Friday, June 1, 2018

"Slow Motion Civil War" Continues to Ramp Up - Markets Yawn

Earlier I attempted to assess the ongoing political divide in the US with this blog article. In it I tried to make the case that this "slow motion civil war" as some have called it must move to the top of the list of potential threats to systemic stability. Since then, events have only continued to convince that nothing in that earlier article needs to be changed.

The battlefronts in this war are now so numerous and confusing that I doubt any average citizen can keep up with it all and most likely don't even try. At this point I think the best approach is to try and keep things a simple as possible so I'll try to do that below.

This is my take on this situation in terms of trying to assess the impact on systemic stability and then of course on everyday people. We are seeing all kinds of information pouring out from both sides of the civil war and the intensity only seems to ramp up. Clearly, those directly involved in this conflict who have the most to lose are engaged in intense fighting that does not appear to be coming to an end any time soon.

With all this going on, here is what I focus on. I just watch these three signals:

1- US and global stock markets

2- the US dollar index 

3- the price of gold (and silver)

Even with all kinds of breaking news potentially implicating powerful US officials or former officials on almost a daily basis, so far these markets just observe the proceedings and yawn. We see no indications at all that markets are concerned that systemic stability is at risk for now.

Until I see at least one and more probably all three of these markets signal some kind of distress, I will assume that they don't see the "civil war" threatening systemic stability or that the current President is in any real legal trouble.

If we see a sharp and deep drop in stock markets, a sharp and deep decline in the US dollar, and/or a sharp rise in the price of gold (and silver), then I think we need to pay close attention to systemic stability. As long as these markets seem unfazed, I will assume either the "civil war" is ultimately not going to result in any significant changes or that it is locked in a stalemate that neither side can win any time soon.

Update to readers on the status of blog articles here:

If nothing arises to suggest major change is on the horizon any time soon, I will proceed with my plan to cut way back on blog articles. I may cut back to just one a week or less starting in June or July and then even less after that. At some point in the fall if nothing is changing, I will probably just go into "monitor" mode and only produce an article if I see something truly important in terms of systemic stability or of such worthwhile educational value to readers that I feel I should add it to the blog. 

If readers send article links or other information, I would likely feature that type of information since I know there is reader interest enough for someone to send me the information.

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