Wed | May 27, 2020

Worst than the Great Depression

Published:Monday | April 6, 2020 | 12:20 AM


OIL HAS been less than US$30 and as low as US$20 a barrel for about a month now. The Russians refused to cut production, and so Saudi Arabia said they would sell in April, 12.3 million barrels a day – more than their production capacity, which means they will use their reserve.

US President Donald Trump has tried to negotiate a truce, but both Saudi Arabia and Russia want the US to cut production, also.

The US oil companies are heavily indebted and need oil to be at least US$50 a barrel. Both Saudi Arabia and Russia need far less than US$50 a barrel to make a profit.

Even during the COVID-19 pandemic, nations are still in cold competition.

I surmise that the COVID-19 crisis is a global changing event equivalent to a world war. I predict that the United States will be devastated by the COVID-19 crisis and will therefore be weaken as the global hegemony.

In two decades, the US had three economic crashes and they bailed out the corporations and left the ordinary people to suffer – the 2000 dotcom crisis, the 2008 Great Recession, and the COVID-19 crisis of 2020. This shows instability and will lead to class conflict.

This is how Donald Trump got elected, by tapping into that working-class discontent, although he wrongfully blamed it on immigrants taking their jobs. In two weeks, 10 million new people claimed unemployment benefits in the US.

This is shaping up to be worst than the Great Depression, when unemployment in the US was 25 per cent. The US Federal Reserve estimates that unemployment will be 32.1 per cent in the US.