We have been warning about the impending economic crisis since March 2017. Central bankers and Chinese leaders have been able to postpone the onset of the crisis for several years, but now the coronavirus outbreak will make any such efforts futile. We are heading to a new global economic crisis.
However, crises are not just doom-and-gloom, and the human costs of dangerous viral outbreaks cannot be measured in money. Still, economic crises do sow the seeds of large potential profits for prepared investors, companies and households. This is because crises will re-price a wide range of assets—which makes a crisis an opportunity as well.
The approaching economic crisis put in motion by the coronavirus outbreak will be exceptional in one important aspect: it will the first-ever global economic crash. The Great Depression spread across the globe in the 1930’s, mostly because of the gold standard, but it only created serious economic malaise in few countries outside the U.S. The Global Financial Crisis (GFC) was also global, collapsing the global flow of liquidity (credit), but it was quickly contained.
The coming crisis will be a different “beast” altogether, even without the virus outbreak.
The biggest reason behind is the mispricing of risk. When central bankers forced interest rates to zero and below, and began to push artificial liquidity into the financial markets through QE-programs, they started to undermine the ability of markets to allocate resources effectively by distorting market prices.
The world will pay a steep price for the arrogance and errors of global central bankers. The ‘everything bubble’ they have blown has also made hedging especially challenging this time around. We will help you to find efficient hedging positions.
In this Q-Review Special Issue we will explain how investors, households and corporations can protect their assets from both the pandemic and the economic collapse it will bring.
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Prepper’s bunker, table of contents:
The tale of four crises
The prepper’s bunker
Lessons from history
General guidelines for crisis investing
Financial hedging against the pandemic
Appendix I: Figures
Appendix II: The best performing stocks during and after crises