{"id":52287,"date":"2020-04-08T14:26:26","date_gmt":"2020-04-08T19:26:26","guid":{"rendered":"https:\/\/olduvai.ca\/?p=52287"},"modified":"2020-04-08T14:26:29","modified_gmt":"2020-04-08T19:26:29","slug":"the-worst-economic-collapse-ever","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=52287","title":{"rendered":"The worst economic collapse ever?"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/gnseconomics.com\/2020\/04\/08\/the-worst-economic-collapse-ever\/\">The worst economic collapse ever?<\/a><\/h3>\n\n\n\n<p>Country after country has reported extremely dark economic numbers. The gigantic jobless claims, 6.6 million from the U.S. last week, are just the tip of the iceberg. For example, the&nbsp;<a href=\"https:\/\/tradingeconomics.com\/country-list\/services-pmi\" target=\"_blank\" rel=\"noreferrer noopener\">service sector PMIs<\/a>have been simply ghastly across the globe. We are now in a crisis of epic proportions.<\/p>\n\n\n\n<p>But, how massive can the crisis eventually get? Since our inception,&nbsp;<a href=\"https:\/\/gnseconomics.com\/home\/\">in 2012<\/a>, we have contemplated three scenarios as a part of our quarterly forecasts. While we have not referred to them in each report, we have repeated them periodically. They are:&nbsp;&nbsp;the&nbsp;<em>optimistic<\/em>, the&nbsp;<em>most probable<\/em>&nbsp;and the&nbsp;<em>pessimistic<\/em>.<\/p>\n\n\n\n<p>But at this point our main worry is the approaching realization of the&nbsp;<em>pessimistic<\/em>, or the worst, scenario.&nbsp;&nbsp;It\u2019s likelihood, while still low, is increasing fast in our estimate.<\/p>\n\n\n\n<p>Underpinning its severity is not the virus, but the fragility of the global economy.<\/p>\n\n\n\n<p><strong>Breeding chaos:\u00a0\u00a0failed clean-ups and bad policies<\/strong><\/p>\n\n\n\n<p>The Global Financial Crisis (GFC) was considered a&nbsp;<em>Black Swan<\/em>&nbsp;event to many. However, it was no such thing. It was a massive failure of hedging and diversification within the global banking system, most notably in the U.S., and a number of prominent analysts saw it coming. See our blog,&nbsp;<a href=\"https:\/\/gnseconomics.com\/2018\/09\/14\/10-years-from-lehman-and-nothing-has-been-fixed\/\" target=\"_blank\" rel=\"noreferrer noopener\">10 years from Lehman. And nothing has been fixed<\/a>, for an insight view on that crisis.<\/p>\n\n\n\n<p>While banks were wound down and recapitalized in the U.S. after the GFC, an equivalent restructuring did not happen in Europe. Stricken European banks were left to linger in a state of permanent financial distress.\u00a0<\/p>\n\n\n\n<p>\u201cOutright Monetary Transactions\u201d or \u201cOMT\u201d, negative interest rates, and ECB\u2019s QE program all aggravated the predicament of European banks.\u00a0 The failure to resolve the 2008 crisis \u2018zombified\u2019 the European banking sector, a situation which persists today. (See\u00a0<a rel=\"noreferrer noopener\" href=\"https:\/\/gnseconomics.com\/en_US\/2019\/09\/10\/q-review-3-2019-the-endgame\/\" target=\"_blank\">Q-Review 3\/2019<\/a>\u00a0for a detailed account).<\/p>\n\n\n\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The worst economic collapse ever? Country after country has reported extremely dark economic numbers. The gigantic jobless claims, 6.6 million from the U.S. last week, are just the tip of the iceberg. For example, the&nbsp;service sector PMIshave been simply ghastly across the globe. We are now in a crisis of epic proportions. But, how massive [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,130,28817,29341,2310,19965,24423],"class_list":["post-52287","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-china","tag-coronavirus","tag-covid","tag-depression","tag-gns-economics","tag-tuomas-malinen"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/52287","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=52287"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/52287\/revisions"}],"predecessor-version":[{"id":52288,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/52287\/revisions\/52288"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=52287"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=52287"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=52287"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}