Thus far, the assembled mass of politicians and central bankers appear to have managed to save the global financial system from meltdown or a major ‘credit crunch’, and ostensibly more successfully than during the Global Financial Crisis. However, the broader economic and social impact has been catastrophic, above all in terms of the loss of life and jobs, despite unprecedented (even including wartime) fiscal and other legislative measures. ‘Whatever is necessary’ in both fiscal and monetary terms was the unavoidable consequence of opting to ‘lock down’ economies to stop the spread of the virus, as was the lack of any immediate consideration of how these measures would be wound back, let alone paid for in the long term. Indeed, with interest rates at current levels, and likely to remain so for a very protracted period, governments in the developed world can probably spread the costs over many decades, though this does not apply across all developed nations. However, this is not true for most businesses, and certainly not an option for consumers, above all given the enormous disparities in wealth and income, as well as rather more permanent damage to labour demand as the economic landscape shifts in a likely dramatic way, thus heightening job insecurity, beyond health and safety concerns as long as no vaccine exists.


As harsh as it may appear in judgement terms, the ‘we’re all in this together’ chatter and the hope of a V-shaped recovery were never anything more than political slogans, and a triumph of hope over adversity, which is a natural human reaction function. Equally,


the lack of any discussion about the ‘moral hazard’, or the total removal of risk and term premia in asset prices engendered by central bank purchases of almost any asset class, was always likely to promote what appears to be an ever greater disconnect between ‘Wall Street’ (markets) and ‘Main Street’ (and their equivalents elsewhere), as well as being another nail in the coffin of ‘capitalism’. But as William Pfaff noted in ‘Barbarian Sentiments - How The American Century Ends’: “The accounts that history presents have to be paid. Past has to be reconciled with present in the life of a nation. History is an insistent force: the past is what put us where we are. the past cannot be put behind until it is settled with.” It is that challenge which the current crop of politicians will have to meet, with cheap populist rhetoric likely to foment divisions, particularly with the public at large facing ostensibly greater existential uncertainties. Politicians will do well to remember that public acquiescence to, and compliance with the necessary authoritarianism of lockdown is premised above all on it being very transitory in nature, rather than a new normal; the populist fraternity may well struggle with this. The mirror side of this is that measures taken to protect jobs and businesses have been wholesale rather than targeted (due to the pressing need to take immediate action), and leaving aside issues about efficacy, they will be tricky to unwind both in terms of pace and timing, let alone the fact that they have set a precedent, which likely fosters a sense of entitlement both now and in future.


7 | ADMISI - The Ghost In The Machine | Q2 Edition


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42