{UAH} Economic Collapse Could be underway

 The worst economic collapse in history is most probably on its way or is already here.  In 2008 Financial Crisis, over the course of 517 days, the stock market dropped by more than 56%, millions of people lost their jobs… their homes… and their lifesaving. It was the worst time for the global economy since the great depression. 

Come 2020, over the course of just 21 days, the market has dropped by roughly 20%, the world has seemingly shut down, and we just might be on the worst economic trajectory in history.

So how did we get here…and what could we expect going forward. Well let's start off with the first part. The first thing is that…Corona-virus. With an incompetent administration in the white House, they did not take the Corona-virus seriously due to ineptness and also political reasons.

 Initially when the disease had its first outbreak in China, it caused the Chinese Government to shut down its manufacturing sector in order to help prevent the spread of the virus.

Now, that wouldn't be a problem…if 1/3 of all products in the world weren't made in China.  China is the global supply chain of the world, so when China experiences delays in production, the entire world's economy experiences delays as well. So, because of this supply chain slowdown, we have seen many large companies experience a slowdown in their sales and revenue.

Let's take an example of the car industry: It is very dependent on tools, die, and machinery in order to manufacture their cars. But each one of these industries is experiencing 1 to 3 month delays because of the shutdown of the manufacturing sector. This means that car companies will not be able to launch their new annual vehicles on time, therefore missing out on billions of dollars' worth of sales. And also, because people are being asked to stay at home, be cautious, or work from home if possible. It certainly means auto sales are down probably by anything over 50%.

And this effect keeps trickling down. If the Car companies are seeing a drop in sales and revenue, then so will its suppliers. And if the suppliers see a drop in revenue, so will the raw industries that work with suppliers. And this effect radiates to all other companies that are connected to the automotive industry. And what happens when a company sees a drop in sales or revenue?

Well, we tend to see things like layoffs, or even bankruptcies. This will certainly lead to a higher unemployment rate which would lead to less purchases being made by consumers, which would lead to less sales being made by businesses.

 And if the cycle continues, the economy will hit a low point like the great recession or the great depression.  Keep in mind, this is just the automotive industry. This drop in sales will apply to virtually every other industry in the world.

Let's hope that these grim economic indicators will make sober minds ignore an incompetent president and get to work to help slow the apparent recession and stabilize the economy.

Am not sure this "stimulus" package that has been passed will change anything but let's wait and see.

Allan

 

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