No One Is Immune From the Economic Storm to Come

Our problems are only just starting

I blame this blasted weather. It lulls us into thinking that we are passing through a sunlit dreamtime, a holiday from reality after which things will get back to normal. But things won’t get back to normal. Our problems are only just starting.

Even if, either because we find a cure or many more of us turn out to be immune than was realised, we are able to lift the restrictions speedily, the damage has been done.

Our economy is in collapse. We have taken on debt at a rate not seen since 1945. A new generation is about to learn what mass unemployment feels like. How, in the circumstances, can we be so relaxed about extending the closures? When every day in lockdown adds billions to our debt, and months, even years, to the eventual recovery, how can so many of us think it reasonable to leave things as they are “until we can be absolutely sure”?

Why, when other European countries are firing up their economies, do we remain the most timorous of all the electorates polled?

The answer, I think, can be found in a YouGov survey last week which asked people whether the lockdown was having a positive or a negative effect on various aspects of their lives.

Most of the results were unsurprising: people thought that the impact on their family relationships was positive, the impact on their social lives negative, the impact on their diet and exercise neutral. But there was one especially telling response.

Asked about their personal income, only 26 per cent of respondents felt the lockdown had made them worse off (with 21 per cent saying the effect was positive and 50 per cent saying it was neutral).

Think about those figures for a moment. Closing down most economic activity is bound to make almost everyone poorer. That should be an obvious, indeed indisputable, statement.

Look around you. Businesses are already going under, two million more people have been driven on to benefits, and the sums we are borrowing, hour by hour, will condemn us to decades of tax rises, inflation or both – which will in turn hit our productivity.

No one is immune. If you’re a pensioner, your pension will lose its value. If you’re a public sector worker, you’ll find that, as its tax take evaporates, the Government can’t afford to pay you.

If you have savings, they will be inflated away. If you’re a student, you’ll be working off these debts for the rest of your life.​

Britain, as a whole, is perhaps 25 per cent poorer. Yet, so far, few of us are feeling it. That 26 per cent figure is a reminder that our economy is an inverted pyramid resting on a relatively small number of profitable enterprises. The rest of the population – whether state employees on full pay or furloughed workers who, without travel or childcare costs, are no worse off – naturally find it easier to call for caution.

“We need to put lives before the economy,” say the majority – as though the economy were some abstraction removed from human endeavour.

Perhaps we can’t help thinking this way. We are flesh-and-blood creatures. We can picture getting sick much more easily than we can picture a fall in GDP.

Only when that fall hits us directly, leaving us unable to afford the things we used to buy, will we understand that “the economy” is what we call the transactions people make to improve their lives.

And, even then, we may struggle to link our misfortune to the closures we have spent the past two months demanding.

Weather conditions along the lines of King Lear act three, scene two would be more appropriate. They might just give us a premonition of what is heading our way.

Source: The Telegraph

  1. Michael says

    The basic aspect is that America’s economy can run well without most of the population. Most of the 330 million population have been rendered obsolete back in the 90’s when outsourcing included a vast population of skilled labor for pennies on the dollar. The profits of hiring a labor force hardly any different to indentured labor and a few rungs above slavery, is immense.

    The only use for most Americans is to be consumers of these products. With E-Commerce and possibly Universal Basic income (UBI) an American can stay at home and consume. Most of that is returned when items and services are purchased. Taxes are paid through sales but the worth of American requires that he is expended earlier than his normal life.

    So any lifestyle that shortens his life is encouraged. From fast food to pot to a sedentary life watching the idiot box or pornography is encouraged. Americans are dumbed down to be complacent and by dying earlier they do not tap into any Social Security or pensions. Families and children are discouraged or made impossible to have. Lifestyles that go against reproduction is encouraged. From abortion, the pill, homosexuality to transgenderism are encouraged. God is taken out of society and replaced with a seflie. One becomes self centered if not narcissistic. A toxic culture effectively thins the herd.

  2. Michael says

    Before this shutdown there were several sectors that were badly underperforming. Among them were the sports industry. Stadiums that used to be packed often were barely occupied while cost of tickets continued to climb. Players demanded 7 figure salaries. It was impossible to sustain
    Hollywood to Disneyland could not bring in the numbers needed to make a decent profit while cost of tickets to Disney world and Disney land continued to rise. Even blockbuster movies costing hundreds of millions to make failed. Las Vegas was too costly to run and entire Gambling industry was floundering.
    In the economic war China retaliated by canceling orders. This act alone hit the agricultural sector with a body blow. A good deal of America’s Agra business was geared with China as the major consumer. when China left Agra business became a losing industry. These are some examples why a shutdown would wipe them out and the shareholders would be compensated with bailouts
    At the same time the Federal Reserve stepped in to buy up Corporate bonds. This is not legal so the Federal Reserve bought them using a company named “Blackrock”. That way DC runs corporate America and can rebuild the economy without the input of the private sector.

  3. Michael says

    America’s economy since the creation of the Federal Reserve is based on a cycle of boom and bust with debt being the driving force. This took off especially after ww2 when the GI bill allowed returning soldiers to buy houses at reduced rates. The Diners card came into being in the 40’s and credit lines helped American families buy on Credit. It was feasible since income was sufficient to cover debt.

    the boom and bust was not supposed to happen since the Fed reserve was created to avoid 19th century economic crashes. Yet they did to the point that the National debt jumped from 550 billion in 1981 to 23 trillion in 2019. the impending bust was going to be much larger than 2008.

    In the meantime Trump had launched an economic war with China and lost. Time to cash in before the economic bust and not make the same mistake that brought down Lehman brothers in 2008. At the same time the economy needed to re done from ground up where 5-G tech would introduce smart cities, robotics, AI and so much more but not require the vast workforce. It seems that the corona was convenient crisis to rid the economy of a redundant population and reboot it to compete with Asia.

  4. Michael says

    The following are actions the Federal Reserve took in the last few months:

    03/06 – $8.3 billion “emergency spending” package.

    03/12 – Federal Reserve supplies $1.5 trillion in liquidity.

    03/13 – President Trump pledges to reprieve student loan interest payments

    03/13 – President Trump declares a “National Emergency” freeing up $50 billion in funds.

    03/15 – Federal Reserve cuts rates to zero and launches $700 billion in “Q.E.”

    03/17 – Fed launches the Primary Dealer Credit Facility to buy corporate bonds.

    03/18 – Fed creates the Money Market Mutual Fund Liquidity Facility

    03/18 – President Trump signs “coronavirus” relief plan to expand paid leave ($100 billion)

    03/20 – President Trump invokes the Defense Production Act.

    03/23 – Fed pledges “Unlimited QE” of Treasury, Mortgage, and Corporate Bonds.

    03/23 – Fed launches two Corporate Credit Facilities:

    A Primary Market Facility (Issuance of new 4-year bonds for businesses.)

    A Secondary Market Facility (Purchase of corporate bonds and corporate bond ETFs)

    03/23 – Fed starts the Term Asset-Backed Security Loan Facility (Small Business Loans)

    04/09 – Fed begins several new programs:

    The Paycheck Protection Program Loan Facility (Purchase of $350 billion in SBA Loans)

    A Main Street Business Lending Program ($600 billion in additional Small Business Loans)

    The Municipal Liquidity Facility (Purchase of $500 billion in Municipal Bonds.)

    Expands funding for PMCCF, SMCCF and TALF up to $850 billion.

  5. ke4ram says

    “A new generation is about to learn what mass unemployment feels like.”

    Why,,, because like good little sheeple they “obeyed!”

  6. Cushite says

    The Demise of the Petrodollar and the End of American Power

    Nov 25, 2014

    The Colder War by Marin Katusa

    Marin Katusa’s blockbuster New York Times best selling book, “The Colder War: How the Global Energy Trade Slipped from America’s Grasp.”

  7. hoyeru says

    again, it’s ALL be design. The fake lockdown was implemented to create the illusion that the corona virus is the cause of the collapse of Western style “capitalism” when in fact, the collapse was all but inevitable. Zerohedge was talking about this back in sep 2019 when the US FED began giving trillions to the banks to prop them up.
    If the author doesnt realize any of that, then I don’t have to waste my time reading his stupid BS. This web site really needs better articles than this BS to make me come back.
    Nice Escape from New York image. The President of what?

    1. Robert Bruce says

      It wasn’t just ZH, but a lot of net economic sites were all saying the FED was running out of bullets and the collapse was going to be late this summer or early fall.

  8. Billy Cobbett says

    It’s Hannan’s useless “Leader” that is to blame for the catastrophe to come, no one else.

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