The State of the World Economy

world economy

We are facing a rerun of 2007-2008 with more dire consequences and a longer duration than we experienced then.


The first blows will surface as a result of the collapse of the European Banking System. Last September, I wrote Where Now-Why Volatility. The Grand Surprise:


where now

“The U.S? The end of Quantitative Easing. In fact, Quantitative Easing has accomplished little more than inflating stock and bond markets. It has been devastating to pensioners, destructive to U.S. city and state budgets, and non productive to employment levels.”

In January of 2016, China? Oil Prices? Saudi Arabia? Iran? Why Volatility? The Grand Surprise Part Two  is the follow-up. Most of what we discussed is quickly coming to pass, though marked by the foolishness of the Eurozone quantitative easing – read Quantitative Obfuscation:

where now part 2

“In conclusion, 2007-2008 is likely to be repeated in the foreseeable future. This time there are no engines of restoration on the horizon. The catalyst will not be the usual blah blah we read in the financial press. It will be the collapse of the financial structure of Europe, both Sovereign and private. World liquidity, which is strained today, will find its home at “zero”. The recovery will be long and painful.”

Our series on Greece began in April of 2010, Myths of Today:

“30 Billion Euro commitment will solve the problems of the Euro currency zone. As was the case with the American banks, the number 30 billion was put forth as the salvation of the system. At the top the U.S. government (taxpayer) exposure was about $12 trillion. In April of 2008 we put forth that the number would be at least $3 trillion. We were wrong by $8 trillion. The Greek needs are yet to be determined but they are not 30 billion Euro!”


These are the catalysts to the near term disturbance of the world economy. No proper protections have been built to the financial system to either prevent or deal with this next round. It is unlikely that any will be constructed soon enough to be of help. In the United States, neither Trump nor HillBill as president will take effective steps to prevent or limit serious economic consequences to the U. S. as the solutions are not in the realm of monetary policy and neither will accept or act with the assertive fiscal policy necessary to stem the tide.

On another topic, I will be in Basel next week. Some of you have asked if I can be helpful in choosing insurance companies to protect your art. Recently, I have had reason to think on that matter. I’ll have a bit of time open for discussing that or other areas of the financial side of art collecting. I can be reached at +1 917 859 9275 or at from Monday the 18th throughFriday the 29th in Basel.


Asher Edelman


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