Bubble will burst and states will have no quick fixes
First published: https://www.businesslive.co.za/bd/opinion/2018-02-13-bubble-will-burst-and-states-will-have-no-quick-fixes/
When the crash becomes a reality, the political and social consequences will be chaotic and very uncertain.
In early January, capitalists across the globe were celebrating the fact that the Dow Jones had rallied by 45% since the election of US President Donald Trump.
Brokers were beaming in Sandton when the JSE hit a high of 61,475 points. Up a staggering 300% since early 2009, when it was 18,465 points. Yet beneath all the exuberance, danger signs abound, including signs that stock, bond and debt markets are experiencing bubbles that will burst at some point.
The danger derives from the reactions of the ruling classes and their governments to the crisis of 2008.
The paths they chose to follow to save and increase their wealth in the aftermath of the 2008 crisis have paved the way for a future crash that could dwarf the one of a decade ago.
The main thing currently keeping the global economy stumbling along — and not crashing down as happened in the 1930s — has been massive intervention by governments in the EU, US and China.