Anne Applebaum: “Political instability will follow economic instability like night follows day”

While I am markedly more upbeat of late about economic matters, I still harbor some deep concerns about the direction of both the global economy and resultant political stability.

The Washington Post columnist Anne Applebaum has summed up my gravest fears about a global depression and its destabilizing effect on emerging market economies with this quote:

Political instability will follow economic instability like night follows day. Iceland is not alone. Serbia, the Baltic states, Kazakhstan, Indonesia, South Korea and Argentina are all in financial trouble; so, too, are Russia and Brazil.

And here’s a final, unpleasant thought: Pakistan. This is a country with 25 percent inflation and a currency in free fall; a country with a jihadist insurgency on its border with Afghanistan, permanent hostility on its border with India, nuclear weapons and a tradition of street demonstrations in response to suspect newspaper articles. Dozens of people, with all kinds of agendas, have an interest in using financial markets to destabilize Pakistan, and Afghanistan along with it. Eventually, one of them will.

–The Iceland Syndrome, Anne Applebaum, Washington Post

My sincerest hope is that monetary and economic stewards understand this close connection between economics, politics and geopolitical stability. The last time we had a period of equal or greater economic devastation, it led to the rise of Fascism, the Holocaust and the Second World War. While the developed economies look a might bit more stable, things are going pear-shaped in a hurry outside of the G-7.

We are not out of the woods yet.