SYED HASAN JAVED — A lot of people ask me about the likely trajectory of US dollar in view of impending Global financial collapse.
Only God alone knows the future. But the Global economy has come a long way on target toward collapse. So is the Indian Economy. India has lost an economy of US$ 282 billion (size of Pakistan) in just 2 months. Worse is yet to come.
- In my humble analysis, Pak Rs will appreciate to Rs. 100 per 1 US dollar and INRs will depreciate to INRs 100 to 1 US$.
- India’s Debt to GDP ratio which was 70 percent of GDP in Dec 2019 is likely to touch 100 percent of GDP by Dec 2020. Pakistan Debt to GDP Ratio which is 74 percent of GDP will fall to 60 percent of GDP in Dec 2020.
- With the collapse of IFIs, Pakistan will say good bye to IMF Programs. Pakistan will also undergo a social upheaval like India and many other countries. Pakistan will however survive but not India in its present shape..
- I was not sharing these predictions because a lot of people would think these as wishful thinking or ridiculous. These definitely look so scary.
- Now, the way the global situation is evolving, the game is over. We are at the very starting phase of this crisis. It has not yet begun. When lockdown ends, the world is likely to be overwhelmed by several multiples of exponential rise in Coronavirus cases by the end of 2020.
- Law of nature is taking course. The New World Order, in my humble analysis, will not be built out of the existing global system, but on the wreckage of the old. The UN Headquarters could relocate to Shanghai and the reshaped Global Financial System could move to Shenzhen in Pearl River Delta including Hong Kong. We should all have patience. Wait and see.
- The WHO may shift it’s Headquarter to Wuhan and the European HQ of UN may shift from Geneva to Saint Petersburg in Russia. The whole World Order will be redrawn. Nations will not be able to operate Air Craft Carriers.
- Despite tall claims, the vaccine for Coronavirus will never be effective even if found.
I avoided commenting on global currency crisis except the fate of US$ in South Asian context.
9. It is right that US can freeze Treasury bills and refuse to honor or pay back it’s debt. That is precisely going to happen, in my opinion. It will be the end of US$ role as a Reserve Currency. It will also mean the end of Bretton Woods System.
10. The World has a GDP of US$ 88 Trillion and a Public Debt of US$ 227 Trillion. US Public Debt is US$ 23 Trillion. If Private Household Debt (Credit cards) and Corporate Debt are added up, the figure becomes US$ 327 Trillion.The Corona crisis has devastated the ‘Services Economy’ which comprise more than three-fourth of US and EU GDP.
- The European picture is particularly horrendous. The total debt of EU countries vary from 200 percent of GDP in Germany to 600 percent in the Netherlands. Most European economies will go bankrupt. The Euro could collapse and EU could disappear.
- The Coronavirus is disproportionately devastating Europe and this is just the beginning. I think it is a payback to nature for what we have done so far . European colonialists even did not spare their American cousins when it comes to brutality. The American European heritage made them out of control.
- So, a collapse of US dollar followed by collapse of IFIs and collapse of EU all seem to be in the realm of possibilities. The current crisis is not 2007 or 2008 Derivative, Hedge Funds or Housing loans related GFC or 2001 WTC scale. It is a hundred times more devastating.
- We as a global family all stand to be impacted. It is useless to talk of winners or losers or a Zero Sum Game.
- There is no global leadership, Institution or Processes or Passion which can help avoid it. Even if there was, it would not make a difference. Let us prepare individually for the inevitable. Be smart and diversify your Portfolio and go back to agriculture as “TKJ” is doing. Stay safe, stay healthy and stay home.
The writer has authored several books, is a geopolitical analyst, scholar and a linguist. One of his books, a GOOD READ is: Rise of China and Asian Century, published by National University of Science and Technology (NUST), Islamabad in 2016.