It’s been roughly five months since COVID-19 lockdown measures were first put in place. That means that come September, we will have gone two quarters like this with no end in sight.
Masks and social distancing contained the spread of the virus somewhat but could never eliminate it. Yet that is the only containment strategy we had. The only real solution is a vaccine. Many have already claimed that a vaccine is coming soon, but even if comes to market in September, producing, distributing and administering it to billions of people will be a time-consuming and logistically fraught process. Obviously, the number of people vulnerable will decline over time, but it is not clear that social distancing or quarantining will be suspended simply because a vaccine will be available. They will likely continue.
I have argued that unless a solution is found by September, the probability that the recession could turn into a depression would mount. A recession is a normal part of the economy, a primarily financial event that imposes disciplines on an overheated economy. A depression, from a geopolitical standpoint, involves the physical destruction of the economy, something that lays waste to businesses, dislocates labor and vaporizes capital. A recession is the economy cycling. A depression is an economy breaking.
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WNU Editor: When the Russian economy collapsed after the breakup of the Soviet Union, I got first hand experience on what a depression is like. To say that it was a horrible experience is an understatement, and it took a decade for Russia to crawl out of it. Will the US and other countries experience the same thing in the coming months? That is why the above post is a sobering and must read commentary. The only difference that I have with the above post is that I believe the crunch time will happen after the US election in November, not before.
