Mar. 14, 2020

DIRE PREDICTIONS

 

The virus may kill fewer than the usual causes of death, But the panic is real. 
 
China will more rapidly eclipse the US as a result of the virus.  
Because China, Vietnam, Singapore, S. Korea, Japan and Taiwan have cultures where the people act for the collective good when told, East Asia will  bounce back economically faster and stronger than the self centred cultures of the west. This may variously be due to centuries of obeying authority, Confucian values or dictatorial powers. 
 
Recovery in the US and some European economies will be slow, due to the need to rebuild wealth over consumption and travel. This will slow recovery in countries dependent on exports to the US and tourism.
 
  Restructuring supply chains and manufacturing centers will take a while  
 
The US policy of ensuring a disunited and weaker Europe that cannot challenge its imperial dominance will at least partly succeed, due to the way Trump is acting. The other part is the inability to dictate to those europeans who think freedom to do as they want is important.
 
The forces working for the break up of the EU will be stronger. The local interests of many European countries are prevailing over the EU's ability to dictate or stop the panic or virus. Those in stronger economies are increasingly less keen to bail out the weak ones.
 
Countries with high indebtedness will default and devalue. They usually do.
 
There will be huge unemployment and bankrupcies in economies dependent on tourism. 
 
Individuals and companies with loans and negative net worth will default. Reposessions of houses, cars, business assets and planes will drive down asset prices and increase unemployment.
 
Countries with rigidity in labour markets, high personal and state debt, overvalued currencies, corruption and nepotism will really suffer and recovery will be slow. Costa Rica is one such.
 
Stay safe and well.