We Are Entered The Lost Decade of The Greatest Economic Crisis In History
We Are Entering The Lost Decade – The Greatest Economic Crisis In History Our economy is never going to fully recover. The main reason for a long slog back to economic growth is our debt levels.
Debt to GDP is unprecedented at all levels, consumer, corporate, and sovereign. Low-interest rates are not enough to compensate for current debt levels and will result in an extended wave of defaults. Our consumers, our government, Our corporations have all spent their futures away when they went deeper and deeper into Debt.
The one and the only thing we are going to see going up steadily in the months and years ahead are corporate and consumer bankruptcies. Delayed openings. Concerts, tourism, and sports a no-go this summer. International tourism will grind to a halt. Airlines, hotels, cruise ships. Civil unrest. Political instability.
The pain has not even begun, nor has the asset price crash. No economic recovery means that the Fed will print 10s of trillions more in order to pump up stock prices.
The mistake is that the market is not the economy. The rest of 2021 is toast. And if cases continue, 2022 will be a tepid year on a depression level with 20% plus unemployment.
Commercial real estate defaults on a scale that will make the housing crises look like a picnic. Mall closures. Declining tax revenues for local schools and governments. Furloughs of government employees from the Fed, State, and Local to help balance budget shortfalls.
With this total lack of momentum, whether the ends in 2021 or 2022, it will be a terrible 2022. We may not fully recover until 2023, if ever. In the worst financial crises since the mid-19th century, it took on average, eight years for per capita GDP to return to the pre-crisis level, while the median was seven years.
Historic levels of monetary and fiscal stimulus might allow the US to fare better, but most countries don’t have the capacity to offset the economic damage from the pandemic. Which means the rebound is the beginning of a long journey out of a deep hole.
The idea that everyone who’s been laid off or lost revenue is just going to all of a sudden jump right back into working full speed and spending nonstop again is complete fantasy. For many small business owners, this will spell the end of their enterprises, and those lost jobs could take years to come back as those people try to recover from the loss of their businesses.
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