The economy is about to take a hit none of you are ready for

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I understand you’ve all ‘heard this before’ so I get your skepticism. But unfortunately very few of you understand the mechanism of market forces.

A total seizure of Chinese production and consumption means an absence of either supply or demand in very large, very fragile international markets. The consequences of this Chinese slowdown will be enormous and industries that rely on regular shipments of Chinese-produced goods, or rely on the purchase of inventory by Chinese customers will be severely affected. In a globalised world this means everyone.

You can see the evidence now in the Chinese banning short selling, the instructing their banks to be ‘tolerate’ on debt delinquency. The stacking up of ships in Asian ports.

This isn’t something that’s ‘going to happen’, it has already happened. It’s happening right now.

Just because you can’t see an immediate effect in the world doesn’t mean it hasn’t had one. The impact of this on the global economy will take some time (could be days to months) to really come into effect. Shipments get cancelled, contracts are reneged on, people can afford to litigate, business run out of raw materials, of support materials, subsidiaries get wound up, margins are called, divisions are downsized….you starting to get it yet?

This isn’t a movie where something happens instantaneously in front of your eyes, it happens indirectly in ways you can’t perceive. The world has already irrevocably changed. The global markets are propped up on stills by central bank QE. A healthy economy would have trouble reacting to the shock of its primary producer ceasing operations. The world economy is not a healthy economy.

Regardless of whether anyone actually gets China flu the world economy is being slowly nuked in front of your eyes. You need to prepare adequately and stop using the word nothingburger over the internet. Whether or not a virus gets you the world has changed. This is what you’ve all been waiting for. And it’s only the start of it.

 

 

h/t Chaosisfreedom

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