Of Two Minds – When Will We Admit Covid-19 Is Unstoppable and Global Depression Is Inevitable?
If we asked a panel of business executives to imagine a global system optimized for vulnerability to external shocks, they’d likely include these characteristics:
1. Long global suppy chains, four, five and six layers deep, so those in the top layers have no idea where parts and components actually come from.
2. Just-in-time deliveries and limited inventories dependent on complex logistics, so any shock quickly disrupts the entire network as key nodes fail.
3. A global supply chain dependent on hundreds of financially marginal factories and suppliers who do not have the means to pay employees for weeks or months while the factory is idle.
4. A global supply chain dependent on hundreds of financially marginal factories with high debts and expenses that will close down and never re-open.
These are precisely the characteristics of our precarious global economy, dependent on rising debt, vast speculative bubbles, vulnerable supply chains and marginal consumers and producers.
When debt and speculative excesses collapse, it’s a depression, not a recession. If we can’t call things by their real name then we guarantee a wider, deeper cataclysm.