So here we are 09-05-2020, after 53 days of the shut down, we manage to tank the world economy for decade to come.
Not even during the world wars did we see this kind of shut down.
Yes we did close the trading and our businesses artificially and not due to an economic meltdown, but now we have created an economic meltdown by listing to much to the medical professionals and fair mongers that does not know the first thing about running a business .
Make no mistake about this, the bigger companies will use this leverage to buy up smaller and medium sized companies for a 0.25 cents on the dollar over the next 18 months time globally.
A business owner in the production field that has worked all of his and his families life with building up a business that was a few months ago valued to over 10 million dollars will have an evaluation of 2.5 million today in May 2020.
So how could this be?.
It is quite simple actually the shutdown created a vacuum where larger companies who have piled up cash for a long time and normally used that for buying back their own shares have now been placed in a great positions as a liquid company to take over all smaller and medium sized companies for a 75% discount.
But why is that?, the reason behind this is that smaller and medium sized companies have for decades been forced to re-invest everything they make back into their business to keep them self relevant when competing with larger competitors for market shares.
And by offering a more personalized products/service at a better price point they have been able to compete.
But this has also meant much smaller margins and very little saved up in the rainy day fund.
So when we have a shut down like this regardless if the company qualifies for PP, paycheck protection they will have huge problems starting up again like nothing ever happen.
You will have huge issues for a year in many supply chains, which will affect the possibility for many companies to resume their normal business routines.
Layoffs of 1/3 of the personal staff will be forced up on business owners when the business is not operating at a normal capacity any-longer when we now start to re-open the world step by step again.
This will mean that 2/3 of the staff that will still have a job, will have to pick up the slack and cover the work load that the 1/3 that was let go, handled on a daily basis.
There will be a big risk that we will have to start working also 6 day weeks meaning that we will work also Saturdays with the same pay as before for 5 day work weeks.
At many larger companies people will be let go and then re-hired again with very disadvantaged terms, compered to what they had in the past, with the same company.
So it will look something like this, John had 80.000 dollars a year in base salary and two weeks of paid vacation and a 25.000 dollar yearly bonus.
Now when he has been let go, the same company will offer him a (new position) same job as before but with a different title to justify the pay cuts for John.
So he will be offered 60.000 dollars in base salary and a 10.000 dollar bonus and with one week of paid vacation and one week without pay.
So the company will save money, but for John he will be forced to cut all excess consumption besides the groceries and the mortgage and the car payment.
So for John there will be no high ticket items in his near future of consumption.
So this will also affect the American economy really hard.
There is no doubt in our minds as experience business advisers that the last of the middle class will be moved into the working class during the next decade so from 2020 to 2030.
And this will also mean that for the next decade the unemplyment numbers will stay at double digits overall.
Unless the minimum wage gets slashed even more, than it already has in many profession over the past two decades.
A lot of people do not seem to understand that many professions work 80% on tips, and they make a few bucks an hour from their employer without any benefits like medical or 401K , or anything.
There is a reason why many Americans have been forced to work 3 jobs already in a bull economy, so what happens when we enter into a decade of a bear economy.
So we are seeing a tragic future happening in-front our eyes as we speak.
Is there any hope for a recovery of the boom cycle economy that we have been having for the last decade.
Yes and no, it is simply put very difficult to tell the future based on a pandemic that will linger for a few years and come back in waves.
The silver lining here is that maybe we will start to produce items again in the US, and move back some jobs in the process.
But the problem with this is that many jobs can not be moved back because the items would cost 3 times as much to buy, as they cost to buy today.
And with more middle class workers being moved to the working class, the Walmart type of businesses that are based on import from Asia up to 80% of their items will be the big winners in this mega depression that we are heading into as we speak.
We will also see much less travel which will impact the tourist economies of New York and Florida and also California very much in the next decade.
There are a few reasons for this, reason number one will be that many people do not want to travel as much as before again due to them being afraid.
The second things will be that vacations will become an extrem luxury in the next decade, compared to how it has been in the last two decades where almost the whole middle class have made trips abroad globally every year.
The final punchline here will be that we will have to start helping each other out much more than we have done in the past.
In our families in our church group’s, sports teams and in general in our communities.
There will be much less time to be jealous of someone else´s life, and much more time to help each other out in many different ways.
The one good thing that can come out of this pandemic and economic meltdown will be that maybe we can focus on what really matters in life which is family,friends,pets and clean water and clean food and clean air.
Thank you for reading.