During this lockdown, it’s easy to get a bit down. The constant news of deaths and corona cases; the arguments between liberals and conservatives; the debate over whether the government acted early enough, fast enough, good enough; the rage over those breaking the rules and anger over those enforcing them; and so on and so forth.
Out of all of this noise, one article jumped out at me by Nouriel Roubini. Who he? Just some Professor of Economics at New York University’s Stern School of Business, who predicted the 2008 financial crisis.
He posted a piece at the end of April, predicting that this coronavirus crisis will introduce a decade-long recession.
Oh no! What? We don’t want contraction; we want expansion. We want growth. We’re not used to the idea of a never-ending stretch of hardship.
Why does Nouriel think this way? Ten reasons:
- deficits and their corollary risks: debts and defaults
- the demographic time bomb in advanced economies
- the growing risk of deflation
- currency debasement
- the broader digital disruption of the economy
- de-globalisation
- the backlash against democracy
- the geostrategic standoff between the US and China
- a new cold war between the US and China, Russia, Iran, and North Korea
- environmental disruption
He concludes:
These ten 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.
Jeez. That cheered me up.
It made me ponder what the future really holds? How will all of this play out long-term?
No idea. I can predict technological change, but society, politics and economics is way beyond me. And I’m not alone. Even The Harvard Business Review agrees with me:
No one knows for sure what is going to happen. Digging deeper, three key factors are causing forecasters particular difficulties. First, the economic impact and speed of policy changes have never been higher; second, the pandemic is undermining the reliability of economic data — the bedrock of any good macroeconomic model; [and] third, the models are diverging because economic forecasters are having to delve into the unfamiliar world of epidemiology to better understand the likely evolution of the coronavirus outbreak in each country.
In other words, no one knows what’s going to happen next. Now, I know that sitting indoors watching Netflix is nothing like World Wars, but one thing is similar. In a war, no one knows the outcome and therefore no one knows the future. Therefore, if anyone tells you this is what the world looks like after coronavirus, don’t believe them. They don’t know. No one knows.
We can all make projections and have ideas about tomorrow, but no one knows what tomorrow looks like. The only thing we do know is that it looks nothing like yesterday.