SHANGHAI, CHINA / ACCESSWIRE / December 12, 2019 / As markets embrace borderline irrational exuberance in light of the solid US stock market performance for 2019, economist Andrei Polgar (who has written a best-selling book on economic calamities, runs the One Minute Economics YouTube channel and is the managing partner of China Fund Dot Com - https://chinafund.com) warns that volatile times are ahead in China as well as elsewhere. In his view, what can only be described as a "perfect storm" situation is brewing.
On the one hand, the looming elephant in the room represented by the failure of central banks around the world to normalize interest rates, rates which flirted with the 0% zone in the United States and even went negative in jurisdictions such as the European Union and Japan.
Next, lingering geopolitical frustration is not difficult to identify, with the most popular example to that effect being represented by the trade tensions between the United States and China. However, additional examples abound, from tense NATO meetings to more or less economically belligerent statements on all fronts.
Farther away from China, the Brexit debacle cannot and should not be ignored. However, in Andrei Polgar's view, it does not qualify as a potential systemically dangerous black swan event given the record-breaking coverage it has been receiving. While most likely not breaking the back of the proverbial camel in and of itself, it may just act as one of the last straws that does just that.
Closing this parenthesis and returning to China, the pre-2010 double-digit yearly GDP growth days are clearly over and the economy of China as well as economies that have become over-reliant on Chinese demand need to adjust to that. As China moves more and more toward growth generated by internal consumption, consequences will undoubtedly be felt.
Finally, in Andrei Polgar's view, the possibility of geopolitical hot spots (the Middle East, North Korea, more recently Turkey, etc.) rather than strictly economic ones bringing about market panic should not be discounted.
In and of itself, Polgar believes that each scenario is more than capable of causing tremendous economic damage and in aggregate, a valid case could be made that they potentially represent a force so unprecedentedly devastating that it is impossible to accurately project implications.
In light of the fact that there has never been this much time between recessions as right now and in line with the arguments Polgar puts forth, bracing for volatility when everyone else seems to be doing the opposite might be a good idea. The economist also stresses that even in the most dire of circumstances, it is paramount to maintain a value-oriented perspective which revolves around having adequate capitalization at hand so as to make acquisition when other market participants are frightened.
He quotes a Romanian proverb which revolves around buying a sledge during summer and a carriage in winter. In other words, increasing your capital when the market seems overly-exuberant so as to make wise acquisitions when the opposite holds true, in China (where generational opportunities continue to abound) as well as elsewhere.
Name: Andrei Polgar
Company Name: Shanghai Fanyi Industry & Trade Co., Ltd.
Email: [email protected]
Phone number: +40724729347
SOURCE: Andrei Polgar