With the Covid-Easter weekend well behind us and the first major quarter of Covid-inspired earnings well underway, a new reality is facing investors harshly in the face: are the world’s leaders preparing to sacrifice human life for the sake of economic recovery, or will they be prepared to hold on to the shut-down regime, come what may, at the expense of their economies. Just last week, even Donald Trump stared the governor of Georgia in the face and said – wait. Not yet. This from a man who dismisses the assistant requests of NY Governor Cuomo as lamentations.

And for anyone thinking immediately: UK and US, there is a much worse culprit at large: China.

On Monday we learned that YouTube will be deleting clips that contradict the WHO’s position on the Covid-narrative: we have come to depend on a commercial giant more than upon our leaders. Clearly, the attempt by US President Trump to lay the blame for his ineptitude at the feet of the World Health Organization’s alleged collusion with the Big Bad Bogeyman from the East is – at best – misplaced; but even now, CNN reports that China is attempting to re-write the Corona narrative and is actively censoring academic research on the source of the virus.

It has succeeded in such endeavours in the past – witness the ease with which it tore Tiananmen out of public memory, quashed Facebook’s Libra, which it considered a major contender against its soon-to-be released digital Yuan.

At jeopardy is China’s endeavour to establish its global economic presence by way of the Belt & Road initiative of infrastructures throughout Asia, Africa and even Eastern Europe. Such an initiative requires trust on the part of the recipient and, to maintain that trust, China has been providing assistance to those same countries and more – including Western Europe and the US – in technology and equipment worth millions, this as the US shutters its doors and the Federal Government avoids helping US state governors.

This is not a matter of guilt – it is PR, pure and simple.

Meanwhile, as the US slumps deeper and deeper into the crisis, China has been reopening its economy, car sales quadrupling in March alone, despite the fact that imported Corona cases are rising by more than 100 a day. It and the WHO have been refusing assistance and denying information to Taiwan, a country that still holds an impressive record of less than 400 cases and 6 deaths; and inexplicably, China has resumed increasing military activities in the surrounding waters, according to the Japan Times.

But is this all mere opportunism or is there something more acute taking place?

Where’s the Cash Going?

In response to the Covid-19 crisis, many governments around the world have been following the sage advice of throwing money at their problem economies, but it’s all landing in a black hole. This could be – among others – because the time to throw money was up long ago, and that money’s target should have been underfinanced healthcare rather than banks.

All the US FED’s efforts over the past months didn’t stop the Dow from edging towards the 18,000 mark in mid-March and probably won’t delay the upcoming plunge when Q1 reports prove that the situation is worse than expected – momentary reprieves, cheap dollars and presidential blustering aside. Indeed, it took something as hackneyed as a (granted) very serious plunge in oil prices (seriously? We’re all at home; it’s Spring – what, precisely, were they expecting) to generate a second collapse in the cheap-money, overly-inflated equities market, as the banks looked on, worried about their credit to the industry no less than they were concerned with the subprime fiasco..

But there is actually worse:

Usually, currencies and equities exhibit an inverse relationship: when shares go up, the dollar goes down. Quite simply, when one sells shares, one has cash that needs to be re-invested in order to grow. At present, this has not been the case in most of the world – shares are tanking and local currencies are following suit. In the US, as the crisis hit, the 10-year treasury yields bottomed out just as the DOW pierced 20K to the downside, with gold dropping and everything else in Corona-Crisis mode, raising the question – where’s all that cash going?

Well, not surprisingly, it’s most probably being stashed under mattresses, to collect mildew as the Dollar Index once again aspires to last month’s highs. Meanwhile, other currencies – save the Yen – sank as the dollar rose, putting a hefty share of global central bank relief efforts to waste (by making them worth less against the one true global reserve currency – the rising almighty dollar) and poking a tongue out at an entire 3-years’ worth of rancour between the US president and his policy-keeping Fed heads.

At present, all the liquidity being pumped into the systems abroad is paling in comparison to the dollar, and US exports – if and when they actually become a “thing” again – will once again be too expensive to compete.

Safety – Where?

JP Morgan analysts optimistically quoted on Reuters penned the US economy to shrink by 14% in the year’s second quarter, after China’s lost 40% (annualized) in Q1. Of course, the latter number could improve, with China back to ‘normal’. Clearly, though, the loss in GDP is less concerning than the current run on money markets.

For here, the damage could be far-reaching.

The financial world has so far depended on four major safe-haven assets: gold, the US Dollar, the Swiss Franc and the Japanese Yen. As regards the yen, that nation’s economy is SO far out of the game, that little surprise is lent to those watching it drop, lately – yes – alongside the Nikkei. The Swiss disappointed our collective faith by surprisingly de-pegging from the Euro and our collective trust several years ago. Gold simply isn’t taking up the slack, but the US dollar… It just keeps on rising. As for cryptos – no. They haven’t shot up since they are still a fad awaiting the support of a major financial entity, like a nation with a very large economy or a social media giant with an equally large following

A true sign of panic, though, is the continuing (and quite possibly questionable) belief that – once again – the only ones left standing after the war is over will be the mighty US, surrounded by a world in shambles with everyone pointing their finger at the bogey man what started this all (sic)… and as we are aware from Trump’s press conferences, the finger-pointing had never stopped.

But will the US indeed repeat its World War Two double forward somersault?

Who’s next?

The US comes into this tragedy unprepared: its private health system is for the rich and it is decentralized; its leaders underplayed the danger until it was too late (except for those well-connected enough to get their money out of the market and not get penalized for insider trading); it is a nation easily beguiled and prone to mass hysteria – all the makings of a 1970s-style post-apocalyptic B-movie – even a proposal to tax firearm purchase has been quashed by the still livid pro-gun lobbies.

If we look at the past, we notice that a positive outcome of the 1918 Spanish Influenza was the increased use of social security systems. If the US expects to regain its status, it will have much to answer for vis-à-vis its own populace – the requirement to pay for Corona testing, the total absence of a safety net for the poor, the closing of its major disease control agencies in 2016, and so on.

Perhaps this will serve as a wakeup call to the one nation in the world without a respectable health services infrastructure (I stress, to those who will answer: “we have the best science and the best bestest in the world,” I refer to delivery. What good is the best science if it misses 90% of the population?).

Public health is not only there to ensure services to the poor; it is also the beginning and end of containment. It is the only arm of a health infrastructure that can speak transparently to security forces and the government with a single voice. Sadly, Americans are soon to discover how quickly and deadly the lack thereof can be.

Add to that a president who looks at China’s recovering economy and concludes that he too must reopen the gates, thus perhaps precipitating a b-wave viral apocalypse…

WHERE’S next?

Notwithstanding the above, the world may be edging towards the Coronavirus’ dip. So far, most medical services around the world have not had to face the tragedy that Italians have been experiencing, even though the US and soon the UK too will have easily surpassed that nation’s death-count.

And come the premature unlocking of the world’s major financial centres, the next wave will probably be even worse – this time, we’ll have no idea where the infections are coming from.

Meanwhile, we will have learned to live in isolation, expand our lives over the digital cosmos; and, as that space becomes our only source of interaction and procurement, we may even find ourselves reverting to some form of blockchain-based barter, in which the first major political power to administer its e-coin upon the shoppers of the world will manage to supplant that trusty old greenishly-backed paper whose mildew and print will soon become suffused.