by Charles Hugh Smith
Of Two Minds
The global political/economic state feels precarious for a good reason: it is precarious.
That the global economy is in a precarious state seems self-evident. Take your pick of the systemic risks: debt bubble and slowdown in China, banking/political crisis in Europe, negative interest rates and stagnation in Japan, ongoing meltdown in emerging markets and currencies, oil prices that threaten mayhem if they go up and if they go down, and a downturn in global trade that is usually associated with recession.
Other than that, everything’s great. How about those summer Olympics? Seriously, what isn’t in a precarious state?
If the global financial sector isn’t precarious, then why is capital flooding into negative interest bonds? Why are money managers willing to accept a guaranteed loss of capital if things are going great and opportunities for low-risk profits are abundant?