Markets are once again at a possible inflection point – and a deeply negative one at that. Last week’s sudden escalation in hostilities in the Middle East, and the equally abrupt recalibration of interest rate expectations that followed the release of worse than expected US inflation figures, may be the final straw. In combination, they amount to a potentially deadly cocktail with wide ranging implications for financial markets made doubly vulnerable by asset price valuations that have been stretched to breaking point and a global economy awash with debt. Many of the ingredients seem to be there for another Minsky moment, named after the US economist Hyman Minsky – the point where markets and economies, overwhelmed by debt, suddenly collapse. Minsky’s abiding economic insight is the idea that stability in financial markets breeds instability. The longer things remain settled and predictable, the more oblivious to risk financial markets become, until eventually the whole edifice comes tumbling down. You’d have thought that more expensive money alone would be enough to force open the cracks and fragilities in the system, but so far markets have taken it in their stride, riding the tightening cycle relatively unscathed. But for how much longer? For...