It’s Not Merely the Virus- A Crash Was Inevitable

Since 2018, I warned that in no more than five years, there would be a major market crash based upon economic fundamentals and patterns of historical behavior leading up to a crash. The virus has expedited this, but according to Bloomberg by way of MSN Money, a crash was inevitable and the virus just expedited what was already in progress.

The novel coronavirus has already had a significant impact on the global economy, which will worsen if the outbreak and the shutdowns designed to contain it continue for very long. But it’s only an accelerant: If not Covid-19, as the disease caused by the virus is known, something else would have started the conflagration. Shortfalls in revenue and cash flows, caused by the shutdowns, have simply exposed the vulnerabilities of a structurally unsound economic and financial system.

A fall in revenue is problematic but manageable without debt. Unfortunately, in the aftermath of the 2008 crash, debt levels were increased rather than reduced, encouraged in part by low policy rates and the abundant liquidity engineered by central banks globally. Global debt as a percentage of GDP rose from around 250% in 2007 to 325% in 2019. Current debt levels are triple what they were in 1999. Businesses and households, with declining or no income and high levels of borrowing, now face an existential struggle to meet large financial commitments. (source)

The crash happened earlier than expected because of the virus, but it fundamentally does not matter that it was earlier, but that it happened as it did. What matters now is how one deals with the fallout from the events.

I am going to say what I have said before. If you can work, do as many hours as possible, provided you are being able to be safe and secure. Likewise, try to find a second job so long as the above conditions are met.

A lot of people will be out of work or looking for work. Things are going to get very hard and fast. If one does not take action now, one might find oneself in a rushing torrent of water and forced to swim but lacking both a life jacket and or a paddle for one’s boat.

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