Things Will Get Messy in 2024
February 5, 2023
The upcoming year will be an exciting one and not necessarily in a good way. We seemingly have more countries spoiling for military confrontation than any time since before World War I. The U.S. has a contentious election coming up where neither side is likely to accept a lose with any sense of grace or sportsmanship. We continue to be in a period of slow economic growth. In fact, developed nations like China, Germany and Canada are struggling economically. Many lesser developed countries are on the precipice of failed nation status.
A new cold war has clearly begun. Its first two theatres are in
Ukraine and Israel. On one side we have the West and our allies in the East like Japan, South Korea and Taiwan. We are economically and military formidable, although not as much as we once were. Our enemies are basket cases in comparison. And make no mistake about this or be naive; we have enemies and they seek to destroy our way of life and subjugate us. Sadly, our side has lost its sense of purpose and is in decline making a positive outcome less certain. This decline has been precipitated by leftists taking over our institutions. Low birth rates among the best and brightest of the local populations of Western nations and an influx of less economically productive immigrants has led to lower economic growth, a decline in living standards among the middle class and societal strife and decline. Of course, maladaptive economic policies have been the primary mover of our decline. The mass migration/demographic problem is a manifestation of decades of economic and moral malfeasance.
Mobs infested with the disease of mass delusionality mindlessly chanting for the annihilation of the State of Israel and the death of Jews are only the beginning. Historical point: nefarious forces have always used the “rabble” to do their dirty work and always will. Those thugs marching in support of Hamas and attacking Jewish institutions are the moral descendants of the savages of Kristallnacht, the mobs that slaughtered French Protestants during the St. Bartholomew’s Day Massacre in 1572 and countless other abominations. Cynical tyrants have used violent and uneducated fools to do their dirty work and always will.
My contempt for these “ordinary people” may trigger some, and seem anti-populist but understand that every person has a choice. Many, if not most, choose righteous behavior over joining the mob. These people chose the dark side.
On the other side of the new cold war is an alliance of malicious actors who share little in common other than resentment of Western civilization. Islamists have never gotten over the 1683 Battle of Vienna, when Europe defeated the Ottoman Empire thanks to a last minute charge of the Polish Winged Hussars. Modern Poland, by the way, is still not letting Muslim migrants into their nation.
The Islamists resent that Muslims nations that devoutly follow the “one true god” are being left in the dust economically, militarily and culturally by decadent and inferior “kaffirs”. (A derogatory term for non-Muslims.) Understand that in the Muslim religion physical outcomes are believed to have more of a direct causal link to faith. The plight of the Islamic world is not seen as bad luck or bad planning. It is the result of a lack of religious fervour on their part or the evil of the enemies of Islam. Therefore given the strict adherence to Sharia in the Islamist world, the only explanation is that the West is Satanic; which on turn, justifies atrocities
Iran seeks to lead the Islamic world into the new caliphate. Turkey has chosen Iran over NATO. That is a decision that Turkey will eventually regret for many years to come.
Russia is angry at the West to the point of paranoia. They feel that they single handedly saved the world from Nazism but are not respected. They have been economically dwarfed by North America and Europe. Putin dreams of Russia becoming the dominant world power. If he can't accomplish his goal by building his economy, he feels he can accomplish it by destroying ours.
It may seem almost trivial to discuss the economy and markets in the context of a world that is breaking down but it is important. People still live in the real economy and need to provide for themselves and family. The Houthi’s blockades effect prices and lower the standard of living of Westerners, at the margin. Markets and economies do not like uncertainty and we have entered a very unstable period. The U.S. stock market had done well but is as overvalued at levels only previously seen just before catastrophic stock market collapses in the past and/or periods of poor equity returns over long periods. Recession indicators like the yield curve inverting and then normalizing, and the Conference Board’s Index of Leading Economic Indicators are flashing danger signs. Our political leaders tell us that: “This time it’s different”.
Bad times always differ but they are all bad to varying degrees. Also, we may not be facing a typical crash like in 1929, 2000, or 2008 but a period of long-term decline. The truth is that Western economies have been struggling for a while. For example, since Trudeau came to power in 2015, the Canadian economy has barely grown on a per capita basis. Although there has been no “official” recession, only a fool or member of the Liberal/NDP coalition government believes that Canadians are not significantly poorer. Importantly, the U.S. economy, as much as it has appears to have its own issues has grown by about 10% more than Canada under the Trudeau regime.
We may have some black swan events in 2024 as things are unstable. The US election might get very ugly, very fast. A credit crisis is a very real possibility. The war in Ukraine and the Middle East could escalate quickly and spiral out of control. The US border situation is out of control and we will see increased violence. Western nations are electing leaders from the right as the mixed free market/socialist consensus is collapsing. The socialists have reached the point where they have run out of other people's money to spend.
People should probably hunker down this year and adopt defensive investment positions. Going 100% cash is overdoing it but exposure to risk assets should be below average. Mid-term U.S. government bonds are relatively safe. If there's a market meltdown, capital will flow there as the U.S. dollar is seen as a safe-haven by institutional investors that control large pools of capital. Hysterical YouTubers who constantly preach doom and gloom to attract likes do not carry much weight. Exposure to gold and silver as insurance is probably a good idea but don't expect the “gold is going to $5,000” guys to finally get it right. Also, restrain spending if you can. You might not have as much job security as you think.