The Circus Is On Borrowed Time. And Money.

The September rate hike pole axed global credit markets. The December rate hike, less than six weeks away, is the death blow...

"There is no means of avoiding the final collapse of a boom brought about by credit expansion"

- Ludwig Von Mises

And no, they don't see it coming. Because the only rules of the system are, don't question the rules. Sadly, the tribalism that has hijacked American politics provides "unique" insight into the fact that most humans don't have freedom of choice, they have the illusion of choice. The need to "belong" is all-consuming...

Today's ludicrously amplified political acrimony in the U.S. has sent fault lines down the middle of families and communities. Artificially splintering society into divided camps - people who otherwise have a tremendous amount in common, in many cases even last name. In other words it's a fabricated civil war, predicated upon belief in spurious political platforms each having the veracity of a Madison Avenue advertising campaign. A slot machine handle in a voting booth going nowhere yet giving the voter the delusion of full dominion over both the past and the future. 

It's Exhibit A for how groupthink offers group acceptance at the price of conformity. 

"Groupthink requires individuals to avoid raising controversial issues or alternative solutions, and there is loss of individual creativity, uniqueness and independent thinking. The dysfunctional group dynamics of the "ingroup" produces an "illusion of invulnerability"...Furthermore, groupthink can produce dehumanizing actions against the "outgroup".

Which is how religions and cults have survived for thousands of years. You're either with us, or you're against us. The ability to recruit and retain new members determined the size, strength, and power of the organization. Say for example, the Holy Roman Empire. 

Within today's corporate society with its endless array of consumer "choice" one would think that we have finally been freed from our legacy of tribalism and now have unlimited choices. Sadly, nothing could be further from the truth. Because ironically, the one choice most people don't have - is whether to be a "consumer" or not. And by that I mean a conspicuous, competitively-driven, keeping-up-with-the-Joneses mindless zombie. Because while we all know of hippies who dropped off the grid or people who otherwise live a more modest lifestyle, most people we know have capitulated to the de facto zombie lifestyle. Notwithstanding the vicissitudes of the past two decades and various warnings that it's over, and will inflict near total cost on those who cling to it.

Because asset bubbles are not the real problem. It's the attendant liability bubbles, collateralized by imploding assets, that cause ALL of the problems. Or have we learned nothing in the past decade?

"Few world leaders have in recent years found debt reduction measures politically palatable, running up steep obligations that sooner or later will need to be repaid."

There are several ways to measure the world's current level of indebtedness, but it's difficult to find data suggesting obligations haven't mounted considerably in the aftermath of the global financial crisis. In 2010, the ratio of debt-to-gross domestic product, or GDP, in the average country belonging to the Organization for Economic Cooperation and Development stood at 71.7 percent. By 2016, that average had climbed to nearly 86 percent."

"All that debt means the potential losses from a rise in interest rates would be is more costly than in the past, especially combined with a stronger dollar pushing up the cost of dollar-denominated debt outside the United States...Worries about the impact debt will have on a new financial crisis are growing, particularly now that the U.S. Fed is raising its benchmark rate in an effort to normalize monetary policy"

The interconnected nature of international debt has made it difficult to predict which country – or group of countries – sets off the first domino potentially leading to another global crisis"