Has Coronavirus Just Triggered The Next Great Depression?

Mar 18, 2020 | Uncategorized

I am wrapping my head around this as best I can. The major upheavals that we are seeing play out right in front of our eyes. And the follow-on ramifications of this Coronavirus and how it will likely impact our way of life for quite some time to come.

Doom and gloom for dramatic effect? No. I really have serious concerns about where we’re headed. So lets talk about this as rationally, sensibly, and logically as possible.

This Coronavirus is a Black Swan event. It came out of nowhere. Not foreseen. How could it? It’s brand new, and quite likely a bio-weapon that ‘leaked’ from China’s only Level-4 microbiology lab at Wuhan Institute of Virology, China.

Is This What Peak Fear Looks Like?

Highly contagious, COVID-19 Coronavirus is forecast to kill millions. As a result, panic and fear has triggered massive panic buying of food and consumable supplies. Why? Because people are realizing they will need to shelter in place. And they don’t know for how long. So they’re buying whatever they can. Because they don’t produce any themselves.

My Concerns

Financial | Economic

The stock market subset (DJIA) (Dow Jones) had peaked just about near 30,000. In a very short time it lost almost one third of its value down to ~20,000. The FED lowered their rates to zero. Announced essentially another QE (quantitative easing). They shot their bazooka. No more ammo. Desperation.

Word has it that some major banks are in trouble. We all know that the globe is in a MASSIVE debt bubble. The derivatives that interweave among so many financial institutions are so stunning in magnitude (exposure) that it’s really impossible to comprehend (at least for me). A falling domino could cause a chain reaction collapse of the entire system.

Is This What Desperation In The Gold Market Looks Like?

You aint seen nothin yet…

We are in the early stages of the effects that Coronavirus COVID-19 will play out. You’ve probably heard the phrase, “You ain’t seen nothin yet…”. I believe that months from now, this will be staggering. Why? Algebra. If you don’t understand basic algebra (high school, remember?), then you won’t get it. It’s the curve. And this one is going up…

The Effects Of Distancing

Self isolation. Quarantines. Social distancing. Stay home. Don’t go to restaurants, bars, public gatherings. Stop non-discretionary travel. On and on… all common sense methods to flatten the curve.

People get sick, confirmed positive for Coronavirus. Resulting in countless prior exposed people at work. Businesses shutting down as the contagion extends. People losing income – not working – layoffs – a chain reaction. All more fuel for the financial/economic meltdown.

Reliance on China | The Impact

Coronavirus has deeply affected the distribution supply lines and availability of product from China. Apparently up to 97% of one pharmaceutical ingredient or another used to come from China. No longer. It won’t be long and that’s going to really hurt. How long to resource and ramp up from somewhere else? This doesn’t happen overnight. In fact, much, much longer than that.

There are countless other integral parts that we are no longer getting. This has impacted countless businesses and is showing up as shortages of final product. This will only get worse as Coronavirus ramps up here, and elsewhere.

Food & Supplies | It’s Going To Get Worse

Food. Wow. This is the biggest. Everyone has seen it by now. Empty shelves at your grocery stores. It’s surreal. How can this happen in ‘merica ? Well guess what – it just did. Good luck finding the food staples that you’re looking for at this point… Much of it is simply, increasingly, gone.

My great concern is this… Many might think that those empty shelves will back-fill soon enough. People will stop panic buying and the distribution will catch up. However, it may not be as quickly as you think.

Panic begets more panic. When shoppers see empty shelves (of whatever), they will snatch up ANY replacement inventory the second it hits the shelves. Why? Because they fear it will be gone again. It’s a natural human reaction (survival). We are seeing this today, right now, as of this writing. It’s getting worse.

What happens as more and more people within the supply chain systems begin to get Coronavirus? How many of those systems will be partially shut down due to self isolation or quarantine?

What about the truckers? Did you know that when the truck’s stop, it’s over?

How Long Will This Go On?

We don’t know. We’re in uncharted waters. It feels like the perfect storm. Lots of things coming together at once, to create a potential disaster beyond what we’ve ever imagined.

I am concerned about Coronavirus. However I am MORE concerned about the possibility of follow-on affects that may change our lives as we know it.

Might the entire globe be launched into a ‘Greater Depression’ as too many systems break while most people struggle to survive through shortages and increasing violent reactions?

Normalcy Bias. We all have it. There is a desire for things to remain the same – status quo. It is difficult to imagine or accept major changes. But it feels like they’re coming.

There are lots of things that can go wrong from here. Being overly optimistic in the face of these circumstances, in my view, is foolish. It is wise to think it through to the extent that you can. Stay informed. Get prepared. Think seriously about the ramifications if it gets much worse. The things you can do now, to help mitigate it.

by Ken Jorgustin for Modern Survival Blog


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