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“Rolling Natural Disaster” – COVID-19 Supply Chain Shock Could Trigger Global Depression

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Evidence of creaking global supply chains is fast emerging, at risk of triggering the next global depression amid the COVID-19 pandemic.

A supply chain crisis that began earlier this year, one that we warned from the very start, has now spread across Asia to the Middle East to Europe, and now to the Americas.

“This is kind of a rolling natural disaster,” said Ethan Harris, head of global economic research at Bank of America. “In terms of the impact on global production, the shutdown outside of China will likely become bigger than the impact from China.”

Harris warned that the shock to global supply chains is deep and broad and could easily last through the next quarter. He estimates that factory shutdowns in many regions could last until May.

He describes a twin shock, one where a supply chain shock has been combined with a demand shock, culminating into a perfect storm, will likely tip many countries into recession, if not depression during the second quarter.

Bloomberg piecemeals current supply chain disruptions seen across the world:

Apple has had the most exposure to a China shutdown, with manufacturing plants in the country still operating well below full capacity in late March. Virus-related closings have hammered several of the company’s key suppliers operating in South Korea, Italy, Germany, and Malaysia.

In late January, Freeport-McMoRan’s CEO Richard Adkerson warned that the virus outbreak in China is a “real black swan event” for the global economy. The company’s mining operations in Peru have recently been halted. Other mining facilities in Chile, Canada, and Mongolia have also been shuttered.

Across Europe, Airbus and Volkswagen AG have closed production plants amid severe virus outbreaks in Italy, Spain, Germany, France, Switzerland, and the UK. Major transportation networks on the continent have come to a standstill as nonessential travel has been banned in many regions.

Europe’s car industry has been absolutely devastated by virus disruptions in China and elsewhere.

Germany’s Schaeffler Group, a major supplier for European carmakers, announced this week that it would reduce hours for thousands of employees and slash production.

“As we have to reduce production in our plants in the light of the crisis, it was important to us that flexible solutions be quickly established,” said Juergen Wechsler, who represents Schaeffler workers for union IG Metall.

Across the Atlantic, we noted as early as the start of March, that China’s supply chain meltdown reached US West Coast ports and was about to unleash economic doom on “the greatest economy ever.” Several weeks later, GDP estimates for the second quarter are apocalyptic via JPM’s chief economist Michael Feroli, expecting an unprecedented -14%, a drop the kinds of which have never before been seen.

As the US economy grinds to a halt, General Motors Co., Ford Motor Co., and Fiat Chrysler Automobiles NV are shutting down plants, resulting in steel and aluminum manufacturers to reduce capacity as well.

“We have ships loading steel in Europe next week headed for the US, but will there be shipments beyond that with industry shutting down?” Anton Posner, CEO of supply-chain management and consulting company Mercury Resources, asked. “Who’s going to hold inventory if there’s no consumption?”

As creaking supply chains are seen across the world, the second quarter will most likely be one of the biggest crashes in economic data the world has ever seen.

via zerohedge

8 Comments

  1. Terry Wilson March 22, 2020

    Fake news

    Reply
  2. William Dorich March 22, 2020

    Last year I published the book, THE ILLNESS OF MEDICINE by Michael J. Young, M.D. a Urologist and surgeon in Chicago who gave up his 30-year practice due to Big Pharma and the STRANGLE HOLD of the Insurance Industry…The Chickens are Coming Home to Roost!

    I could not get this author on any television program and only a hand full of radio interviews because his book exposed how vulnerable this country is, and some hosts admitted their fear of pissing off their advertisers. In other words, you deserve to be kept dumb and stupid and lulled into ignorant sleep so they can continue to stuff their pockets at your expense…

    We now discover we only have 900,000 hospital beds across the nation (about 100,000 ICU beds for the critical ill)…in a pandemic that could require 3 to 4 million ICU beds in the next few months. The supply chain disclosed in this article reveals how much China has us by the balls as more than 80% of our medicines are produced in China…only in a stupid science fiction movie would this level of “Germ Warfare” be accepted as real… Was this the intention of the Chinese Military? It’s time to Fight Back!

    This book also reveals how thousands of doctors are leaving the medical field and thousands more across the nation are selling out their private practice to the local hospital and taking a salary…ask your physician if he or she is now an indentured slave, you might be shocked…the real catch here is their annual bonus is based on how many of their patients they place into those hospitals…Wow! who is the victim in that manipulation of our medical care? YOU AND ME…the book is available on Amazon.

    Reply
  3. Peter March 22, 2020

    As I have stated previously on several other websites, this whole thing is a bunch of SH**!

    Reply
  4. Karen Baumann March 22, 2020

    The Corona Virus has been politicized, but not by Trump, by the Demonrats, fake media, Communist China. The Dems, Leftists, and their ilk have tried since day one to unseat our duly elected POTUS – Russian Hoax, Ukraine Hoax, fake impeachment over bogus allegations, the media spreading any kind of b.s. propaganda they can to take Trump down.(proven daily by their own actions). Trump’s economy was booming, stocks were at an all-time high, unemployment at an all-time low for blacks, Hispanics, and women. Making Trump unbeatable in November. The Dems boasted themselves that they would take Trump down no matter what. These same Dems have ties with China and also have Military conspirators in their pockets. I have no doubt in my mind that they hashed this plan with China to create this pandemic in an ultimate attempt to oust Trump It is the perfect way to discredit him and undo all of the progress he has made in this country, then they can come forward and act like the heroes who saved the American people. They have used this to attack Trump at every turn, keep him busy fighting the virus so it frees them up to continue lauding for their failed Democrat candidates. The Chinese have no problem killing off their own people as they are well overpopulated and have taken other such measures in their past to thin out their population. They created this virus and let it spread to cause exactly what they intended it to do. Chaos and to weaken this country, oust a President who has sanctioned them, called them out on their unfair tariffs, taking unfair advantage of this country for years.

    Reply
    1. William Moore March 23, 2020

      Couldn’t have said it all any better. Thanks for telling it like it really is!

      Reply
  5. Courtney Thomas March 22, 2020

    The damnocrates think they have all the rights they need their ass kicked they will do find ways to sabotage president trump in November well damnocrates will wake to a nightmare and they cry scream they vote murders and republicans will take this country back the illegal aliens need to go back the hell they came from and whoever they brought with and all democrates and need to be voted out of office and jb the fucking asshole of diaster governor need be kicked out of Illinois as governor and the all republicans need to be voted in and make this country safe and peaceful again

    Reply
  6. Courtney March 22, 2020

    Everything needs to be reopened after spring break because this is ridiculous and this bull shit it’s going to far school churches needs to open up and everyone needs to go back to work and there’s bills to pay that asshole governor here in Illinois needs to open up everything back up its just like getting a cold or the common cold and people die of the flu or common cold

    OPEN EVEYTHING UP

    Reply
  7. Denn March 22, 2020

    Karen is correct on all points. The virus is out there, yeah, but the panic is establishment made and is another attempt to dump Trump. He is the best president we have and he deserves another term. The politicos should be working with not against him. We need to dump THEM and start over!

    Reply

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