The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist is warning.

On the eve of the World Economic Forum in Davos, Switzerland, here’s what William White, the Swiss-based chairman of the OECD's review committee and former chief economist of the Bank for International Settlements (BIS), told me:

"The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up. Debts have continued to build up over the last eight years (which) will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something.”

Mr. White says the Fed is now in a horrible quandary as it tries to extract itself from QE and right the ship again. "It is a debt trap. Things are so bad that there is no right answer. If they raise rates it'll be nasty. If they don't raise rates, it just makes matters worse," he says.

America's mass shooting capital isn't somewhere out West where you can get a gun at the corner store. It's in Obama's own hometown.

Chicago is America's mass shooting capital. 2,995 people were shot in Chicago last year. Shootings were up, way up, in Baltimore. With an assist from Al Sharpton and #BlackLivesMatter, Baltimore beat out Detroit. But Detroit is still in the running.

Chicago, Baltimore and Detroit all have something in common. They're all run by the party of gun control which somehow can't seem to manage to control the criminals who have the guns.

These cities are the heartland of America’s real gun culture. It isn’t the bitter gun-and-bible clingers in red state territory who are racking up a more horrifying annual kill rate than Al Qaeda; it’s Obama’s own voting base.

Gun violence is at its worst in the cities that Obama won in 2012. Places like New Orleans, Memphis, Birmingham, St. Louis, Kansas City and Philly. The Democrats are blaming Republicans for the crimes of their own voters. 

China is perilously close to a devaluation crisis as the yuan threatens to break through the floor of its currency basket, despite massive intervention by the central bank to defend the exchange rate.

The country burned through at least $120bn of foreign reserves in December, twice the previous record, the clearest evidence to date that capital outflows have reached systemic proportions.

“There is certainly a sense that the situation is spiraling out of control,” says Mark Williams, from Capital Economics.

China’s reserves have dwindled from $4 trillion to $3.33 trillion and are no longer far from the $2.6 trillion deemed to be the prudent threshold by the International Monetary Fund, given China’s $1.2 trillion dollar liabilities.

In economic parlance, China is trapped in what is known as the Impossible Trinity.

No one wants to buy electric cars, Bloomberg reports (1/06):

“Americans bought just 102,600 such vehicles in 2015, a 17 percent decline from the previous year, according to researcher Autodata. Nissan Motor Co. sold 43 percent fewer of its all-electric Leaf and General Motors Co. reported an 18 percent drop for its Chevrolet Volt, a plug-in model that’s driven by an electric motor and has a gasoline engine to recharge its batteries.”

And who can blame them?

Apart from being poky and tinny and smug and expensive and utterly useless for long distances, electric cars are also terrible for health and the environment, as even environmentalist Bill Gates has recognized.

This is the glory of the untrammeled economic system: it is the collective product of million upon million voluntary decisions by free individuals. No economist, no government functionary could ever replicate this system through management or regulation because they could never hope to gain access to the complex and ever-changing data which informs all these consumer decisions.

But that’s never going to stop Obama from trying, is it? Last night (1/12) in his thankfully final SOTU, he blathered on about how “we’ve got to accelerate the transition away from dirty energy.” That was just after he took credit for “gas under two bucks a gallon.”

It’s the ethanol, Sherlock. As in IBD’s editorial yesterday (1/05): A Profile In Courage In Iowa: Cruz Won't Bow To Ethanol Lobby.

Ted Cruz thinks he's going to win Iowa on Feb 1^st, and then compete for the nomination with whomever of the establishment candidates wins New Hampshire on Feb 9^th. But he's selling himself short. He should also win New Hampshire.

Winning both would give him the clear momentum to win South Carolina on Feb 20^th, Nevada Feb 23^rd, SC 20^th, NV 23^rd ST March 1^st

allowing him to wrap up the nomination on Super Tuesday March 1^st with 45% of the delegates needed (565 out of 1236).  

Here’s the key: if Cruz wins Iowa, he will have defeated the ethanol lobby. And beating Big Corn on its home turf is what can propel him to a win in New Hampshire.

People in New Hampshire hate ethanol. Ethanol is corrosive, it destroys engines. Go to any tavern in New Hampshire and you'll hear an earful. And they despise craven politicians seeking the White House whoring in Iowa for the votes of a special interest that the rest of the country is forced to put up with – like Donald Trump, declaring “I love ethanol” at rallies in the state.