You do have to become a teensy bit worried when very bright economic and fiscal commentators like Ambrose Evans-Pritchard appear to be struggling with the interminably impenetrable detail of WTF is going on.
Some examples include:The effect is doubly powerful since the US economy is simultaneously coming back to life. (Is it?)a strategic and economic setting more conducive to a blistering dollar rally, a process that will pick up speed as yields on 10-year US Treasuries break through 3pc. (Rallies alongside rising borrowing costs?)
I doubt that we are safely out of the woods, let alone on the start of a fresh boom. How can it be if the global savings rate is still rising, expected to hit a fresh record of 25.5pc this year? There is still a chronic lack of consumption. (Correct, but I thought you said the US economy is undergoing a resurrection?)
It will take politics – not markets – to break this bad equilibrium, the moment when democracies cease to tolerate youth unemployment of 58pc in Greece, 57.4pc in Spain, 41.2pc in Italy and 36.5pc in Portugal. (What – you mean like they’ve done so far?)
China may try to cushion any hard-landing by driving down the yuan. The more that Mr Abe forces down the Japenese yen, the more likely that China will counter with its own devaluation to protect the margins of it manufacturing industry…..his will transmit an a further deflationary shock through the global system, catching the West sleeping with its defences against deflation already run down. The US may be strong enough to cope. For Europe it would be fatal. The denominator effect would push Club Med into a debt compound spiral. Let us give it a 30pc probability. Happy new year. (We don’t have a debt compound spiral already then?)
It simply doesn’t make any kind of sense. And of course (just to produce even more anarchic chaos on an omnidimensional scale) it doesn’t even take into account any eurobank failure or sovereign (Greek/Italian/Spanish) default – either or both of which would pretty quickly wipe put at least three top ten Wall Street firms.
But such is the nature of this physical Earth upon which Salvador Draghi controls Europe, Goldilocks Flax controls the US, Abba economics controls Japan, geriatrics control Beijing, Osborne the Draper controls Britain, and Tony the Mad Abbot controls Australia, the question one must ask is, “Is anyone at the controls?”
On top of all this, of course, poor AEP has to accept that he is working for two fat blokes in the Channel Islands. It’s a funny old world, innit?