An R-shaped “de-covery”?
Ted Prince
CEO performance prediction, family succession,, behaviorally-based investment, behavioral ratings for CEOs, company founder, thought leader, judge for Harvard Innovation Labs
So the latest GDP data shows the US economy fell 9.5% in the 2nd quarter of 2020. That’s the worst showing ever since the Great Depression. It doesn’t get worse than that right? Or maybe it does.
Hmmm, what is worse than a Depression? The economists now need to put their thinking caps on.
There was a time in those halcyon days of March this year when the argument amongst the econo-literati was about whether the economy was going to recover with a V-shape or a W-shape. Those discussions sound so quaint these days. We’re well into a second wave of covid-19 that looks very likely to extend into a third wave, and maybe to be transformed into a permanent wave – “WHO says COVID-19 pandemic is 'one big wave', not seasonal”. That doesn’t sound like a recovery to me, V-shaped or any shape. What’s the opposite of a recovery? It’s a de-covery of course, dummy!
Seems to me there’s a lot of things about to hit that will cause the “recovery” to be more like a continuing decline over several years. What else do we call that I wonder? A secular decline? A slow collapse? Wait! How about an R-shaped implosion?
What in the Earth is that? Put the R on its back (or side) and there you have it. First a steep lurch downwards, then a very gentle incline off the depths over a longer time. That’s the future, folks. What happens then?
For those people who caught covid-19 and lived there’s the unwelcome prospect of chronic ill-health. There’s the prospect of millions more business failures and a long-term process of rolling disinvestment globally. Protectionist sentiment rises quickly, a reminder of the protectionism and competitive devaluations in the 30s that exacerbated the global rot. We’re already seeing government instability on the rise in Europe and Asia, not to mention in the US just like we saw in the 1930s.
The last time the world had a depression it ended in a world war. GDP figures are actually going to show an even worse collapse of economic performance globally now versus then. That means a corresponding dramatic increase in poverty and political radicalism in both developed and developing countries. An R-shaped global decline doesn’t even start to capture the reality of it all.
It seems to me that the best case is for a long flat low plateau in global economic performance around 15% below before where the pandemic started. If all goes swimmingly, we come out of it in a decade. That’s unless other, ugly things don’t intervene. In which case we’re in a 20 to 30-year Dark Age.
Maybe a 10-year R-shaped recovery is the best case. Let’s pray for it.
BTW it’s looking like China is already well into it’s V-shaped recovery….
CEO performance prediction, family succession,, behaviorally-based investment, behavioral ratings for CEOs, company founder, thought leader, judge for Harvard Innovation Labs
4 年Haha ur right, we're descending on the other side
CEO performance prediction, family succession,, behaviorally-based investment, behavioral ratings for CEOs, company founder, thought leader, judge for Harvard Innovation Labs
4 年If u look at responses by leaders in the 1930s to the ongoing crises, they were cowardly and ineffectual. Unfortunately I don't see any reasons why they would be different this time
CEO performance prediction, family succession,, behaviorally-based investment, behavioral ratings for CEOs, company founder, thought leader, judge for Harvard Innovation Labs
4 年Thx for comments Salman. What we are seeing is epic failures in global leaders, leadership and governance. We are still early in Act 1. Act 3 wil be ugly.
Executive Vice President - 1 / Head Treasury and Wholesale Banking Risk Reviews
4 年Scary, isn't it Ted. The miscaluculations and lack of perception/ vision on part of global leaders have blindfolded them in such a way that they are not able to see what you, me and many others can see. They are calling these waves second or third just out of sheer ignorance, its actually the first big wave going on with its highs and lows, its just that governments try to give it a different perspective because somewhere they feel that if they will project actual on ground situation, it will effect the so called V or W shaped recovery, what they are missing is that the Covid is not going anywhere ( specially with this urban party like life style) and if same lack of seriousness continues, we can see what you call R shaped "de - covery". You are very right when you say we can go into another economic depression. China for some unknown reason have been an exception to the above but cases are resurfacing there also however they are not reporting it transparently.