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2020-

2020-03-17 a
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,

If the economic collapse is exclusively a consequence of the coronavirus pandemic and the western countries in its path are able to follow something like South Korea’s trajectory, we should be on the way back to business as usual by summertime. Terribly sad for the elderly victims and their friends and families, but minimal loss in the way of human capital. By cold, callous economic calculus, more a shedding of dead weight than anything else. A couple months of contraction on the downside, free money on the upside, and we should expect the markets to come roaring back.

I don’t. Resist being fooled by dead cat bounces like the one we’ll get tomorrow morning. We are witnessing the international credit economy on the verge of collapse. There isn’t enough liquidity, there isn’t enough resiliency, there isn’t enough production. Flooding the zone with cash directly from the Fed and indirectly through tax and interest holidays is pushing on a string at this point.

The second- and third-order effects of this will be staggering. Expect public and private pension funds to go bankrupt in the coming several months and years. The Fed’s balance sheet will explode into the several trillions, rocketing past the former highs following the 2008 recession, as calls go out from every corner of the country for it to bail out everything by giving free money to everyone. (source)

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