As TDB has been pointing out from the beginning, the 3 Tsunami waves of Covid are:
1 – The immediate cost in human life and sickness from the virus.
2 – The economic carnage from the virus.
3 – The psychological impact of a unique universal event and the isolation and alienation and mental stress that has created.
We have passed the first peak with global deaths and sickness, we have just started the second wave of economic carnage and the psychological impact of all of this is barely beginning to be recognised.
To date Grant Robertson and Labour have told everyone listening that the inflation spike is but a blip and life will return to normal in the 3rd or 4th quarter of this year.
Inflation is but a spike and the economy will get back up on its feet with hyper tourism, exploitation of migrant labour and more international student language school scams.
That’s what will save us hu?
Nearly 400 million people across 45 cities in China are now under full or partial lockdown as part of China’s strict zero-Covid policy. Together they represent 40%, or $7.2 trillion, of annual gross domestic product for the world’s second-largest economy
…add the Ukrainian war and the instability to wheat and base line manufacturing in metals prices alongside the impact on developing economies…
Smaller countries are also struggling. Many borrowed heavily over the past decade to deal with the effects of the 2008 financial crisis and the pandemic. Now, interest rates are starting to rise, just as the prices of essentials like food and fuel leap.
…and you have geopolitical shockwave after geopolitical shockwave hitting us and snapping neoliberal free market global supply chains.
Don’t believe me? Well ask the World Bank and IMF then...
The World Bank has slashed its forecast for global growth in 2022 to 3.2% from 4.1%, anticipating a sharp deceleration from estimated growth of 5.5% in 2021. The IMF’s latest outlook arrives later Tuesday.
World Bank President David Malpass told journalists that “severe overlapping crises” are weighing on the recovery.
“There’s Covid-19, inflation and Russia’s invasion of Ukraine,” he said on Monday.
Developing countries, many of which are facing high levels of debt and a plunge in the value of their currencies, as well as soaring food prices, are of particular concern, he added.
Breaking it down: Around the world, engines of growth are sputtering as prices rise and the war in Ukraine wreaks havoc on strained supply chains.
…the ramifications of this can’t be underestimated…
Europe, which relies heavily on Russia to meet its energy needs, is especially exposed. There, much could depend on Russian President Vladimir Putin’s next move. If supplies of Russian natural gas to Germany were suddenly cut off, Europe’s biggest economy would lose a shocking $238 billion in economic output over the next two years, the country’s forecasters have said.
…these pressures are impacting America as well…
In the United States, inflation has hit a level not seen in four decades. That’s forced the Federal Reserve to consider an aggressive pullback of its pandemic-era support for the economy, boosting fears that it could hike interest rates so much that it causes a recession.
…all of this is screaming inflation and economic stagnation and recession, so Grant’s optimism that Treasury are right and that inflation is just a temporary spike that will be fixed by hyper tourism, migrant worker exploitation and international student language school scams seems less glass half full and more shards of glass half in your mouth.
I don’t think we are ready for this jelly.
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