Prepare for a global economic shock
Dear Editor,
The novel coronavirus (COVID-19), spreading globally, caused the US Federal Reserves to lower interest rates on March 3, 2020 by 0.5 per cent. This was to help the economy and stock market.
Ironically, it had the reverse effect.
The broader S&P 500 (SPX) closed 2.8 per cent lower, only a day after the index logged its best day in more than two years. The Nasdaq Composite (COMP) closed nearly 3 per cent lower.
This reminds me of 1929, but it is China, not the US, who is the central player. In 1929, the US was the world’s cheapest producer of goods in agriculture and the factory of the world. In the 1930s, the Great Depression occurred.
The COVID-19 has pulverised the automotive sectors in China, Germany, South Korea, and the rest of the world. The automotive industry is at the heart of industrial manufacturing. This phenomenon has affected computer production, luxury goods, and every aspect of the global supply chain. It is also affecting tourism, which Jamaica depends on. Australia is losing about US$1 billion a month because of cancelled flights.
My advice is ‘better to be safe than sorry’.
The Central Bank of Jamaica should buy gold for foreign reserve. Prepare for a global recession or depression. My calculator says there is a 70 per cent chance within the next 10 months.
Brian E Plummer
brianplummer@yahoo.com
