Debt, Inflation and Global Instability Increase Odds of Economic Calamity

April 10th, 2024 Comments off

Sheldon Filger-blogger for




With a divisive presidential election occurring in the world’s largest economy in November, multiple signs point to long-term dangers for the global economy. They can best be summarized as debt, inflation, and global strife.

After a prolonged era of near zero or even negative interest rates in the economically developed world, most major economies now have histrionically high-interest rates, a policy measure meant to reduce high rates of inflation. While predictions are being made by economists that central banks will begin reducing interest rates as inflation is supposedly tamed, there are everywhere indicators of global tensions that can easily spike core inflation to elevated levels. The war between Russia and Ukraine has fractured oil, gas and food supply chains throughout the world. In the Middle East, the proxy war between Iran and Israel threatens to interdict oil supplies from the region, so vital to major economies.

Another factor is that much of Europe and North America enjoyed a peace dividend after the collapse of the Soviet Union. That is now over; having pared defense spending to a minimum, that policy is now being revered, further contributing to already high sovereign indebtedness. The resulting increased level of deficit spending, combining with higher interest rates, will result in much higher levels of public spending being devoted to debt servicing costs. That will impede social spending, resulting in an increased level of social strife.

All the above facts point to a substantial risk of sustained stagflation. In an era of unpredictability, one given is that the global economy will face unprecedented challenges in the coming decade, with the real risk of a worldwide economic depression. Amid all the negative indicators, it is difficult to see any light at the end of what appears to be a long and darkening tunnel.

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February 17th, 2024 Comments off

Navalny knew he was a marked man. On August 20, 2020 a nerve agent attack , undoubtedly instigated by Russia’s secret services on the orders of Vladimir Putin, nearly killed Alexei Navalny. His life was saved by urgent medical treatment he received in Germany. Having botched their first assassination attempt, the Kremlin hoped Navalny would remain in Germany. However, Russia’s most prominent opposition leader insisted on returning to his homeland, harboring no illusions of the fate that awaited him.

Arrested and convicted on trumped-up charges, Navalny was serving a 30-year prison sentence in Putin’s version of the Gulag. Recently, he was transferred incognito to one of the most isolated and harsh prison camps in Putin’s Russia. There was a clear reason for this move, which greatly increased his isolation from his circle of supporters. Finally, the Russian Prison Service released a bizarre statement on February 16, 2024 that Navalny had died suddenly while taking a walk.

Without question, Putin gave the order that the time had come to murder the most courageous opponent he faced. With Russia’s rump “election” for president scheduled on March 15-17, the Russian dictator wanted this last irritant standing in the way of his coronation eliminated once and for all. At age 47, Navalny has become a martyr to the Russian motherland no less than the soldiers who gave their lives in the war against Hitler. Putin had a particular loathing for Navalny, for he went beyond\d the usual plank of the Russian opposition. While calling for freedom and true democracy for the Russian people, Navalny also used social media with great skill to expose the vast corruption of Putin and his cronies, and demonstrate conclusively that the Russian dictator and his clique have stolen tens of billions of dollars from the Russian people.

The timing of Navalny’s murder is no coincidence. Tucker Carlson, an American media personality, was in Moscow, and had just recently interviewed Putin. More than the interview, however, Tucker Carlson’s short reports have been even more beneficial to the Kremlin tyrant. He has portrayed Putin as a highly capable leader, and as proof he went grocery shopping in Moscow, marveling at prices far below what groceries cost in the United States. He made the claim that higher food prices at home are proof positive of how bad and inferior America’s leaders are.

Tucker Carlson’s critics point out that what seem like low grocery prices in Russia are reflective of extremely low average wages, and that a typical Russian family spends a far higher percentage of their income on food than their American equivalent. Those critics are missing the point. Tucker Carlson may be many things, but he is not a stupid man. He knows very well that his hit piece about Moscow food prices is complete nonsense. Than why has he engaged in pro-Putin propaganda?

I am convinced from statements this American media celebrity has made in the past that he does not view Putin’s Russia as a threat to the US, but sincerely believes that the Peoples Republic of China is the greatest danger confronting America. He views supporting Ukraine in resisting Putin’s aggression as being the catalyst that has pushed the Russian dictator into the arms of the Chinese. Tucker Carlson apparently believes that allowing Putin to devour Ukraine, and ignoring his suppression of basic human rights, is a price worth paying if it results in flipping Putin into the anti-China camp.

My own view is that Tucker Carlson is tragically naive. Appeasing dictators has been historically proven to be antithetical for democratic countries, including America. Furthermore, Putin’s alliance with China is based on his greater comfort in being in solidarity with a fellow authoritarian polity. Allowing Putin to march into Kiev unopposed would not affect this dictator’s calculus in the least. So in the final analysis, all Tucker Carlson accomplished was to provide a distraction while the tyrant rid himself of his most prominent democratic critic, this time permanently.

As for Navalny’s legacy, his martyrdom has left a stain of blood on the Kremlin walls that will never clot. Despite repression of immense ferocity, Russians are beginning to sense that the tyranny and corruption of the Putin regime is inimical to their country’s future. Not only the liberal elements in Russian society, but even the nationalist community, which up till now have been the chief supporters of Putin’s attempt to conquer Ukraine by force. Putin’s corrupt police forces and judiciary have begun to target pro-war nationalists, an example being the imprisonment of Igor Girkin. On telegram, Russian nationalists openly and bitterly condemn the corruption and fraud of the Putin regime,which have led to the deaths of many of Russia’s soldiers in Ukraine. Perhaps Russian nationalists will recall the words of Russia’s greatest nationalist and patriot of the last century, Aleksandr Solzhenitsyn, who in his chronicle of Soviet prison camps, “The Gulag Archipelago,” warned against excusing those guilty of criminal misuse and abuse of the nation’s justice and prison system.

Putin may believe that his barbaric and cynical assassination of Navalny has rid him of a political irritant. Instead, however, he has transformed Navalny into a martyr that will eventually empower forces that will in time overwhelm the Kremlin’s tyrant and his clique.

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Will Gaza War Spark Global Economic Shock?

November 12th, 2023 Comments off


Sheldon Filger-blogger for



Economist Nouriel Roubini has written an article for Project Syndicate that looks at the probable scenarios for the trajectory of the Israel-Gaza war, and their likely consequences for the global economy. Bottom line: Roubini thinks that economists, investors, and markets in general are underestimating the risk factors of a worst-case spillover of the Gaza conflict.

Roubini assigns a 35% probability that the Gaza war is transformed into an all-out regional war, with Iran unleashing its proxies against Israel and its U.S. ally. Ultimately, in this scenario, Israel attacks Iran’s nuclear facilities, with American support.

What are the economic implications of such a scenario? A geopolitical shock similar to the oil shock of the 1970s. This would result in global stagflation, with Europe and China in particular being vulnerable. Ironically, the United States would suffer economic dislocation somewhat less, as it is now the number one oil producer in the world, a sharp contrast with the 1970s. However, a regional war in the Middle East would create further political instability in the U.S., with negative economic implications.

Essentially, Nouriel Roubini is warning that global markets are only pricing in a 5% probability of a worst-case scenario, where 35 % is more realistic. This unwarranted optimism, posits Roubini, leaves the global economy highly vulnerable to the worst possible economic consequences.

Russia Faces Severe Economic Trouble as the Currency Sinks and Deficits Explode

August 15th, 2023 Comments off

Sheldon Filger-blogger for



War is the province of uncertainty. When the ruler of Russia made the fateful decision to invade Ukraine, by all accounts he expected a blitzkrieg that would overrun the country in a matter of days. Now, one and a half years into a vicious war with no end in sight, the chickens are coming home to roost in terms of economics.

Apologists for Putin claimed that the sanctions imposed on Russia were not working, and pointed to the appreciation of the national currency, the rouble, as evidence. In the first months of the war, the rouble did indeed gain value, but for reasons largely ignored by pro-Putin aficionados. In the first place, the cut-off of Western exports to Russia, combined with initially strong oil sales abroad, did improve Moscow’s balance of payments for a period of time, at least on paper. Then there was the monetary tightening engaged in by Russia’s central bank.

The governor of the Russian central bank is Elvira Nabiullina. She is a Yale-trained economist and is widely regarded as an excellent central banker. According to some media reports at the time of Putin’s decision to attack Ukraine, Nabiullina was opposed to the invasion and submitted her resignation, but Putin refused to accept it. Besides being one of the very few women in a senior government position in the Russian Federation, Nabiullina is respected as highly professional by her foreign colleagues. In the wake of the invasion and the swift decline in value of the rouble, she undertook a massive increase in monetary tightening, raising interest rates for a period to as high as 20 percent. This halted the decline of the rouble, and brought about its subsequent appreciation. As the currency stabilized, Nabiullina gradually lowered interest rates.

However, the Russian central bank cannot control macroeconomic trends unleashed by the war. Western countries that were once major customers for Russia’s energy exports have, in a surprisingly short period of time, largely weaned themselves away from Russian oil and natural gas. To replace lost markets, Moscow has been forced to sell its energy exports to other countries, especially China and India, at a large discount. This has eroded revenue earned from Russia’s major export commodity. In addition, the war has added tens of billions of dollars in unanticipated annual military expenditures, while tightening the supply of labor due to army mobilization and the decision by hundreds of thousands of Russians, the majority being young men, to flee the country. Finally, the sanctions have reduced Moscow’s access to large sums of capital, including foreign currency reserves. All these steps have cumulatively had a negative impact on the Kremlin’s finances.

The government’s budget deficit is exploding, and the large current account surplus that existed in the early months of the invasion has been severely diminished. All these developments have eroded the value of the rouble, which dropped in value from around 70 to the U.S. dollar at the beginning of the year to about 100 to the dollar in August.

Predictably, the ultra-nationalist media and blogger community attacked Nabiullina, blaming the central bank for the collapse of the rouble. In part under pressure from the government, the central bank has sharply increased interest rates from 8.5 % to 12 percent, an increase of 350 basis points. This most recent act of monetary tightening has brought a modest appreciation in the rouble that is likely to be temporary. The fact is that Putin’s war has unleashed a torrent of negative macroeconomic trends. While Russia’s large energy and agricultural sector renders it immune to total economic collapse, the nation is likely to experience increasingly sluggish and even negative economic growth, combined with high inflation that will erode the already meager disposable income typical for the vast majority of Russians. This increasingly dire economic trend does not bode well for Russia’s future political stability.

Fitch Downgrades Credit Rating of U.S. Government

August 2nd, 2023 Comments off

Sheldon Filger-blogger for




One of the leading credit rating agencies, Fitch, had lowered its assessment of credit worthiness of the U.S. from the top level of AAA to AA plus. Though only a notch lower than the top level, the new rating by Fitch may be the start of a disturbing trajectory for American sovereign debt.

The explanation given by Fitch for lowering its rating on U.S. Government debt has been what it views as the deterioration of governance in the USA over a period spanning two decades. The evidence of this is apparent to any observer of political discourse and activity in the U.S. and raises questions about the long-term stability of the American political system. The economic and financial repercussions of those internal developments will now have a steep cost, as Fitch is likely to be followed by other rating agencies.

While U.S. Treasury Secretary Yellen has been joined by leading analysts in decrying the move by Fitch, it is clear that this rating agency is looking far beyond current economic data, which on paper makes the Amerasian economy appear strong, especially compared with other major economies. It must be noted that the U.S government functions on a a sea of red ink. It must constantly borrow vast sums of money to function. What has made that vast debt edifice functional has been credit access tied to the lowest possible borrowing costs. The decision by Fitch is an indication that the costs of sovereign borrowing by the U.S. will escalate. This opens up the possibility of a long-term sovereign debt crisis in the U.S., which would have devastating consequences far beyond\d America’s shores.

In 2022 the U.S. federal government deficit was 1.4 trillion dollars, representing 5.5 % of GDP. Total federal spending was 6.3 trillion dollars, with revenue of only 4.9 trillion dollars. Interest paid on the national debt that same fiscal year was 476 billion dollars, presenting a whopping 35 % increase over the prior year. Now, with the first crack in America’s AAA credit worthiness having occurred, substantial increases in annual debt servicing costs are to be expected, eating up a growing percentage of the federal government’s fiscal capacity.

Banking Crisis In the USA: Collapse of First Republic Bank

May 1st, 2023 Comments off

Sheldon Filger-blogger for




Today the California based First Republic Bank was seized by the FDIC (Federal Deposit Insurance Corp.). It had 229 billion dollars in assets, making its demise the second largest bank failure in US banking history. Only a month ago, the number two spot was held by another California based banking institution, Silicon Valley Bank.

The FDIC worked out an agreement whereby First Republic’s assets will be taken over by JP Morgan Chase. In return, the FDIC will pay out about 13 billion to cover losses. Under the agreement worked out by the regulator, all of First Republic’s 84 locations in 8 states will reopen as branches of JP Morgan,

With the collapse of First Republic, the FDIC has had to grapple with three major bank failures in just over a month. This is further evidence that a banking crisis is underway in the United States, it is accelerating and is reflective of deep seated financial and economic weakness in the national and global economy.

It should be recalled that the Great Depression, which began with the stock market crash of 1929, became far worse and spread globally when a major Austrian bank, Creditanstalt, collapsed in 1931. The collapse of 3 American banks during the past month, including the second and third largest banking failures in American history, is the canary in the coal mine as the Global Economic Crisis worsens.

U.S. Banking System On The Brink

March 13th, 2023 Comments off

Sheldon Filger-blogger for






The collapse of SVB (Silicon Valley Bank) has sent shock waves throughout the financial world. It has also aroused a morbid sense of deja vu harkening back to 2008, when the global banking system seized up, leading to the Global Financial Crisis. With 175 billion dollars on deposit as of December 2022, SVB was the largest regional bank in Silicon Valley, playing an important role in financing the hi-tech sector.

The highly speculative model employed by SVB (high level of unrealized losses accentuated by Fed rate hikes)) led to its failure, being forced to close after a run on deposits. Unable to engineer a quick sale of SVB, the Biden administration, in a fit of panic which may be justified, took extraordinary measures. About 85 percent of deposits at SVB were not insured by FDIC, which has a cap of $250,000 . The Treasury Department decided to ignore the cap and guarantee that all deposits at the failed bank would be covered. It added, as strictly PR, that U.S. taxpayers should not worry, as they would not cover the cost, leading to the question of who will.

The SVB deposit resolution had barely been announced when New York state regulators shut down Signature Bank, which had 80 billion dollars on deposit and was involved in speculative assets, in particular cryptocurrency..

Both these bank failures, occurring withing days of each other, took the financial world by surprise. The risk of contagion is real, explaining why entities such as the U.S. Treasury are taking extraordinary policy measures.

One likely casualty of these bank failures is the war on inflation being waged tardily by the U.S. Federal Reserve. Only days earlier the Fed had convinced the markets that another rate hike of up to fifty basis points was on the way. Now this seems doubtful, and if more bank failures occur the Fed may even go in reverse. This means that in addition to the danger of a banking collapse, an alarming acceleration in inflation is a serious possibility.

Economist Nouriel Roubini Has Written the Most Important Book of the 21st Century

January 13th, 2023 Comments off

I have recently read MEGATHREATS, a new book by renowned economist Nouriel Roubini. If this book were fiction, it would be a chilling horror thriller. However, what makes this book far scarier than a horror novel is that it is non-fiction; a deep dive into ten threatening trends and developments, each one of these evolving threats, which the author categorizes as a mega threat, in itself a force that imperils human society. Taken together, as they are interconnected in the author’s analysis, they represent a ten-by-ten matrix, as Roubini has pointed out.

Nouriel Roubini came to public note before the onset of the 2007-09 Global Financial Crisis when he warned about a looming financial disaster triggered by subprime mortgages. For that prognostication, Roubini was dismissively dubbed “Dr. Doom.” History proved that Roubini, who prefers to describe himself as “Dr. Realist,” to have been unerringly prescient in his dire financial and economic forecast.


Sheldon Filger-blogger for

In MEGATHREATS, Roubini begins with economic and financial trends that threaten a severe and enduring stagflationary recession for the global economy. He points out that central banks and sovereigns have created what is described as the “mother of all debt crises,” creating debt to GDP levels in advanced economies and China that are far in excess of what occurred during the last great stagflationary recession during the 1970s. Unsustainable debt ratios, combined with negative demographic trends and ill-conceived policies portend a dark and uncertain future for the global economy. Added to this is currency instability, including the weaponization of the U.S. dollar which will likely debilitate its standing as the global reserve currency. Roubini also looks at the phenomenon of cryptocurrencies, which he has long excoriated as being illusionary.

The matrix in MEGATHREATS encompasses other developments that feed into the economic malaise that Roubini convincingly prognosticates on. The emerging cold war between China and the U.S., exacerbated by other revisionist powers, increases geopolitical instability and fractures global supply chains. These developments further add to inflationary pressures which, in the context of negative supply shocks, augments the severity of the coming stagflationary crisis.

Among the other mega threats Roubini explores is the likely impact of climate change, rendering many coastal areas, including in the United States, uninhabitable. Furthermore, the author sees climate change exacerbating the conditions in which pandemics such as Covid will become far more common. The author also discusses the transformative impact of artificial intelligence or AI and machine learning, which will likely lead to the elimination of vast numbers of human jobs, not only unskilled but also highly skilled, as technological means displace humans.

Nouriel Roubini presents to the reader an ominous but convincing case for a dangerously dystopian and unstable future for human societies globally. Does the author offer any hope humanity can avoid the dire future he lays out with such clarity? He does, principally in the area of technological advancement that could lead to much higher than trend economic growth, which would resolve issues such as sustainability of the massive debt to GDP levels that have been accumulated in advanced economies. However, the tone of the author’s conclusions indicates he is not excessively optimistic that the right policies and developments will occur in an effective timeframe.

Without a doubt, MEGATHREATS is the most important book thus far written in the 21st century. It is a penetrating look into the dystopia that lies ahead, supplanting the long period of relative stability that occurred after the Second World War. The author is not a modern-day Cassandra offering prophecies conjured from a crystal ball; he is one of the most impressive intellectual minds of our era, offering deep analytical insights into the dark global malaise that is unfolding. As he states in the book’s epilogue, “the snooze button invites catastrophe.”

MEGATHREATS should be required reading for every policymaker on the planet.




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UK Economy Collapsing Amid Political Disaster

October 14th, 2022 Comments off

The unfolding Global Economic Crisis has stricken most economies, large and small, with the bitter twins of high inflation and recession. This phenomenon of stagflation, amid the destabilizing war between Russia and Ukraine and broken supply chains resulting from both war and Covid restrictions, is spreading like wildfire. Record levels of inflation are occurring in virtually every developed economy, including the United States. However, it is in the United Kingdom that the most disastrous repercussions are unfolding.

After Boris Johnson was forced to resign as British prime minister, he was succeeded by Liz Truss. Her hand-picked Chancellor of the Exchequer, Kwasi Kwarteng, released a proposed budget that immediately sent the British pound plummeting, sovereign bond rates soaring and fear and loathing manifesting in all leading UK financial circles. This is amid annual inflation exceeding double digits and an ongoing retraction within the UK economy.


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The key component of Kwarteng’s budget package was major tax cuts targeting high net-worth taxpayers, to be financed by substantial borrowing despite the British government already facing large budget deficits. The whole ill-conceived package was an example of political ideology triumphing over economic reality. The markets swiftly provided a painful response, making the proposed budget untenable.

Truss has now fired her financial minster, a desperate move to save her weeks-old prime minister tenure by making Kwarteng the scapegoat. Already there is talk of a palace coup to remove Truss by desperate members of her Conservative Party. All this is another example of incompetent politicians doing everything possible to make a very bad economic crisis into an unmitigated global catastrophe.

Inflation Continues To Ravage U.S. And Global Economy

September 14th, 2022 Comments off

The U.S. Bureau of Labor Statistics reported that the CPI for August exceeded the consensus expectation, registering a figure of 8.3 %. Though slightly lower than the June figure of 9.1%. a dive into the details reveals disturbing trends.

The modest reduction in the CPI for August was almost entirely driven by a pullback in oil and gas prices, a phenomenon driven by market forces. However, other core components of the CPI accelerated their inflationary trend. Food prices registered a sharp rise of 11.4 %, the largest level of inflation in this critical category in 43 years.

The continued high level of inflation in the United States is being replicated globally. In the UK the official rate of inflation exceeded double digits and has only slightly receded to above 9% due to fuel price retrenchment, as in the U.S. Virtually every other economy on the globe is experiencing levels of price inflation not previously witnessed in decades.

The most recent data in the U.S. will compel the Federal Reserve to continue to significantly increase interest rates. Other central banks will follow in lockstep. All these moves will instill a fiscal drag on the global economy, further increasing the likelihood of a global recession. All trends remain on track for global stagflation and the worst world economic crisis since the 1930s.

Sheldon Filger-blogger for