May 4, 2023 - Economy

Welcome to the New Not Normal

Illustration of two people shaking hands upside down. Their ties are hanging from gravity.

Illustration: Aïda Amer/Axios

If you're confused by the current banking crisis, that's entirely understandable: We live in very confusing times.

The big picture: The 70 years from 1946 to 2015 individuals and companies could make long-term plans. Then in quick succession came 2016 (Brexit and Trump), 2020 (COVID-19) and 2022 (Russia invading Ukraine).

  • The pandemic, in particular, broke the very foundations of the global economy, from our supply chains to our sense of time to our ability to agree on scientific facts.

Why it matters: My new book, "The Phoenix Economy," is an examination of "life, work, and money in the New Not Normal" — how we should get used to unexpected things that don't make a lot of sense.

Where it stands: The banking crisis has felled three huge banks — all with more than $100 billion in assets. Paradoxically, the number of small-bank failures this year remains stuck at zero.

  • In normal times, bankers worry about loan defaults, which are currently at historic lows. Instead, what caused the bank failures was the huge amount of money that flowed into Silicon Valley Bank and First Republic Bank as stimulus funds spilled across the economy.
  • Those deposits proved to be much flightier than any bankers anticipated. If they'd never arrived, the banks would have been fine, but their arrival and then departure in quick succession proved fatal.

What's next: We know now to expect the unexpected. There will be more pandemics — the chances we'll go another 100 years before the next one are almost nil.

  • The long arc of history will become jagged and unpredictable. Both domestic and international politics are running hot by postwar standards and will remain that way, the flames of conflict fueled by inexorable global climate change.
  • Will AI kill us all? Probably not — but it's easy to see why, in the New Not Normal, people are worried about that. This is a world of black swans.

The bottom line: The biggest lesson the pandemic taught us was YOLO — you only live once. Live your best life today, for no one knows what tomorrow might bring.

  • In the phoenix economy, we're no longer able to count on the kind of things we used to be able to take for granted. Tragedy and triumph will both become more common. But underlying it all is a renewed appreciation for life itself — our own, and everybody else’s, too.
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