Financial Crisis | What To Expect Next

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Financial Crisis | What To Expect Next:
This is the follow up video to yesterdays video:
https://youtu.be/Dd2-VY6roL0

As we go into Nov & Dec to end 2020, you may be left wondering what’s going to happen over the next few months as we go to 2021. Are we going into a V-shaped recovery? Will it be a K shaped recovery with the poor getting poorer and pulling the middle-class down with them, whilst the elite get even more wealthy?

You may think, so what if retailers are going bankrupt, so what if the local Mom and Pop restaurant has closed, it doesn't affect me or my job so I don’t care… well, maybe, you should care…
Because this is how it might just come to affect you…

60% of employees are employed by SMEs, which are small-medium sized companies

Right now, the following employment sectors have been decimated:
Retail: 18%
Accommodation and Food: 9%
Arts & Recreation: 3%
Just these alone = 30% of all employees, I’m not even counting all the other business sectors...

Of this 30% of all employees, we know from the data that 60% of these businesses have either permanently closed or have temporarily closed.

So they are in effect already burdened down by extreme debt, most of which don't think they can ever repay this debt because the profit margins in these sectors are already so slim.

People are petrified to leave the house, people don't want to go into to a restaurant for a meal.

People don't want to go into retail because they have completely removed all the fun of shopping. And even if you do find a nice outfit let's say, where are you going to wear it?

So we are now in a phase of having an oversupply of production and an under supply of demand. Which is directly correlated to the expansion of the credit supply as directed by the Central Bank.

A credit supply which has now taken our debt level Vs GDP to over 100% for the first time since World War II.

When you have an oversupply like this and a lack of demand, this often results in deflation. Now you're not hearing about deflation, because this is the worst nightmare of the Central Banks. And they will do anything to avoid deflation, and I do mean anything! Which will be the subject of future videos.

So what does this situation create, well quite simply it creates lower business profits, meaning what’s the first thing that businesses usually look to cut? isn't it obvious, staff.

This is why I said 6 months ago that all of this v-shaped recovery nonsense was a lie because they weren't taking into account a very basic and fundamental economics principal, called employment scarring.
Employment scarring is what happens after an event occurs resulting in heavy unemployment. Most people think that employers will just simply bring that job back again later on, but that actually isn't what happens. Only a percentage of those jobs will ever come back for various reasons but to give you a couple of examples: the company might make efficiency improvements instead such as mechanising that job, bringing in software, or just simply having another person take on your responsibilities.
Either way, this all results in Greater unemployment. And greater unemployment leads to well, greater unemployment. Because how are you going to spend money in the economy if you haven't got a job and you haven't got any income.

And the more businesses that collapse, the more jobs go with them. and the more jobs that disappear from the marketplace, the more competitive the workforce becomes, and what can often happen is that salaries drop as a result of this, because people need to take care of their families. I have numerous friends who have taken pay cuts already.

Either way, all of this results in a much lower GDP via a loss of income from the economy and on a much bigger scale, deflation. The dreaded word that no one wants to hear.

The Unemployment Rate is apparently 4.5% in the UK, can you believe that? Well, I don't believe that for a minute. Even if it is theoretically true right now, it's only because of the furlough program. But once the furlough ends, we’re going to see a spike in unemployment.

DISCLAIMER
This video is for entertainment purposes ONLY & designed to help your thinking, not direct it. These videos shall NOT be construed as tax, legal or financial advice and may be outdated or inaccurate; all decisions made as a result of viewing are yours alone.

Видео Financial Crisis | What To Expect Next канала Neil McCoy-Ward