Apocalypse Revisited: The Entire Global Economy Is Breaking up on the Rocks
The comments below are an edited and abridged synopsis of an article by David Haggith
“You can hear the tearing of financial sails everywhere in the world right now, and that includes right here on the USS Bailout where Captain Powell reaffirms that the job market is strong and the economy resilient even as we hear the hull grinding under our feet. First Mate Yellen smiles her grandma grin from the tilting crow’s nest and assures everyone below she sees no land or rocks in sight.”
Yet, on September 30, all major US stock indices ended the quarter at new lows for the year. They’ve gone down every quarter, but “we’re not in a recession yet” is all we hear. The US is now nine full months into 2022, and every quarter has ended lower for all indices and for GDP, and they’re now taking on water faster than ever.
The US is going down in a burning ring of fire—inflation, forcing the Fed to fight it with all it has. The Fed believes it needs to take an already crippled labour market and submerge it deeper to suppress the flames of inflation. It’s making the greatest mistake in Fed history. If you have to sink the ship to extinguish the fire, it’s not going to help.
The US is also three full quarters into the year, and each of the first two quarters ended with GDP deeper below the waterline. The Fed’s GDPNow estimator recently hit the deck where it lay at the end of the last quarter, too, and the one before that, both of which then sank further underwater as they got closer to the calculations of GDP being released. It has bounced more erratically in the third quarter than ever, showing just how choppy the present seas have been.
Haggith discusses the bond market and concludes: “But that’s how it is with these black swans. They are more like black sea monsters, shadows that move beneath the deep. They are often things our financial leaders and even investors could have and should have seen as reasonably high likelihoods—shadows sliding right beneath our sails—but didn’t. Suddenly, they burst as monsters out of the sea right in in front of us. Janet’s colleagues in the UK certainly should have seen the potential for this bond bust building, but they didn’t… probably because no one wanted them to. Greed is so profitable if you just let it happen. Until it isn’t. But that’s what bailouts are for.”