In the previous article, we discussed a set of existential problems facing the US and the West in general. We also took a look at why white population contraction along with a 3rd World tsunami make addressing these issues impossible, unless we have our own ethno states. This time, let’s explore when and how these issues could explode on us.
Nobody really knows because the number of potential catalysts is so high. Moreover, that’s just referring to what can be identified, absent some unforeseen event. The financial/economic situation today is totally unmaintainable. A big reason why it hasn’t come to a crossroads yet is misplaced confidence. This is often rooted in a sense of complacency based on a past that functioned under different conditions. Some market participants realize that things will fall apart, but seek to get what’s getable before that starts to happen. When could that be? As early as next year or down the road. We’re far down an uncharted path.
Here’s what can’t happen: a massive stock market crash in a single day, like the Great Depression. The market has a set of circuit breakers. If it drops a certain percentage from the previous day’s closing value, then it shuts off. There’s also a powerful Presidential Working Group on Financial Markets, commonly known as the “Plunge Protection Team”, capable of intervening secretly and with undisclosed methods to stop a crash. Rest assured, anything that’s possible will be done to keep it from plummeting.
We should pray that a reckless attack on Iran doesn’t happen. However, that’s about all we can do, since the easiest predictive maxim for American legislation and foreign policy is this: What Israel wants from us, Israel gets. The interests of the US and the consequences for its people don’t factor into the decision making process. Their Saudi partners are beating the war drums. Both are growing increasingly desperate to clip the growing power of nuclear-capable Iran, which they perceive as the foremost threat to their existence. Thus, it comes as no surprise that bogus stories linking Iran to 9/11 appeared in the MSM last month. Let’s hope this is the most remote possibility, because it could easily cost us our lives.
Personally, this seems to be strongest possibility: Many American states, large cities, and EU countries are in financially precarious and unsustainable positions. They can keep things going for the moment because they’re able to borrow money at minuscule interest rates. As long as they can keep servicing this cheap but growing debt, they’ll keep limping along. But, a day will come when this is not the case.
When this happens, confidence in risky public debt will be eroded and the market will demand higher interest rates. Higher borrowing costs would make continuing the debt scheme unfeasible. This could start in one or a handful of places and then spread across the board. If this scenario happens, my bet would be Chicago/Illinois in the US or Spain/Italy in the EU.
If you’re skeptical, then I’d recommend reading This Time is Different: Eight Centuries of Financial Folly. As the title implies, two economists performed an exhaustive analysis on a huge amount of data collected across the centuries. Their findings reveal that sovereign entities often default on debts, and that they can usually find willing lenders right up until the obvious end. The delusion of lenders is often rooted in ignorance about what’s happened in the past. Sound familiar to any of the attitudes we commonly lament?
Long Term Outcomes
Whenever the next crisis arrives, it will trigger a process that leads to a grave reckoning. Ultimately, we’ll be forced to confront the physical reality that we are not producing nearly as much as we consume. Every boomer who retires heightens the severity of this dilemma. Every new vibrant makes it even worse. Time isn’t on our side.
We can’t abandon the practice of racking up huge deficits and debts, then borrowing cheaply to cover them. Our major trading partners are still willing to vendor finance us. Nonetheless, the day will inexorably come when this doesn’t work anymore. The ramifications will be huge. The next article will discuss the potential enormity of the next crisis.
-By Tommy Shackleford