Something scary is going on in financial markets, where bond prices in particular are indicating near-panic.
Panic moves to prop up Deutsche bank underline fears about both the eurozone and a wider global financial crisis. And there’s a lot of volatility in the political as well as economic markets, when it comes to the EU referendum. The Mail splashes on plunging exports to the EU, while the Telegraph reports that the Companies Act will force firms to detail the risks of ‘Brexit’ on the eve of the poll.
The stock market had predicted nine of the last five recessions; the wisdom of crowds is often overrated. Still, bond markets are a bit less flighty than stocks, and also more closely tied to the economic outlook. [A weak economy has mixed effects on stocks, low profits but also low interest rates, while it has an unambiguous effect on bonds.] What plunging rates tell us is that markets are expecting very weak economies and possibly deflation for years to come, if not full-blown crisis.
The government and central banks world wide have spent the past seven years inveighing against both fiscal and monetary stimulus, and seems to have learned nothing from the utter failure of its predictions to come true. One of the most popular political outs is "we will have to learn the lessons from this" but it is now obvious that this is not true with financial regulation.
If I were a betting man putting a wedge down on the next financial crisis happening before 2020 would not be a difficult choice, however, I do not expect good odds.