r-Selection Requires Free Resources Continue Indefinitely

Without a continual influx of free resources, things turn K:

Emerging market companies have an estimated $3 trillion in overextended loans that threaten to trigger a sharp credit crunch and capital outflows in economies that have already been hit hard by low commodity prices, the International Monetary Fund said on Wednesday.

The IMF warned that a messy withdrawal of stimulus measures in advanced economies could start a “vicious cycle of fire sales, redemptions, and more volatility.” The U.S. Federal Reserve has said it is on track to raise rates for the first time in almost a decade by the end of this year.

Overborrowing in emerging market economies likely adds up to an average of 15 percent of their gross domestic product, and 25 percent of China’s GDP, the IMF said.

Emerging markets where companies tapped easy credit to soften the impacts of the global financial crisis are now on the verge of a credit downturn, the IMF said. Many of the borrowers are state-owned enterprises and the lenders are often local banks.

Ultimately the best way to internalize the r-paradigm is by visualizing it within the context of addiction. Once you begin taking that dopamine agonist, be it heroin, cocaine, or a massive influx of free cash, it alters the baseline state of your condition, requiring ever more free resources just to maintain the status quo. Pull that dopamine, and you get withdrawal. If you took drugs, withdrawal is shakes, sweating, and bad feelings. If you partook of free cash to keep an economy afloat, withdrawal will mean an economic collapse and maybe war.

Apocalypse cometh™