F. William Engdahl -- Will China Virus Trigger New Great Depression?

11.02.2020 Author: F. William Engdahl

Will China Virus Trigger New Great Depression?

Column: Economics

Region: Eastern Asia

Country: China

Historically the greatest economic depressions have started with unexpected events on the periphery of major financial markets. That was the case in May 1931 with the surprise collapse of the Austrian Creditanstalt Bank in Vienna which brought the entire fragile banking system of postwar Germany down with it, triggering the Great Depression in the United States as major US banks were rocked to their foundations. Will it be again an unanticipated event outside the financial markets, namely the China 2029 Novel Coronavirus and its effects on world trade and especially on US-China trade that triggers a new economic depression?

Until around January 20 when the news broke about the coronavirus exploding in China’s Wuhan and surrounding cities, global financial markets and especially in the US were optimistic that the combined actions of the Federal Reserve to pump in more liquidity and of the Trump Administration to do all possible in an election year would keep the economy positive. Stocks continued their artificial climb as Fed liquidity fueled the fires of the most overvalued stock market in US history for January.

However since then, as official China infection numbers soar daily and the deaths attributed to the corona virus climb, it is beginning to sink in that the world’s major manufacturing center and source of a huge part of the global industrial supply chains, China, could face catastrophic economic consequences from the health emergency and resulting cordon sanitaire closings of cities involving at this point more than 77 million citizens and the manufacturing that is linked to it. That in turn could drag the entire world, most especially the USA, into a severe economic downturn at a time it is ill-prepared.

US Economy Already Fragile

What is usually downplayed in major media is the fact that the world’s largest economy, the United States, was already showing alarming signs of economic decline before the China virus shock.

One of the most alarming declines in the past months before January was the sector that many believed was the lead of an American energy renaissance, namely the once-booming shale oil and gas sector. Over the past decade, to the surprise of much of the world, the USA emerged as the world’s largest producer of oil, passing both Russia and Saudi Arabia. At the beginning of January US oil production stood at 13 million barrels a day. The vast share of that rise was due to unconventional shale oil wells, most in Texas.

The World Must End the US’ Illegal Economic War. Sanctions Imposed on 39 Countries

The World Must End the US’ Illegal Economic War. Sanctions Imposed on 39 Countries

By Kevin Zeese and Margaret Flowers

Global Research, January 14, 2020

Region: USA

Theme: Global Economy, Law and Justice, Police State & Civil Rights

The United States is relying more heavily on illegal unilateral coercive measures (also known as economic sanctions) in place of war or as part of its build-up to war. In fact, economic sanctions are an act of war that kills tens of thousands of people each year through financial strangulation. An economic blockade places a country under siege.

A recent example is the increase in economic measures being imposed against Iran, which many viewed as more acceptable than a military attack. In response to Iran retaliating for the assassination of General Qassem Soleimani and seven other people, Iran used ballistic missiles to strike two bases in Iraq that house US troops. President Trump responded by saying he would impose more sanctions on Iran. Then he ended his comments by urging peace negotiations with Iran. The United States needs to understand there will be no negotiations with Iran until the US lifts sanctions that seek to destroy the Iranian economy and turn the people against their government.

The sanctions on Iran have been in place since the 1979 Iranian Revolution, which made that country independent of the United States. Iran is not the only country being sanctioned by the United States. Samuel Moncada, the Venezuelan ambassador to the United Nations, speaking to the summit of the Non-Aligned Movement of 120 nations on October 26, 2019, denounced the imposition of sanctions by the US, as “economic terrorism which affects a third of humanity with more than 8,000 measures in 39 countries.”

It is time to end US economic warfare and repeal these unilateral coercive measures, which violate international law.

Take Action: Join The International Days Of Action Against  Sanctions And Economic War, March 13 – 15, 2020

Sanctions are war. From havaar.org.

Sanctions Are A Weapon of War

The United States uses sanctions against countries that resist the US’ agenda. US sanctions are designed to kill by destroying an economy through denial of access to finance, causing hyperinflation and shortages and blocking basic necessities such as food and medicine. For example, sanctions are expected to cause the death of tens of thousands of Iranians by creating a severe shortage of critical medicines and medical equipment everywhere in Iran.