Since the Trump/Putin/GOP ticket won America’s screwed up election, the worlds economic markets are starting to look a little nervous. Don’t get distracted with the climbing U.S. stock market, that too could be more of a result of the nervousness than a rejoicing that a new Kleptocracy has taken over in the U.S.

I know, you’re thinking WTF do I care about credit markets in China, or U.S. 20 year Treasury bonds, or LIBOR rates…? Well, in 07/08 these obscure warning lights started flashing red. While the lights were flashing, most Americans went about their daily business and borrowed money they didn’t have, to buy new houses and new cars and much of the junk that Americans think they need, to impress people they don’t like.

Now trying to read the economic tea leaves isn’t a science, it isn’t even an art, it’s more like placing a bet in a Vegas casino. So I try to listen to people who have a “good” track record, and when they start getting concerned, I start getting concerned.

So things are going on in China that are looking a bit shaky.

China's central bank stepped in to urge major commercial banks to lend to non-bank financial institutions on Thursday afternoon after many suspended interbank operations amid tight liquidity conditions, ... Caixin said that traders pointed to worsening sentiment among banks about market conditions and growing caution over interbank lending, especially after the U.S. Federal Reserve triggered a sell-off in the bond futures market on Thursday by signaling more rate hikes in 2017.

“Tight liquidity”. Everyone complains about the TARP bank bailout in 2008, although it was the best of a bunch of really bad choices, well tight liquidity (borrowing money gets really hard) is the reason TARP had to happen fast. And here we are talking about 2008. For better or worse a good example of how global the economy really is, is the part about what the Federal Reserve does in the U.S., can have a big impact on interest rates in China.

Here’s what Austin Goolsbee, previous Obama economic adviser, had to say:

So what’s going on in China?

"The vast scale of these injections shows that the PBoC is acknowledging the need to do something about very tight liquidity," said Jonas Short at NSBO. "Long-term rates have been shooting up and it's been choking liquidity in the bond markets." ... The central bank has been selling down its foreign exchange holdings in an effort to slow the renminbi’s fall against the dollar and stem capital outflows. Both the PBoC’s dollar sales and continued capital outflows have drained liquidity from the bond market, which has rallied strongly over the past 18 months.

So take a look at that 2nd highlighted part. The Chinese are selling off their dollars to try and stop their currency from falling. Now what does Trump say about the Chinese currency?

x Did China ask us if it was OK to devalue their currency (making it hard for our companies to compete), heavily tax our products going into.. Ã¢ÂÂ Donald J. Trump (@realDonaldTrump) December 4, 2016

Yep, the exact opposite of reality. Of course with Trump, it’s hard to tell if his ignorance is rising above his lies.

Separately on Friday, China’s banking regulator ordered banks to stop supporting “zombie” companies in the coal and steel sectors. Both industries have been buoyed by rising prices over recent months, frustrating authorities’ larger effort to reduce overcapacity. On Thursday, the day after the Fed’s interest rate rise, sharp price drops in five- and 10-year China government bond futures triggered an automatic trading halt — a temporary suspension similar to the “circuit breaker” mechanisms that occasionally stop trading on the country’s equity markets.

So China is trying to kill off “zombie” companies that are over producing things that nobody actually needs. And their bond market triggered circuit breakers last week! What does that mean? Well the U.S. stock market has circuit breakers that kick in around a 7% move. So imagine if the DOW dropped 1400 points tomorrow morning, that’s something like what happened in the Chinese bond market last week. That’s not good.

So now look at the U.S. treasury bond chart at the top of the page. Keep in mind, that bonds move the opposite of interest rates, so when bonds fall, interest rates rise. Also keep in mind, if you think the value of your bonds is going to fall, you might want to put your money somewhere else, say, maybe the stock market, which might cause the stock market to start rising. See how bonds started selling off pretty big around the first week in Nov.? Now, let me try to remember what happened in the first week of Nov. that would cause bonds to sell off? Hmmm, I just can’t think of anything.

So Trump is really ignorant, and he’s surrounded himself with some really incompetent and dangerous people, and economic warning lights are starting to flash around the world. What could possibly go wrong?

Jut because we’ve got a warning light flashing, doesn’t mean we’re going over the cliff, but it’s something we should be aware of and something we should start taking some steps to prepare for. If you’re like me, you honestly believe that GOP economic policies of pillaging the economy to give more to the rich, are really devastating to the economy and end up in some type of recession or depression.

Unfortunately, the only way we may be able to save our democracy is if a lot of Trump supporters end up suffering economically, and GOP economic policies will probably make this unavoidable. Hopefully our democracy will once again rise out of the GOP economic ashes.

A warning light is flashing in China, so don’t panic but be prepared and hang on to your butts, it could get rough for awhile.