There is an end of the world vibe on the global stock exchanges.
The reasons are many and it is appropriate to analyze them better because the collapse risk is perceived as getting stronger.
The world is facing an inflation that hasn’t been seen for decades. In fact, the rich countries are now verging on inflation at 10% when for decades inflation was so low that it was practically irrelevant.
Strong systemic risk: real estate and food crisis
So after a very long period in which inflation was almost forgotten it has returned as a terrible scourge on the international economy.
Inflation so high as to bring families to their knees and put businesses in trouble. But inflation isn’t the only threat to scare wall street gurus and simple savers. The very strong infringement can in fact push the economies of the planet into recession and most likely this recession is near. There recession by now it is practically taken for granted by many but once again it is not the only alarm. There food crisis not only risks destabilizing global geopolitical balances but also risks unleashing unprecedented waves of migration.
Waves of migration and collapse on the stock market
In fact the costs of the raw materials needed for thefarming and agriculture have become exorbitant and producing food becomes more and more difficult. Over 50 countries in the world are now considered to be at risk of hunger and are tremendous migratory waves were expected. Central banks and especially the Federal Reserve and its European counterpart are called to a sharp rise in rates. In fact, the only way to mitigate inflation is to sharply increase rates. Yet raising rates means hitting the economy hard in many different ways. First of all, the increase in rates can bring the recession closer. Secondly, the increase in interest rates risks blocking the very rich mechanism American mortgages.
The moves of the FED
The impact of the rate hike on the US mortgage market is much feared, in fact a real estate bubble could burst like the one in 2008. But another risk of the rate hike is that the other bubble may burst, namely the one on the stock markets. In fact, many believe the US stock market is vastly overvalued. As a result, a rate hike could burst a bubble of truly devastating consequences. It is no coincidence that many Wall Street gurus are dreading the worst about central bank maneuvers.
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