The Worst Economic Collapse In History Is Starting Now
The Covid-19 virus might have triggered something way bigger.
The Worst Economic Collapse in History is on its way.
The big question is how do we prepare for this kind of crisis?
To get an idea of how bad this current virus crisis that the world is facing now, we just have to look at the last global crash of the 2008 Sub-prime Crisis. Then in 2008, it took 517 days for the Stock Market to drop a staggering 56% which in turn caused millions of hard-working people to lose their jobs, their homes, and their entire life savings.
It’s far scarier now if we take a look a how the 2020 Virus collapse has done so far. In just 21 days, the NYSE has dropped approximately 20%, the world businesses are on lockdown, and it’s just the start. We might just be looking at the worst economic crash in history…perhaps even far worse than the 1929 Great Depression.
So how did we end up in this mess in the first place?
Well, we all know how this started… it’s the virus that triggered this global illness and it got a lot of government from China to South Korea to Iran to Italy to Spain to Germany all over the world and to the United States…essentially all the World Government got worried about this virus and how contagious it is.
When this virus broke out in Wuhan, one of the largest cities, and a major transport hub in China, the Chinese government decisively lock down the city and then later on in a few days the entire Hubei province.
With one-third of all products manufactured from China, this lockdown has a major impact on the global supply chain. With the lockdown, factories are closed down and this caused the supply chain to break down.
This break in the supply chain will cause many large, medium, and small companies to suddenly drop in their revenue because when you have no product to sell, you don’t have revenue. It’s simple as that.
An example is an automotive industry that is heavily dependant on machinery and tools when it comes to manufacturing their cars. With these industries now experiencing up to a 3-month delay because of the shutdown, it cannot launch their latest car model.
And when their car launch is delayed, they lose out on the billions of sales that their new models generate every year. And yet what’s worse than losing billions of revenue is that their expense and employee wages are still not reduced. Can you imagine what happens when the cost remains constant with virtually no revenue?
Usually, it just means bankruptcy for most companies as many companies have a cash pile that’s enough to last just 6 months.
But wait… there is more… the ripple effect. Using the same example of the auto industry, when the car manufacturers suffer, how about their suppliers who are heavily dependant on the customers for their sales? Paint supplier, the nut and bolt supplier, the suspension supplier, and the list goes on… the ripple effect goes far and deep.
The next step when a company can no longer sustain is to layoff its employees. And if that does not work, then the next step is bankruptcies. The vicious cycle continues with a high unemployment rate which we are already seeing in the last economic data released in March.
Higher unemployment rate leads to expendable income which leads to fewer sales and revenue continues to drop further. The higher unemployment rates can also lead to their inability to service loan repayments which now may lead to personal bankruptcies. The cycle continues to the point that the economy hits a low point where nobody has money to spend.
Governments around the world are frantically preparing their stimulus package to save their economy. They are printing money and pumping trillions of dollars into their stock market. Will this work or will this just be the preview to a much bigger problem… Hyper Inflation?
If you are reading this, you have perhaps 3 years to prepare for the biggest crash, The Worst Economic Collapse in History.
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