So who will pick up the bill for the global recession??

2개월 전

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If you haven't noticed by now, the world is clearly heading on the steep downward slope towards recession because of the COVID-19 pandemic. The duration of this recession and, very possibly global depression, will be heavily dependent on the longevity of this crisis. Also crucial to this war will be human endurance, decisive government policy and geopolitical relationships.

The measures taken by the United Kingdom and nations around the world to manage the COVID-19 pandemic: restricting travel, shuttering nonessential businesses and implementing universal social distancing policies are having severe economic consequences.

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Financial and housing markets are collapsing, with retirement and sovereign funds worldwide hemorrhaging trillions of pounds. This is consistent with findings that negative market effects occur with bad news. In fact, negative and positive news have asymmetrical effects of equivalent magnitude in the market, and it disproportionately affects equity markets, as well as foreign exchange markets.

Unsurprisingly, we are witnessing a temporary, short-lived recovery in equity markets propped up by trillions of pounds in government stimulus packages, a dangerous and superficial way of reversing, or trying to contain, the economic havoc caused by the pandemic. These stimulus injections are simply not feasible to keep the economy afloat, should the COVID-19 crisis last longer than forecasted.

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While the National Health Service is occupied with saving human lives, it is a serious oversight by governments worldwide to rely on stimulus packages to safeguard livelihoods from the current economic meltdown. Governments do not understand how their authoritarian and unilateral decision of shutting down entire economies, and attempting to salvage the fallout with stimulus until COVID-19 is no longer a threat, will pan out.

The massive government borrowings used to fund these stimulus packages are not free gifts. Who will repay this enormous debt, and how long will it take? The answer is clearly more bad news than governments are prepared to confront right now.

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But, ultimately, taxpayers will be responsible for repayment, and it will take at least a decade, if not more.

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Some forward-looking indicators are plummeting at an astounding speed.

Since the COVID-19 pandemic, UK consumer sentiments have plunged vertically with almost zero slope and no sign of turning around any time soon.

A cross-country, historical time series of sentiment data shows that at the end of March, South Korean consumers were the most pessimistic about the economic and financial market outlook, followed by Italy, France and others. Currently, China is leading the consumer index, indicating that its economy may see the light of recovery much faster than any other country.

With China lifting its 76-day lockdown of Wuhan on April 8, the country is certainly in a better position to recover economically compared with other nations, where the restrictive measures are only continuing to be in effect. China will take full advantage of this during the rebound.

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If the whole world owes debt to the whole world it doesn’t make sense to plunge the entire planet into misery.

All of these debts will be erased.

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@offgridlife, I believe debt forgiveness for at least the last 6 months is appropriate. Most people and governments are not responsible for Covid 19 spreading.

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All debt will be wiped away.... so buy buy buy.

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My concern for all this is knowing how we will live the post-covid-19 era; It will be interesting to see analysts debate the different scenarios that will be on the table and none will be favorable to the population. Only by seeing that the FED's negative rates could last until 2021 is he admitting that the economic avalanche will be inevitable.

Letting people circulate for an economic reopening, personally I do not see it feasible, a person in South Africa contacted more than 500 fellow citizens, if they in turn go to their homes or communities, mathematics does not lie. I don't see an economy progressing when you have everyone sick, and some of whom could not return.

The world has changed, for better or for worse, the economy has changed and I believe that the facts will speak in the coming months, it only remains to wait.

These are indeed scary times. Our country doesn't want to use the 'D' word, but I'm afraid that's where we are headed. And, this virus isn't done with us yet. Hang on tight, for sure!

The world was heading for a big recession well before there were any news about covid-19, it's just people ignored it and now government s have a perfect scapegoat!

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Totally agree with you there. This is the opportunity the central governments and global elite have been looking for to blame for their mishandling of the financial system - "it wasn't our fault, honest!! It was covid-19's fault...."

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"Funniest" thing about it is it happens over and over and yet the general population still supports the same system and enteusts it with our wellbeing
They say madness is to try the same thing over and over and expect a different outcome I guess the whole world has gone mad

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That's an understatement.... I'd say most of the world has gone bat-shit crazy!!

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The future is kinda scary and by history we know that depression and economic collapse always leads to revolt. We never learned from our past mistakes and so the current monetary policy persists not realizing the the system is rigged from the very beginning. We should go back to the basic instead of printing away money (currency, if you know what I mean) to solve problems.