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Following a financially ravaged year in a post-Covid-19 era, where the UK is faced with an upcoming recession and inflation crisis, relevant to the nation’s active housing market crisis (though at the same time amidst predictions of a housing market cool-off post-recession), and where the Russian invasion on Ukraine is estimated to have a heavy impact upon the global financial recovery, onlookers ought to wonder about these vast issues’ implications.

Subsequently to the above, it would seem, as if the prevailing procyclicality phenomenon, revolves around the speculated upcoming global liquidity crisis, and any relevant profitability arising from it, whose apparent reification has created a rather unusual shift in the actions of whale players.

Amidst a historic 60-year point that finds China’s population decreasing and thus affecting worldwide economies, the country’s economy is paradoxically predicted to enter into an economic rebound after its recent exit from its zero-Covid policy.

One fact which is perhaps interconnected with China’s economic prospects is quite possibly hidden in the fact that an “epochal realignment” of wealth is currently affecting the Asiatic Economic world since Chinese legal and physical entities are physically and financially increasing their already established migration and presence to Singapore, since the island country’s neutrality, stability, low corruption, and low taxes have turned it into a safe destination with a high rate of return, as well as a center of stability.

However, in the Western world, there is the looming certainty of increased inflation, with inflation being the rate of increase in prices over a given period of time and entails that the real value of money will lose on its purchasing power, impacting its financial integrity.

As examined in the past, during times when a liquidity crisis is looming, the need, or rather, urgency, to pile up liquid assets so that they can easily be exchanged for cash at a predictable price, arises.

The above, partially explains the tactic of Chinese influx to Singapore, as analysts could argue that the future has speculatively been foreseen, but one stands to question whether there is indeed a liquidity crisis, to begin with.

However, there are some underlying red flags, such as the implementation date extensions for the Basel III standards, the revised market risk framework, and the revised Pillar 3 disclosure requirements by the Bank for International Settlements (BIS) which expired on January 1 ^st of this year, perhaps being one of the factors affecting the Eurozone’s construction sector crisis.

In addition, not only are UK consumers increasing their credit card borrowing as a result of the cost-of-living crisis, but the UK wages are currently undergoing exponential growth whilst still failing to keep pace with inflation, and while in the wake of China’s Covid-19 restrictions relaxations are expected to cause a dramatic rise in global oil demand, but the core inflation also continues to rise in many economies around the world.

To further elaborate upon China’s financial future, an important point to note would be that China’s tech stocks have recently entered a $700bn recovery rally, though one must not neglect to pay any attention to other sectors, such as development, since instances such as PwC’s resignation from Evergrande’s auditor can be a reminder that just as capital can fluctuate in, capital may brim over, unexpectedly and unpredictably.

On the other hand, though, it requires mentioning that until now, January 2023, inflation has been decreasing in the UK at the same time when the nation’s fuel prices ease, whereas simultaneously, 2023 has begun by treating global bond markets kindly, as they are currently going through a rebound, and perhaps giving a premonition for decreased inflation fears.

However, the biggest fear of every analyst, scholar, and investor alike, would be the abuse of an instrument, related to all of the above facts and speculations, with its name being ‘Collateralized Fund Obligations’ (CFO’s).

With a similar structure as ‘Collateralized Debt Obligations’ (CDO’s), which were one of the main reasons why the financial crisis of 2008 occurred, CFO’s have recently been identified as investment vehicles, that potentially, and fearfully, are being used by private equity groups while rating agencies are downplaying their dangers, whilst exposing issuers to undue risks.

Additionally, all the above exist simultaneously alongside the critical scenario that has just overshadowed the US economy, which is the fact that the US Treasury has begun taking “extraordinary measures” so as to meet its obligations, in response to the US government hitting its $31.4tn borrowing limit. Should the Treasury and the Government remain idle to their obligations, the US government can risk defaulting.

Thus, despite any questions over the reasons as to the source of the currently ravaging global high inflation, amidst the reality of this “loneliness economy” we are all currently experiencing, one certainty is that a new world energy order between China and the Middle East is ought to materialize; speculatively, as always.

Regarding the question as to how China’s financial moves, UK’s financial struggles, as well as CFO’s play, will affect global inflation in the immediate future, one can merely speculate, as the harmonized financial world is currently entering a so-called terra incognita.

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