If the status quo is so good why would we vote out the incumbents?


Almost everywhere we look, we’re told by the political class how good our lot is. Our blessed Aussie PM told us, “It has never been a better time to be an Australian.” Boosted asset prices, low unemployment and tepid inflation gives the illusion of real wealth for everyone. As an electorate, if all of that were true, why wouldn’t we be going out of our way to make sure the status quo gets voted back in with similar if not greater majorities? As it stands, more and more incumbent parties are hanging on by their finger nails, being forced to create alliances to stay in power rather than stick to the principles their parties were founded on. The irony is that these grand coalitions are formed on the tenets of ignorant ‘un-populism.’

The latest election cycle shows us that a growing number of people aren’t buying mediocrity. They’re sick of incumbent politicians ignoring them. The current crop of leaders seem to think that being less worse than the opposition is a virtue to be proud of. Yet poverty levels continue to rise and wealth is not trickling down to the masses. Even rising state entitlements have a finite life and the electorate knows it. Being married to the government is not seen as a desirable strategy long term. Deficits keep rising and look increasingly hard to pay down.

Searching through the St Louis Fed database, civilian employment under Obama managed to grow 2.5% on pre-crash levels. So the US loaded up on $9 trillion in short term debt to create 4 million net new jobs. That works out at $2.25 million per worker. Hardly an achievement. Yet despite that economic growth has dithered at the lowest post recession rates ever. As much as we might want to celebrate record low unemployment these are not proud statistics. The quality of jobs keeps going down. $8.4 trillion of this federal debt load needs to be refinanced inside 4 years. $12.3 trillion inside 10 years. While politicians can call the average voter stupid, the daily struggles of the average punter shows how out of touch the law makers are. This was the grand mistake made by Clinton. While she hung out with her elite mates at $1,000 plate dinners in Democrat strongholds in LA, NY and Chicago expecting a coronation, Trump hit the little people and had crowds flocking to see him.

While Trump’s trade tariffs seem daft on the face of it, it was done for the forgotten people who voted for him. He is not concerned about the consequences. That’s the point. So much of his platform appears abhorrent but he is the only politician in danger of being raked over coals for keeping his promises. That’s why he was elected. The status quo had failed to deliver over decades. 80% of the population didn’t benefit from the asset bubble post GFC. The 1% took 42% of those gains. The average Joe and Joanne see this. While they might not fully comprehend it they know enough to see their situation is not much better.

Take a look at Trudeau’s India debacle. Apart from the embarrassing wardrobe saga, the bigger problems came when he blamed the Indians for letting a known terrorist attend a state dinner. The Indians, unsurprisingly, were most unhappy at the accusation. Many look to Trudeau as the posterchild of the left, pushing peoplekind. Telling Canadians that he will convert returning ISIS fighters with haiku poetry, podcasts and comparing them to Italian migrants at the end of WW2 is utterly preposterous to his constituents. Telling his veterans they’re asking for too much flies in the face of love of one’s country. No wonder his popularity continues to dive. His speech to the UN – where he rattled off how Canada was ticking all the UN diversity boxes – was only a quarter full. Not even his own liberal mates rallied to show unity in numbers. It was telling that virtue signalling is all about appearing to do good rather than doing it.  Yet the day before Trudeau presented, Trump spoke of America First and the audience was packed. They might have hated every word that dripped from his tongue but they didn’t miss it for the world. It is hard talk. Not carefully prepared politically correct nonsense.

Take the recent European elections. Germany gave Merkel the worst ever performance of the CDU post WW2. The SPD was even worse. The anti-immigrant AfD stormed to 16%. Is it any wonder that when Merkel’s misguided altruism  showed up on Election Day even she finally conceded we have a problem with “no go zones”. Some may wish to look at the Merkel miracle of growth and low unemployment but the public service in Germany has exploded from 9% pre 2008 crash to 16% today. Not private sector growth but public sector.

The Italian election showed over 60% of the vote went to eurosceptic parties. While volatility has always been a feature of Italian politics, this results showed the discontent underbelly of Italy which has seen poverty jump 50% to one third of the population since Lehman collapsed. While M5S said it wouldn’t form a coalition, all bets are off if it tied up with League. There are plenty of overlaps on the party platforms but the M5S would have to insist on the PM role. The EU would go into a tailspin on such news.

Austria voted in a wunderkind who put the right wing anti immigrant FPO in charge of immigration. Holland saw Wilders claw more seats. Nationalist Marine LePen in France doubled the number of seats ever attained by the Front National. Even Macron is changing his spots looking to introduce national service and take a harder line against migrant crime.

Whether the real statistics of migrant crime are wholly accurate or not is beside the point. It is increasingly seen as an election issue and more EU countries have had enough. They feel their lot is getting worse and view forking out billions in aid for people to settle here is pennies out of their pocket. If the stats are as the government sugar coats them to be in terms of the prevailing prosperity surely the citizens would overwhelmingly back them. Sadly the opposite is true meaning politicians aren’t selling their “compassion” effectively. Too many examples of gagging the police and muzzling the press have surfaced.

That is the thing. If the economy was rosy and bullish and more people felt secure there is a likelihood they would look at the immigration debate in a more positive light. All they see now is millions flocking to Europe as poverty is on the rise and the economy is on the back foot at ground zero. European EU-28 GDP hasn’t grown since Q4 2015. Despite a quadrupling of ECB assets net jobs created post GFC numbers 4 million, labour force participation remains below the peak. However we should not forget that Romania and Bulgaria joined in Jan 2007 and Croatia in 2013 which would add (at a 50% employment ratio) c.20mn meaning that employment in the EU on a like for like basis as a whole is down 16mn jobs ceteris paribus. Even if only Croatia was included then net jobs creation in EU-28 would be a paltry 2mn, or a smidgen above 1%. Anemic.

Yet the political class still doesn’t seem to be learning, especially the EU. Poland and Hungary have formed a pact to reject proposed quotas on migrants. The EU has failed to address the most important question. The wishes of the migrants themselves. It is one thing for the EU to appeal to voters as saving asylum seekers from war torn lands (when 80% are economic migrants by the EU’s own numbers), it is another to forcibly send them to countries that flat out don’t want them. Ask for a show of hands of asylum seekers looking to stay in Germany or head off to Hungary to settle and the likelihood is 100:0. Trying to make Hungarians or Poles feel guilty for being incompassionate is a price they’re clearly willing to pay with losing EU membership. Would we take kindly to a neighbor telling us how to arrange our furniture in the living room or sign a petition to prevent us building extensions even though it is not even in their way? Of course not. Still wagging fingers in disapproval is only likely to steel their resolve.

Flip to the Southern Hemisphere and Australian politics is also exposing the sordid state of the swamp. 5 PMs in 10 years. Now the Deputy PM has had to resign to the back bench and in a last ditched effort to claim some sort of moral high ground with the staffer he was having an affair with. He claimed he would still look after her even though a paternity test might show the kid wasn’t his. What a grub and a slap in the face for his partner to imply she may have been promiscuous. Once again the popularity of the incumbent parties in Australia continues to sink to all time lows. The Labor Party looks to have the next election in the bag but even then the popularity of the opposition leader is woefully tiny.

While the world seems to be in this state of blissful tranquility on the outside, we needn’t probe too deep before seeing how bad things continue to be on the inside. The little people may not have any financial fire power but at the ballot box they have an equal opportunity to stuff those that aren’t listening. Once again Italy shows us it wants change. Call it populism if you must but it is truly a reflection of just how bad things really are and how little ammunition to deal with any future crises remains. The little people are raising their voices. Best heed their words. It is the same reason why as zero chance as Trump looks in 2020, don’t bet against another 4 years in the White House. If the Dems hope that celebrities that talk of #METOO and gun control (all the while they attend Oscars semi-naked and collect their millions doing action films full of explosions and automatic weapons fire) will sway them to a return to the swamp they’re sorely mistaken.

$8.4 trillion of the $21 trillion in US debt matures in 4 years. What could possibly go wrong?

E0F20948-4A5A-48F1-B8AF-06FA92EBAC7AWith a US Fed openly stating it is looking to prune its bloated balance sheet by around $2 trillion, it seems that $8.4 trillion of that debt held by the public matures within the next 4 years according to the US Treasury. To that end, debt maturing in the next 10 years totals $12.233 trillion. It needs to be ‘rolled over’. The national debt pile has jumped $1 trillion in the last 6 months. After the GFC and an overly accommodative central bank, the Treasury took advantage of this free money. Under President Obama, the debt doubled. That’s right, debt in his 8 years equaled that of the previous 43 administrations combined. Most of it was short term meaning the mop up operation starts earlier.

While there is little doubt this $8.4 trillion will be recycled, the question is at what price. With rising rates and a Fed back-pedaling one would expect the interest bill can only lift. At the moment the US federal government pays around $457 billion p.a. in interest alone. Average interest rates rose for the first time since 2006. Were average rates to climb back to 2007 levels then the interest bill alone would surpass $1 trillion.


This global aversion to tightening belts continues. Many US corporations have taken the same approach to their balance sheets as the government as pointed out in the previous example on GE. Lever up and be damned with the credit rating as the spreads have been almost irrelevant to higher rated paper. It has been a financially credible decision to lower WACC and increase ROE provided one didn’t lose control and overdose on free money. However the relatively short duration on corporate debt is facing a similar refinancing cliff as the US government.

All this cumulative debt needing refinancing while credit ratings are on average the worst they’ve ever been in a rising interest rate environment coupled with a bubble in bonds while a growing number of these levered consumer and industrial stocks have negative equity. What could possibly go wrong?

Do we see the Fed reverse its decision and embark on more QE? Indeed to do such a thing would tank the dollar and send the yen back towards the 70s to the US$. Interesting times ahead. Throw on the $7 trillion shortfall in state public pension liabilities and watch the fire from the other side of the river. Finally some university think tank has come out saying that wiping out the $1.5 trillion in student debt would be ‘stimulatory’ to the economy adding 1.5 million jobs. What a world we live in when we get to walk away from responsibility and accountability.

Gun makers or Drug makers? Who should we be more afraid of?


One by one, more of Corporate America is shunning the National Rifle Association (NRA). There is a touch of irony, perhaps hypocrisy about these moves. For a long time it has served rental car agencies, United Airlines and credit card companies to show their support for the NRA as its membership base was credibly large that it was ‘good for business.’ Despite dozens of massacres after the Columbine High School shooting in 1999 why did they not shun the NRA in the last 19 years? Why didn’t the 14 gun massacres under Obama where Democrats had a majority in the House and Senate cause them to ban guns or automatic rifles period? Now all of a sudden corporates have woken up from their wistful slumber to realize that supporting the NRA may no longer be appropriate “in moving with the times”, the very phrase which is used to silence debate. In the process these corporates pillory all members of an association that in the overwhelming majority of cases are law abiding citizens.

Let’s make it clear. CM is no fan of guns. CM is a fan of laws. A fan of democracy that lets people vote on issues such as this. Changing the constitution is in most countries a matter for the people to decide, not just the handful of politicians within the walls of law making. CM doesn’t need a gun. CM doesn’t want a gun. CM, like most reading this can’t understand why one would want to massacre innocent people with a gun. However we’ve stated clearly that banning guns won’t fix the problem in America. One could easily drive a car through a school campus and mow down dozens of kids during play time. Do we ban cars? The two students who carried out the Columbine massacre had handgrenades, pipe bombs and propane time bombs. While guns were the sole cause of the 15 deaths, these kids had intended to murder 100s in the commons area with the bombs (which were made from everyday off the shelf items).

Although when United Airlines starts taking the moral high ground with respect to the NRA after its own scandals of heavy handedly frog marching passengers off its aircraft it isn’t worth listening to. If these corporates could openly say that running NRA discounts was not worth it on economic grounds in terms of the administration in running such programs one could understand. If they made rational decisions that showed their business would fall of a cliff by supporting the NRA one could understand. It hasn’t happened in 20 years, so why now? If one chooses to fly United for whatever reason (convenience, price, family emergency) will they stop flying it in fear of association with the NRA might be bad for their image? Does the average American, where there are as many guns as people, think ill of the NRA? 32% of US households own guns. Are 32% of households unhinged lunatics? Granted the NRA does itself  little favors in the PR department after such tragedies.

As we’ve written in recent days, the growing incidence of broken homes and the surge in the dispensing of antidepressants to ‘tranquilize’ those who might be tempted into suicidal or homicidal tendencies is a worrying trend. Pharma companies are expected to mint $17bn in antidepressants by 2020.  Should we spurn Eli Lilly’s over-the-counter drugs because they are the evil corporates milking billions from Prozac?

To put it into perspective the total number of overdose deaths involving heroin from 2002 to 2015 jumped 6.2-fold in the US. Automobiles killed around 32,000 people last year or a little over 2x that of heroin overdoses. When adding non-methadone opioids (illicit fentanyl) overdose that number surged to 20,000, a 33% YoY jump on 2014 and 5.9x 2002. Why is it happening? The problem for many prescription painkiller users is that once their bottle ends, the addiction doesn’t stop meaning many switch to heroin to get the same ‘opioid’ hit.

Excessive use of pain relievers make up a large proportion of illicit drug use. Oxycodone is one of the more common type of opiate pain killer and it is highly addictive. In 2010, the US Food and Drug Administration (FDA) required the formulation of OxyContin be changed to make it harder to become addicted to. Talk about loading patients with too much ammunition.

As opioid overdoses rise, companies such as Adapt Pharma have seen sharp rises in the sales of products like Narcan (Naloxone) which basically revives victims from the dead. Narcan publicizes its price that is even insured meaning one can overdose and revive with a $10 co-payment.

94% of insured lives in the US have coverage for NARCAN® Nasal Spray*. According to IMS Health, nearly three quarters (74%) of prescriptions for NARCAN® Nasal Spray have a co-pay of $10 or less**. For those paying cash, ADAPT Pharma has partnered with retail pharmacies to reduce out of pocket costs (Retail is $62.50/dose)…To expand community access, NARCAN® Nasal Spray is available to all qualified group purchasers for $37.50 per 4mg dose ($75 per carton of 2 doses). This pricing is available for all Qualified Group Purchasers, such as first responders (EMS, Fire Department, Police), community organizations and Departments of Health, regardless of size. This pricing represents a 40% discount off the Wholesale Acquisition Cost (WAC) of $125 per carton.”

Price hikes have been a feature of naloxene. As of January 2015, Amphastar’s version of naloxone was up to $41 a dose, according to Fierce Pharma, a pharmaceutical industry news website. That follows a price increase from $17 to $33 a dose back in October 2014, according to data provided by Truven Health Analytics. So not only is volume spiking, so is price. Walgreens has expanded the availability of prescription-free naloxone to 33 states.

West Virginia health officials are responding to opioid overdoses by distributing more than 8,000 kits with Naloxone that can get people breathing again if administered in time. Money for the kits comes from a $1 million federal grant to West Virginia, which has had the nation’s highest rate of overdose deaths at 41.5/100,000 people.

Local emergency medical services agencies in West Virginia administered 4,186 doses of Naloxone in 2016, up from 3,351 the year before and 2,165 two years ago and that data doesn’t include uses by hospital emergency departments, urgent care centers, first responders and family members.

The gun industry in America is around $11 billion. 35,000 work in the manufacture of guns and ammo. There are 50,000 retailers in the US. 32% of American households possess a firearm. One-third. The federal government collects $132 million in taxes on guns. 17 million background checks for gun purchases are conducted annually.

By all means let’s have common sense debates on regulation surrounding guns. Sending memes of Republicans on the payroll of the NRA can be met with as many Democrats accepting fortunes from the pharmaceutical lobby so as to prevent price cuts being driven through Congress. While guns maybe noisy killers, pharmaceutical companies are  in a sense becoming (or already become) stealthy silent assassins. Their drugs causing patients to switch to harder substances. 13% of adolescents are on antidepressants. Thirteen percent. 68% of them have taken antidepressants for 2 years and a quarter for over a decade,

The tragedy of school shootings is awful in every conceivable way. How it tears families apart, destroys the lives of survivors who must cope with unspeakable trauma and creates a platform for such horrid knee jerk responses in all forms of media. How the loss of 17 lives takes a back seat to agendas which feed the very opposite of the intention they proclaim. Corporates joining the bandwagon only fuel mixed messaging. It is exactly the type of ‘shaming’ that was so prevalent at the time of the election.

Trying to get the NRA to come around to spreading the word amongst its members that banning bump stocks and certain weapons is feasible won’t occur when corporates and the media publicly kick them. It is never an easy discussion but it only makes members want to dig their trenches deeper. Do people honestly believe that all NRA members would reject common sense proposals about screening, age limits and certain weapons restrictions? Yet that is the picture that is painted. They’re lunatics to a man, woman and child. Let’s hope that United Airlines and others that have spurned the NRA now turn to the drugs list in the company health provider to ensure that those pharmaceutical companies behind so many of the deaths from the explosive concoctions they sell are dealt with in the same way. Here’s a prediction. That hasn’t crossed their minds. So much for pharma companies saving lives. They are cashing in as a growing number of patients check out.

Playing down a mass suicide note


With the release of the Nunes memo, do top Democrats honestly believe that such collusion by the DNC with the nation’s judiciary and intelligence services doesn’t expose the hypocrisy of a party which proclaims its platform is all about equality and liberal ideals? Does it not expose that these politicians are only in it for themselves? Is it any wonder the Democrats are proclaiming this memo is ‘misleading’ or worse that Americans are too stupid to understand the memo? On reflection they probably had wished they’d stood and applauded during the SOTU address instead of childish frowns of bitterness and playing Candy Crush on their smartphones.

While many Americans probably suspected corruption (so brilliantly conveyed in ‘House of Cards’) for decades, they have had it transparently confirmed.  The DNC hope was that the illegal and doctored FISA application would sink Trump as a candidate and lock in a Clinton White House. By then the scam could be lost as easily as 33,000 emails. Power corrupts. Absolute power corrupts absolutely.

Who could forget Bill Clinton’s chance meeting on a Phoenix tarmac with Attorney General Loretta Lynch the day before her testimony on Hillary’s email scandal? Did anyone honestly believe they just talked about grand children? Lynch downplayed the severity of the private server as ‘careless’. Conservative watchdog Judicial Watch has found 30 pages related to the encounter at the FBI, after being caught for hiding them in another lawsuit.

Obama was front and centre of the Clinton campaign. Hillary caught the jump seat on Air Force One numerous times. Are we to believe that this dossier was never discussed on board? That Obama, so obsessed with protecting his legacy,was in no way complicit in making sure Trump wouldn’t get in the Oval Office?

If we go back to mid 2006, news broke that the NSA was tracking the calls and emails of tens of millions of Americans to create  the “largest and most comprehensive database ever assembled in the world.” In the summer of 2007, the Bush administration pushed FISA amendments known as the “Protect America Act” through Congress which authorized the surveillance of any phone call or email by any American suspected of ‘suspicious dealings’ with ‘foreigners’.

As a presidential candidate in the 2008 election, Senator Barack Obama pledged that there would be “no more illegal wiretapping of Americans”. Post the election win, Obama reversed his position and continued the Bush-era surveillance via FISA. Obama’s Department of Justice aggressively defended court challenges from anyone who suspected their phone calls or emails had been illegally traced.

In his last days as president, Obama authorized the NSA to share its volumous databank on Americans with other federal agencies, opening a can of worms for politicians to dig up dirt. Talk about muddying waters in an already dirty swamp. This seems like a move that could badly backfire if a cleaning house of the FBI and DOJ is undertaken. What option has the president but to do it? What better way to talk of transparency to the American people than lop heads of such duplicitous people.

Therein lies the problem. When the state’s own intelligence services are working so closely hand-in-hand with political parties to keep dynasties alive one has to question democracy. Despite Wasserman-Schulz stabbing Sanders in the back, a mainstream media overwhelmingly behind Clinton, a p*ssy grabbing opponent, we now learn that not even a dossier paid for by the DNC in cahoots with the FBI and DOJ to cheat FISA got Democrats across the line – what a hatchet job.

Even Turkish President Erdogan would blush at the level of ‘duplicity’ of this scandal. This is abuse of power on an industrial scale.  One wonders whether the often made claim that the ‘Obama administration was one without scandal’ maybe tarnished with one of the worst. We haven’t heard the last of this.

Usually a mutually exclusive headline in WaPo


Surprising to see such an opinion piece in WaPo. Usually mutually exclusive subject matter with such a title. Admittedly the author said she had incredibly low expectations.

Who said it?


Trump’s tweets on the comparative size of nuke buttons or his supposed genius are juvenile and arrogant. While hardly surprising it detracts from some of the more important things he is actually doing for the greater good.

While not talking of two wrongs making a right it is also unsurprising that the mainstream media overlooked this in terms of arrogance:

I think that I’m a better speechwriter than my speechwriters. I know more about policies on any particular issue than my policy directors. And I’ll tell you right now that I’m going to think I’m a better political director than my political director.” — Senator Barack Obama

Always important to call out for balance when one’s own side is also in the wrong. How they are all fawning for Oprah 2020

2018 – no more space for multiple ‘elephants’ in the room


The Contrarian Marketplace wishes everyone a Happy New Year and prosperous 2018.

As oft the case people are busy making new year’s resolutions. CM mission doesn’t change. It aims to further energize the spirit of enquiry. To be the maverick voice that will not be silenced. We live in a world where we need to become comfortable being uncomfortable. We can no longer hide behind group think Because we feel it is dangerous to challenge consensus views. CM won’t buckle to identity politics, victimhood or social justice.

However that will never exclude us from criticism and we welcome feedback to improve the offering. We will not take The Guardian approach of refusing to acknowledge the content might be the problem when appealing for readers to ‘donate’. CM is self funded. It will remain so because it never wishes to be beholden to others to peddle tailored messages to keep the lights on.  If CM doesn’t survive on its own merits then it dies through market forces.

In 2017, Brandon Tatum showed what impact a Tucson, Arizona police officer can have on today’s media. His videos have gone viral (50mn+ views) on topics from the NFL, BLM to anti-Trump protests. He is now working for the Conservative Tribune such has been his impact. He speaks in cold hard truths. One doesn’t have to agree with what he says but he makes compelling arguments. No accolades from the journalist associations to self congratulate. As we used to say at high school sports competitions- “look at the scoreboard.”

CM started two years ago to challenge conventional thinking on all manner of topics.  It was born out of a growing realization that the mainstream media on both sides of the fence was too biased. Investigative journalism has all but disappeared, replaced with clickbait headlines and little more than biased piffle for what can only loosely be described as content. It seems that journalists are paid on the number of shares or likes rather than the quality of input.  As Ariana Huffington once said, “I’ve long said that those of us in the media have provided too many autopsies of what went wrong and not enough biopsies.”

2017 has been a continuation of the ridiculous pandering to political correctness and our lawmakers seem even more determined to avoid censure from social media, somehow thinking it speaks for the majority. Gender neutral toilets, removing statues and same-sex marriage take priority to the oncoming fiscal/monetary train wreck and a fracturing geopolitical landscape. It is almost as if our elected leaders have the blinkers on.

2018 is shaping up to be one that our political class is ill prepared for. Out of one’s depth is not a harsh enough criticism. Too many governments (including conservatives) are running up the national credit card trying to bribe bewildered constituents into tolerating more of their nonsense. However at some point, appeasement will not work because government’s can’t economically afford it.

Silent voices are increasingly pushing back. Traditional parties are seeing their constituents abandoning them. Australia’s conservative Liberal Party is Exhibit A. It is no longer a party true to its core. After the Turnbull coup it has taken its constituents for mugs but they have left in droves. While the Libs champion superior leadership, how is it One Nation has taken a huge bite out of it’s support base? It doesn’t add up and its this sense of denial that guarantees they’ll be destroyed at the next election.

Look at the growth in nationalist parties in Austria, France, The Netherlands, Germany, Italy and even America. While they may not have outright majorities in every case the reality is that all of these parties surged in the most recent elections. Mainstream parties can mark it down as a one-off or ‘they’ll be back’ mentality but this time is different. Take Trump. His GOP hate him almost as much as the Democrats. While the mainstream media ties itself into knots over the relevance of well done steak and tomato ketchup to running a country or the fact he paid millions in tax, his brand of political incorrectness is refreshing.

Sure his words are vulgar at times and Obama knocks the sports off him for eloquence or as a nice guy but we are in a world of ruthless people. The geopolitical landscape is rapidly changing. The last US administration allowed a free-for-all for nations such as China and Russia to roam free on the global landscape. Russia’s actions in the Ukraine, Syria and Iran or China building man made military bases in contested Asia-Pac waters have filled a vacuum vacated by the US. We should be glad that we have a Trump who is putting his foot down that things have changed.

While Trump’s use of ‘Rocketman’ to describe North Korea’s leader may seem juvenile, China hasn’t fully worked him out. They stroked his ego by allowing him to be the first President to dine in the Forbidden City after his rhetoric saying that if they don’t deal with Kim he will. The resumption of Chinese oil trading with North Korea in full defiance of UN sanctions tells two things. China thinks the UN is a waste of space and it is testing Trump’s resolve to carry out his threats to take care of business with minor provocations. China’s military is nowhere a match for the US so this could backfire badly if they miscalculate. This will escalate again in 2018.

Don’t rule out India’s growing frustrations with China. China’s built a naval port in Sri Lanka’s Hambantota. Recently the Maldives signed a FTA with China which should be ringing alarm bells in Delhi. For the last decade, China has been strengthening its armed (ground and air) forces to India’s north too, including the funding of the upgrade of the 1300km construction of the Karakoram Highway (aka China-Pakistan Friendship Highway). It is no surprise that Russia has been replaced by the US and UK as preferred arms suppliers to India.

As written several days ago, the Middle East seems to be an unstable powder keg. The way the stars are aligning with respects to the death of the former Yemeni President Saleh, the cleaning of the House of Saud, the repudiation of Qatar by the Gulf states and ructions in Iran point to something larger to kick off. Do not be surprised to see Israel and Hezbollah clash again in 2018. It won’t be an Arab Spring. Afterall this is more a shift toward a more direct clash between Sunni and Shia, not just played through proxy wars in Yemen, Syria or Lebanon. One can’t sink Saudi and Emirati naval vessels off Yemen’s coast with Iranian Revolutionary Guard support indefinitely.

These geopolitical problems will only put pressure on global markets which are already overstretched asset bubbles in almost every form – equities, bonds and housing. The realisation that unfunded pensions are likely to wipe out the retirements plans of millions causing even more pressure on economic growth. There is no escaping the fact that the can has been kicked down the road for too long. Whether 2018 is the precise year it unfolds is still a moot point but we are moving ever closer to the impending financial collapse which will be uglier than 1929.

Central banks have no plausible ammunition left to play with. Bloated balance sheets filled with mislabeled toxic assets (liabilities). Record low interest rates offer next to no policy flexibility and tapped out consumers face oblivion if asset prices keel over. A systemic banking collapse is absolutely plausible. No amount of QE will work this time.

Yes, it would be nice to see 2018 trump 2017 for good news (it wouldn’t be hard) but sadly the punch bowl at the party is empty and the hangover won’t be pleasant. No amount of painkillers will let one avoid a throbbing headache which will last a very long time.

Forewarned is forearmed.