It is probably a sign that markets have peaked (the Dow plunged 800 points Wednesday) and we are heading into a storm when The New York Times runs a major feature on multimillion-dollar survival condos built in abandoned missile silos and bunkers hardened to withstand nuclear war. On the one hand, it’s nice that some folks have a few million to spend on having a place 15 stories below ground with its own dog park and indoor farm.
On the other hand, what the fuck? Is this what the world has come to?
The short answer is “yes.” The long answer is: Aaaaaaaahhhhhhhhhhhhhh!
Like it wasn’t bad enough to have the worst president in American history—a corrupt, racist, serial sex abuser who is deeply unstable and getting worse daily. Or that his successor, were he to someday succumb to his awfulness, appears to be a department store mannequin salvaged from some failed shopping mall in Bloomington, Indiana. Or that the secretary of state actually believes the end goal of U.S. foreign policy should be the Rapture.
No, it’s worse than that. Have you turned on the financial news lately? My advice is do not. But if you do you will see that the world economy has entered a skid, while approaching a cliff, and with nincompoops at the wheel.
You’ve heard about it. The yield curve has inverted. That sounds bad, right? If a doctor said your yield curve had inverted, you would get your affairs in order and probably wouldn’t even bother bidding for one of those lifetime passes to Olive Garden that they’re selling at $400 each because you wouldn’t imagine you’d get many bowls of carbonara out of it.
Well, candidly, it is bad. When the yields on 2-year bonds pay more than those on 10-year bonds, it means that investors are very worried about near-term risks. And for the past half-century, every time this has happened, the result has been a recession. And it has happened seven times, the last time in 2007. You remember what happened after that, don’t you? That’s when you decided you would work until you were 85 and then tie an anchor around your neck and throw yourself into into the nearest ocean.
Well, every time the yield curve goes all pineapple upside-down cake like this, trouble ensues. On average, a recession sets in within 22 months. But that’s not all the news that should make us concerned about the world economy. Europe’s largest economy, Germany, is markedly slowing. China’s too. And hopes that the U.S.-China trade war will come to an end any time soon have faded a bit, with some leaders in China thinking they may just be better off to wait a bit and see if Trump and his trade team might leave office in a year and a half.
That trade team, by the way, may well go down in history as the worst ever. I was a trade official in the Clinton administration and have taught trade policy in some major universities, and I have to say, there is not one of these yobbos that I would even accept in my class. Trump has regularly tried to make the case that tariffs such as those he has levied on China are paid by the Chinese—not true, of course. They’re paid by U.S. consumers and businesses.
Another thing that’s paid by us are the billions Trump is sending to farmers to help them survive the catastrophic damage that the trade war has done to their sales. (Note: It won’t be enough to make up for the long-term damage from the Chinese finding and building relationships with other more reliable suppliers worldwide.) His China guru, a guy named Peter Navarro, is at the fringe of the fringe of the fringe of trade policymakers, an ultra-lightweight policy extremist who thinks penalizing China is of itself a win for the U.S.
Normally, with a recession on the horizon, the government can introduce stimulus measures. You know, like tax cuts or big spending programs. But see, Republicans already did a crazy tax cut that only benefited the rich and big companies. Trump said the companies would reinvest their savings but of course, they didn’t. They used the dosh they got from Uncle Sam to buy back stock and thus make themselves richer. And with no spending discipline either, this year the fiscal deficit of the U.S. will pass $1 trillion. A new record! Winning!
So, there are no stimulus options and the Fed, which has already begun lowering interest rates, doesn’t really have many steps it can take. As a result, while recession is not a sure thing, all signs point to serious economic slowing or worse.
Which can’t be good for the market for multimillion-dollar survival condos buried deep beneath America’s heartland, right?
But wait, there’s more! Because while the economic problems on the horizon are bad—see your 401(k) for more on this—they are hardly the only serious problems bubbling up at the moment. In fact, if you look around the world today, you will see more potential major crises than we’ve seen since perhaps the height of the Cold War.
China isn’t just in the midst of a game of economic chicken with the U.S., it has troops massing on the border with Hong Kong. Ten weeks of protests there have turned violent, but they could become more volatile still. North Korea has more nuclear warheads than it did when Trump took office, and love notes between the Dear Leaders in the White House and in Pyongyang aside, danger signs are mounting, including the accelerating pace of missile tests.
The potential for conflict between the two nuclear powers on the sub-continent, India and Pakistan, has always been considered potentially the world’s most dangerous. Now, tensions are rapidly rising over the disputed region of Kashmir. Not too far away in the Persian Gulf, the consequences of America’s withdrawal from the Iran nuclear deal have the region on edge and the potential for accidental conflict between the U.S. and Iran at its highest level in years.
The British government is desperately competing with the Trump administration for the title of the Western World’s Worst Government and flirting with a catastrophe via Brexit that will both weaken Europe and lead to the United Kingdom falling apart like an ice cream cone on an August afternoon. Oh, and Russia—which has its own growing protests challenging the regime of Vladimir Putin—recently tested a nuclear-powered missile that unfortunately blew up, killing those who were testing it and spreading fallout for miles.
Each of these crises has the potential to spin up to levels that would affect world markets and regional stability. But all are dwarfed by the climate crisis, which this summer has turned so dark and ugly that the next stage of escalation involves Dennis Quaid traveling across the frozen tundra of New Jersey to save his son from a Manhattan that was submerged by rising sea levels and ocean liners floating down Fifth Avenue. The world saw the hottest June on record. The past four years were the hottest four years on record. The odious crackpot president of Brazil is plundering the Amazon rainforest. So many fires are burning in the Arctic that the smoke plume is bigger than the continent of Europe. And Greenland is essentially a big puddle.
We are killing the planet and doing it far faster than anyone thought possible. There is no Planet B to move to. And the only world leader who seems committed to doing anything about it is teenager Greta Thunberg. (Who is a genuine article hero.)
In fact, one of the other big problems we’ve got at the moment—as if we needed more—is a global leadership void that is unprecedented. For the past 100 or so years, whenever a really big problem arose or a big threat from a bad actor, there was a U.S. leader or a team of leaders including the U.S. and our allies to stand up and fight for what was right or at least send a message that they would. But the U.S. is no longer capable of or seemingly inclined to play that role.
Trump has preached “America First,” which sounds a heck of a lot like a cavalry bugle sounding retreat.
But of course, while we have avoided stepping up in many cases, in virtually every crisis area mentioned in this column, Trump has made the situation worse. Do the math: North Korea, China-trade, China-Hong Kong, India-Pakistan, Iran, Brexit, the Atlantic Alliance, Russia, the climate crisis—all made worse by bad U.S. policies, presidential idiocy, or both. And with the U.K. now run by a road company clown version of Trump, the EU weakened, and Japan not engaging worldwide, a void has been created that has been filled by the likes of Xi Jinping, Vladimir Putin, Kim Jong Un, MBS, Recep Tayyip Erdoğan, Bashir al-Assad, the Taliban, and other folks whose agendas seem carefully designed to promote converted missile silo sales.
But, hey, what else could go wrong? Well… the other day on a podcast I host, General James Clapper, the former U.S. director of national intelligence, told me that the U.S. elections are likely to be hacked not just by Russians this time but also—and with the tacit blessing of Trump and Senate Majority Leader Mitch McConnell—by the Chinese and the Iranians and the North Koreans. And that ought to spice things up as a cornered Trump, new scandals swirling around him, does his very worst to win in November 2020.
You know how the Beaufort Scale measures hurricane strength? Well, if there were a similar scale for global shitstorms—with a six being global war or destruction and a five being multiple regional conflagrations that could soon go global—we’re a solid four (multiple major crises that could have dire global consequences) or, depending on your view on the climate crisis, higher.
Which is bad. Unless you’re planning on buying a survival condo. Because at the moment, they only seem likely to go up in value. They’re a great hedge against the end of the world.
Oh, and there is one other bit of good news. As noted before, many of these crises have been worsened or created by one person—Donald J. Trump—and his administration and policies. And if the economy does slow or a recession hits, it won’t just be your chances of a happy retirement that will be hit. His could begin as soon as January 2021. And that just might be the silver lining to this craptastic state of affairs we’re all looking for.