A Simple List of Current Causes of Global Economic Collapse
Here is a clear and simple list of the pressures that are building toward global economic collapse. All of the following toxic elements are pouring into the global economic mix at the same time to where I am certain this toxic brew will blow up this fall. The foreshocks are already being felt.
- Shrinkage in production and consumption by the massively overbuilt Chinese economy.
- Commodity price crashes due to a Saudi price war on oil and the China syndrome leading to…
- Oil companies soon defaulting, causing bank stress from their junk bonds and employment reductions in oil and mining.
- The total stock market crash and wreckage in Beijing that is still unfolding.
- A global currency war, triggered by China, increasing the challenges for U.S. exports.
- China divesting itself from U.S. treasuries in mass and trying to undercut the U.S. dollar as a reserve currency, causing problems for bond markets and possibly raising U.S. debt interest costs in the long term.
- The fact that the U.S. bull market in stocks is very long in the tooth statistically.
- The remaining high overvaluation of U.S. stocks even after the recent stock market crash, meaning a bigger fall remains…
- Causing more bank stress because banks are major players in the stock market due to deregulation.
- Our return in the U.S. to high overvaluations of real estate enabled by the continuation of risky credit practices (ARMs, mortgage-backed securities/derivatives), leading to a repeat of mortgage defaults, causing more bank stress.
- The vastly increased size of banks that were too big to fail, making the stresses of the next collapse more perilous, causing greater panic.
- Increasing political destabilization everywhere. (Ukraine, Middle East, All around China.)
- The current collapsing of minor Latin American economies having unknown domino effects.
- The Eurocrisis and inevitable Grexit, causing more bank stress in Europe.
- Increasing defaults of student loans as unemployment from all of the above starts to rise again, causing more bank stress.
- The fact that major crashes almost always happen, if they’re going to, in the fall. (Something there is in fall that loves a fall.)
- A weakened middle class and a bloated upper class imbalance that is still growing worse each year, meaning the upper class has undermined their support base (weakened the ability of a vast middle class to buy their products).
- Exhaustion of the effectiveness of all central-bank stimulus tactics as they reach that point in the curve of diminishing returns (an economic LAW) where they are more harmful than helpful.
- The huge overburden of national debts accumulated since the Great Recession began, leaving little absorption capacity among the ultimate financiers and guarantors of last resort (governments) and a drop in their credit rating if they do try to absorb more troubles.
- Party political idealism/convictions triumphing over realism, insight, national interest and good sense.
- Absurd economic optimism in the face of all this, which means blindness will cause such things as…
- The first raise in Fed interest rates since the Great Recession began happening with the worst possible timing because the Fed’s funny glasses cause them to actually believe the picture above looks like recovery.
All of these things and more are crushing down on a badly patched economic structure that is deeply flawed in design (built around the idea that an economy of sustainable wealth can be created by enlarging vast holes of debt to build it). Add to these known negative forces a “black swan” event or two that put a match to this explosive mix, and you have a massive global economic collapse.
The biggest contributor is that blind optimism (economic denial) that refuses to see reality coming and, so, refuses to make the tough changes that are necessary to avert disaster. It is almost unbelievable how blind the economic gurus are who steer the world’s major economies. Their blindness is only surpassed by the blindness of the masses who keep listening to them in spite of how they have missed all past economic collapses.