BVI News

COMMENTARY: Corona recession or depression

By Dickson Igwe, Contributor

The world economy is in the process of abysmal collapse: a major contraction in consumer demand and supply.

In the USA, the current President, Donald Trump, is in denial and states that he expects the economy to begin to return to normal in April this year.

Donald Trump believes economic growth precedes national health. And he insists he will have the country open for business next month. He will find that the coronavirus will prevent him from doing so.

The coronavirus drives national agendas today, not any politician, and no matter how powerful. And like his counterpart, Boris Johnson in the UK, who only began to smell the coffee late in the day, Trump has already bungled the coronavirus response through his own dismantling of the national health infrastructure designed to fight this type of security threat to the country.

This was another attempt to kick President Barack Obama in the teet that is now costing lives. As the USA economy collapses, the two men who appear to have their heads screwed on are New York Governor Andrew Cuomo, and the man leading the fight against the virus Dr Anthony Fauci.

On the other side of ‘common sense’ is Donald Trump and his white evangelical base that see the pandemic as some type of conspiracy against the President who continues to hold the support of 90 percent of the Republican base.

This pandemic was created to stop the US President getting a Second Term, many of these Evangelicals assert: Corona is a hoax. But tell that to the thousands dying around the world.

And the hundreds of thousands infected by the virus. Now, the west is already in recession. The simple reason is there has been a massive shock to both global demand and global supply.

Putting it simply, economics is about exchange. I buy my toothpaste and soap in exchange for cash I earn at work, from a business, or investments I own and manage. When I am hindered from going out to make purchases, because of a national lockdown or curfew, and when the supplier is unable to meet the demands of his customers because of a cut in the link of his supply chain from some unforeseen event, the wheels of commerce come to a grinding halt.

Then when these economic wheels driven by exchange fall of their axle everything else in terms of economics collapses. And that is what is taking place the length and breadth of the world today.

The one well-tested panacea is STIMULUS. The USA has adopted a policy where it will pump $2 trillion into the economy to prevent a total collapse: fiscal stimulus. In total it is estimated that $ 7 trillion of stimulus is being pumped into the global economy worldwide. Fiscal stimulus means using debt instruments to bail out businesses large and small, and putting cash borrowed from investors, directly into the pockets of consumers in an attempt to jump-start consumer demand. Already hundreds of thousands of jobs have been lost and the “bloodbath” in the US economy continues in spite of these unprecedented attempts at stimulus.

Stimulus cash is borrowed from global investors who ultimately underwrite global finance in a marketplace – in terms of global GDP- worth $87 Trillion. The dire nature of the crisis in the UK has also meant an unprecedented stimulus.

UK economy flatlines

As the UK economy flatlines, UK Chancellor Rishi Sunak is stating that all workers in the economy, public and private, employed and self-employed, can expect to receive most of their monthly income from government coffers, up to $4000 a month until further notice. The same attempts at stimulus, and saving the global economy from collapse, is taking place elsewhere, in countries with multi-trillion dollar GDPs.

These are economies driven by central banks that hold the confidence of global investors: financial institutions that have the ability to create near-unlimited cash by borrowing from global investors, who ultimately own all debt.

The key question is this one: will these historically unmatched attempts at stimulus prevent a long global recession? The next article in this series will attempt to answer that question.

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  1. Good grief says:

    Yet more clap trap. Full of inacuracies and falsehoods. BVI News should be ashamed at presenting this garbage as journalism.

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    • Really? says:

      Now when the Territory is at its whits end there is nothing more important to publish than drivel from this gas bag. The man knows only how to regurgitate crap that he hears and reads and spins it to his racist views. Silence this moron. I guess that will happen. 6 days in confinement and he will probably wither away. Hopefully so. Good riddance

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  2. I wish says:

    I wish I could just b***h slap this piece of dung. This r****t p** will get what he sows. Karma is a wonderful thing. This piece of garbage spouting his bulls*** when the world is in need will only result in his own torment and demise. Keep it up you r****t lowlife and see where you’ll end up. The dump will be your residence.

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  3. WHOA says:

    @ I WISH….the dump will be your residence…well aren’t you confirming exactly what Igwe is saying.I really don’t understand the hoopla, the man is simply stating facts that are slapping us in the face. Get a damn life all of you who have a problem with the truth.

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  4. Corona and economy says:

    Corona and the economy have nothing, but absolutely nothing to do with the color of people’s skin.

    Stop this crap Igwe.

    There were black people who voted for Trump and also white people who voted for Obama. There are people who voted for both and people who voted for none. Stop generalizing. Stop dividing the world in two groups. It just makes you look silly.

    Want to be seen as a leader of some sorts? Bring people together.

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  5. Anonymous says:

    A legitimate assessment looses validity when the environment and other testing regulations, such as cheating, are violated.

    Likewise, your assertions have no validity when you “thumbs up” your own comment repeatedly. Shows dishonesty, charracter flaws and desperatism for attention.

  6. Ohh wwooww! says:

    Depressing to witness still today, in the 21st, the white man’s inhumanity to his fellow Blackman. The hatred is alive and well still. Sad, very state of mind.

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  7. Diaspora says:

    Both the US and UK lost valuable time in taking action to aggressively fight the pandemic. Both down played the Novel Coronavirus (Covid-19). In the US, it was viewed as another hoax created by Democrats, deep state and press to hamstrung President Donal J. Trump from getting re-elected. The politicalizing of Covid-19 severely hampered the US in getting prepared to fight the virus. For example, the Pandemic Office established by the Obama administration in the National Security Council and had a pandemic play book was disbanded by the Trump admin. Since it was created by President Obama, it is open secret that it would be disbanded but history cannot be wiped out. Further, the Trump admin is refusing to take the lead in fighting the pandemic and now the US leads the world in the number of confirmed cases(143,000). Help is a function of heaping praise on the President.

    Moreover, it took thousands of deaths across the globe, the virus gaining galloping steam in the US and the US stock market tanking due to the poor response to the pandemic for the Trump to be dragged reluctantly to accept that Covid-19 was real, not a hoax. The Trump administration is of the view that if and when reliable treatments, cure and vaccine are developed that the stock market will roar back with a vengeance to its historic height instantly. This is all ground noise and the jury is still out on that. Encouragingly, at least for a day, the Trump admin is putting science over economic advisors.

    Like President Donald Trump, UK PM Boris Johnson was slow off the mark, losing valuable time. However, the UK despite the slow as molasses start, is now moving full steam ahead taking some strict action to arrest the virus. Was it the PM, Prince Charles, Health Secretary……….etc contracting the virus that jolted the UK into the reality that Covid-19 was a deadly pandemic.

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  8. Soothsayer says:

    Its a cold, now everyone going catch financial flu…

  9. duck1951 says:

    the truth hurts .
    That is exactly how these economies work . If one thinks differently then bring it but do not call it garbage.

  10. Quiet Rebel says:

    The US and UK downplayed, debunked and distracted its citizens from the seriousness and deadly nature of the Novel Coronavirus (Covid-19). The lack of US and UK preparedness and outbreaks, coupled with other outbreaks across the globe may have indeed thrust the global economy in a recession and way be on the way to a depression. As a consequence of the global pandemic, the US stock market has been on a turbulent roll-a-coaster ride. And in response to the wild ride, the US Congress has passed a history setting $2T stimulus package and even that may not be enough to stabilize the market. Saddle folks for a wilder economic ride.

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