The last recession was really bad. Caused by stimulus from the central banks to cope with the .com crises we saw an unprecedented bubble in the real estate market. When that bubble imploded and the financial system was at the risk of a complete meltdown we dit the same. Due to the Corona outbreak, we are witnessing the same. With the same solutions. Or to put it in other words: it is stupid what we do. We will get the same outcome. We will get a no different outcome than the last stimulus packages. Unsustainable economic activity, bubbles in the economy, and waste. Waste when the boom is happening and when it is imploding.
Not to state that the current global economic situation is not terrible. Thanks to government interventions and the Corona outbreak we are witnessing an economic depression. One that has massive implications on the world. To give you some idea. At the deepest point in the stock market during WWII, the market was down by 36%. During the temporary setback on the markets due to the Corona outbreak, we are down 40%. What is worse? A war which cost, in total, 80 million people its life or a virus?
Due to the Corona outbreak over 100,000 companies were forced to, temporarily, close their doors. But we can remove the temporary. the doors will never go open again. Think about the lost economic activity, think about the households that are now going to become dependent on government benefits.
To make it even worse. If the Federal Reserve bank of Atlanta is right the US GDP will go down by 42,8% in the second quarter. Think about this. This is almost half of the economy.
It doesn’t matter where we look. Industrial output is down, activity is down. The only bank that is doing great businesses is the food bank. But if they are successful poverty is on the rise.
for generations, not only the USA, but the complete western world was capable of kicking the can down the road. That opportunity is gone. We can no longer delay. It is time to have the much-needed reforms. Very painful. But this is the only chance we get to end this misery.