Many people failed to recognize the global signals leading to the collapse of 2008. But the money creation and over-borrowing was not something that happened at once. Ever since the .com crisis did central banks stimulate the economy. money that went into the real estate sector. We are now in the same situation. So what will the Coronavirus have as an impact?
Well, we need to begin with some history. To truly compare the effects of Corona we can have a look at the 1929 collapse and the effects of the Mississippi Ponzi scheme.
We need to begin by seeing what we know for certain. Well first of all: what do we know about the Coronavirus? Well, there are 2 scenarios of origin. The first one is that is a mutation from a snake. The other one is that it comes from the military research institute in Hunan. Convenient around 20 miles from the epicenter of the outbreak. Which one is true, I don’t know. Feel free to comment below.
If we look at the economic effects we need to look at it. First of all, we need to see what is happening. With negative interest rates are we looking at the beneficiaries of these policies? These are large financial institutions, governments, and the real economy. Or the nonfinancial economy.
At the moment are we witnessing the economic change? Asia is taking global dominance over. The economy is slowing down and governments and central banks are out of ammunition to solve this.
In many countries are we seeing that people are having no savings? Government-mandated pension funds excluded. This worries me after all, is the savings of the world the basics of economic stability.
The stimulus of the central banks is causing bubbles in every market. Thy is running out of options to stimulate the economy.
But at this moment is the factory of the world into big troubles. They have closed. The Hainan government is in talks to buy out the non-aviation assets of HNA Group. One of the most leveraged conglomerates in the world. Just recently HNA sold its last UK property. Taking a loss of 23%.
It is not known how the corona outbreak is affecting the world. If we look at what happened before, when around 23% of the affected dies, then it will cause some big problems.
Without a doubt are people in the USA seeing this as a chance to re-establish American economic dominance. But this is not something that is going to happen pretty soon. Due to overtaxing and over-regulation the USA has lost competence. When it comes to research & development is China outperforming the USA on a 9 to 1 ratio. That means that China is applying for 9 patens and the USA 1.
The USA is not going to regain its dominance. The USA is more likely to see a massive economic bust. A bust that will wipe out many asset classes.