"Crow's Mouth" Doctor Doom: The economy may experience another recession and trigger the Great Depression, Bitcoin is the first to be a safe-haven asset
Dr. Roubini pointed out that the world economy will not recover in a "V-shape", but may turn into a W-shape, with the risk of another collapse!
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Roubini: Nouriel Roubini, a world-renowned expert in the field of international macroeconomics, is a professor of economics at New York University Stern School of Business and the chairman of RGE Monitor. Known as "Doctor Doom".
Dr. Doom Roubini said in an interview with "Yahoo Finance" last week that although the global economy has rebounded due to government injections of funds, the recent recovery has been relatively weak. This phenomenon may indicate that the economy will present a "U-shaped" recovery.
Dr. Doom Roubini also said: "Although the economic recovery looks like a 'V-shaped' at the beginning, it will soon become a 'U-shaped'."
In addition, if the new crown epidemic worsens again, there will be a "W-shaped" risk of falling into a double-dip recession. At that time, there will be a new round of economic blockade, and the economy will shrink and deteriorate again.
Roubini's pessimistic outlook on the economy is mainly due to debt-laden, highly leveraged "zombie companies." Theoretically, the Federal Reserve injects funds into the market to increase the living space of enterprises, so that enterprises can continue to hire employees and maintain consumption, but zombie enterprises are likely to eat up these resources.
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The wave of big corporate bankruptcies is about to begin
Readers can find that many large companies have recently announced bankruptcy and reorganization, including GNC, a nutritional supplement company, JCPenney department store, NPC International, the largest franchisee of Pizza Hut in the United States, and Cheasapeake's, an oil and gas exploration company.
The above-mentioned companies are all “asset-heavy” companies, that is, they must purchase heavy machinery and equipment and deploy retail channels. On the one hand, they can expand their profit margins, and on the other hand, they can increase their market share and raise the barriers to entry. However, during the epidemic, the income of these companies has dropped sharply. If most of the usual capital leverage is allocated to expansion, then it is not surprising that they will close down at this time.
These bankrupt companies will negotiate debts with banks. Although they can continue to operate in theory, they will inevitably limit capital expenditures in order to avoid deterioration of their financial conditions.
Roubini said:
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V → U → W → L, eventually we will enter the Great Depression
Neither U-shape nor W-shape is what Roubini is most worried about. What he worries about is that if this trend is true, the economic recovery will eventually become L-shaped, and even in the next ten years, the world economy may enter the Great Depression era.
Roubini believes that the order of economic development will be V-shaped → U-shaped → W-shaped, and finally L-shaped. To make matters worse, in addition to the new crown pneumonia, the Sino-US trade war, the US-Iran conflict, and the issue of Brexit are also looming.
In fact, long before COVID-19, companies in the US, Europe, China, and other parts of Asia began to rein in capital expenditures in previous years, which means that the global technology, manufacturing, and industrial sectors have begun to fall into recession.
At present, the reason why the global economy can still "maintain momentum" is due to quantitative easing and a large number of countries printing money. If the virus does re-emerge, or the trade war worsens, making monetary policy no longer useful, the world could be plunged into the Great Depression of the 1930s.
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In addition to the fact that the economic recovery may not be as good as the market expected, many people are also starting to feel uneasy about such money printing to save the market.
Ray Dalio, the founder of Bridgewater Fund, believes that the current market is no longer free, because the recent actions of central banks like the Federal Reserve have begun to break away from the traditional economic system and began to dominate the capital market.
Under normal circumstances in the past, the central bank helped banks save money so that these banks could borrow money from the central bank in the future, and they further lent to those who can afford to pay back. This creates a credit system, and then all financial assets compete with each other, and the entire credit system expands.
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As for idle funds, you can adopt a "barbell strategy" to allocate a small portion of funds in assets with high price fluctuations, such as Bitcoin; on the other hand, you can allocate them in financial products with low risks and stable returns.
Allocating assets in Bitcoin is also a strategy adopted by billionaire Paul Jones. he thinks,The best strategy to maximize profits is to own the fastest horse (The Fastest Horse). For this fast horse, he thinks it is BitCoin (Bitcoin).
Why Bitcoin's digital gold value stands out amid the Great Recession:
Why Bitcoin is Digital Gold? Where is Bitcoin worth? (New Aspects of the Block)
In terms of financial products with low risk and stable returns, investors can choose BinFi's rock-solid strategy for investing in commodities. By lending their assets, users will be able to obtain the interest paid by "Agni" users every month. During the contract period After the end, Panshi users can recover 100% of their loaned assets, and get a profit of more than 8% of the annualized remuneration.
Disclaimer: The editor did not purchase any digital currency assets when writing this article. This article is the new point of view of the block-Cheng Wei, the original author, please indicate the source of "new point of view of the block" when reprinting!
