In the article below Michael Blythe from PinPoint Macro Analytics poses the question: "Are we due a Minsky Moment"?  

For those of us who might have previously been unaware of noted US economist, Hyman Minsky (1919 -1996) or his theory which The New Yorker labelled as "the Minsky Moment", it involved a prolonged period of "good times" normally associated with the building up of excessive debt and investor enthusiasm, which is followed by a sudden collapse thanks to recklessness, and an unforeseen (by most) catalyst.

As Blythe explains, "Minsky argued that stability paradoxically creates the conditions for instability. When times are good, people forget about risks and take on more debt, fuelling bubbles". Eventually the system reaches a tipping point... and the inevitable then follows.

Berkshire Hathaway's Warren Buffet is famous for saying "Be fearful when others are greedy, and be greedy when others are fearful" no doubt echoing, or at least following Minsky's theory. Whether we're at a Minsky Moment remains to be seen, but PinPoint's article also quotes legendary Australian economist Dr. Don Stammer, who referred to the "X Factor", defined as something that comes out of left field.

Blyth's article lists 10 potential X Factors at the current time, only one of which is Donald Trump, which is a worry as we would have thought Tweedle Donald was enough of a risk to world order, let alone financial markets, all by himself.

Much like Black Swans, X Factor events are unpredictable, but generally only in hindsight, when they become blindingly obvious. While there may be some in the US who have been caught unawares by Trump's unpredictability - (or should that be predictability?) - it is hard to argue that he's not doing, or acting, exactly as he said he would last year.

From Australia's perspective, it was generally thought that our special relationship with the US, courtesy of history, military and otherwise, and more recently AUKUS would carry the day. Obviously none of that counts. However, while the US can get critical minerals from Ukraine (or even Greenland in due course, Canada currently not being a likely option), what they can't get, and will need if/when push comes to shove with China, is access to the so called US/Australian Joint Defence capability at Pine Gap.

Senator Jacqui Lambie has been criticised for being irresponsible for saying out loud that the government should tell the US to move out of Pine Gap, particularly at a time when the Chinese navy has been circumnavigating our coastline. However, at the end of the day, particularly given the US has been increasing its surveillance capacity there over the past 5 years, it remains possibly our strongest card.

And as we know from the POTUS himself, in any negotiation, you need strong cards. Whether Albo has the nerve to use our Pine Gap ace remains to be seen. If he's doing so via back channels, it doesn't seem to be working.