Home Looming financial crisis: A self-fulfilling narrative?

GEAB 131

The monthly bulletin of LEAP (European Laboratory of Political Anticipation) - 15 Jan 2019

Looming financial crisis: A self-fulfilling narrative?

Happy New Black Clouds?

The standard wishes for a Happy New Year seem almost out of place for many, given the black clouds[1] that seem to be gathering over the economy of the United State of America (US)[2] and the political threats to the economy existing in the European Union (EU).[3] The proximate causes are not hard to see and, without being exhaustive, include:

  • The trade-war between China and the US, which has boiled over to the point where business travellers have been arrested[4]
  • The government shut-down and ongoing dysfunctional politics in Washington[5]
  • The uncertainty perpetuated by the prospect of either a ‘hard Brexit’ or of endless post-Brexit talks[6]
  • The rampaging of yellow-jackets, burning President Macron’s EU credibility as well as buildings[7]
  • Increased visibility of overtly nationalist politicians in governments in Europe and beyond[8]
  • The prospect of conflicts flaring up into fighting again in places like Eastern Ukraine and Kosovo[9]

A cool head would look at this and point out that political and geopolitical turbulence has always been around, and we should not worry so much. After all, the US President hasn’t been caught sending ‘burglars’ to the Watergate building, Russia hasn’t invaded Afghanistan, the Soviet Union hasn’t collapsed, the World Trade Centre hasn’t been destroyed by passenger aircraft, the financial markets haven’t gone into meltdown because of sub-par Collateralised Debt Obligations being sold as AAA rated assets, Japan hasn’t had another nuclear power plant meltdown and there are not another million refugees all heading to Germany at once. And, given we managed to overcome those past events, surely we must be able to handle the current batch of bad news.

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