10 Reasons Why The “Stressed” Global Economy Is In For A Hard Landing!

1. The Global Economy is under lots of “stress,” and the feeling of “weirdness” where nothing makes sense about where it is headed adds to the overall sense of what The Atlantic Magazine called “The Everything is Weird” Economy. So, to make it easier for you, the reader, to comprehend what is happening in the Global Economy, I have compiled Ten reasons why we are in for a rough ride and where uncertainty is the only certainty. I know that corporate planners hate such extreme volatility. As someone involved in Business Continuity Planning in the aftermath of 9/11, I can only “shudder” at the thought of the scale of challenges facing contemporary businesses.

2. While the Global Economy is yet to recover from the pandemic-induced “blues”, Putin has upped the ante with his Ukraine invasion and, more importantly, “weaponized” gas and wheat to the extent that it has been dubbed Russia’s “hunger games”. Worse, he has promised a “winter from hell” for Europe, which can quickly turn into a “nuclear winter” if the current “heated” rhetoric is not piped down. Indeed, there is nothing to prevent Putin from “going for broke” in his quest for supremacy on the battlefield. So, here we are with a belligerent Russia, having pushed up Oil, Gas, and Food prices to the extent that the Global Economy is being tipped into a recession.

3. Of course, Putin is not the only one to blame for the Global Economy’s troubles, and the biggest culprit is the Pandemic that has left in its wake economies tottering due to huge job losses and a drastic fall in economic output, the effects of which are being felt only now. As any economics course would teach you, there are “lags” between events and their impacts, so the pandemic-era effects are now reverberating across the Global Economy. Apart from “anarchy” and “lawlessness”, there is a breakdown of the “social contract” that is making economies susceptible to even “minor” shocks in a Shock Doctrine format where post-traumatic stress takes over and causes extreme reactions in the Global Economy.

4. Not to be outdone, Xi Jinping is adding his “might” to the problems in the Global Economy. Right from his quest for “immortality” to his much “panned” Zero Covid lockdowns, Xi has all but “choked” Global Supply Chains to the extent that hyperinflation has ensued, with prices of everything that is made in China skyrocketing. Of course, Xi has other “problems” as well, including the “troubled” real estate sector, where even the most prominent firms like Evergrande face bankruptcy and collapse. On the other hand, “damage control” attempts have failed, so the Chinese markets have been seesawing between extremes in recent days.

5. Given these trends at work, it is not surprising that “every economist and their dog” predicts a recession, which some believe has already started. No matter what you call it, a recession is still a recession, and despite Biden’s “denials”, the US Economy is flying into “turbulence” with a “perfect storm” gathering on the horizon. The noted economist, Nouriel Roubini, dubbed Dr Doom for getting The Great Recession of 2008 right, has warned of a “long and painful” downturn that can turn into a “bottomless” slowdown in addition to a “slow motion” collapse over the next year had half. Indeed, this can turn into a full-fledged “depression” if there are no proper policy responses from governments and central banks worldwide.

6. Talking about policy responses, the present “crisis” is the result of “excessive” monetary loosening that has led to a “glut” in liquidity sloshing about in the Global Economy. From the 1970s, ultra-loose monetary policy has built up “asset” bubbles and encouraged “speculation”, which is now coming apart in The Great Unravelling. Moreover, there is also some kind of The Great Derangement where markets “gyrate” wildly and the “resilience” of the Global Economy is being tested. Unlike in 2008, Central Banks are limited in their choices to stem the “rout” in the Global Economy, and so, there are bound to be more False Dawns ahead as well as investors having “nowhere to run, nowhere to hide”. Indeed, the only way out would be a Great Reset where the entire Global Economy is “rebooted” as the Davos crowd wants a “transition” from the Smokestack era to the Digital Age.

7. Of course, these “grandiose” solutions are of no comfort to the “suffering” masses worldwide who are paying the price for this “race to the bottom” Global Economy where only the Top 1 Percent have any chance. With the “four meals away from anarchy” scenarios in Srilanka and other developing nations, it is hard to see how the Global Economy can be “fixed” without causing too much pain. Moreover, with Millions and possibly more “dropping out” of the jobs radar, there is more “pain” in store. With such a “darkened” economic outlook, the “next shoe to drop” is the only game in town, and so, it is Deja Vu.

8. Perhaps nothing captures the “dire” outlook for the Global Economy than the “angst” driving the Millennials and the Gen Zers, who are the worst hit. From The Great Resignation to Quiet Quitting, these age cohorts are struggling and drowning under extreme stress and burnout. We might very well be confronted by a “lost generation” that can “wrench” the wheels of the Global Economy apart. Moreover, the 18 to 25-year-olds are faring worse alarming business leaders to scramble to find answers lest the global workforce enters a crisis.

9. Having said that, there are some “bright spots” in the Global Economy, with India as the prime candidate here. Indeed, India At 75 is in a “sweet spot” being “wooed” by East and West, with “aspirations” of a $5 Trillion Economy. However, a “reality check” is due as the “spin” overwhelms us, and so, one must notice the “faultlines” building up in terms of a crashing Rupee and “widening” Trade, Fiscal, and Current Account Deficits. While we are “comfortable” for now, the Indian Economy can take nothing for granted and can easily be “singed” by the “fires” engulfing the Global Economy. With its overreliance on services making it a “one pony trick”, the Indian Economy is “vulnerable”, which should worry us.

10. Last is anybody’s guess as to what happens next. While we are reminded of 1991, when similar global turmoil presented itself, the West must not repeat the “mistakes” of the 1990s when it “went after” bogeymen like Russia with its doomed New World Order project. This is a time for collaboration, not competition, and the Age of the Unexpected calls for solidarity rather than sniping at each other. Otherwise, the “zaniness” of the New World Disorder continues leaving everyone and everything poorer in its wake. So, here’s to peace and prosperity and hope the Global Economy will avoid a “crisis by Christmas”.

 

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