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Posts Tagged ‘Coronavirus’

Incoming Biden Administration: A President Biden Makes Global Economic Depression A Greater Short Term Risk

November 8th, 2020 Comments off

The corporate media and social media complex, America’s new power center, has declared that former Vice President Biden is now President-elect Biden. Though Trump is pursuing a last ditch, scorched-earth policy of legal challenges, with no concession in sight, the odds are virtually certain that Biden will be inaugurated as the 46th president of the United States. What are the global economic implications  of this?

The Covid-19 pandemic has unshed in the worst economic downturn since the Great Depression of the 1930s.The  Q3 uptick is now likely to be followed by a double dip recession, as a second wave of coronavirus ravages a advanced economies, including the United States. Though the Biden policy team is committed to a more aggressive stance on combating Covid-19 and offering large fiscal stimulus packages. the economic prognosis is not bright.

Biden will enter the presidency with a divided electorate, including 70 million Trump voters, who are largely convinced that the election was a fraud, meaning the incoming presidency is illegitimate. Instead of the expected Blue Wave, the Democratic majority in the House of Representatives is reduced, and the GOP may very well retain control of the Senate. Divided government, and a divided people  will create instability in what is still the world’s largest economy,  possessing the strongest military power.  That does not portend well towards an economic recovery.

Continued economic shutdowns due to the pandemic, ineffective fiscal stimulus programs combined with growing sovereign debt along with the political and social instability in the U.S. lead to the conclusion that the trajectory towards an economic depression, already baked into the cake, will accelerate. It is likely to happen during the incoming administration’s four-year term.

 

 

Double Dip Recession Imminent As Covid-19 Induced Economic Lockdowns Reintroduced

October 26th, 2020 Comments off

With Europe and North America experiencing a virulent second wave of the coronavirus pandemic, lockdowns of the economy are being reintroduced by sovereigns on  an increasingly stringent basis. As an example, many regions in Spain are imposing enforced curfews.

The first wave of economic shutdowns  sparked the worst economic contraction in many developed countries since the Great Depression of the 1930s, greatly surpassing the Global Financial Crisis of 2007-2009 in severity. A return to at least semi-normal economic activity facilitated a sharp statistical bump in economic growth. Now, another major contraction looms on the horizon.

Depending on the duration of the current wave of Covid-19 induced shutdowns, a double dip recession  looks increasingly likely for many economies, both advanced and developing. A double-dip recession also raises the possibility that a global economic depression, already a strong possibility, becomes a virtual certainty.

 

Coronavirus (Covid-19 ) Second Wave Inflicts Further Destruction on the Global Economy

October 5th, 2020 Comments off

A resurgence, in effect the predicted second wave of the Covid-19 pandemic, is in full motion, striking at both advanced economies as well as large developed economies, such as India and Brazil. The confirmed worldwide death toll has now passed one million, a number both large and yet most probably a severe undercount of the actual number of fatalities generated by the coronavirus pandemic.

The toll in human misery is staggering. More than 35 million persons have been infected with Covid-19. It spares no one; the commoner and the elite are all at risk, as the recent news of President Trump contracting coronavirus  indicates. However, the damage inflicted on the world’s economy  is as severe as that incurred on public health.

The enforced lockdowns imposed by sovereigns as the only currently available means of halting the spread of coronavirus resulted in unprecedented demand destruction in Q2 of 2020. Optimists predicted a V-shaped recovery as a quick end to lockdowns would lead to a rapid “snap-back” in economic demand. That, and unprecedented deficit spending by governments and money-printing by central banks, temporarily reversed the massive fall in equity prices  and induced unwarranted optimism. Now that governments are again imposing draconian lockdowns throughout the world, the evidence mounts that the severe recession created by the pandemic will eventually morph into a full-blown economic depression.

Even once buoyant economists are grasping at straws, praying that quick development and production of an effective vaccine will save the global economy as well as preserve lives. However, even in a best case scenario, a safe and effective vaccine is unlikely to be widely available until the latter half of 2021. The likelihood is that the world will experience, along with the public health consequences, another 6-months of demand destruction and self-imposed economic suicide. Yet, governments, politicians and economists have yet to grasp the full measure of the Global Economic Crisis that is now upon us.

Fragile Recovery From Coronavirus Induced Economic Crisis As Warning Signs Grow

September 5th, 2020 Comments off

 

Government leaders and financial pundits  continue to trumpet the myth of the V-shaped economic recovery, a leading factor in the ability of Wall Street and other exchanges to recoup virtually all their catastrophic losses inflicted in the early stages of theCovid-19 pandemic. Yet, despite the happy talk, the anemic recovery occurring in many economies during Q3  is already in danger of being premature. Growing headwinds  lie ahead  for the global economy.

The temporary alleviation of the worst affects of the economic lockdowns that occurred throughout the second quarter of the year were purchased with a  staggering and unprecedented level of sovereign debt. To give only one example, Canada is projecting a government deficit for 2020 of $343 billion (Canadian), in USD equaling to about $260 billion USD. In the United Sates, the 2020 fiscal deficit incurred by the federal government t (excluding state, county and local government expenditures) is projected currently at  3.3 trillion dollars; more than 15% of America’s GDP.

Never before in human history have sovereigns incurred such massive debt levels within a very short time interval. This rampant borrowing has not been unleashed to fund major infrastructure projects and other activity aimed at stimulating economic growth. In fact, this massive borrowing binge has been utilized by policymakers  for two purposes: providing a financial lifeline to the vast numbers of newly unemployed, and pump up the equity markets that were on the verge of implosion.

For the short-term, stock prices may have recovered and large numbers of unemployed workers have been rescued from instant insolvency. However, with new pockets of Covid-19 emerging and leading to renewed economic lockdowns, and the threat of a second-wave of the coronavirus looming, economic disaster stands right before us. The possibility of an effective vaccine is the remaining hope  for much of the world to escape a Great Depression of the 21st century. How realistic such a therapeutic creation is for the salvation of the global economy remains to be seen.

UK Economy in Freefall Collapse Due to Coronavirus Pandemic

August 12th, 2020 Comments off

Official data just released reveals that the United Kingdom has experienced its worst recession since quarterly economic output reports were first tabulated in1955. In Q2 of 2020 the UK’s GDP contracted by negative 20.4%. This rate of economic contraction was driven by enforced lockdowns of much of the British economy in the wake of Covid-19, which has stricken the nation  more than other European economies.

The calamitous Q2 economic data means that the UK is experiencing the worst degree of economic  collapse of any major developed economy. As bad as the economic news is, there is reason to believe it will get worse. Even the UK government admits that unemployment, already at record levels, will significantly increase in the months ahead. The government has warned of hundreds of thousands of additional jobs that will cease to exists as the coronavirus pandemic continues to paralyze the economy, leading to an unprecedented level of demand destruction.

The dire economic news from  the UK is reflective of what is transpiring throughout the world. Despite continued talk by many pundits and government officials in leading economies about the likely V-shaped recovery  of economic growth, based on  optimistic forecasts of early vaccine development and improved Covid-19 therapeutics, the hard data offers  increasing evidence of a Global Economic Crisis, in effect the Great Depression of the 21st century.

German Economy Suffers Worst Quarterly Contraction On Record

July 30th, 2020 Comments off

Official statistics just released indicated a worse than expected decline in Germany’s GDP. The Q2 of negative 10.1 % follows a less sharp contraction in Q1. This is the most severe quarterly decline in economic activity in Germany since then end of the Second World War and the establishment of the Federal Republic. Germany is Europe’s largest and most successful economy, and the decline reflects the widespread economic damage being inflicted by the Coronavirus pandemic.

Optimists will point to a likely strong rebound in Q3, as economic activity picks up with a reduction in Covid-19 lockdown measures. Such a rebound is likely to be temporary. The renewal of Covid-19 outbreaks in various hotspots throughout Europe, and forecasts of a second pandemic wave this Fall, are predictive of future bad economic news. In addition, the export-dependent German economy will likely be buffeted by Coronavirus infection rate  increases in many of its major export markets, in particular the United States.

The latest German economic data reinforces the growing consensus that the pandemic-driven global recession, already the worst since the Great Depression of the 1930s, will likely evolve into a full-blown economic depression lasting many years.

 

 

COVID-19 SECOND WAVE ACCELERATING GLOBAL ECONOMIC CRISIS

July 13th, 2020 Comments off

 

Coronavirus has already unleashed a severe worldwide recession that is far worse than the Global Financial Crisis of 2007-09. In the words of economist Nouriel Roubini, the emergence of the Covid-19 pandemic resembled an asteroid striking the global economy.

The response of governments was inconsistent, but basically followed the following pattern; shut down much of the economy, accumulate unprecedented levels of debt to subsidize investors, businesses and laid-off employees, while hoping for the miracle of a quickly-developed vaccine. Amid the sea of debt-induced liquidity, pundits and policymakers boasted of a quick V-shaped recovery.’

 

Now we are witnessing in many countries a second-wave of the pandemic, in many cases only weeks after government officials boasted that coronavirus had been contained and that the economy could begin reopening. This, despite warnings from those more knowledgeable about the dynamics of a great pandemic that premature reopening of economic activity would greatly worsen the impact of a second wave of Covid-19, leading to repeated false openings followed by swift shutdowns of normal economic activity. These false starts and rapid lockdowns will actually worsen the negative impacts of coronavirus on the overall economy.

Now we are witnessing evidence that the pandemics is close to being out-of-control and spreading like wildfire in a growing number of countries, while sovereign debt , only months into the pandemic, is already at unprecedented levels. These factors further exacerbate the Global Economic Crisis now underway in tandem with the health crisis,  with talk of a V-shaped recovery proving to be illusory, while a severe economic depression  on the scale of the 1930s looks increasingly likely.

Asia Economy Contracting for the First Time According to IMF

July 2nd, 2020 Comments off

For the first time in “living memory,” Asia’s economy overall will shrink by at least  1.6% this year, according to the International Monetary Fund. The last projection from the IMF  had a forecast of flat growth. The update shows that the IMF sees worsening data impacting all of Asia in the wake of the Covid-19 pandemic.

The IMF concedes that no region, including Asia, will be immune from the ruinous impact of the Coronavirus on the global economy.  Yet, though the IMF is predicting a global economic contraction of almost five percent in 2020, it is still forecasting  a V-shape recovery in 2021 in excess of positive five percent.

With Covid-19 running an unpredictable course, with signs of a second-wave already present, it is being excessively optimistic to hope for a speedy economic recovery. In fact, even the IMF states it will take years for the economies of Asia and other regions to fully  recover, in spite of rosy forecasts for 2021.

Coronavirus Health Crisis Now An Economic Depression in the United States and Globally

May 28th, 2020 Comments off

 

A milestone of misery has just been reached in the United States. The Covid-19 pandemic has now claimed more than 100,000 lives in the U.S., and the country’s Labor Department has issued a weekly jobs report showing another 2.1 million Americans have filed jobless claims. This means that in the last 10 weeks, more than 40 million American workers have lost their jobs.

In addition to the above grim statistics, the U.S. Q1 economic report has been revised, showing a higher level of economic contraction of negative 5%. However, this is a mere harbinger of what is to come. The Q2 economic report is forecast by several experts to reveal a contraction of between 20 and 40 percent.

The bad economic news in America is being replicated globally. Virtually every major economy has witnessed an economic shutdown based  on combating the coronavirus. The result has been economic suicide in numerous countries. We are clearly already in a severe recession, far worse than the Global Financial Crisis of 2007-09. Increasingly, we are entering a global economic depression, the Global  Economic Crisis of the 2020s.

Global Risk Expert Ian Bremmer States World Economic Crisis Has Reached Initial Stage of a Depression

May 12th, 2020 Comments off

Political scientist and noted global risk expert Ian Bremmer, who is president of the consultancy firm Eurasia Group, in a recent podcast indicated that in his view the world is now headed into a severe economic depression. He indicated in his podcast that while a uniform  formal definition  of an economic depression does not actually exist, the statistics of economic destruction emanating from the Covid-19 pandemic exceed the parameters of a recession.

Ian Bremmer pointed out in his podcast that a technical recession is defined as two quarters of consecutive negative economic growth. A depression would mirror the coronavirus  pandemic in that it has far greater depth and duration than a normal event. The global health emergency generated b y Covid-19  has resulted in a level of economic shutdown and contraction throughout  the world that far exceeds the formal definition  of a technical recession.

Though there is resistance at the early stages of this new Global Economic Crisis to label it a depression, Bremmer points out that there was also hesitation  towards labeling the coronavirus outbreak a pandemic in its early phases. The noted political scientist is convinced that we are entering the first  new economic depression in nearly one hundred years. Ian Bremmer also believes the world of the 21st century is stronger financially and economically than was the case with the Great Depression of the 1930s. This is the only positive insight he offered, in what was otherwise a prediction of economic doom and gloom.