Reader Notes:
1. Under more Normal circumstances, this depth of material would be for our Peoplenomics.com subscribers only. But, because of the urgent and general nature of this material, it is being shared “in the open,” If you share, please send a link to this page rather than copy-pasting so that we benefit in some small way.
2. The Peoplenomics report for this weekend will be based on the follow descriptive narrative and will attempt to plot a reasonable expectation set for both corporate strategic planners and regular people through what’s shaping up as a possible “shit storm to come.”
In our forward contingency planning, we have expected for several weeks now that the Stock Market would be feeling serious impacts of the outbreak, particularly when an “in the wild” case shows up in the United States; which is now has.
What made the Ebola coverage Wednesday so interesting was it caught up to the headline I posted September 22 “When Will Ebola “Infect” the Markets?”
We now know that Wednesday, October 1, was the correct answer. Airline stocks were down almost 3% and it’s this that causes us to look further into the rolling impacts of the Ebola event because from a long wave economics perspective, this comes at a terribly inopportune time.
It’s inopportune because in the 48-64 economic long wave we usually see a deep bottoming out of interest rates that mark the bottom being in. From there, the usual course of events is for a trough war to occur, such as World War Two that really ended the Great Depression.
A study of history shows how clear this relationship between peak and trough wars is. Most Americans don’t think much about the length of Great Depressions, though, because they are generally treated as one-off events as though of minimal persistence.
The Great Depression, like its precedents, however, was not a single-year event. What most remember from school (if anything) was the Crash of 1929 and that’s that. Yet a closer study of the data suggests that the initial bottoming period didn’t occur until 1932-34. More significant is that after a period of a few years of “recovery” the Nation slipped into a further Depression. This was the secondary depression of 1937 that persisted until war spending cranked up in preparation for the Second World War.
With such a clear history available, therefore, we can look back at the Great Depression and as an intriguing question: “What would the Great Depression” have been like if, following the Crash and partial recovery into, oh 1936, or so, have been like if a pandemic had (rather inconveniently) arrived at that moment?
It’s not a trivial question, for sure. But we do know the secondary depression was real. And we can model how society would have behaved had the US been in the grips of a pandemic at a time when (as luck would have it) we had tons of raw materials, an under utilized workforce, and a will to fight.
Given that a new Depression likely has begun to unfold with the collapse of the Housing bubble, a fact not-yet recognized widely because of normalcy expectations and the failure of the financial community to resolve the twin issues of excess debt and malinvestment, the country has experienced a remarkable recovery – at least on paper.
In reality, however, while we saw the large pullback in 2008-2009, there has been no fundamental resolution of the excess debt issue. In fact, in the most recent report on derivative operations, the Office of the Comptroller of the Currency’s office reports we’re in about the same net credit exposure position as we were leading up to the Housing collapse:
Since the system of continuous settlement, the workaround for counterparty risk causing global lockup, as nearly happened with the Herstatt Event, worked well (all things considered), prior to the Ebola arrival we might have expected a series of “bumping along” until another collapse came along circa 2016-2017 as the underlying problems haven’t been addressed.
Ebola may change that.
In order to really recover from an economic setback, at some level you have to spread the wealth out from the One Percent back to the 99’ers. The reason is obvious: The One Percent simply cannot consume enough goods and services to drive recovery.
Working people need to have dreams and aspirations.
Unfortunately, these were already fading going into Ebola and it was on the verge of swinging the economic pendulum back to the right which might have, all else being equal, given the GOP a chance to regain the Senate.
The New Economic Reality emerging is that there will be little to no real recovery in terms of the crucial working people (Middle Class) for a multiplicity of reasons:
- There is a well-documented decline in the number of jobs available because of factory automation. This keeps worker wages low and drives people into the Service Industry. For this reason, Gross Domestic Product calculations are likely to be further jiggered in order to count more service jobs. This results in increased circularity (shop-keeper economy) risk and places greater reliance on the public mood.
- Further, the coming (marginally “legal”) Executive Amnesty program that will foallow the elections this fall shows a terrible lack of economic sophistication by the Washington Cartel. Simply: The more low-paid illegal foreign workers we have in America, the slower the economic recovery of the Middle Class wage earners. In other words, Immigration Reform really means lower-cost workers bidding for jobs and that doesn’t spread out wealth or raise prevailing general wage levels. Scarcity builds price while excess supplies always kills pricing power. Ugly as it is to allege, the likely impact of mass amnesty will be to continue the trend toward concentration of wealth. Thus, it benefits the corporate ownership class (the One Percent) but not working people as purported in by the 6CorpPress.
- Then we have the rolling “topping” of debt, as mentioned above. Lenders have yet to feel any real “pain and suffering” yet the Middle Class has plenty and is willing to share.
- And these contexts are against the backdrop of cyclical (trough) warfare that we forecast in the 2017-2025 period without any stretch> This is because by then the bankruptcy of this whole fracking business will be passing, leaving in its wake the problems of a society that has become overly dependent on cheap energy. The major powers are still in the ramp-up of the Manufacturer’s Resource Wars. If you like how global devolution has been rolling here lately, you ain’t seen nothing yet.
This was our playing field before Ebola shows up as a multispectral trend accelerant. Let’s consider what Ebola does:
Over the course of the roughly three or four years the disease is likely to run, we will probably see a death toll globally that could run in the 600-million range, plus or minus 200 million.
This figure in imprecise because of the variability in re-infection rates (RO) and these will in turn drift around because of how policy works.
Put your worst visions of the Black Plague and Great Depression in a blender and press the start button: That’s the reasonable 3-year planning model.
My tax attorney/CPA/consigliore has been incredibly details in his forecasting effort and he’s been generous enough to share his detail work:
“George,
I did an analysis of the potential for Ebola infection and deaths. This analysis had two huge assumptions, neither of which may happen:
1) The outbreaks reaches Lagos Nigeria and begins to run badly there – if it does that it WILL spread worldwide
2) That physical containments on it’s spread, via Trade Restrictions and Travel Restrictions are reasonably effective at slowing it’s spread and also assist in bring down the RO.
This is NOT a worst case scenario. This is a REASONABLE scenario IF it breaks out of it’s current “Hot Zone” into the greater populous of heavily populated 3rd world areas (particularly the mega slums).
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EBOLA Infection and Timing (Revised Sept 23, 2014)
For “Informational Purposes” I am going to roll forward my Ebola Projections using the following assumptions:
(this is more sophisticated than a straight line calculation and is to be adjusted as needed as actual information becomes available):
Assumptions
All RO’s are per infection cycle which is stipulated as 21 days. In () will be the approximate monthly rate. Additionally the RO’s are calculated off of those LIVING vs.