Comment by ben_w
9 hours ago
> I don’t think a dramatic “crash” is the most likely outcome.
There's lots of crashes, but they're over-predicted. A quote I can't remember perfectly, "we predicted 10 of the last 3 stock market crashes".
That said, if the levers of power in the USA stop being independent, if they all become bound to the will of the President, there's a strong risk of someone — could be the President who ends their independence, could be a successor — crashing it all very hard. If whoever is in charge at the time hates intellectuals, I mean it can be Pol Pot hard; but even if the leader at that point tries to do it all right and listens to sane advisors, it can still crash as hard as the Chinese famine resulting from the Four Pests campaign.
The USA isn't there yet. That's the direction of motion, but even with the current speed of change, there's enough independence that it's not even close to that bad yet.
Monarchists-esque governments arguably have a stronger incentive to preserve and generate wealth than elected officials, so it's not really a given that a dictatorship style government would be bad for equities.
Take a look at Dubai, for instance.
The UAE, Kuwait, Qatar, Oman and Saudi monarchies, all around 10x higher GDP per capita than Arab non-monarchies Egypt, Lebanon and Yemen. The exception being Jordan, an Arab monarchy that still manages to be relatively poor.
Are you normalizing by oil per capita?
Holy confounded variables, Batman! You're measuring oil wealth, not government organization.
And at least arguably, the causality goes the other way: restless populations in poorer nations are more likely to drive democratic reforms, where wealthy folks tend not to rock the boat.
Gives me the goosebumps.
I hope we never get there.