1.0 Paper currency will be eliminated: As the Chinese government continues its effort to slow the spread of the deadly coronavirus, the country’s central bank told media it was going to begin literally cleaning its currency. It’s an extreme move that makes sense. Whether it’s dollars, pounds, euros, shekels, or in this case yuan, currency is notoriously dirty. A 2017 study of $1 bills in New York found some 397 bacterial species living on the surface. And when someone with the flu handles it, that virus has been shown to survive for up to 12 days. The federal reserve along with banking industry has been working very hard over the past few decades (especially after 9/11) to eliminate paper currency and move completely to electronic transactions.
Currency in circulation as a share of GDP has fallen over the last 150 years, that decline has not been very large given the evolution in payment technologies over the same period. The US patriot act enacted after 9/11 had many provisions that ‘addressed’ this long-standing goal but still cash has stubbornly remained a significant part of overall transactions.
“A key thing about cash is that it’s anonymous and hard to trace,” says Kenneth Rogoff of Harvard University. He argues that this makes cash the ideal medium of exchange for consumers who value privacy, both for legitimate and illegitimate reasons. “There’s a lot of evidence that cash plays a big role in tax evasion and crime.”
Many countries, like for example Sweden, are moving aggressively to cashless systems. Finally, with the Corona Virus pandemic, we have the perfect ‘excuse’ to push harder to create a cashless society.
2.0 US-China relations will change dramatically, and this will have a huge impact on the global economy. US dependency on China will be under a magnifying glass. Every single US importer of Chinese goods will now (or more likely probably already has) look at alternate supply options.
Unless China can make this up with trade elsewhere, this will fundamentally result in a serious economic recession in China. This in turn will lead to even bigger recession in countries (and economies) that depend on China. Putting my orange skin on: ‘This is huge, a big deal’! Roughly 15 to 20 percent of the global economy is completely reliant on China for its survival. Countries like Iran, Venezuela, North Korea (all US enemies) …even economies in South East Asia (South Korea, Japan, Philippines etc.) and Australia depend significantly on the Chinese economy. Of the nearly $500 billion goods South Korea exported to the world last year, around $125 billion were sent to China, or a quarter of their exports!
The impact will be huge. In turn, other economies that the US will turn to i.e. India, Vietnam etc. will take up the slack, and will see unprecedented economic growth. The world will ‘change’! It will be a profound change. US will be on a pathway to diminish its relations with and dependence on China.
3.0 Supply Chains will shift Dramatically: “IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!” But to most economists, China was the real reason for disruptions in the metal market, and imposing tariffs additionally on U.S. allies was nonsensical, the argument went: After all, even if America lost its steel industry altogether, we would still be able to count on supplies from allies in North America and Europe. But, this week, U.S. allies are considering substantial border restrictions, including shutting down ports and restricting exports. While there’s no indication that the coronavirus per se is being transmitted through commerce, one can imagine a perfect storm in which deep recessions plus mounting geopolitical tensions limit America’s access to its normal supply chains and the lack of homegrown capacity in various product markets limits the government’s ability to respond nimbly to threats. The Corona virus has revealed true interdependencies – and it’s not good. This same process will be undertaken in Europe, South America, etc. In the end, overall global trade with China will decrease substantially. It will contract.
New supply chains will be developed. I fully expect for example, Apple (Foxconn) to shift their manufacturing outside China. This by the way has already happened to some extent because of the trade-dispute but will now be accelerated. Virtually everything that is supplied by China will eventually be wholly or partially sourced from a second source outside China.
4.0 Global Biowarfare proliferation control system will be established: Two inevitable outcome of this pandemic is that many global adversaries have seen the massive economic consequences of the pandemic, and there is widespread gossip of the outbreak coming out of bioweapon labs in China or America or Israel (depending on who’s comments you believe) on blogs. These same adversaries have no choice but the set up their own labs now! Its going to be a shit-show! Unless, of course, some widespread and very effective Biowarfare proliferation control system is established, very quickly.
5.0 A Major Shift to Virtual Settings: Everyone will be asking, “Is there a reason we can’t do this online?”. Or, “Is there any good reason to do this in person?”—and someone will have to provide a deep justification and convince everyone that that a trip is vital. Those without easy access to broadband will be further disadvantaged. The paradox of online communication will be ratcheted up: It creates more distance, yes, but also more connection, as we communicate more often with people who are physically farther and farther away—and who feel safer to us because of that distance.
Virtual settings will become the norm. Imagine putting on glasses, and suddenly you are in a classroom or another communal setting, or even a positive psychology intervention. This is precisely how we have adapted and stayed safe during this outbreak.
Telemedicine has lingered on the sidelines as a cost-controlling, high convenience system. Out of necessity, remote (online) offices will now skyrocket in popularity as traditional-care settings are overwhelmed by the pandemic. There would also be containment-related benefits to this shift; staying home for a video call keeps you out of the transit system, out of the waiting room and, most importantly, away from patients who need.
Even congress is toying with virtual sessions and voting. Yes, there will be profound in how we interact as human beings – in virtual settings.
6.0 The Pendulum will shift from Rugged “Individualism” to the “Common Good”: The Corona Virus has highlighted the weaknesses in the system. Private health insurance, private hospitals, private care simply can’t handle the ‘surge’.
Why build extra hospital bed capacity i.e. under-utilized assets for a ‘pandemic’? In business you always want to match capacity to utilization – to get the highest rates of return on investments.
Health insurance companies have been pushing doctors towards outpatient treatments, and there has been a 25% decline in hospital bed capacity and along with-it ICU beds (that are needed precisely for pandemics like this).
And then there are the economic consequences of widespread unemployment or business closures from the pandemic. This past week 3.3 million Americans filed for unemployment. By the summer it is estimated that 30% of all US workers will be without work. This surely will have political consequences.
Coronavirus has also put the spotlight on unmet needs of the growing older population in our country, and the tens of millions of overstretched family and professional caregivers they rely on.
Care is and always has been a shared responsibility. Yet, our economic policies have never fully supported it. The Corona Virus will fundamentally change attitudes towards public policy. This, in turn, will have vast political consequences.
6.0 Government’s public health role will change significantly i.e. become pharmaceutical entities:
Private pharmaceutical firms simply will not prioritize a vaccine or other countermeasure for a future public health emergency until its profitability is assured, and that is far too late to prevent mass disruption. The reality of fragile supply chains for active pharmaceutical ingredients coupled with public outrage over patent abuses that limit the availability of new treatments has led to an emerging, bipartisan consensus that the public sector must take far more active and direct responsibility for the development and manufacture of medicines. That more efficient, far more resilient government approach will replace our failed, 40-year experiment with market-based incentives to meet essential health needs.
7.0 Revival to Fact Based Politics: Coronavirus will jolt Americans into a realization that the institutions and values Donald Trump has spent his presidency assailing are essential to the functioning of a democracy—and to its ability to grapple effectively with a national crisis. A recognition that government institutions—including those entrusted with protecting our health, preserving our liberties and overseeing our national security—need to be staffed with experts (not political loyalists), that decisions need to be made through a reasoned policy process and predicated on evidence-based science and historical and geopolitical knowledge (not on Trumpian “alternative facts,” political expediency or what Thomas Pynchon called, in Gravity’s Rainbow, “a chaos of peeves, whims, hallucinations and all-round assholery”). Instead of Trump’s “America First” foreign policy, we need to return to multilateral diplomacy, and to the understanding that co-operation with allies—and adversaries, too—is especially necessary when it comes to dealing with global problems like climate change and viral pandemics.
8.0 Global Approach will take renewed Emphasis: The Trump administration made it almost an obsession to poo-poo international agreements and bitching about the United Nations. By the end of February, the World Health Organization had shipped tests to nearly 60 countries the U.S. wasn’t one of them.
Why the United States declined to use the WHO test, even temporarily as a bridge until the Centers for Disease Control and Prevention could produce its own test, remains a perplexing question and the key to the Trump administration’s failure to provide enough tests to identify the coronavirus infections before they could be passed on?
The slowness of the testing regimen — which, administration officials acknowledged this week, is still not producing enough tests to meet the national demand — was the first, and most sweeping, of many failures.
Yet, now it is almost comical to see the U.S. so dependent on data and test kits from the World Health Organization (WHO). The Trump administration’s arrogance and go-it alone approach to issues being confronted across the world has been summarily debunked. Clearly, there is a role for global entities. The question now, is NOT whether these entities are relevant, but how to make them more effective. This will result in huge, almost tectonic shifts in global governance and attitudes. There is simply no denying it, virtually all domestic issues, have global dimensions in how they are resolved!
10.0 US Dominance will diminish with the worst President the US has ever had: While there is still a hot debate about the origin of the Corona virus, there are ONLY two possibilities … it either escaped a lab in China or it was a Bioweapon that backfired. Regardless it has caused 13 Trillion+ Dollars in asset losses. The problem is that while market indices have grown over the past few decades, the US economy has only grown because of a massive debt burden undertaken by the US economy. It now requires nearly $3.00 of debt to create $1 of economic growth. This will rise to more than $5.00 by the end of 2020 as debt surges to offset the collapse in economic growth caused by the corona virus. Here is a chart that shows the impact of this debt on the economy i.e. what “debt-free” economic growth looks like. In other words, without debt, there has been no organic economic growth – in fact it has been massively negative.
The US may be reaching its “Chernobyl moment” as it fails to lead in combating the coronavirus epidemic. As with the nuclear accident in the Soviet Union in 1986, a cataclysm is exposing systemic failings that have already weakened US hegemony in the world. Whatever the outcome of the pandemic, nobody is today looking to Washington for a solution to the crisis.
The fall in US influence was visible this week at virtual meetings of world leaders where the main US diplomatic effort was devoted to an abortive attempt to persuade the others to sign a statement referring to the “Wuhan virus”, as part of a campaign to blame China for the coronavirus epidemic. Demonizing others as a diversion from one’s own shortcomings is a central feature of President.
This may not be our last pandemic. To me, it is fascinating how in a very strange way, everything we do is being shaped by forces of nature far beyond any single nation or politician or humanity’s ability to control. Forces of nature dictate our destiny.