It is not easy to convey the magnitude of the unwind underway in the global economy. It is not a cycle like those we have witnessed in our lifetimes. It has the dimensions of the bubbles and greed that we have all marveled at since the 1980s. It has features of the great imbalances and mad capital flows that created the Global Financial Crisis. It has the huge inflations and monetary heroics of central banks we’ve seen over and again. But it is none of these things yet all of them and on such a grand scale that seeing the big picture is a little like pressing your nose up against Mt Everest, you know it’s big but not how big.
It is my view that the post-2008 business cycle – such as it is – has entered its end-of-cycle crisis. I see today as somewhere around mid-2007, into the foothills of the event and climbing with greater rises and falls but not yet there. The easiest way to understand where we are is, in fact, to look backwards. We are entering the final unwind not just of this cycle but the previous one as well. It is GFC 2.0, chapter two as it were, in a volume that will constitute one of the great economic texts of history: the rise and fall of Chimerica.
So, if it’s chapter two, let’s briefly reprise chapter one, from Wikipaedia:
