The Economic Impact Of The Lock Downs
(Edited)
We are just starting to feel the economic impact of all these shutdowns.
In the past I wrote about how a 50% drop in global GDP from pre-COVID levels is possible. We could see a lot more damage done in 2021.
In this video I discuss how the chancellor for Britain said the economy will suffer its biggest drop in 300 years. This means to levels not seen since the early 1700s.
Here is the article outlining that:
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Finally someone is talking about this. I keep telling people the hardest part is yet to come and not many seem to realise that. They think if the virus will be under control, which is a question of when, then we'll be fine. Not financially. The effect is yet to come and it looks ugly, really bad.
Look at Greece, who's been loving off tourism and still struggling for a long time, getting EU help one after another.
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Anything in the hospitality business is destroyed for the next few years. This is going to impact the countries that have a larger part of their GDP dependent upon this such as Italy and Greece.
In the US, and I am sure all over the EU and Japan, small businesses are being wiped out by the day. Here, that employs the majority of people, meaning unemployment will remain high. While the Congress argues over the ways to "stimulate", people are suffering. There was a report that savings rates went down in October as people dipped into that to spend.
A drop of 50% in global GDP by 2022 is not off the table. That would wipe out more than $40 trillion off the global GDP. We see how the UK is off more than $250 billion this year alone.
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My friend @cryptoandcoffee just put out a post about this - > Carnage All Around Me
It's frightening, really
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I've got my 401k all moved to cash for now. I may miss a bit of "Yeah! America has a sane President again" rise, but I've got too much in to take a chance of a huge drop this late in my career.
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That is smart although what is ironic is that the market has never seen a more friendly President to Wall Street than Trump. He never met a spending bill that was too big to sign, a regulation he didnt want to get rid of, nor an interest rate he didnt want cut.
The guy did everything he could to give Wall Street all it wanted and then some.
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UK is not in the euro zone, but UK is still on of the worst examples in Europe on how to deal with this pandemic which in my opinion is not really a pandemic since it has been proven multiple times by now that the numbers are blown and unrealistic.
If Joe Biden will actually do what he's planning, then this a clear act of directly putting americans, not all of them of course, to the ground, quite many will probably end up bankrupt. Worth mentioning also that he's planning to shut a country down for six weeks for a virus that is less harmful than a normal flu.
Another thing that leads me to think of all this pandemic to be nothing more than an orchestrated act to enslave the people more and control them is these dates: we're expecting the second wave to come as of that date, we will shut down the country as of that date and so on. A bit suspicious.
This thing won't be over until all of us will get on the streets and ask for our stolen freedom rights back. Otherwise the so called new world order will eat us alive. I know it sounds like a conspiracy but it's being discussed for decades and now we can see it become a reality right before our eyes.
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Biden will close down the country which will do the same thing it is doing in Europe: it will crush what is remaining for small businesses. The first wave of lock downs did a number on most of them but many are still left standing. Another lock down, especially on a national scale will polish off much of what is remaining.
Anything to do with hospitality is destroyed for at least 2-3 years. All the "kick the can down the road" with mortgages, rents, and other forms of debt will topple at some point as defaults filter through the system.
You are right about this being nothing more than a power play and a grab for more control. Tens of trillions of dollars worth of capital formation are being wiped out. People talk about the stimulus like it is even a drop in the bucket. It isnt. The US printed like $3 trillion so far yet I am sure there was more than ten trillion in capital formation eliminated.
This is going to cripple the economy.
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Because of pandemic I lost my job and it's been 6 months and I'm feeling like hell with little to no money
Sadly, and I know this doesn't help, you aren't alone. There are estimated into the hundreds of millions around the globe who are in a similar situation. Hopefully you activity in cryptocurrency is helping a little bit.
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Yeah I get to know about hive and crypto that way
Because I was looking for make money online
Well if you can gain some traction and keep growing your stake, you might not need to return to that job.
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Hahaha I hope so!
the economic damage of a year of almost zero production is truly incalculable.
According to data from an Italian business magazine a couple of months ago, Italy had economically gone back in time to 1980.
And the calculation does not yet consider the last months of this year...
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The southern half of Europe is totally screwed. Italy and Spain are leading the way down. Germany, for all its might, is also killing itself. They totally destroyed the car industry in that country, something that was the envy of the world.
We are going to see some horrible numbers across the world. Sadly, 2021 might be worse.
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As far as hyperinflation is concerned... what is the big difference between currencies that are hyperinflating vs ones that are impossible to hyperinflate? Economic sanctions? Developing nations vs Developed nations? Regulations and government oversight in republic sovereignties?
Seems like only currencies at the bottom of the pyramid are the ones that crash into the mountain.
Very astute observation.
The starting point is confidence, or lack of. The tip of the iceberg is the a loss in confidence in the overall state of the economy. This can be brought on by a variety of factor such as sanctions. Coupled with this, is the loss in confidence in the government.
Venezuela is a prime example. The economy was tanking and then supplemented (negatively) by US sanctions. The Maduro regime did nothing to instill confidence which furthered the problem. This led to the central bank going to the economic playbook and printing money.
Why the lower end of the spectrum tends to get hit the hardest is the lack of resiliency in the economy. Venezuela, for the most part, was a one trick pony. Oil was how it got dollars to pay for commodities that are needed in the country. Without the ability to sell oil, no dollars were to be found. The Bolivar is worthless on the global scale meaning all that printing stayed right at home.
Iran is an interesting situation. Instead of following the playbook and churning out the Rial, they are turning to Bitcoin. By mining this, they are not only building wealth for their country, they have the ability to interact on a global scale since Bitcoin is a global currency operating outside it borders.
Finally, the lower end economies tend to lack technical advancement. This means the deflationary pressures that are eating up the major economies, which are far more advancement, are not present. At the same time, investment is minimal as compared to other nations like US, Japan, and China.
This is the biggest advantage to cryptocurrency. Since it is global in nature, any new token can be eaten up anywhere in the world. It is not dependent upon the population of any single geographic area.
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Lot of people financial state have been affected negatively during the last lockdown and pandemic. I just wish and hope 2021 will not offer another one again
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I am lucky enough to work in IT and I was barely impacted by this pandemic. In the same time my usual spending decreased which allowed me to make some investment in crypto or stock space. I am aware by the overall economics that are not good, but I think that the world did change and the money might have moved towards new spaces. I look forward towards 2021 and I am expecting things to come back to normal and powered by new technologies to alleviate some of the past pains.
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Wait until after Easter. Only then will we see how bad this has been and the impact will be obvious. I say that as many businesses rely on the festive season and the build up to it. October, November and December normally is boom time and the businesses rely on this to make it through January, February and March which are usually fairly quiet. If they aren't doing the business right now then they are toast and will not make it through. Many businesses I know are only covering costs right now and making no profit which is fine but what about the first 3 months next year? I am seriously worried for the economy as it is going to test everyone and how much you have stashed away for the rainy days.
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Social and political consequences of lockdown and ruined economies look unfathomable at this point. If the history is any guide, the COVID-19 "New normal" is going to include a lot "abnormalities" which were supposed to be forever gone in 20th Century.
And smaller countries, especially those that rely on tourism, are going to experience even less fathomable economic ruin than big economies like USA, UK or EU. There the effects of COVID-19 on economy, everyday lives and citizens' future prospects are more difficult to hide. Probably the most telling example in Montenegro, which has economy almost completely reliant on tourism, only a few degrees less than neighbouring Croatia.
In Croatia elections were held in July, a month or two after the first lockdown, but before the traditional peak of tourism season. The national media deemed COVID-19 a major success and convinced the people that the tourists will come and save the day. As s a result, governing party won.
In Montenegro, the elections were held in late August. By that time, it became apparent that, even without lockdowns, tourism season failed and citizens knew that can't expect money that fueled everything in that country. As a result, party of Milo Đukanović, president that ran the place even before the fall of Berlin Wall, lost elections.
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Summary:
In this video, Task discusses the economic impact of the current global situation, focusing on the UK and Europe. He highlights the significant 11% drop in the British economy, the largest contraction in 300 years, attributed to lockdowns in 2020 and the challenges faced by other major economies such as the US and EU. Task mentioned the possibility of a further economic downturn in 2021, emphasizing the severe impact on small businesses, savings, and capital formation. He also touched upon the airline industry's struggles and the role of central banks in financing the recovery efforts.
Detailed Article:
Task's video delves into the economic repercussions of the ongoing global situation, particularly zooming in on the United Kingdom's economy and its unprecedented 11% contraction, the most considerable drop in 300 years. He points out that the UK is the fifth-largest economy globally and underscores that this downturn follows two rounds of lockdowns throughout 2020. Task also mentions the imminent reopening post the approaching lockdown, projecting potential challenges for the country, especially amid the troubling economic forecasts.
Furthermore, Task compares the economic situations of other major economies like the United States, China, Germany, and Japan, illustrating the severity of the situation facing the UK amidst a broad global economic downturn. He alludes to the United States' past experience with a 30% GDP drop during the second quarter due to lockdown measures, hinting at a bleak economic outlook for 2021 under Joe Biden's proposed six-week shutdown policy. Task emphasizes the repercussions of such drastic economic contractions, especially on small businesses, capital formation, and national GDP figures.
Moreover, Task touches upon the struggles faced by the EU, hinting at the challenges ahead for Western Europe, specifically calling out Italy's tourism-dependent economy's vulnerability to prolonged shutdowns and the lack of autonomy in currency devaluation due to its EU membership. He suggests that nations heavily reliant on sectors heavily impacted by the current crisis, like tourism, might face insurmountable challenges without adequate intervention. Task also mentions the need for agility and vigilance in navigating the uncertain economic landscape ahead.
In conclusion, Task emphasizes the pressing need for countries and economies to be prepared for the troublesome economic waters ahead, especially in light of the severe contractions and challenges faced across various sectors. By providing a comprehensive assessment of the economic impact and forecasts, Task offers valuable insights into the current global economic landscape and urges viewers to remain alert and adaptable in the face of these evolving challenges.