more global round (given all that I see), and I think you are right that it will fail. (And the globalists will not see the reasons it will fail as you have.)

          –David

          • Peter Harris

            I see you have created a new alias, to talk to yourself with.

      • jakartaman

        My higher longer term perspective is this:
        We know that mankind since Adam and Eve have been hostile to each other. Humans have a problem in living in peace. I don’t think that fact cane disputed. We are now at a point in our evolution that we have many reasons and the ability to depopulate the world. The globalist know that the majority of people will/are no longer required. The masses are now only a liability that are wasting earths resources.
        My question(s) would be does this depopulation and collapse of civilization happen as a result of economic collapse or acts of war/violence or both? Will it happen over a protracted time period or will it hit hard and fast?

  • Benedict

    A financial crash will be the end of the Globalist movement. Even on Trump’s watch. But I feel like all sides and all powers don’t understand this, because they are only looking one move ahead. They think to themselves, “aha! If the economy crashes under Trump, then we can pin the crisis on Trump, and we can then assume power in his place. Which may be true, although it will be far harder to take him down then the Globalists think they will, now that Trump is the incumbent and the “fear factor” is absent because of Trump’s restrained governance.

    But in terms of “one-move ahead,” an economic crash would be stellar to dethrone the nationalist opposition and restore ‘order’ to the world.

    Yet I challenge you to think two-moves ahead now, David, instead of one. Here is the world for Globalism in a post-economic crash, when you think two moves ahead.

    1. The Great Society is Dead- The greatest problem for a Globalist world post-Globalism is that the state will no longer be capable of providing for the Great Society anymore. The primary base of Democratic support has gone from Trade Unions to Entitlement programs. People vote Democrat to ensure that they have access to entitlement programs, and they continue to support Democrats to increase those entitlement programs. Without entitlement programs, the literal base of the Democratic party stays home, or worse yet, goes against the party. Therefore, in an economic crash, the Democratic Party is severely crippled because it can no longer provide for generous entitlement programs that it originally used to secure power. So in a ‘one-move ahead’ kind of thinking, having the economy collapse under Republican rule is great, but in a ‘two-moves ahead’ strategy, the Democratic party walks away permanently hobbled in its ability to provide. This complicates the situation for Globalists as their main vehicle of securing power, which is already weakened, becomes even more weakened when Great Society programs are no longer feasible. How will Democrats secure voters if the US government itself cannot purchase them anymore? (Likewise, how will Left Wing European parties secure votes if they cannot offer entitlement programs?)

    2. From #ResistTrump to #ResistCaptialism- At the same time that the Great Society no longer is capable of being provided for, there will emerge a “Bolivarian Left” that will primarily demand gratuitous welfare programs at the expense of Globalist bank accounts. And since there isn’t enough to go around anymore, the money will come from the Globalist bank accounts. #ResistTrump will become #ResistCapitalism and the stoogies that work under Globalism will inevitably begin to turn against their masters as their economic insecurity will compel them to turn against their wealthy masters. Imagine for example that a Bernie Sanders candidate does in fact win the 2020 primary instead of the Clinton equivalent. What will the Globalists do then? They’ll be compelled to back Trump, because a Strong Socialist would be far more of a threat to the system than a mere Nationalist. Globalism will lose control of it’s foot soldiers in favor of new forces.

    3. The Eagle Declawed- War with Russia effectively becomes moot the moment the economic crash occurs. No longer will the US have near-unlimited funds to build up its War Machine on an already difficult war to wage. Now the US will be forced to cutback on its defense spending, ultimately conceding major spheres of influence and giving Russia (though not China) a major advantage. The War with Russia becomes a non-effective option anymore now that the US cannot support its massive military strength. An opportunity is over.

    4. Collapse of Open Borders – This will be more present in Europe than the US, but without gratuitous welfare programs, immigrant populations effectively starve. What used to be a place of free money and prosperity no longer becomes a feasible option. The Turks in Berlin, for example, no longer get access to free money from Germans. What will they then do? Riot? That’ll only get them killed (at the expense of killing natives.) Outvote the government and seize control from the natives? That’ll only lead to Civil War and further death. But that’s missing the point. The real point is that without gratuitous welfare programs the dream of Open Borders no longer becomes feasible. Why immigrate to Sweden if Sweden doesn’t provide free benefits anymore and there are no jobs? To wage war against the Natives? That may be appealing to some, but the primary draw of the open borders society is effectively over without the ‘carrot’ of free benefits that comes from immigrating to first world nations.

    5. Rise of Islamism- When the Islamists realize that they cannot get free money from the Globalists, they will turn on them. The Globalists, from who I’ve talked to, have a very bad mindset where they are better at executing tactics than planning strategy. Or as Sun Tzu puts it, “Strategy without tactics is the hardest path to victory; tactics without strategy is the noise before defeat.” The Islamists will begin to resist control of Globalist agendas and will inevitably turn on their supposed ‘masters’ now that the Globalists cannot secure free prosperity for them anymore. Yes yes, the Globalists will tell me how powerful they are, and how socially skilled they are, and how much of an ant I really am. But their control over Islamism (or frankly militant minority groups) is far overstated, and the appeal of these Globalist groups will effecitively dissapper now that the powers at be can’t fix the economy. No more Jiyza means war by other means.

    6. Once broken, can’t be put back together- Perhaps the most damning things is that if the economy breaks, the Globalists can’t put it back together. It was their excesses which caused the economy to collapse, and it’s their very existence which is the obstacle to economic recovery. This means that symptoms of Globalism will eventually kill the system, while the Globalists themselves cannot fight the disease because they are the disease. As the economy spirals out of control, the forces of the status quo are torn down as well, leading to destruction unseen since World War 2.

    7. The Nationalists could win- Even in the scenario when the Globalists have all the cards, they still lost. If you think it’ll be easy now to defend Globalism now, imagine how much harder it’ll be to defend Globalism when London is screaming for a Caliphate, California is seceding for a basic income, Russia is making new aggressive moves in the chaos, and Globalism’s champion, America, is negotiating for a bankruptcy. The chaos will grow even greater from NEW factions that will emerge when Globalism can no longer provide free money for all. And yet. In the totally stable world of 2017, Trump won Brexit and America. The Nationalists could still win in the end because they’ve beaten the Globalists on stable grounds in their terms. The Globalists are one defeat away from being beaten (France, Netherlands, Italy, or Greece), and may not even live to see the collapse of their world order.

    Despite what you may have thought, the Globalists NEEDED to win against Trump so that they could wage their war against Russia before economic forces destroy them. And the Globalists MUST dethrone Trump because there is only a limited amount of time the Globalists have left before their major pillars of power collapse, and their entire structure becomes dethroned at all ends. They will be flanked by their former allies who will turn against them when the money ends, and the world will be plunged in terrible chaos from their bungling failure.

    So David, here is the one-move ahead thing the Globalists can do.

    -Economy collapses
    -Take power of the Presidency
    -Implement police state, and fight off the Socialists/Islamists and Nationalists at the same time.

    And that’s it. Despite what you may think, “Civil War” isn’t an option for Globalists in America because the Bolivarian Socialist faction, aka the Foot Soldiers, will only actually fight for the regime if they are given massive levels of welfare that will come at the expense of their Globalist masters. So although the US is primed for a Civil War, the Globalist faction is far less cohesive than it appears because of the structures underlying their political allegiance. And the immigrants in Europe won’t fight for George Soros, they’ll fight for Allah. A massive, massive, miscalculation that the Globalists have made.

    Realistically, I suspect this will be the future.

    -Economy collapse
    -A socialist usurps control of the Democratic Party from the Globalists.
    -The Globalists will support Donald Trump as the lesser of the two evils.

    You heard it hear first. CNN will be giving positive coverage of Trump after all, because when the Global economy goes to shit, so too will Globalist power wither away.

    Then again, if the economy survives until 2020, and the Globalists manage to fend off the Nationalists, then none of what I said will come to pass, and the uneasy status quo continues.

  • jakartaman

    Lets see if I can give this great article a short summary.
    “We are screwed big time”

    • Peter Harris

      “”We are screwed big time”

      Yes, and more so, if you eat Ketoprak, from the street vendor in Tanah Abang

      • steve jones

        I suspect jakartaman 1 and 2 may be the same person. At least when Dave talks to himself, it is well reasoned and well written.

        • Peter Harris

          Wrong on both counts.
          I suspect that, jakartaman is yet another Knave alias.

        • Peter Harris

          “At least when Dave talks to himself…”

          So, you agree with me, huh?

          “…when Dave talks to himself, it is well reasoned and well written.”

          Isn’t that an Oxymoron??

        • jakartaman

          Just an old ex-pat that has lived in many countries.
          I have seen a lot and have done a lot. I like what Dave has to say because I have also had many very similar thoughts of what lies ahead. Anyone that thinks that the world is not going to be a lot different in the near future is a fool. Globalists are the enemy of humanity.
          Jones and Harris should shut up and listen – people that talk to hear themselves talk learn nothing.

          • Peter Harris

            “… people that talk to hear themselves talk learn nothing.”

            Oops!

        • : )