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Lack of Global Liquidity making countries act more aggressive?

February 15, 2016

Lack of Global Liquidity making countries act more aggressive?

by Lushfun

 

As we approach the liquidation phase of the debt paradigm. Perhaps the internal/external dynamic as it impacts economies via debt growth and constraint by the necessity to pay it back in the future, we may see this desperation seep into the global political establishment. Every bet becomes more dear since the resources spent to establish it are no longer available in the same dynamic as before. This is can be seen in Turkey, Russia, Saudi Arabia, Iran, Syria nexus. We can even notice how lack of ability to expand trade or clear out debt is forcing China to posture outward to give it an out, if need be to re-direct any possible discontent from gradual marginal decline in global demand.

 

Theoretically there would be a clearance mechanism other than war for aspect such as this one. Where some countries lose their “bet” and are cleared negatively while other win and cleared positively. Ramifications of these aspects would seep into the financial system since a lot of sovereign debt is denominated in foreign currency and along with that corporate, and other debt of those countries as well. In some sense since the world was ‘stagnant’ for so long with borders not being dynamic in the sense of exchange of goods and services, the pent up energy of disequilibrium was directed elsewhere into destructive ideologies or geopolitical plans to rectify prior aspects.

 

We have yet to see a full unraveling of something coming to a heed, where the global financial waves are uplifted and shoock for a bit for some of the conflicts happening in the world today. If one loocks back in history the impact from various crisis changes some sort of dynamic of our lives, be it asset prices in the form of real estate, or how people are treated, or perhaps how we see the world. Right now most of the crisis that occur are somewhat in a vacuum and are only beginning to impact the world at hand. Refugees coming to Europe and setting off a right-shift in ideological lean is part of this but to a degree this was coming for a while simply was an accelerating catalyst to an already shifting world view there. Imploding debt setting off the need for ‘guaranteed income’ to maintain asset prices is more where my thoughts are going.

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