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Bubbles and Backlashes

October 13, 2015

Bubbles and Backlashesfinancial panic

Image: trialsanderrors/Flickr CC.

Financial markets have been turbulent as of late with no end in sight. A sagging global economy could overwhelm America’s recovery efforts with toxic effects on key climate change and clean energy initiatives now underway.

The Federal Reserve’s recent decision to postpone an interest rate hike is but one reflection of their deep global concern. In a world of multiple, interrelated systems, a sneeze in one global system could cause pneumonia in another; ultimately triggering a perfect storm.

As the global economy worsens and bubbles start to burst, an over-fixation on economic recovery could relegate promising clean energy and climate change initiatives to a secondary status, or worse. The geopolitical blips on the radar screen are ominous. Consider this:

1.We’ve been warned

Global asset, credit and debt bubbles are on the cusp of bursting. My email “News Flash” warned of this last May (See: “Bubblemania is Contagious – Five Warning Signs”). The punctured commodity bubble has already demonstrated the economic fallout to nations exporting raw materials. Imagine the impact of multiple bubble bursts all at the same time. Bottom line:  Bubbles always burst; it’s not about if, but when.

2. American limitations

America’s economy is strong compared to many others, but not strong enough to lift the world back into prosperity. In fact, the opposite could occur. China’s declining growth rate (See: “The Chinese Ripple Effect“), deep economic malaise in Europe, Japan, Russia, Brazil, OPEC nations and others, and a slowdown in global trade are taking a toll. Bottom line: Global economic headwinds will be difficult to overcome in the foreseeable future.

3. Low on ammo

In an effort to recover from the Great Recession of 2008 and stimulate growth, our Federal Reserve and central banks worldwide have “printed” money, devalued currencies, created an easy money environment and purchased debt (Quantitative Easing). In addition, governmental fiscal policies have piled on huge deficits and debt to stimulate growth.

– See more at: http://transitionvoice.com/2015/10/bubbles-and-backlashes/#sthash.XM1igyNv.dpuf

 

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