The mouthpiece of the right wing economic agenda in the NZ Herald, Liam Dann, was just one of a number of mouthpieces that rushed out ‘don’t panic’ columns last month when Wall St melted down.
Liam wanted to explain to Kiwi’s as they nervously saw their Kiwsaver accounts drop that no one should panic because as far as Liam was concerned, the market fundamentals were sound.
Which is an odd belief to hold.
For the last decade, to avoid the horror of systemic financial market collapse in 2007/2008, $30Trillion has been printed and pumped into the global economy falsely creating the lowest inflation rates for 5000 years. That seems about as far removed from the concept of sound market fundamentals as The AM Show is from intellectual curiosity.
The problem now for Wall Street is structural. All that printed money wildly speculating equities to unstable and bloated levels are ripe for a meltdown because the AI trading robots will simply cut across the human greed of now for the profit margins of tomorrow.
As bond yields rise, the droids will suck money out of stocks and plunge them into Treasuries at nanosecond speed faster than human traders can match.
This reality seems to have just dawned on Liam whose latest column acknowledges that there may well be a good reason to panic after all.
You know when the establishment tell you not to panic that it’s probably the moment for you to start quietly easing your way to the exit.
There is going to be one almighty crash because the superstructure of the system can’t keep holding up the vast sums of printed money that it’s been swamped by.