Tag: prediction

Will our lifes be fundamentally different after corona?

No.

I don’t believe that the corona pandemic will fundamentally change the course of geopolitics or the global economy. As I predicted on March 25, 2020:

All the doomers, America-haters, EU-haters, permabears, moralizing nutters, communists, and libertarians are crawling out of the woodwork due to the coronavirus. However, I expect they will be proven wrong again. #timestamp#prediction

  • The coronavirus will not cause the collapse of society
  • The coronavirus will not end the dollar hegemony
  • The coronavirus will not be the end of the American empire
  • The coronavirus will not cause the end of the euro
  • The coronavirus will not cause the end of the EU
  • The coronavirus will not start a 20+ year bear market
  • The coronavirus will not reverse global supply chains
  • The coronavirus will not stop the desire for money, travel or luxury
  • The coronavirus will not stop climate change
  • The coronavirus will not cause the end of capitalism
  • The coronavirus will not lead to central planning
  • The coronavirus will not stop the government from intervening in the economy
  • The coronavirus will not stop central banks from “printing money”

Pent up demand after corona lockdown will be very limited

Will consumer spending exceed its pre-corona level to make up for the lockdown? I doubt it.

Lockdowns force households to save. However, consumers won’t be able to spend money at crowded spaces1 as easily as they did before the virus.

Furthermore, a lot of consumption is lost forever and cannot be replaced. Just think about things like haircuts, restaurant visits, massages, and housecleaning.

I still think a swoosh-shaped recovery is possible2. Yet I don’t expect the economy will bounce back above its pre-corona level thanks to pent up demand.

A prediction about Turkish government debt

The central government debt of Turkey was 28 percent of the country’s gross domestic product (GDP) at the end of 2017.

Although making financial predictions is usually a fool’s game, I’m pretty confident that by the end of 2020, the central government debt of Turkey will be higher than 40 percent of GDP.

My prediction is based on the ongoing crisis. Private debt tends to become public debt in these circumstances. Because the debt is dollar-denominated, it cannot be inflated away.

Check this post in 2021!