To connect the future configuration of the global market with a "market moment" might sound bizarre. But this is exactly what several think tanks are doing at this moment, mostly in closed-door sessions. The trend shows a possible fragmentation of the global market into regional blocks – which is not a problem per se. The bigger threat is that each block's degree of openness to the international circulation of capital, goods, information and people might become less and less – and if the markets begin to smell such a scenario, that could be a far bigger problem. Firstly, the geopolitical uncertainty wouldn't be manageable through monetary policy instruments, creating a structurally destabilising effect meaning long term interest rates might go up. Secondly, the stock markets are structured around the potential for unlimited future growth – should that be inverted it would destroy the main locomotive of the financial system.
Should the analysts tracking the probability of this possible future shock keep their mouth shut to avoid premature warnings, or should they make explicit the risk? I chose the second option because I observe that many market actors are increasingly inserting geopolitical scenarios in their financial and business calculations, led by the evidence of a growing world disorder signalled by the increase of internationally unmanaged conflicts: Ukraine, China-Japan, China-Vietnam and Northern Africa. From this observation, to the realisation that no one is managing the globe, the road is short. In the past the openness of the global market has been defended by the American empire, as the British one did for centuries. But its global governing capacity and appetite is shrinking.
The Chinese empire has a pro-openness posture for defending its export interests, but it is not doing anything active. The Eurozone is led by a Germany more interested in acting as a neutral mercantile power than a globally stabilising one; Russia is reconstructing its regional empire. Beyond that, the G20 is a joke, the G7 an impotent residual of the past. Can we envision a new active source of world order and defend the global market openness? The network of bilateral free trade agreements among democracies, both in the Pacific (TTP) and the Atlantic (TTIP), look promising. In any case, it seems prudent to me to stimulate solutions today before the problems become too evident tomorrow.
