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Since September, the global mood has been in a process of peaking optimism within a larger downturn (that is still only just beginning). It has been difficult for many to truly believe in an economic recovery, but more and more have decided to embrace it whole heartedly. While efforts to keep the global consumption machine moving have been no less than heroic, they cannot much longer forestall the inevitable. Trying to spend one’s way out of a situation that resulted from over consumption and over spending in the first place is like trying to pick oneself up by one’s own boot straps. Eventually, the result is falling on one’s face. The topping process in the markets and the recovery is nearly complete. This month is a glimpse at some of the unintended consequences that have been purchased in an attempt to continue to keep the global wheels turning at an unsustainable pace.
Beginning with the second week of December, geopolitical concerns are on the rise. Key global players such as China and the United States may be less than cooperative with each other; Russia may be at odds with Eastern Europe; and we must not forget the wild cards—Iran and N. Korea which may add renewed trouble to the global balancing act at a moment’s notice. Displays of discontent or unrest are more likely on a global scale, and incidents of violence may be seen to be up as well. In the middle of the month, there are indications that inflation concerns will rise dramatically. This should be accompanied by either a sharp sell-off in U.S. Dollars, U.S. Treasuries, or both. Concurrently, confidence in the U.S. government will diminish, and there may be worries that the global system is breaking down. Immediately surrounding the Christmas holiday there may be some relief. However, as the New Year begins, geopolitical worries and systemic risks again come to the foreground as noteworthy threats to the fragile house of cards that have been so carefully stacked in place.
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http://anewstory.org/moodcompass.htm (current issue viewable by research sponsors only; reprinted with permission of A New Story Foundation)
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