The arc of the Long Descent

20d8e859-trucksfi2-1024x534 – Army trucks filled with bodies drive through Italian streets


“…the Coronavirus is more a window or a marker that separates what will be seen as the end of an era and the beginning of another.”

Econimica, “End of Growth: Does Covif-19 Herald An Era of Decline?”, Chris Hamilton


 “At some point, major pandemics will become inevitable, leading to huge disruption of global and regional supply chains, international tensions and the closure of borders to refugees.”

 Forecasting Intelligence, “How to prepare for a dying future”, 10 March 2019.


It now feels like a lifetime ago that I posted my predictions for 2020 within the wider picture of an industrial civilisation peaking.

The day after I posted that on the blog, I jetted off to Asia for a three-week holiday, just as the coronavirus was starting to spread beyond China. It was a great trip travelling across south-east Asia and at some point, I will write a post on it.

However, there is only thing to write about today and that is the developing global crisis of the coronavirus pandemic outbreak. Apologies for the delay in writing a post, it’s been hectic since I came back from holiday and to a certain extent, I’ve, like millions of others, has been trying to get my head around this developing situation.

The coronavirus marks the end of the long era of growth and the new era of deglobalisation, supply disruption, international balkanisation and state interventionism. We are now entering that era.

Last year, in my post “How to prepare for a dying future”, I wrote that “at some point, major pandemics will become inevitable, leading to huge disruption of global and regional supply chains, international tensions and the closure of borders to refugees.” I should have added everybody else as well!

The situation is developing fast, and as I write, the Financial Times is leading on the story that London will be shut down soon to prevent the spread of the virus. So, what do I see coming?

  • The confirmed (and unconfirmed) number of the infected will continue to exponentially rise throughout the developed world for the foreseeable future. The death rates will continue to soar, despite the shutdowns being imposed throughout most of the Continent.


  • Financial markets will continue to have a volatile journey with relief rallies being punctured by ever deepening slumps as the crisis worsens. My tentative forecast for the bottom in the markets is when the FTSE 100 hits the low 4000’s and the S&P 500 around 1750 which could happen within weeks.


  • Governments around the world are already stepping up monetary and fiscal measures to avoid a deflationary depression and a re-run of the 1930’s Great Depression. This will involve nationalising of essential bankrupt companies (airlines, railway companies etc), massive support to small-to-medium businesses via tax breaks, grants etc as well as helicopter money to citizens. All this will not be cheap. Government debts will soar and central banks will monetise on a scale never seen since the 2008/9 financial crash.


  • The medium-longer term consequences of a global bailout of the private sector negatively effected by the shutdown measures will be a permanent shift in power from the private to the state. The inflationary impact of People’s QE by the central banks will, in time, result in a wave of global inflation. I would recommend gold as a good hedge when this happens.


  • It is likely that the combination of stringent shutdown measures on a scale of China, the warmer weather from May onward and the fast-track work on reaching a vaccine will ensure that the worst of the pandemic crisis – at least for the cooler regions of the world, will be over by the beginning of June. I am also cautiously optimistic that a vaccine will be ready by the Autumn for mass production.


  • The economic impact, at least in the short term, will be severe and whilst there will be a recovery later on, it will be jagged one given the fact that millions of people will have lost their jobs and stared (or fallen into) the financial Abyss. After such an experience discretionary spending will remain weak and consumers will prioritise getting cash reserves and stable employment over spending on non-essential items.


  • The pandemic virus will trigger a wider reorganisation of life – a further shift to remote forms of working and a greater focus on reliance at a personal, family, corporate and national level.  Governments around the world will prioritise the re-localisation of the production of goods: China and the south-east Asian region will be the main casualty of this trend.


  • The virus will have negative consequences for the European Union (EU) as it has acted as a brutal reminder that when the chips are down you are only rely on the nation-state to act in the interests of the people. The failure of the rest of the EU member-states to provide medical provisions to the Italians in their darkest hour (China intervened) will not be forgotten by Rome for a long time.


  • Civil disorder is likely to occur in our major cities. Criminal gangs will exploit the partial withdrawal of the police to target the wealthy, food supply chains will be severely stretched given the increased demand for food and this, in itself, could trigger violent clashes in our major urban centres. Declarations of martial law, army on the streets, rationing, curfews and in the worst-case scenario, shoot-to-kill orders could occur.

Insurge Intelligence recently posted a good article on the potential ramifications of the outbreak. They argued that “the prospect of business closures due to the outbreak could perhaps be the biggest wildcard, leading to unpredictable societal disruptions in public services— food supply chains might become strained if companies are forced to close on a large scale, or operate on reduced staffing, for a prolonged period due to the virus becoming endemic.

However, much of the real risk here comes not from supply chains, but the self-fulfilling prophecy of panic-buying, leading to empty-shelves and disruptions in availability of key food items. At worst, managing that sort of disruption could see national security agencies step in to maintain public order and keep the show on the road until things settle down.”

So, to summarise, we are entering uncharted territory but this isn’t the end of the world but rather the end of an old world.

The globalisation dream has ended. Even if, as I’m sure we will, partially bring back the tourist industry, global travel in the years to come and relax border controls, it won’t be on the scale before.

The emergency measures being introduced, massive state interventionism, rationing of goods, border controls, nationalisation of industries and the suspension of the free market itself (mortgage relief, landlords banned from removing tenants etc) are a hallmark on what is coming longer term. The end of the money economy.

As I explored in an earlier FI post here, what will eventually happen in the decades to come is the partial or complete collapse of market based economic arrangements around the world.

Big picture, the macro trends, whether on escalating climate change disruption, resource scarcity, the shrinking of working-age workers in the developed world from 2020 onwards are here to stay and will accelerate.

Welcome to the new era folks.

The arc of the Long Descent

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