Back in the day, long ago, when the United States and industrialized nations of Europe produced physical goods in such quantity as created surplus for export, atop this capacity was built a credit bubble with its own, unique character ... born of innovation dreamed up by the "talent" of that former time ... and similarly inflated to grotesque levels until it inevitably was popped in the autumn of 1929.
The subsequent scramble in that "new normal" brought trade war affecting the exchange of such physical goods as were the product of the world's leading nations.
Contrarily, today's "new normal" is bringing trade war to the realm where former industrial economies have been led: to the now-dominant financial sector. Case in point: Dubai.
Looks like resolution of Dubai World's recently disclosed insolvency is not nearly as certain as was being promoted last week...
So, we're stuck between a rock — can't gut the labor force any further to maintain currently depressed corporate revenues — and a hard place — the risk of sovereign debt default cannot be easily lied away.
Team Fraud requires tribute: be it gutting health care, a further shut down of industry, or just plain, old asset grabs. However, all are such terrible long shots at this point. Unfortunately, the same can't be said for the likelihood of more crises like Dubai...
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