Try to hang on to any threads of optimism you might still have as I summarize,from an article in The Guardian by Nouriel Roubini
, 10 ominous and risky trends:
-Soaring levels of public and private debts, and their corollary risks of defaults, all but ensure a more anemic recovery than the one that followed the Great Recession a decade ago.
-The demographic timebomb in advanced economies with ageing societies means more public spending (and debt) allocated to health systems.
-Deflation risk is increasing as COVID crisis creates massive unused capacity, unemployment, and commodities (oil, metals) price collapse, making debt deflation likely, increasing insolvency.
-As central banks run monetised fiscal deficits to avoid depression and deflation, currency will be debased and accelerated deglobalisation and renewed protectionism will make stagflation all but inevitable.
-Income and wealth gaps will widen as production is re-shored to guard against future supply-chain shocks, accelerating the rate of automation and downward pressure on wages, further fanning the flames of populism, nationalism, and xenophobia.
-The current deglobalisation trend, accelerated by the pandemic, will lead to tighter restrictions on the movement of goods, services, capital, labour, technology, data, and information.
-A populist backlash against democracy will reinforce this trend, as blue collar and middle class workers become more susceptible to poplulist rhetoric, scapegoating foreigners for the crisis, and supporting restriction of migration and trade.
-A geostrategic standoff between the US and China will cause decoupling in trade, technology, investment, data, and monetary arrangements to intensify.
--This diplomatic breakup will set the stage for a new cold war between the US and its rivals (China, Russia, Iran, North Korea) and because technology is the key weapon for controlling future industries and pandemics, the US private tech sector will be increasingly integrated into the national-security-industrial complex.
-A final risk that cannot be ignored is environmental disruption, which, as the Covid-19 crisis has shown, can wreak far more economic havoc than a financial crisis.
These 10 risks, already looming large before Covid-19 struck, now threaten to fuel a perfect storm that sweeps the entire global economy into a decade of despair. By the 2030s, technology and more competent political leadership may be able to reduce, resolve, or minimise many of these problems, giving rise to a more inclusive, cooperative, and stable international order. But any happy ending assumes that we find a way to survive the coming Greater Depression.
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