Great framework for thinking about tail risk scenarios. One angle I'd add: the insurance sector is a massively underappreciated transmission mechanism here. PE-backed insurers have been running capital cushions as thin as 1% vs the traditional 12% norm. If an energy shock triggers correlated claims across marine, property, and credit books simultaneously, these thinly-capitalized carriers could amplify the very recession dynamics you're describing. The financial system's shock absorbers aren't what they used to be.
So your solution is more liquidity, which according to your analysis will create asset inflation or exacerbate the problem of the financialization of the Western economies that was first led by the US so the wealth and income disparity continues to unduly enrich those with assets by increasing their market value therefore have even more unearned capital and those that don’t fall further behind. This is a system built on capitalistic-feudalism.
It is time for the US to take its medicine. The geopolitical and geoeconomic reset is long overdue. Nixon started this Crap Economy by financialization of the Petrodollar by recycling Yankee dollars paid to Gulf countries for oil in exchange for Gulf countries exporting some of those same dollars back to the US via foreign direct investment. It staved off a reckoning because Nixon could read a balance sheet. It also started a symbiotic relationship where the US acted as military protector of corrupt monarchies and the Gulf monarchists were coddled into a false sense of security domestically and from their adversaries in the Middle East region. In other words GCC oil dollars were exchanged for Merchants of Death weapons and domestic monitoring systems to repress their subjects.
In postponing the problem, however, it turned the US into a service economy - gradually at first then under Reagan and subsequent administrations and congresses into what has become a financial, insurance and real estate (FIRE) dominant economy. The bean counters and the FIRE sectors of blood sucking leeches to the goods producing economy took over and per your Capital Wars missives you want it to continue by reiterating liquidity, liquidity and liquidity.
Your Faustian bargain with the central banksters that are owned lock, stock and barrel by the banksters and do their bidding for them also got the US into this mess and you want to perpetuate it. I get it why you do. You earn your living off of this rapacious system that sucks the lifeblood out of the real economy.
What I don’t think you get is the system you support facilitates the the further expansion of empires, destroys republics, cuts education, creates huge wealth and income disparities, causes wars, depressions, oligarchs, oligopolies, cartels, environmental degradation, increased suicides, destruction of families, and failing societies which elect charlatans and in worst cases malignant narcissists that have messianic misguided tendencies with sociopathic or psychopathic proclivities that will lead that country down the road to ruin.
so far the fact on CN local level is the ones refine Iran oil are still producing relatively stable both in YoY and MoM terms--specially comparing to those ones that refine "legit" oils.
So much for Chinese iran oil import 4D chess game...not winning
But Trump do win is an economy war against its allies, really.
But hey, if allies therefore increase military spending, and become more physically involved in regional security... etc., does this not exactly what this government has been claiming to do all along?
Great piece, really keen on seeing how this all plays out in the endgame
Txs for the good content
Great framework for thinking about tail risk scenarios. One angle I'd add: the insurance sector is a massively underappreciated transmission mechanism here. PE-backed insurers have been running capital cushions as thin as 1% vs the traditional 12% norm. If an energy shock triggers correlated claims across marine, property, and credit books simultaneously, these thinly-capitalized carriers could amplify the very recession dynamics you're describing. The financial system's shock absorbers aren't what they used to be.
So your solution is more liquidity, which according to your analysis will create asset inflation or exacerbate the problem of the financialization of the Western economies that was first led by the US so the wealth and income disparity continues to unduly enrich those with assets by increasing their market value therefore have even more unearned capital and those that don’t fall further behind. This is a system built on capitalistic-feudalism.
It is time for the US to take its medicine. The geopolitical and geoeconomic reset is long overdue. Nixon started this Crap Economy by financialization of the Petrodollar by recycling Yankee dollars paid to Gulf countries for oil in exchange for Gulf countries exporting some of those same dollars back to the US via foreign direct investment. It staved off a reckoning because Nixon could read a balance sheet. It also started a symbiotic relationship where the US acted as military protector of corrupt monarchies and the Gulf monarchists were coddled into a false sense of security domestically and from their adversaries in the Middle East region. In other words GCC oil dollars were exchanged for Merchants of Death weapons and domestic monitoring systems to repress their subjects.
In postponing the problem, however, it turned the US into a service economy - gradually at first then under Reagan and subsequent administrations and congresses into what has become a financial, insurance and real estate (FIRE) dominant economy. The bean counters and the FIRE sectors of blood sucking leeches to the goods producing economy took over and per your Capital Wars missives you want it to continue by reiterating liquidity, liquidity and liquidity.
Your Faustian bargain with the central banksters that are owned lock, stock and barrel by the banksters and do their bidding for them also got the US into this mess and you want to perpetuate it. I get it why you do. You earn your living off of this rapacious system that sucks the lifeblood out of the real economy.
What I don’t think you get is the system you support facilitates the the further expansion of empires, destroys republics, cuts education, creates huge wealth and income disparities, causes wars, depressions, oligarchs, oligopolies, cartels, environmental degradation, increased suicides, destruction of families, and failing societies which elect charlatans and in worst cases malignant narcissists that have messianic misguided tendencies with sociopathic or psychopathic proclivities that will lead that country down the road to ruin.
I welcome any and all responses.
Lol lost me at Kushner is not an idiot
Are you still long the ORCL position?
You mention that high inflation and the 'central bank cage' will lead to ample liquidity. Could you elaborate on the transmission mechanism here?
if they dont tighten (think 2021), we have a bubble
You can already see that Japan and Korean stockmarkets are falling much harder than the Chinese ones
Wanna add:
so far the fact on CN local level is the ones refine Iran oil are still producing relatively stable both in YoY and MoM terms--specially comparing to those ones that refine "legit" oils.
So much for Chinese iran oil import 4D chess game...not winning
But Trump do win is an economy war against its allies, really.
But hey, if allies therefore increase military spending, and become more physically involved in regional security... etc., does this not exactly what this government has been claiming to do all along?