IMO, the upcomming economic depression is going to shift the wealth around as it will the global economic balance of power.
At this stage it looks like China has the timber on the USA in terms of manufacturing, trade and GDP growth and, IMO, the pandemic effect on china's economy over the next 2 years will likely be less than that on the US economy.
As we sit here, the US is trying to garner support of its so called western allies to gang up and isloate China but that IMO is probably a decade too late. The US behaviour towards its allies of late is not what one might call friendly. On the contrary it has ruffled feathers in Europe by bunging extra tariffs on some European imports and at the same time demanding that NATO Countries lift their military spends to at least 2% of GDP.
Even the Trump import tariffs threatened our scant exports of steel & aluminium to the USA which necessitated Malcolm Turnbull paying Washington a visit to highlight the terms/conditions of the Aus/US FTA and the fact that the USA ran consderable surpluses with Aus since 2005 despite our massive contribution to the US ME wars.
We have now played our hand by backing the USA in the US/China economic war which over the next 2 years will add to our economic woes. Weare loaded with almost $1.2 Trillion of combined Comm, State and Muni debt with historic levels of personal debt and inflated housing prices due to low interest rates and Government subsities and tax incentives. So, IMO, we are in a bad shape to tackle a depression.
A depression will likely drop housing by 35% IMO, as it did in Ireland 2008-10, compel the nationalisation of the banks, as it did in Ireland and tripple our soverign debt. This in turn will likely devalue our dollar causing inflation because of our addiction to imports (Capital, Petroleum, Cars & machinery, and general manufactured goods.) In essence we will likely do a Japan with a decade of stagflation, IMO.
Which gets me back to the introduction of wealth shifting and the global economic balance of power.If we look back to the past 10 to 12 years and take the GFC as a lab version of what is to come, we saw: Personal Level: wealth of average Aussie decrease National: Level: monumental accrued of debt Global: US stagnated while China Prospered.
IMO, we cold well see that X 10 over the next ten years unless the US elects to have a kinetic go at China and no doubt that is on the menu in Washington this week behind Closed Doors!
IMO, Trump is just a cut out caricature of US Pentagon China Hawks who will stymie China's economic rise even if that means WW3. Should that happen, Russia will likely keep its powder dry and by default become the Global second power again, IMO.
I know that this may sound alarmist but history tells us that great powers dont wither gracefully. Graham Allisons book "The Thucydides Trap" makes very interesting on the history of when a Rising Power challenges the Dominant Power and in his analysis of the past 500 years , 75% resulted in War.
So, IMO, from an Australian perspective we are between a rock and a hard place by being economically dependant on China and our National Security depending on China. Bear in mind that China defacto bailed us out 2008-2012 when we just avoided recession through China's strong demand for our exports and its 100s of billions of investment.
This time around, that unfortunately wont happen, IMO, and we will likely be on our Pat Malone unfortunately.
IMO, our best strategy from here is to industrialise , diversify trade and be economically and securitywise independant and we simply farm that out to multinationals as history has proven. Just look at where our oil and automotive industries have went?
