Well, no they haven't, and Trump has not torn off his mask yet. Oh, and it's the 7th of April 2020 and the world is in lock down because someone ate a bat. So where to from here?
Let's start with the economy. Everything has stopped. Everything excluding grocery stores and toilet paper manufactures. I should have bought shares in one of them! Lots of commentators were predicting an imminent recession, and what they got was a depression. Good call guys! Even a war wouldn't shut down the world. Think about it for a moment, supply and demand have been shut down. You can't buy a car, even if you have cash to do so, because the people wanting to supply the car can't make it, or get it to you. Where will this lead to? As I have the time, I will exercise the noodle and try invent some predictions. In a years time I will come back to this post and see which have come true. Here goes......
Inflation or deflation?
Governments in the rich countries are literally printing money, and giving it to citizens, which under ordinary circumstances would cause inflation, people would spunk the cash on crap, such as TV's and holidays, BUT, the people supplying those services and products can't provide them. Looking at the demand side, you and I, about 30% of people have less than USD1,000 in savings, and people with substantially more, will start digging into their savings as they become unemployed. I suspect that many people will finally begin to try to stretch any government hand outs as far as possible, thereby buying less crap, which in turn will cause manufactures to lower their prices to encourage people to buy crap again. Hey presto deflation. Governments hate deflation, and I will get to that later.
Since the last thing a government will want is deflation and the money printing will continue until inflation kicks off again. Hopefully the money supply will be properly managed, as unrestricted money printing leads to hyperinflation. I fear this will happen in countries such as South Africa that have no fiscal discipline and those in power will want to stay in power, resulting in them lighting up presses. Hello Zimbabwe!!!! That will lead to social unrest (in SA that was happening before that pesky virus arrived on the scene), and goodness knows what else.
Conclusion: first deflation and then inflation. I would hazard a guess that the initial inflation will center around food, which will be triggered by a rise in oil prices.
Banks
I reckon there are going to be mergers/bankruptcies as people lose their jobs and are unable to pay down their loans. We will see a few bank runs (people withdrawing their savings) from banks who they think are going to fail. If this crisis will teach people anything, it will be STAY OUT OF DEBT. The people who will emerge the strongest from this will be those who have little or no debt. Don't borrow money to buy shit!!!
Conclusion: It would be a good idea to keep a months worth of expenses as cash under your mattress.
(Un)employment
No way to sugar coat this one. It gonna get ugly, quickly. Do what you can to help each other. Something positive. There are many more types of work available, than there were just 10 years ago. Be creative use the Google to help you. Humans are ingenious creatures, and will recover, that's a given.
China
This is where it will get interesting. China's growth has been dependent on manufactured exports, and many companies who had large amount of their supply chain, or their entire supply chain based in China where caught with their knickers around their ankles. The Chinese were cheap, but the cost was high.....Companies are going to diversify their supply chain, which will mean more work coming back to it's country of origin, however expect it to be more in the form of automation.
The economic devastation, which many countries are experiencing will lead them to seek compensation from China. Having built large amount of infrastructure around the world, especially on the African continent, could see countries enacting legislation which would nationalise these projects as compensation. The Chinese are investing heavily into obfuscating there responsibility (i.e. deleting any evidence/silencing whistle blowers). Which way could that go? Will the CCP (Chinese Communistical Party) release control of their assets. I doubt it. Would would they risk all out war to maintain their position as a global leader? A war would cause even more damage, so no. If the virus was the CCP's attempt at developing a biological warfare agent, it has gone terribly wrong, and the small amount of trust that has been placed in the CCP has been destroyed.
The destruction of trust (bare in mind that the Chinese citizens and the rest of the world, have both lost trust), will cause a change in CCP leadership. Will it cause a collapse of the CCP? I doubt it, as no one in that position of power will ever let go of the power. Human nature and all that.
Let's start with the economy. Everything has stopped. Everything excluding grocery stores and toilet paper manufactures. I should have bought shares in one of them! Lots of commentators were predicting an imminent recession, and what they got was a depression. Good call guys! Even a war wouldn't shut down the world. Think about it for a moment, supply and demand have been shut down. You can't buy a car, even if you have cash to do so, because the people wanting to supply the car can't make it, or get it to you. Where will this lead to? As I have the time, I will exercise the noodle and try invent some predictions. In a years time I will come back to this post and see which have come true. Here goes......
Inflation or deflation?
Governments in the rich countries are literally printing money, and giving it to citizens, which under ordinary circumstances would cause inflation, people would spunk the cash on crap, such as TV's and holidays, BUT, the people supplying those services and products can't provide them. Looking at the demand side, you and I, about 30% of people have less than USD1,000 in savings, and people with substantially more, will start digging into their savings as they become unemployed. I suspect that many people will finally begin to try to stretch any government hand outs as far as possible, thereby buying less crap, which in turn will cause manufactures to lower their prices to encourage people to buy crap again. Hey presto deflation. Governments hate deflation, and I will get to that later.
Since the last thing a government will want is deflation and the money printing will continue until inflation kicks off again. Hopefully the money supply will be properly managed, as unrestricted money printing leads to hyperinflation. I fear this will happen in countries such as South Africa that have no fiscal discipline and those in power will want to stay in power, resulting in them lighting up presses. Hello Zimbabwe!!!! That will lead to social unrest (in SA that was happening before that pesky virus arrived on the scene), and goodness knows what else.
Conclusion: first deflation and then inflation. I would hazard a guess that the initial inflation will center around food, which will be triggered by a rise in oil prices.
Banks
I reckon there are going to be mergers/bankruptcies as people lose their jobs and are unable to pay down their loans. We will see a few bank runs (people withdrawing their savings) from banks who they think are going to fail. If this crisis will teach people anything, it will be STAY OUT OF DEBT. The people who will emerge the strongest from this will be those who have little or no debt. Don't borrow money to buy shit!!!
Conclusion: It would be a good idea to keep a months worth of expenses as cash under your mattress.
(Un)employment
No way to sugar coat this one. It gonna get ugly, quickly. Do what you can to help each other. Something positive. There are many more types of work available, than there were just 10 years ago. Be creative use the Google to help you. Humans are ingenious creatures, and will recover, that's a given.
China
This is where it will get interesting. China's growth has been dependent on manufactured exports, and many companies who had large amount of their supply chain, or their entire supply chain based in China where caught with their knickers around their ankles. The Chinese were cheap, but the cost was high.....Companies are going to diversify their supply chain, which will mean more work coming back to it's country of origin, however expect it to be more in the form of automation.
The economic devastation, which many countries are experiencing will lead them to seek compensation from China. Having built large amount of infrastructure around the world, especially on the African continent, could see countries enacting legislation which would nationalise these projects as compensation. The Chinese are investing heavily into obfuscating there responsibility (i.e. deleting any evidence/silencing whistle blowers). Which way could that go? Will the CCP (Chinese Communistical Party) release control of their assets. I doubt it. Would would they risk all out war to maintain their position as a global leader? A war would cause even more damage, so no. If the virus was the CCP's attempt at developing a biological warfare agent, it has gone terribly wrong, and the small amount of trust that has been placed in the CCP has been destroyed.
The destruction of trust (bare in mind that the Chinese citizens and the rest of the world, have both lost trust), will cause a change in CCP leadership. Will it cause a collapse of the CCP? I doubt it, as no one in that position of power will ever let go of the power. Human nature and all that.
Brain dump over. Standby for an updated brain dump in the future.
