developed by Elizabeth Kübler-Ross, with stock markets following Bob Farell’ s model of reactions to financial crises, as shown in chart 17.
A number of currency crises have already occurred around the world. Now Trump’ s trade policies will introduce us to the world of protectionism. The White House website has already confirmed the planned withdrawal from the TransPacific Partnership – and from NAFTA, if Mexico and Canada refuse to negotiate a new deal. China is certain to be targeted as well. Clearly, other countries will respond in kind.
It also seems clear from President Trump’ s Inauguration speech that the US has now followed the UK into the Anger stage:
“ This American carnage stops right here and stops right now …"
“ For many decades, we’ ve enriched foreign industry at the expense of American industry; Subsidised the armies of other countries while allowing for the very sad depletion of our military; We’ ve defended other nations’
▼ Chart 17 Elizabeth Kübler-
Ross’ and Bob
Farrell’ s models may provide a good guide to the outlook borders while refusing to defend our own; And spent trillions and trillions of dollars overseas while America’ s infrastructure has fallen into disrepair and decay."
“ We’ ve made other countries rich while the wealth, strength, and confidence of our country has dissipated over the horizon. One by one, the factories shuttered and left our shores, with not even a thought about the millions and millions of American workers that were left behind. The wealth of our middle class has been ripped from their homes and then redistributed all across the world.”
Like a stone being tossed into a pond, the ripples from Trump’ s protectionist policies will gradually spread out around the world. And the process will likely speed up if we are correct in suggesting that a global downturn is around the corner.
We have all become used to a globalised world with global supply chains and have forgotten that, historically, this has been the exception rather than the rule. 2017 may prove to be the year when we start to rediscover our past, for better or worse. ■
ADJUSTING TO TODAY’ S NEW DEMOGRAPHIC REALITY BOB FARRELL’ S MODEL OF FINANCIAL CRISES: ELISABETH KÜBLER-ROSS’ PARADIGM OF LOSS MODEL
SHARP DECLINE
2008 – 2009 REBOUND 2009 – 2014
DENIAL Stimulus policies‘ Things will soon return to Normal’
ANGER Downturn becomes obvious‘ The triumph of the populists’
2015 – 2020?
CURRENCY CRISES
DRAWN-OUT DOWNTREND, WITH INTERMITTENT RALLIES
BARGAIN
PROTECTIONISM Focus on what we can control‘ Simple solutions to a complex problem’
DEPRESSION Reality begins to be confronted‘ Awareness of what has been lost’
2021 – 2025?
ACCEPTANCE Finally people accept what has happened New settlement emerges out of extreme pessimism
THE NEW NORMAL
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