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

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

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 abound. The Chinese and Americans have been at each other’s throats. Some claim it was a Chinese invention to get even with the West. Others said it was an accident from a biosecurity lab in Wuhan. The Chinese initially insisted 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. There is also the theory of G5 radiation, on which 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 or uranium. There is also a “Devil theory”, whereby COVID-19 is part of a grand complot by the shadowy Illuminati that govern the world 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 Orwellian electronic implant is generating great panic in Africa. 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 bio-warfare secrets to the Chinese. He faces a long jail term if convicted. A French medical scientist, Jean-Paul Mira, outraged many Africans when he declared: “If I can be provocative, shouldn’t we be doing this study in Africa, where there are no masks, no treatments?” Football legends, Didier Drogba and Samuel Eto’o, came out to warn the French to desist from their racist and devilish plans against our continent. So far, Africa has registered a total of 8,701 cases and 320 mortalities. Nigeria, has recorded 224 infections, five deaths and 27 recoveries. The world is surprised that our continent has weathered the storm rather well. But Director-General of WHO, Tedros Adhanom Ghebreyesus of Ethiopia, warns that we must “prepare for the worst and prepare today”. The economic fallouts from COVID-19 have been globally devastating. Some economists have drawn parallels to the sub-prime 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 to1.5 per cent if the pandemic does not begin to decline by the second quarter. The economic lock-down across the world has disrupted supply chains. 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 last week. Stock markets have lost with more than US$2 trillion. Investors have been scrambling to safety in US Treasury securities. The scramble to safety has in its turn pushed down the yield curve to less than one percent. There has been a demand for more and more of the greenback as investors scramble for dollar-denominated assets. READ ALSO: AU-ECOSOCC condemns French scientists’ comment on testing COVID-19 vaccine in Africa For most countries, the fiscal space will be further diminished, as big holes appear on public expenditure plans. Debt is bound to increase. The good news, however, is that, unlike, the subprime crisis that devastated Wall Street, households have not lost out significantly. But big firms and SMEs have lost considerable incomes. More than 3.5 million lay-offs have occurred in the United States alone. But there are silver linings. The London-based Economist newspaper predicts that many couples under lockdown will make more babies, echoing Ukrainian President Volodymyr Zelensky who urged his compatriots to take advantage of the enforced intimacy to reverse their dwindling population. There might well be a coronavirus “baby boom” in the coming nine months, given past trends when people were forced to stay at home during disaster emergencies. The 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. Already, the Chinese industrial juggernaut is re-booting. The Chinese are snapping up businesses in Italy and other parts of the 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 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, President 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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