A scientific term that states that chaos is always increasing. I thought this title was appropriate to reflect what is going on in the world. We are in a negative spiral that is difficult to straighten out. We are only in May but world events are happening at a rapid pace this year, on every level. Here are a few examples of the chaos in the world.
Although the pandemic is at its end, the consequences of this virus are far from over. Corona was used as a scapegoat to explain the poor economy. And this has indeed played a role, but what we are now experiencing was long in coming. Money was printed in huge quantities, making a currency susceptible to inflation, and then the ECB and the European Central Bank came and told us that they had not thought of the consequences. Absurd just like that.
The next world event is of course the war in Ukraine. The consequences of this are incalculable. The prices of its products and supplies have been called unreal to say the least. Inflation is skyrocketing, especially on food, energy and diesel/gasoline. Everywhere this is paid for by the poor but the incredible profits that these companies make are talked about as little as possible. Shell, for example, is making billions in profits despite its departure from Russia, and Aramco, the state oil company of Saudi Arabia, is also making exorbitant profits and the market value of this company has just overtaken Apple. So these large multinationals earn billions at the expense of ordinary people. Because of all this, a quarter of a billion people are ending up in extreme poverty and they have nowhere to turn for help.
Still worth mentioning is the fact that not a word is said about Evergrande. The mega real estate company of China that was on the verge of collapse. I think a lot of people would like to know how it works. The company could be at the root of a new global crisis.
With the huge amounts of additional money being printed, Corona and the war in Ukraine, inflation is out of control. Real estate is on average 8.7% overvalued and within a short time the Euro will be equal to the dollar, this event already happened 20 years ago. In Turkey they are also well on the way to hyperinflation. Similarly, the Russian ruble was in a downward spiral. There they were able to cope with this by raising interest rates extremely high to 20% and so the ruble was saved from collapse. This is also what is needed here. The problem of inflation can largely be solved by raising interest rates, but of course this is not ideal for the stock markets. Yet the ECB says that from July an interest rate increase will take place, how much and what impact it will have remains to be seen but it is a step in the right direction so that the population gets some protection against inflation.
It is now painfully clear how fragile the whole system is, the stock markets are suffering enormously from all these events and we see a huge red market. The system is also so unfortunately fragile that 2 weeks ago someone pushed the wrong button and caused a flash crash of 300 billion euros on the stock exchange. The mistake was quickly noticed and solved but it still shows how weak the whole system is. The negative spiral has also carried it through to the crypto market. Of course, the story of Terra Luna and its stablecoin UST has a lot to do with it as well. But a lot of the red numbers are correlated to the stock markets, whereas before this tended to go more towards gold. Hopefully, the crypto market can break away from all those traditional markets and start walking its own path.