Global Recession: Was COVID-19 a Cause or a Catalyst?
It has been observed by many economists and financial analysts that wealth begets wealth, an observation which illustrates why developed nations and global powers usually keep getting richer during eras of economic prosperity. Another common observation is that these developed countries usually tend to maintain to maintain a relatively high level of domestic stability. It should be from a macroeconomic perspective that the stability of a nation and its covering bodies is one of the major foundations of a strong economy. Although, the following statement might sound like a contradiction, but this above-mentioned stability in the modern world is highly dependent upon an extremely sensitive balance herd consumerism and overall accumulated debt.
It should be noted that, as a society, we modern humans are generally addicted to debt (both corporate and personal debts), with the total debt of the 21st century monumentally exceeding the net revenue generated by the world during this time period. The historically low interest rates maintained by banks and other creditors haven’t really helped in curbing the exponential growth of this dangerous bubble. This has led to many economists theorizing possible global debt wave (the fourth of it’s kind in modern economic history) if this debt bubble ever bursts, however the everyday operation of today’s continuous markets keep this debt-fueled economic recession at bay by facilitating the regular flow of money in the global economy. This process keeps the highly-sensitive well-oiled capitalist machine running. However, everything changed in 2020, putting the entire global economy on critical life-support.
When it struck, the COVID-19 pandemic took the entire world by storm. What was once inaccurately described as a “harmless seasonal flu” by several prominent world leaders, has now brought world governments to it’s knees, reducing stability during it’s campaign of world domination. As of today, most nations have implemented strict lockdowns and extremely restrictive travel bans in an active attempt to protect the health and overall safety of their citizens, while simultaneously trying to curb the spread of the novel coronavirus. Due to the above-mentioned quarantine procedures implemented by various governments around the world, the continuous operation of consumer-driven markets has screeched to a sudden halt making this debt-driven recession more of a reality as each day passes (assuming it isn’t occurring already). This has resulted in Wall Street along with other financial hubs panicking, leading to global stock markets plummeting (this stock market crash was later reduced by a cash injection via a government funded stimulus-package to create confidence in the market).
Despite the best efforts to stimulate the global economy by several prominent nations, this debt-driven crisis seems inevitable at the time of writing. In a way this crisis was more of a “when” than an “if” and the COVID-19 pandemic was just a catalyst for this economic recession.
Author's Note: unlike my other writeups which exclusively deals with the world of intellectual property law, I thought that it was necessary to add my perspectives on the upcoming 2020 global recession.
