Reevaluations

From all the evidence so far, it looks like the Wuhan coronavirus will be as bad as the Spanish flu, if not worse. However, the markets seem in denial, with evaluations near all time highs. The sentiment still seems to be that of euphoria and a belief in continued growth. But this sentiment is unlikely to last for much longer. Tourism and transportation is already hit by sharp falls in demand. Supply lines are disrupted. Factories are shutting down, not necessarily due to any local illness, but due to disruptions caused by dependencies on Chinese made components.

A large number of companies will see their earnings severely hit this year. The stock market is in for a rude awakening. People will want to get out of companies teetering at the edge of bankruptcy, no matter how much artificial stimulus is pushed into the market by the FED. Added liquidity will find its way into gold soon enough.

However, a much more important awakening may come with the spread of the Wuhan virus. People will start asking themselves more fundamental questions. Once widely held assumptions regarding life are challenged with the prospect of imminent death, things may change in a fundamental way. We may in retrospect see the year 2020 as a watershed in history, much like we view the first world war today. While 1913 can be seen as the year the progressive era started in earnest, with the establishment of the FED, we may see 2020 as its end. This may be the year pension funds get completely wiped out. This may be the year the welfare state fails to provide the sort of immediate as well as long term safety that it has been advertised to provide. This may be the year central banking blows up. This may be the year trust in politicians evaporates completely. Anyone dependent on the system for their needs are likely to be disappointed. Hyperinflation will decimate savings and government handouts, and people will start asking themselves why they bother to go to work.

I have a brother who goes to the office every day, despite being more wealthy than me. Yet, I'm doing just fine, living off of my savings. If my brother catches the Wuhan virus as a consequence of him going to work, he'll no doubt realize that the price of going to work may be far higher than what it's worth. He may want to do what I've already done. He'll cut his ties with the system and live a more self reliant life, with no debt, lots of spare time, and no worries.

I suspect that the number of people in my brother's situation is rather large. They are the hard working back bone of the current economic system, and they are brutally exploited for their sin of having overlooked the obvious. Why on earth are they doing so much work when they are rewarded with so little?

By Pieter Bruegel the Elder - bAGKOdJfvfAhYQ at Google Cultural Institute, zoom level maximum, Public Domain, Link