The Financial and Economic Impact of Covid-19

The Financial and Economic Impact of Covid-19

In April, just after governments of major countries started printing money to support their citizens and their economies against the crippling impact of Covid-19, I wrote about my concerns for what economic impact this will have in the future in an article titled, "Will the printing of Covid-19 'Helicopter Money'​ lead to Hyperinflation later?". This collection follows the financial and economic impact of Covid-19. By being aware of what the future could hold can help us better prepare against eventualities and spot opportunities when they present themselves. 

Industries most and least impacted by COVID-19

Yahoo Finance | Posted: 3rd Jul 2020 | Source: 1st Jul 2020 | Trading & Investing, Business, Economics, News & Current Affairs

Industries that are doing relatively well during Covid-19 in the US (but still an indicator for potential trends in other countries):

  • Vacation rentals are rising — people want to rent places nearby, driveable, to avoid having to travel by air or train. 
  • Sporting goods
  • Luxury goods are recovered quickly
  • Many e-Commerce businesses are doing relatively well

Companies reacted three ways when Covid-19 kicked in:

  • Those who cut investments in eCommerce
  • Those who took a wait-and-see approach
  • Those who increased investments in eCommerce <-- naturally these have a fighting chance in surviving the pandemic

 

How the Pandemic Is Changing Our Commute

Wall Street Journal | Posted: 1st Jul 2020 | Source: 29th Jun 2020 | Business, Economics, Technology, Science, News & Current Affairs

Covid-19 is forcing travel to change. This video discusses the future of Public Transport: Trains, buses and trams. 

Covid-19: is working from home really the new normal?

The Economist | Posted: 1st Jul 2020 | Source: 25th Jun 2020 | Business, Economics, Technology, News & Current Affairs

Description: "The covid-19 pandemic has accelerated a shift towards remote working. This could affect not just people’s working lives, but the shape of cities, gender equality and even how we measure time."

It took a pandemic for us to really take advantage of what the internet brings into our working lives. 

 

It could take years before there is a vaccine for Covid-19, or there will never be one

Marquez Comelab | Posted: 23rd Jun 2020 | Trading & Investing, Business, News & Current Affairs

Many of us are sort of holding out hope for when a vaccine will eventually be made and expect that things will get back to normal. However, there is a good chance that a vaccine for Covid-19 may take longer than the 18 months we often hear mentioned by optimistic immunologists. It may take years, or it may never happen at all.

The Spanish Flu took three years. That was at a time when it would have been harder for people to social distance and isolate themselves because they had to go out and do everything physically. We can do a lot of things online now. We can work, shop, entertain ourselves and catch up with friends and family online.

We might have to prepare for a life filled with frequent lockdowns, at least in the next few years. Which businesses will fail and which will survive? What skills and talents will the world need? What adjustments will you make in your work, career, business or investments?

Related video: What if a COVID-19 Vaccine Is Never Developed?

What if a COVID-19 Vaccine Is Never Developed?

The Infographics Show | Posted: 23rd Jun 2020 | Source: 18th Jun 2020 | Economics, News & Current Affairs

"The Coronavirus Pandemic is still in full force and scientists and researchers are doing whatever they can to develop a vaccine, but in today's video we are going to take a look at a bleak scenario in which a vaccine for Covid-19 is NEVER developed. What would the world be like without a vaccine for this deadly disease?"

Why is the stock market going up?! Anthony "Pomp" Pompliano explains

Anthony Pompliano | Posted: 21st Jun 2020 | Source: 21st Jun 2020 | Bitcoin, Trading & Investing, Business, Economics, News & Current Affairs

Description on the video: "Anthony 'Pomp' Pompliano explains how central bank actions from the Federal Reserve is devaluing the US dollar, while also pumping asset prices up. He goes into detail about what is happening, why Wall Street is confused, and what you can do at home to benefit."

Comment:

I posted this here because he, an American, shares the concerns that I, an outsider, have of Trump's printing of money, especially after he fired the official who was supposed to oversee how the funds are to be distributed. Trump's government have not been transparent enough. One crucial aspect of printing money is transparency. When the government prints money, it siphons a percentage of the value of everyone's money into their pockets. This is okay if they re-distribute the printed money to where it is needed most. But if they are not disclosing how that money is distributed, then we can presume they are doing something with the money that they — the government — do not want their citizens to know. 

This event — Trump's printing of money — could well be a live example of why people should protect at least a portion of the value of their wealth by buying Bitcoin. 

Interesting points on potential opportunities and trends:

  • Trend towards working from home, people working digitally. This is driving people away from big cities since all they need is a device connected to the Internet to work, without the high rent and high cost of living. 
  • Digital portals to interact with people to work remotely with everyone. 

The Incoming Currency Crisis is Starting: Be Prepared

Jack Chapple | Posted: 20th Jun 2020 | Source: 1st Jun 2020 | Economics, News & Current Affairs

In April, I wrote about my concerns about the inflationary pressures that can apply to economies when governments start printing money. This video also argues for the possibility of the opposite happening: deflation, and it occurs when the demand for cash exceeds the government's ability to increase the money supply. Over the past three years, the US dollar increased by 10% each year because of this deflation. On the surface, deflation sounds good because it increases the purchasing power of your money. The problem is, deflation increases the real value of debt. Now, with Covid-19, this is not good for those who are borrowing money: governments, businesses or individuals will have a higher debt burden. Countries who have high levels of debts and go through major deflation are at risk of going through a crisis called a Deflationary Spiral. 

In the Great Depression, this is what happened:

  • Deflation → prices ↓
  • → businesses made less money
  • → mass lay-offs, wages ↓, spending ↓
  • → mass lay-offs, wages ↓, spending ↓ and so on...

This is what Jack Chapple is suggesting might happen. 

How will countries pay off their debt after COVID-19? | Counting the Cost

Al Jazeera English | Posted: 20th Jun 2020 | Source: 20th Jun 2020 | Economics, News & Current Affairs

Jan Randolph, director of sovereign risk at IHS Markit, explains how countries may pay off debts in the coming years.

Take-away: 

  • Governments will lose tax revenues; deficits widen, debt levels as a ratio of the public debt to GDP are at record-level highs. 
  • How will governments deal with this? Can governments continue borrowing from their central banks? It depends on a few factors: If a government can borrow long-term at low-interest rates, that makes it easier for them to service debts. But it is not a free lunch, and it will need to be paid back. 
  • Will investors continue to buy up these new debts? This depends on the confidence they have of each government, whether investors see each government as responsible. 
  • Most economists agree that now is the time for governments to support the economy so that there is income later to service the debt eventually.
  • After the second world war, when the US had similar debt-level ratios, debts were paid back in the 50s, 60s and 70s. Also, in the 60s and 70s, the US had a lot of inflation, and that helped ease the debt levels down. BUT, investors now will be put off investing if governments are seen to be stoking inflation. 
  • Can we be printing money and be okay with that? It depends on who you ask. If you ask a German monetarist, they will disagree. Because in the 1930s, this practice decimated their savings, which eventually lead to the second world war. Printing money would create problems if it leads to inflation. 

 

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