Today's "normal" is certainly different than our "normal" even a few weeks ago. But what about tomorrow's "normal"?
One of the cool aspects of studying history and psychology is you start to learn cause and effect. If "X" happens, "Y" follows. It's never possible to entirely predict where current events today will take us tomorrow, but we can make a few broad predictions. Practically, predicting likely future outcomes can help us better prepare for those unknowns we may face tomorrow.
Right now, today, we're still on the "upward curve" of the coronavirus pandemic. Barring a sudden discovery of an effective treatment that can be quickly deployed on a world scale, we're in for a bumpy ride that'll likely last a long, long time. Unfortunately, hydroxychloroquine doesn't look like it'll be our savior drug. Our lone defense against the virus, right now, is social distancing and personal hygiene methods. It's becoming abundantly clear the earlier any give geographic region goes into "lock down" mode, the less severe the outbreaks, and the more likely local healthcare systems can handle the load. The horror happening in New York City right now could be attributed to the lax attitudes a few weeks ago. This also means places like Florida (or Brazil and Belarus), where the governor refused to take the danger seriously, will have a day of reckoning in the very near future.
Barring that miracle treatment and based on that we're seeing in Southern Europe (which is about two weeks ahead of us as far as the spread and severity of the virus), we're at least weeks away from the peak of the virus, and more importantly, at least months away from being able to return to some relaxing of the social distancing guidelines. That means our economy here in the US is going to continue to be seriously hamstrung, which is precisely what's going to make the ride so damn bumpy.
The world we lived in back in February is gone, and probably gone for a lot longer than most of us realize. Maybe even forever. We're just starting to peer over the edge of a giant, deep, dark chasm. The "new normal" we're experiencing today isn't the normal we'll likely be experiencing in the near future. Odds are decent we're just experiencing the beginning of the first of a series of crises.
So What's The Problem?
There are two fundamental issues we're facing as a world community. First, we have a TON of debt. Second, we're not getting along too well these days. On top of these two problems, the sheer worldwide scale of the pandemic means we can't really help each other out too much.
These two fundamental problems have created the potential for a catastrophic collapse of the world economy, the likes of which could pale the Great Depression. The coronavirus pandemic could be the spark that ignites the dumpster fire of that economic collapse. The shutting down of commerce will cause a series of severe crises; each one contributing to the potential misery of our "new normal." Here are a few of these crises, both local and worldwide, in the making:
- Rampant worldwide unemployment. The cascading effects of the shelter-in-place orders is causing world economies to grind to a halt. No commerce = no jobs. We'll likely see unemployment numbers that rival or even surpass those we saw during the Depression when it peaked around 25%.
- Failing businesses. Businesses both large and small are already under immense pressure. As the pandemic wears on, more will fail which will lead to more lost jobs.
- Oil price collapse. The Saudi/ Russia oil price war drove the price of oil down at the exact same time demand evaporated due to lock downs. Pretty much every country who isn't Saudi Arabia will see their oil industry collapse. Tough for countries like the US; catastrophic for countries that rely on petroleum as their primary export. I'd expect to see a slew of revolutions in some of these countries.
- Collapse of banking. This could come in two forms. As more and more people cannot afford rent or their mortgage payments, we'll see a slew of defaults that will quickly move up the chain of lenders. We could also see a run on banks ala 1930. While we now have federal banking protections here in the US, there's an upper limit on how much the government can spend. Given how much is going to be needed to prop up every other aspect of the economy, people probably aren't going to have too much confidence in their banks.
- Stock market crash and retirements drying up. As the world economies shrink, world markets will take an incredible hit (bigger than they have thus far.) This will have all kinds of disastrous effects, including the plummeting value of retirement funds. This will probably be fine for younger folks as the markets will eventually recover, but those close to or already retired? They';; be in trouble.
- Collapse of the real estate market. The collapse of the housing market in 2008 had all kinds of negative consequences. Given the sheer number of foreclosures we'll see as a result of unemployment and failed businesses, we'll likely see a repeat.
- Governments defaulting of debt. We have a total of about $260 trillion in worldwide public and private debt, but only about $90 trillion in total worldwide GDP. That means we're paying a whole lotta interest on that debt. As governments are forced to dump piles of cash into their economies in an attempt to prevent a total economic collapse, some countries (like Italy) will likely be forced to default on their debt. This will add even more strain on an already over-stressed world economy and might lead to wars, revolutions, and an even more pronounced swing towards authoritarian, nationalist governments.
The longer the pandemic wears on, the more likely one or more of these crises will explode. The more likely any one or a combination of these crises are to explode, the more it's going to impact us personally.
So What Effect Will This Have On You and Me?
Preppers like to talk about "The End of the World as We Know It" abbreviated TEOTWAWKI), which is the shorthand way to describe what life you be like AFTER whatever calamity they're predicting comes to fruition. And it's almost always a Mad max-like scenario:
In reality, the likelihood of the entire world collapsing and devolving into this kind of scenario is going to be really, really unlikely. The actual reality is likely quite a bit less dramatic. However...
The world as we knew it HAS ended. The world we enjoyed just a few weeks ago is dead, at least for the vast majority of us. What is our new world going to look like? Here are the two probable ends of that spectrum of possibilities.
Scenario #1: At the bare minimum, this pandemic has been a cruel wake-up call for the folks who took our comfortable and safe world for granted. And the PTSD of that realization is the kind of thing you don't forget. We'll likely internalize some of our social distancing behaviors.
Scenario #2: At the worst, we're going to experience widespread financial misery we've only read about in history books. A lot of us will lose our jobs. Many of us will lose our houses. Most of the stuff we used to buy will be impossible to acquire. That which we can buy will be much more expensive. Food will be scarce, thus expensive, especially food that's not grown locally. Starvation and malnutrition will become a real issue. A large number of people won't be able to cope and we'll see an explosion of suicides. Crime will increase exponentially, especially in cities. Drug use will increase dramatically among those who can afford it. Divorce and domestic violence rates will shoot up. Your savings and investments will plummet in value. Systems and infrastructure that's already stressed will start to fail regularly (like the electric grid in California, for example.) And so on.
Our "new normal" will likely fall somewhere between these two scenarios, and will likely be dependent on how this pandemic shakes out. If we find an effective treatment within weeks, the virus weakens with warm weather (thus buying us precious time before we're hit with another wave of outbreaks in the fall), or it turns out the virus has been circulating for months so we're pretty close to developing herd immunity, then our "new normal" will be closer to scenario #1.
But if the pandemic drags on for months? We very well could end up closer to scenario #2. That was the thinking that led to my "surviving the pandemic depression" post two weeks ago. That has also informed my "expect the best but prepare for the worst" approach to dealing with the pandemic.
If I Were You...
My advice is simple. Expect the best; plan for the worst, which is explained in the aforementioned post I linked in the last paragraph. Pay close attention to the "tribe" part; everyone should be shoring up their social connections right now.
But beyond that? I'd say spend a little time savoring what you have right now. If any one of those crises I mentioned at the beginning come to fruition, our world is going to change for a fairly significant amount of time. We'll likely lose all kinds of aspects of our "old normal." Right now, today, we still have a lot of stuff we might not have in a matter of weeks or months.
Enjoy that takeout food.
Enjoy that hot shower.
Enjoy those well-stocked (well, kinda well-stocked now...) grocery store shelves.
Enjoy those parks.
Enjoy the Internet.
And everything else you took for granted before March of this year.
At this point, we can't predict what tomorrow is going to look like. It might be pretty much like it was before all of this exploded. Or it might be completely unrecognizable. Regardless, enjoy what you can of our "old normal."
Lastly, as part of that "tribe" point, I'm always in search of like-minded people who understand the value of fostering mutually-beneficial relationships and see this pandemic as an opportunity to create a better world, even if it's just a better world for our tribe. Contribute what you can to the group; use the group resources to help survive and thrive. Teach each other skills. Share knowledge. Stuff like that. Even before the coronavirus hit, Shelly and I have been developing social connections both locally here in Western Colorado and, thanks to our travels and the Internet, social connections all over the US and world. If you're digging these posts, you're probably in that "like-minded people" category. Find me on Facebook so we can connect. Or shoot me an email at email@example.com.
Stay safe, folks.