COVID-19 - Rome is burning

I found an amazing evolution in the music I listen over the past weeks. Many songs and groups of the Punk wave came back to my memory and I started to listen to them again. Rome is burning, no future etc...

Especially my favorite song at the end of the 70's, by Stranglers - No more heroes (lyrics at the end of the article).

Is this come back of old songs connected with the COVID-19? I would think so. What we are seeing now is not simply a virus spreading across the globe, and not very much of a killer in absolute terms. At best, it is a killer of older people and of people with an existing major health problem, to some extend something that could be quite welcomed by pension fund managers or eugenicists advocating for a reduction of population.

Indeed, if the world included just China and South Korea, the epidemics would be finished now, and future efforts would be made to find a cure good enough to avoid a second wave next winter, and that would be it.

But COVID-19 is not only a virus. It is a social and economical catalyst that shall bring us back in the Stranglers' song - COVID-19 has set fire to Rome, or Milan, but the meaning is the same. The Western empire has started to burn, and the viruses are the matches.

First on the virus front, China, Japan, Korea and Taiwan should be almost out of the crisis now and they should now focus on finding ways to avoid a new infection, especially at the beginning of winter. How Russia shall evolve is still unclear, but the most probable scenario is an evolution like Japan, less effective that in South Korea, but maintaining the impact at an acceptable level. Unfortunately I am far less positive about Europe and the US, for a number of reasons, some of them being discussed later in this article. Italy and Spain have already reached a dramatic level in terms of dead, and in terms of the collapse of their medical system, that has in no way the capacity to treat all people in critical situation. Several specialists already talked about a possible medical chaos until mid or end 2021, and I believe they are right, unless an effective cure can be found very fast. Shall the now famous Chloroquine be able to win fast against the virus, nobody knows yet.

So, again if we assume no cure is found very fast, both Europe and the US shall have to remain in a very difficult sanitary situation, and borders between countries, and especially between US/Europe (West) on one side, and China/Japan/Taiwan/Korea (Eurasia) on the other side shall remain closed for a long time.

Such a long time of international isolation shall have enormous implications in all areas of people life, including politics, economy, and social behavior and values. The impact on western societies shall be much more important than on Eurasian societies. The past decades have seen a lot of social and economical unbalances develop in Europe and in the US. A wider and still widening gap between the rich and the mass of the population has created significant social issues, that have never been addressed. The overall quality of life of the poorest and also of the middle class has gone down, and many jobs have been exported to other countries, part of the globalization process. Europe and to some extend the US has been under hard pressure over the past years to accept more and more migrants, with a situation close to implosion just before the COVID-19 crisis started. In the US, a deep divide between Democrats and Republicans has brought the political life in the country to a constant situation of conflict, and this about all major social and economical questions, from gun legislation to trans-gender toilets.

On the economical side, the level of debt of all Western countries has reached unbelievable levels, inflated year after year since the financial crisis of 2007/2008. That crisis was stopped and the total collapse of the financial system avoided thanks to enormous injection of money from the Central Banks, maintaining the virtual (financial) economy under artificial respiration, like many COVID victims now. The gap between the financial sector and the real economy also reached a critical size since the 2007/2008 and it could have worked further that way for many more year, even if some bad guys predicted that a Black Swan would initiate the collapse.

Now we know how the Black Swan looks like.

On the contrary, Eurasian countries are all much more stable on the social, economical and financial levels. I shall not go into details but for example, both China and Russia have a very stable political model, little debt, large currency reserves, and control about key sectors of activity, like the medical system, or the production of key products. Of course nothing is ideal, but such countries could 1) gather energies and get adequate discipline from the population to win against the epidemics, 2) maintain social peace with real support to the population and to the real economy, all controlled by a competent and decisive leadership.

Western countries shall however be confronted to many issues derived from the epidemics itself, as fragile societies cannot gather the energy and do not by far have the necessary level of leadership to pass the storm in good order.

Many things, all or some of them, can go wrong.

- Economy

The main danger on the short term is the debt bubble, that was close to implosion since 2007. Governments and Central Banks already started to inject money in the financial system, to avoid a fast crash of the stock exchanges and a run on Banks. However, the perspective is to have a GNP falling by 10 or 30%, to be realistic, and it is hard to believe that no major player (Deutsche Bank for example but there are many other candidates) shall avoid collapse, starting the so much feared domino effect.

In parallel, Central Banks and government shall be pushed by impatient populations to support the real economy - SMB's, public sector, consumers - rather than save the financial dinosaurs.

The outcome potentially shall be that the debt itself shall basically vanish. This means a huge amount of money, and we are talking here about 250T$ (250,000 billion $), not to take into account the losses coming from plummeting stocks exchanges. The good news is however that this large bag of money has very little to do with the real economy and the life of population. It shall rather be a "reset" of wealth for the richest around the globe, just like wars or epidemics in the Middle Ages created a reset of wealth for the local Lords.

Again, the virus shall play the role of a catalyst, as the destruction of that virtual money, the heard and lungs of financial capitalism, was due since 2008, and was avoided since then by money creation or pumping money from the real to the virtual economy.

- Society and Politics

It is not a new fact that at least a part of the western population started to have doubts about the legitimacy of their leaders, but every time, after a first wave of discontent, every body got back to the working and entertainment routines, forgetting about it.

The only really enduring wave of protest was in France with the Yellow Vests, a movement that allowed a large number of people to better understand the current situation. The Corona here again shall play the role of a catalyst, and change the rules of the game.

First, the response of most western governments to Corona have been at best slow and incompetent, at worst purely criminal. Second, a vast majority of people now sit at home and have a unique opportunity to read independent media and discuss, not only the actions of the leaders, but also put them into perspective.

Society was already sick, hit during many years by the systematic destruction of the local real economies, to the benefit of a virtual financial economy and of a globalization of production means. On the psychological side, societies also lost their roots, forced into a multi-cultural soup, at running pace over the past couple of years in Europe. Everything related to traditions, roots, sovereignty was considered as obscene ideas to be banned by all means by the crowd of the media figures, journalists, experts and the like. Basic values like solidarity, empathy or general interest were also consistently replaced by competition, private liberty or the need to allow "Markets" to develop and "decide", while most of the Public Services was sold to private interests.

Strong opposition developed in most western countries between groups, with increasing tension and violence, verbal and sometimes more. Each country had its own picture, but just to mention a few:

The US has seen an increasing level of conflict between the two major political sides. The spectacle of Democrats accusing Trump and Republicans accusing Democrats of all possible evil have been an entertainment for many in Europe. A Europe that also could be entertaining for Americans, looking at Boris and his Brexit gamble, or at how the EU and Germany took an apparent pleasure at bringing the Greek nation to a social disaster to please the financial gurus in Frankfurt and avoid a collapse of European banks.

A sick society being hit by a sanitary disaster is not leaving much hope for a positive and peaceful outcome. Rome is collapsing under its own sins and now starts to burn.

Right now, the medical system in several countries is totally overloaded and close to implosion. With a large part of the medical personnel being step by step infected. the situation shall be worst and worst. Many people shall die, although I do not believe millions shall die, but many shall be left with disabilities (having 20% of 50% of lung function left is a disability, although not visible). Another victim of the Corona is trust. Population had limited trust in their elite and governments, but the crisis brings that level to pretty much zero.

How shall be the world after Corona? Very different, and I risk a few forecasts bellow. Nothing is sure of course, as the forecasts involves many aspects of life and many geographies. It may also be, like all forecasts, influenced by my own wishful-thinking. Take it as it is and build your own vision!

Again, I believe all aspects of our life shall be changed, sometimes radically, sometimes slightly.

In terms of values, we should see a return of values like empathy and respect for the common interests of the community, especially at local level. People who sang together on their balcony in Italy shall see their neighbors differently when all shall be over. The attitude towards the medical staff shall also change. Think about your own community and I am sure you shall find tons of other examples. Bad times is also a time where real assholes reveal themselves. People who profited of the situation shall better keep a low profile after the crisis, like the ones in France who just wrote to their neighbor working as a nurse, asking her to move to another place, as she was a risk for them. Such things happened a few times already, and remind us of people in WW2 writing such letters to the police, to denounce Jewish neighbors as they could be "a risk for them". Of course the world shall not in one day be populated with angels, but the trend shall be there for more human and community oriented thinking.

In the same way, a return to a more positive feeling for traditional religions shall take place. Do not expect a return to the religious 17th century, but a return to a higher respect to religious traditions and a revival of its value.

As far as geopolitics is concerned, the tsunami may be total and spectacular. The total absence of positive action by the EU condemns it to a collapse, may be even during the epidemics. Not only did the EU not help countries in despair like Italy in March, but did not find it awkward to fine that country when the situation was already terrible. The EU demonstrated its uselessness, as well as it total lack of interest in the life of it citizens. The Schengen agreement shall of course be dumped, also for health security reasons.

Countries shall also see large changes inside their borders and in the relation between them. To mention a few:

- France, already in a very tense situation between the Parisian elites, the migrants and the core of the population shall see big changes. At the end of March, the elite and the "bobo" (see my recent letter) are very quite and hiding, the migrants refuse the confinement and send stones to the police, while the core of the nation keep the country running and risk their life. Many people who in the past months did not join the Yellow Vests by inertia, or did not understand the reason to demonstrate, are now totally upset by the disastrous management of the crisis and ask for heads to fall. Violent actions from migrants can be expected and the development I anticipated in the letter mentioned above shall happen much earlier than expected. France is definitely the most unstable and dangerous country in Europe. The past elite (and not only Macron) shall feel the heat.

- the USA is also one of the most divided country in the West, and an acute crisis, as it seems just started to develop over the past weeks, shall initiate a chain reaction, activating sleeping conflicts that indeed have been around since the end of the Civil War. Nobody can predict how events shall develop, especially in a country where most people have at least one gun, but the outcome shall I believe be the collapse of the Federation, much like the collapse of the USSR in the early 90's, and a split in several countries, basically the West Coast, keeping closer connection to China and Japan, the East Coast, and the more conservative Center/South.

The collapse of both the EU and the USA shall open the door to a complete re-balancing of powers and a shift to Eurasia. China has started to help many countries in Europe and other continents. I believe that China can get out of the crisis in the exact same position as the USA after WW2, only without a real contender as the USSR was for the USA. The help provided to get rid of the virus and save lives shall give a definite moral legitimacy to China, combined with an economical legitimacy, that shall play the same role as the Marshal plan in the late 1940's.

- the return of Public Service

the privatizations of many public services as part of the eco-liberal period have already been much criticized over the past years. What ever political tendencies survive after the crisis, it is highly probable that many branches of the economy shall return under state control, with key segments like:

. all transportation, including airlines and airports

. health system, including hospitals, big pharma companies and research laboratories

- local versus global: a larger part of consumer goods and food shall be produced locally, at least for critical items like health related products. It is not the end of globalization, but the start of a new globalization, not driven by the optimization of private profit only, but by best efficient supply and production chain.

- while home work was not widely accepted, we shall certainly see a wider use of that option, mixed with some time in office. Occupancy of business centers shall drop, definitely an issue in many countries where many offices are already unused.

- the on-going shift from large shops to on-line shopping shall be accelerated, as many shall prefer to use that service rather than go to a shop in a crowded shopping center or super-market. Same thing for food delivery from restaurants. More virtual restaurants shall open, providing quality food at reasonable price, freed from the cost of space and service of a physical restaurant

- on the country political landscape, most old parties and decision structures may not survive, having often shown a total incompetence in the handling of the crisis. The new leaders shall emerge from the crisis period itself, because of the role they have played in the fight against Corona. A definitely more "populist" and socially oriented governance shall be dominant, more like in China or Russia today, but of course adapted to each country's culture and traditions.

May be not all of the above shall take place, may be unexpected events shall happen. But Rome is burning, and tomorrow shall be a new world. We all shall be Alice, and we pass the mirror NOW.

Stranglers - No more Heroes.

Link to a video where all group members are completely stoned, kind of after 2 months confinement...

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