Too much of a good thing

The good times of the past 30 years have created economic & political exposures for firms & countries in a changing world

Welcome to my 50th small world note!  Thanks for reading.  Please feel free to share with your network, let me know what you think, or subscribe if you don’t already receive these notes.

It has been another turbulent week.  The S&P 500 is close to bear market territory, partly on concerns about higher interest rates and inflation; China’s Covid lockdowns continue to have major disruptive impacts; Sri Lanka is in financial distress, out of dollars and fuel; Finland and Sweden formally applied for NATO membership; and the EU announced measures to decouple from Russian energy.

These and other developments indicate that we are entering a new, less benign, global environment.  As recent notes have discussed, the global economy is fragmenting along political fault lines amid rising geopolitical tensions and there is a growing array of economic and political risks.

Countries and institutions that are highly leveraged to the previous global system face significant exposures.  Hard choices will b…