DARK CLOUDS

7 May 2022

Plague, war, famine, global warming, migrations, rioting.

The indicators are all on red, with major economic consequences that states cannot foresee - cause-effect chains, feedback loops, multipliers -  and may not have the resources to buffer. Eg the energy bills you mention; or who'd have thought gas and fertiliser were so tightly bound? or the 700 container ships waiting outside Shanghai port for covid clearance.

In addition, we are nearing the end of a long debt-cycle and central banks are raising rates and tightening money supply, with recession and maybe depression beckoning, clubmed economies could really suffer, the Euro is threatened, the EU even.

For investors, demand and revenues will surely be hit by inflation costs will be hit when it comes to rolling over debt at the new higher interest rates then you get into a downgraded spiral and there's no money for investment but it is precisely higher productivity that lowers prices and raises wages.

Globally, the three blocks are going down three different plugholes, with Europe probably tumbling down the deepest.

And not much of this seems to have been predictable or is much controllable. Turkey inflation is 70%, Egypt eats the most bread in the world and all the wheat comes from Russia and Ukraine. The least well-off are the most numerous,  though excessive diversification and wokism aggravates everyone, pushing govt.s to erect barriers of all kinds.