From Birch Gold Group
The quickly-spreading coronavirus is understandably causing worry in the markets.
Originating in Wuhan, China, the virus moved from animals to humans at a local food market. Since then, it has since spread to other parts of China and beyond.
Jim Rickards compares this virus with a potential economic “contagion” that can result as the concern over the virus turns into panic and causes distress.
He describes the “panic” as already happening in China, only a couple of weeks after the virus began to spread, and asks a crucial question:
The disease is causing financial panic in China at a time when it can least afford it. GDP growth has hit a wall and investors have curtailed new investment. Could it unleash a global financial panic that ultimately results in a lockdown of the banking system?
The Federal Reserve, which completed its most-recent Federal Open Market Committee meeting on Wednesday, doesn’t appear to be too concerned with Rickards’ question at the moment. In their official statement following the meeting, it only mentioned keeping track of “global developments” and “readings on financial and international developments”.
But it’s quite possible that Fed Chairman Jerome Powell will have to change his tune in the months to come. After all, he has already created a QE “monster” for the markets to deal with. Piling potential ripple effects of the coronavirus on top of that could result in an absolute disaster for the economy.
Jim Rickards thinks one reason things could still take a turn for the worse is that there is still quite a bit of time for the virus to impact the economy, saying, “This is the type of catalyst that could take a year to build.”
The “Black Swan” that Could Blow a Hole in the U.S. Economy
Writing on Forbes, Senior Contributor Jack Kelly paints an even more disturbing picture.
According to his piece, “A black swan event is a term used on Wall Street that refers to a rare and unpredictable occurrence that is beyond what is expected and has severe consequences.”
There are two ways the coronavirus could qualify as a black swan event. One is how rare and unpredictable this new virus is, which is fairly obvious.
But more importantly, it comes at a time when other market signals are already pointing to a potential recession in the U.S.
So this virus certainly is “beyond what is expected” and could potentially have “severe consequences” economically, including the possibility of a full banking system lockdown, which Rickards alluded to.
To illustrate the immediate potential impact a “black swan” like the coronavirus could have on any economy, Kelly highlights at least five impacts already beginning to take place in China’s economy:
- The virus started around the Chinese Lunar New Year, which is known as the country’s biggest travel period.
- Global stock and bond markets have been hit by mounting worries. Investors are afraid of how this will play out.
- Employees returning from impacted areas are being told not to show up to work.
- International commerce will slow down.
- China and neighboring countries are shutting down restaurants, hotels, resorts and other businesses that may spread the virus.
Kelly adds, “It’s reasonable to believe that for the near-term period of time, stocks will fall in value, hiring will temporarily slow down, new corporate initiatives will be placed on hold and the overall business climate will be fearful.”
Keep in mind that all of this economic chaos is happening within two weeks of the World Health Organization (WHO) announcement that the virus was spreading in China at a faster pace.
Imagine if Rickards is right, and the economic catalyst takes a full year to develop even further. Then imagine what could happen if this virus spread more prominently in the U.S.?
Best to Hope for the best but Prepare for the Worst
The situation surrounding this potential “black swan” and the resulting economic impacts will both continue to develop over the coming year. It’s safe to assume it will result in plenty of uncertainty (and possibly panic) in the markets.
But you don’t have to let a volatile market hit your retirement the way it did to millions of people during our last recession. The best time to prepare is now.
Having a diversified retirement plan with assets known for their protection during uncertain times is a strategic way to diversify your nest egg. Precious metals like gold and silver could prevent your retirement savings from suffering the consequences if this situation takes a turn for the worse.
After 8 long years of ultra-loose monetary policy from the Federal Reserve, it’s no secret that inflation is primed to soar. If your IRA or 401(k) is exposed to this threat, it’s critical to act now! That’s why thousands of Americans are moving their retirement into a Gold IRA. Learn how you can too with a free info kit on gold from Birch Gold Group. It reveals the little-known IRS Tax Law to move your IRA or 401(k) into gold. Click here to get your free Info Kit on Gold.
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I am wondering where are the success stories of 100% cured Coronavirus patients, if any, are they allowed out of quarentine or are they still carriers.
Many new flu viruses originate each year in China and spread across the world. Why is this particular virus causing panic when the death rate is so small compared to other viruses from China.
What or who is stirring the pot and for what reason?
People are easily suggestible and the fear of disease; like that of war, always cause cognitive dissidence and irrational thinking in people. It is too early to make judgments about this virus.
Do we know how many people have survived this virus or how many are carrying it with no symptoms? No we don’t or are not told yet we are told many are dying? Really? 1.4 billion people in China and how many have died? Far less than how many people in the US die of the flu each year.
Something smells.
And to relate this story to a possible economic black swan? Maybe the economic condition of the world is a lot worse than people think and what better scapegoat to blame it on than a virus coming out of China.
I guess my original BINGO! response was too edgy, eh? It disappeared…
Tbird, i think they are allowing us to see how we are supposed to react. They let it out in a socialist/communist country that has full u precedented power so the people are unarmed, afraid, and complaint. This teaches us sheeple here how we are to react. And then it false flags here and they get to monitor how we as a free nation react. Wil. There be trouble makers, gangs roving? Etc. If it goes as they hope and plan then the dems will us pandemic to take over, force martial law, confiscation of arms, and then its over. This is a dry run, for psyops to see a prelude to the real thing when the elites are ready. Can you imagine large cities and tens of millions locked in their homes for 2 weeks. The impact on the economy would make two buildings in NyC in 2001 look like a nickel and dime show loss. Shut down for two weeks Tiny jackson mississippi and it would even affect national gdp. To cause a national recession. This is a prelude after trump wins to crush his mkt and economy so demoncrats win back congress on both sides in 2022 and then presidency in 2024. Mark my words…
We have a service economy and with quarantine you have no economy….
You don’t know the death rate, I don’t know the death rate, the Chi-coms are liars about everything so I assume they are lying about this. At some point, we will know whether this is a real crisis or mostly manufactured. I would say in another couple of weeks it should be reasonably clear.
Whether this is manufactured as a dry run or not….a real crisis is overdue and yes the elites fear their control is slipping with Brexit, Yellow Vest, Wexit (western Canada seceding), Hong Kong, and of course Trump. So a pandemic is a great way to reassert control.
Wouldn’t a Black Swan event like Coronavirus give cover to Trump should the economy tank prior to November, 2020? In other words, if anti-Trumpers tried to blast the president’s tax or trade policies, he could blame the bursting of banking and business bubbles on veritable bugs and blight.
But what would that imply, if anything, in broad terms, regarding the big picture?
Remember one important factor Uncola, if the stock market flops and the bonds become worthless there is still an economy out there; a service economy.
Yes most of our manufacturing jobs have been outsourced to third world countries with low cost labor but these jobs were replaced with service jobs.
As I remember the past when recessions came it was not the service industry that suffered with lack of jobs but rather the construction industry and the financial sector.
If and when an economic downturn materializes it will be the professional class that will suffer the most. The maintenance workers will do well because in a depressed economy durable goods will have to be repaired; not thrown away like now.
Who really is afraid of an economic downturn? It is large transnational corporations, the financial sector, big box retail outlets and government. All these sectors will shrink or face bankruptcy.
With this situation people will again have to take responsibility for their own life.
America is a rich country. It is rich in agriculture, machinery & tools, know how, durable goods that can be repaired & maintained, and the ability to retool for manufacturing.
This is not the 1930s when the country had little infrastructure and systems of distribution; not to mention the vast communication networks of today. Today a monetary failure can be dealt with rather quickly due to our communication networks and other forms of currency like Bitcoin as one example.
An economic crash would be a blessing to the common people around america because it would bankrupt the monopoly corporations that control commerce and open up creativity for new products to emerge in the market place. Take Hemp for example. The growing and processing of hemp could open up all types of little industries that can produce products that generate wealth.
I do not believe the doom & gloom economists in our society. They are not talking to me. They are talking to the people that make their money in a rigged economy that favors wall street and the financial sector. And to those people I say yes you have a reason to worry. You have had it too good for too long.
The coronavirus may be a black swan but not for it’s potential to kill. It may be a black swan because of our growing fear of it thus causing people to fall into cognitive dissonance and wildly irrational thinking leading into unreasonable actions.
Let’s visualize this virus passing into history with little life lost like so many other viruses coming out of China.
An economic crash would be a disaster for this country. China is toast for the foreseeable future: pig flu, bird flu, H1N1 and corona means a very hard time feeding the masses along with medical care and keeping the infrastructure running.
Very few people have any skills today, many can’t even sew on a button or boil water and these folk are somehow going to be able to repair equipment and grow food?
The stock market is a pressure release valve. But when the bond market blows, the Dollar is toast. And as supply chains snap, one wonders if there can be service without parts. The point is, there will be ever-expanding pain for everyone over time to varying degrees.
All of the current global trends,
includingespecially Coronavirus®, are about establishing control prior to the advent of the new order.The future will either be decentralization or centralization. Or, very likely, that will be the sequence because ordo ab chao
“And as supply chains snap, one wonders if there can be service without parts.”
Creativity is one of the features that made this country so prosperous before large corporations became monopolies.
Remember the saying, “Necessity is the mother of invention.” There was a time when many small companies made only parts for durable goods. Many small companies made durable goods. There was competition, there was innovation. All this was lost when large corporations became monopolies and bought up all the competition then created regulation that made it to costly for the small enterprise to compete.
The large corporations are not creative. They bought up creative companies then called them brands. Then they built manufacturing facilities in far away countries and exported our jobs. Then working with government they created ridiculous regulations to stifle competition.
All this will end when the stock market flops and these large corporations go bankrupt.
If necessity is the mother of invention, then the logistics of extracting and transporting raw materials is the father. And both require the consummating act of applied innovation.
Except, unlike during the rise of the Industrial Age, any innovation during the post-apocalypse will (quite likely) take place amid lawlessness in the form of either (decentralized) anarchy or (centralized) tyranny.
And even if “necessity” becomes synonymous with “survival” in future years, there can be no denying the dynamics will greatly differ from those during the Industrial Revolution.
Can innovation flourish without freedom, without (just) law?
Maybe. Maybe not. Because, if not, the Devil’s in the Details are going long on death, decay, disease, and disorder.
And it doesn’t take a whole lot of imagination to see where the trends are leading:
“HOW CHINA IS ENFORCING THE CORONA QUARANTINE BY DRONE”
Yeah, just like raising taxes will solve Global Warming™ buying gold will solve everything else.