Friday, December 7, 2018
The stock market has been doing some pretty dramatic gyrations of late. The break for a Presidential funeral didn't seem to dampen the financial craziness. When they reopened on Thursday it didn't take long for things to go south.
There are many people concerned that the US yield curve has inverted. Wish I understood it well enough to explain it to other people. Let's just say it's a pretty good indicator of a recession or even a depression. It may take a year or two to get there, but that's one of the ways these things start.
Like a lot of Americans, I don't have much invested in the markets. That's doesn't mean I'm safe. My state retirement plan is invested in the market. I haven't gotten a raise in over ten years because the last recession hurt the fund so much. When the people who own businesses have to cut back, people lose their jobs. The little guys aren't safe from financial meltdowns.
The world political situation is dicey. Russia is rattling sabers, threatening Ukraine and vowing to build more nuclear weapons. China has territorial issues. There are any number of smaller conflicts in the world that have the potential to drag in the big players. The problem with proxy wars is that they sometimes aren't limited to the proxys. Sometimes their big backers stumble into a toe to toe struggle.
As countries suffer internal unrest from worsening conditions, they traditionally go to war. Nothing like a war for changing citizens' focus. Usually most people rally around the flag in time of war -at least in the beginning.
While everything could go up in flames tomorrow, odds are it will take some months or even a couple years. There are many factors that can lessen the consequences. However, that takes both good leadership and a fair amount of luck.
Is that something you want to bet on? Anything you do now to lessen your exposure to these risks could pay off big time in the future. If I'm wrong you've become more self-reliant when your didn't really need to. If I'm right, it could save you a world of grief.
Let's see what happens during the rest of the month. That may give us a hint of things to come.