The economy was booming. The stock market was setting records. Then coronavirus came along and governments shut things down to minimize the pandemic. That led to massive layoffs and a nasty recession. But once states open up, things will spring back to life and the economy will go back to being great again.
That’s the mainstream narrative. But it’s not based on reality.
In truth, the economy was a Fed-induced bubble before the pandemic. The central bank has managed to reinflate the stock market bubble despite the economic destruction, but it is nothing but a Fed-induced sugar high. And the economy won’t likely rebound quickly, even after things open up.
There are all kinds of reasons to doubt the quick economic recovery narrative. We’ve reported on the number of over-leveraged zombie companies, skyrocketing household debt, the battered labor market, and a potential cash-flow crisis even after the economy gets moving.
Now we have another sign of long-term economic trouble. A survey conducted by financial services company Azlo found that nearly half of small business owners think they will eventually have to close their businesses for good.
Forty-seven percent of the small business owners surveyed said they anticipate shutting down, and 41% said they are looking for full-time work elsewhere.
This is on top of the small businesses that have already shut down and will never reopen.
The survey also asked questions about the Paycheck Protection Program (PPP) instituted through the CARES Act. The results were less than stellar, as Newsweek reports.
Less than half of participants—38 percent—involved in Azlo’s recent survey applied for PPP loans. Of those who did apply, 37% said the program was slow to distribute funds and 20% described the process as ‘painful,’ the company reported.”
It’s absurd to think the economy is going to come roaring back when nearly half of small business owners expect to shut down. Small businesses employ 58.9 million Americans, making up 47.5% of the country’s total employee workforce.
The economy would struggle to recover from the shutdown even if it was healthy before the pandemic. And it wasn’t.
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Two things are possible. 1) the govt stops printing money and giving it away to those affected by this fucking debacle, or 2) the govt keeps printing and giving it away.
If #1, then there will be a huge depression and reset as the 40 or 60 million or however many it is unemployed go broke, and drag the economy further down. But the productive and energetic will have some chance of recovering.
If #2, then inflation will skyrocket, but no jobs will be created, and the ENTIRE system will crater. Almost every person who has ever worked and saved for a better life, save the uber rich, will be hammered into poverty.
I know what one I would chose. Going back to the unsustainable status quo is not an option.
In either situation there’s not a fucking chance that this many former middle class will walk away from their homes. They’ll own those properties one way or another (and with the support of the plebes) or burn them down. It’s about the only thing that’ll get the roast beefy suburban ruttholes out of their Lazy Boys.
I wouldn’t touch a Western bank stock for the next 30 years.
Lots of homeowners are in for a rude awakening really soon Taxes and other costs are skyrocketing and salaries are stagnant on top of high unemployment Shits gonna get real, real soon
It just might be taxes that take the cars and trucks off the streets, this might just be the Green Deal coming through the backdoor.
It will be #2, bet on it.
No2 will just make us Venuzueala and No 1 will clear out all the “deadwood” and create great opportunities for those smart enough to own precious metals
I recall a message from a dream last night: The forgotten one will arrive to set things right. Just so you know, if you understand such things, it was posted twice in my dream.
Anybody else get that message?
Dude, you are one of a kind.
https://www.youtube.com/watch?v=UzkZWRW1vAQ
Was this part of the message:
“For the time is come that judgment must begin at the house of God: and if it first begin at us, what shall the end be of them that obey not the gospel of God?”
Doesn’t sound as if it is a walk through the park, even if wearing a mask and six feet apart.
Ahh, the eternal optimists.
Maybe 10%.
Maybe.
The economy was only booming due to borrowed money drawing prosperity and wealth from the future This HAD to happen at some point Evidently that point is now
For over a decade i tried to figure out the fourth turning and what it would look like and encompass. When you are in it, seems to move too slow to make drastic decisions. Writings on the wall but its hard to trust it. Putting everything into gold and silver with fears of govt making it illegal etc for instance. Moving more rural and mortgaging vs cash (to keep liquidity and with low rates), etc etc. Hard to make decisions. Looking back one looks like a fool. Looking forward one has no idea what to do…
1930’s: “brother can you spare a dime?”
2020’s: ” brother can you transfer some bitcoin to my digital wallet?”
In the 2019 edition of Uncle Sugar’s Form 1040 booklet, under the “What’s New for 2019” section is a notice that “virtual currency” transactions are now reportable on Schedule 1. Tax man’s gotta stay up with the times.