In 2017, the financial world was filled with talk of synchronized sustainable growth in major economies for the first time since before the 2008 global financial crisis. This was being proclaimed by global financial elites including Christine Lagarde, head of the IMF. Now that vision is in ashes.
As reported in this article, growth is already negative in two of the world’s largest economies, Japan and Germany, and is slowing rapidly in the world’s biggest economies, China and the U.S.
Synchronized global growth has turned into a synchronized global slowdown. This trend is made worse by the Fed’s monetary tightening policies and the need for other central banks to tighten or pause their easing in order to match the Fed. Global slowdowns of this type are exacerbated by the escalating trade wars and a new Cold War between the U.S. and China.
While growth may be slowing down, debt creation is not. The massive debts created to achieve growth since 2009 are still on the books while new debts are piled on every day. This combination of slow or negative growth and unprecedented debt is a recipe for a new debt crisis, which could easily slide into another global financial crisis.
As we learned in 2008, this shift from positive to negative conditions can happen seemingly overnight. Investors should prepare now for the inevitable crackup.
Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.