Dark Economic Storm Clouds are Gathering

I am sitting here at Gartner’s IT/Symposium 2015 in Orlando and I am having fun talking with clients and organizations about how they can better leverage information in their business to improve business outcomes.  It’s what I do for a living – help organization improve and get ahead of the rest.  However, as I do this, I have noticed some harrowing signs that concern me regatding our economy.  They are worring not for their own sake but for the fact that our leaders’ response to this kind of news has been, for the  most part, innefective and down right market distorting.  We might get more bad medicine (i.e. QE) soon.  Here is a quick rundown of a couple of storm clouds:

Tuesday October 6th: Once the biggest buyer, China now dumping US government debt.  This is not good news for several reasons.  This entire act is tied to China’s efforts to push the yuan into reserve currency status.  China has been orchestrating multiple activites to push this idea.  Only yesterday I noticed that the yuan had displaced the yen, for the first time, as the fourth most used currency for cross border trade settlement.  As China and other nations sell dollar denominated debt, the ability for the US to perpetuate its excessive debt regime diminishes, which will put pressure on interest rates, even if and when the Fed does not want to increase the.  I blogged on this domino effect before.
Wednesday October 7th: Recession buzz is heating up on Wall Street.  News that the gap between realized global GDP and the potental global GDP is widening, and this suggests growing potential for a recession in 2016.  Couple to this the IMF’s re-forecasting of growth slowing down, this looks like a very dark cloud indeed.

I hope the sun comes out soon.

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