The perfect storm and the re-alignment of global economic power

The novel coronavirus pandemic has turned our world upside down. It is the ultimate “perfect storm”. Evolutionary biologists tell us that viruses have been with us since the beginning of time. Civilisation itself has been a struggle between humans and viruses.

Conspiracy theories are understandably all the rage. The Chinese and Americans have been vitriolic against each other. Some claim that it was an accident from a biosecurity lab in Wuhan. Others insist it was brought by American soldiers. Yet, others blame it on the Chinese penchant for eating live worms, fresh monkey brain, dogs, cats, cockroaches, millipedes, pangolins and virtually anything that moves.

Another theory has to do with alleged radiation effects from G5 technology. But the jury is still out. Some physicists blame later-day Luddites for peddling such “fear mongering”. They insist that high radio spectrums do not have the radioactive characteristics associated with elements such as radium, polonium, plutonium, thorium and uranium.

There is also a Devil theory” underpinning the new anxiety. The novel coronavirus is alleged to be part of a grand complot by the world Illuminati to create a New World Order. They aim to achieve this grand objective through manufacturing a virus that will bring nations and communities to their knees while providing justification for population control. The stories about a new vaccine with an electronic implant to control people is an Orwellian nightmare that will extinguish human liberty.

In our cruel and divided world, where ancient hatreds are resurrecting with a vengeance, some viruses are no doubt being manufactured in laboratories. Although the world powers have been signatories to international treaties outlawing the development of chemical and biological weapons, there is anecdotal evidence that they are secretly carrying on as if nothing is amiss. The city of Wuhan, where the novel coronavirus broke out in November last year, is where China’s top-secret biological warfare research laboratory is based.

In February this year, award-winning Harvard biochemist Charles Lieber was arrested by the FBI for allegedly releasing top scientific secrets to the Chinese. He faces a long jail term if convicted.

Some French medical scientists were recently debating the pandemic on TV channel LCI. Camille Locht, head of research at the Inserm health research group, suggested that a trial be carried out in Europe and Australia. He was countered by Jean-Paul Mira, head of intensive care at Cochin hospital in Paris, who declared: “If I can be provocative, shouldn’t we be doing this study in Africa, where there are no masks, no treatments.” Those remarks have outraged Africans across the world, with leading footballers such as Didier Drogba and Samuel Eto’o coming out to warn the French to desist from their racist and devilish plans against our continent.

The worst prophecies made for Africa, have mercifully not come to pass. We have a total of 8,701 cases and 320 mortalities. Nigeria, has recorded 224 infections, five  deaths and 27 recoveries. This is, of course, no reason for complacency. Director-General of WHO, Tedros Adhanom Ghebreyesus of Ethiopia, that the numbers may be under-stated due to under-reporting and lack of testing equipment, urging us “to prepare for the worst and prepare today”.

The economic fallout from Covid-19 have been globally devastating. Some economists have drawn parallels to the subprime crisis of 2008-2009 while others have likened it to the Great Depression of the thirties. The Paris-based OECD recently lowered its global economic forecast for 2020 to 1.5 per cent if the pandemic does not begin to decline by the second quarter.

The economic lockdown across the world has disrupted supply chains. China, the engine and locomotive of world industrial production is tottering to a halt. The aviation industry has been grounded, with losses in excess of US$500 billion while tourism firms have seen an excess of US$800 billion wiped out from their balance sheets. Global oil prices nose-dived to a low of US$22 before rallying to US$34.11 per barrel.

Stock markets have fallen by 30 per cent, with more than US$2 trillion lost. Investors have been scrambling to safety from corporate and municipal bonds to the risk-free US 10-year treasury securities. The scramble to safety has in its turn pushed down the yield curve to less than 1 percent. Given that the dollar accounts for 88 percent of global transactions and for trading in commodities such as oil, gold and other commodities, there has been a demand for more and more of the greenback. The U.S. currency has appreciated more than 3.0 per cent, reflecting increased demand for dollardenominated assets.

For most governments, both rich and poor, the fiscal space will be further diminished, as national budgets are affected and big holes begin to appear on public expenditure plans. Debt is bound to increase. The good news is that, unlike, the subprime crisis that devastated Wall Street more than a decade ago, households have not lost out significantly. But big firms and SMEs have lost considerable incomes from the lockdown across the world. More than 3.5 million lay-offs have occurred in the United States in a matter of weeks.

But there are silver linings. The London-based Economist newspaper predicts thatmany couples under lockdown will find themselves closer than ever with each other. They quote Ukrainian President Volodymyr Zelensky who urged hiscompatriots to take advantage of the enforced intimacy to make more babies. There might well be a coronavirus “baby boom” in the coming nine months, given past trends when masses of people had to stay at home during disaster emergencies.

The ongoing global pandemic may also lead to a new realignment in the global balance of power. For better or worse, China will come out stronger and more prosperous from this global humanitarian tragedy. Already, the Chinese industrial juggernaut is re-booting. The Chinese are snapping up businesses in Italy and other parts of the rich industrial West at a time when they are at rock-bottom prices. Recently, the IMF announced that the Yuan (officially known as the Renminbi or “people’s money”) has been fully welcomed into the international financial markets as a currency for financial transactions. The Yuan has gained 48 points in value, currently standing at 6.9795 to the dollar. There are indications that more and more central banks across the world are keeping some of their reserve assets in Yuan, amounting to a figure of US$900 billion. Yuan-denominated overseas bonds have risen from a low of $895 million in 2007 to a whopping $1.08 trillion in 2018. The Middle Kingdom is galloping towards the Numero Uno position in world power.

The global response has so far been quite robust. Donald Trump has announced a total war chest of US$4.5 trillion, compared to the US8 billion that Barack Obama spent during the Great Recession. Other OECD countries have followed suit, in addition to the World Bank and the IMF that have committed a combined total of US$1.160 trillion to shore up member countries from the economic and financial fallout of Covid-19 pandemic. There is also a commitment to assist highly indebted countries to renegotiate their debt repayment terms.

The economic fallout has been horrendous for Nigeria. The 2020 budget has been revised downwards by N1.5 trillion. Big corporations, SMEs and small traders are feeling the pinch. Poverty and hunger are bound to increase, and with them criminality and even banditry.

We were relieved when, at last, Muhammadu Buhari condescended from his reclusive palace to address the nation. We are encouraged by the Task Force that has been created and the right noises being made by the likes of Health Minister Osagie Ehanire and the indefatigable Lagos State Commissioner for Health, Professor Akin Abayomi. They have lost weight in recent weeks, which is a good sign.

The partial lockdown across the country has helped. But we need to see more communication and engagement with the public. The “palliatives” being promised to the poorest and most vulnerable groups should be disbursed with greater transparency and accountability.

We also welcome the initiatives being taken by CBN, with a package of more than a trillion naira for the health sector, manufacturers and SMES. The directive to the banks to exercise forbearance on commercial debt and also reduction on interest charges on CBN interventions loans are steps in the right direction. The devil, however, is always in the details of implementation.

Sooner or later, this evil wind will pass. This is an opportunity to forge a new compact based on justice, solidarity and hope.

In his 1942 novel, The Screwtape Letters, the Oxford writer C. S. Lewis enacts a scene where Satan is boasting: “I will cause anxiety, fear and panic. I will shut down businesses, schools, places of worship and sports events. I will cause economic turmoil.” To which Jesus counters: “I will bring together neighbours, restore the family…bring dinner back to the kitchen table. I will help people slow down their lives and appreciate what really matters. I will teach my children to…trust me and not their money and material resources.”

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