DREW BESSETTE: And so let me bring this back a little because obviously, that's kind of
where I want to end this conversation.
But what does the coronavirus mean-- you talked about the domino effect, right, and how this
is possibly the first domino.
I might think that's arguable, but hey, whatever domino-- first, second, third, whatever it
is-- it's certainly a big piece falling into place now.
And what does it mean for what you described as the everything bubble?
And I mean, it's not just you.
It's a lot of people here on "Real Vision."
And what does it mean for the fragility of financial markets, and is it a warning sign
for the rest of our systems that this everything bubble popping could be a sign of more-- it
could be the start of the storm, so to speak?
MICHAEL KRIEGER: Yeah, I mean, that's how I see it.
And another thing just for listeners to check out, I wrote a series as well in 2018 called
"The Path to 2025," where I laid out that I thought the world would completely change
from that point on into 2025, everything.
And I'm talking like geopolitics, financial markets, economy, centralization versus decentralization.
Virtually every single thing that we've known since we were born about how the world works,
I believe almost all of those things will be completely turned on their head by around
2025.
I think that's sort of the window.
So we're right in that window.
So if you think about the coronavirus as a domino, well, think about one of the things
I mentioned in the "Shaky Foundation" piece.
Going into the coronavirus, we had built an equity bubble, another equity bubble.
We had a bond bubble that's even bigger than the equity because as we're discussing long
term trends, my entire life-- again, my entire life has been a bondable market for sovereigns.
I mean, it was in the late '70s or early '80s where interest rates were at its highest.
And they've been coming down for 40 years.
If you think about that, in a lower interest rate environment for 40 years, when that reverses,
everything reverses.
Everything changes because so many of the behaviors, whether it's the military, whether
it's the financial empire, or it's just your average asset prices that are boosted have
been boosted for 40 years because of low interest rates, all of those things start to go into
reverse or break down.
So I'm seeing the coronavirus.
It's going to start creating pressure.
I don't know if you saw this, but a lot of companies are now drawing down revolvers.
They announced that yesterday.
So you're probably going to start seeing liquidity tightening.
And now you saw what the Fed announced today with, I think, what was it, $500 billion or
trillion in repos?
The point is, companies are going to start struggling.
Individuals are going to start struggling.
That's going to impact spending, but it's also going to impact credit.
And credit, of course, as I just mentioned, is the biggest, most important market in the
world.
And credit and low interest rates have kept all of this, all of the behaviors, whether
it's geopolitical or domestic, consumption behaviors, it's underpinned all of it.
So if that trend is in the beginning stages of reversing, it's not-- yes, you know, there's
this blow up.
And when you watch the stock market decline, you say, oh, you know, wow.
We're just going to be in this big blowup forever.
It's not quite that.
You have to look at it like we're probably at the beginning of a multi-decade trend reversal.
And the consequences of that are impossible to fully appreciate at this point.
But what you can say is if you have an empire and a domestic economy that's been built on
a 40 year bond or interest rate bull market, if that ends, everything, everything about
the way the world is constructed, will end.
DREW BESSETTE: Yeah, I mean, the editorial team here in "Real Vision," we have a slack
channel that has been screaming about cruise line credit and even casinos and everything.
Every section of the credit market seems to be at least feeling that pressure, that liquidity
pressure that you just talked about.