74 F
Belize City
Thursday, June 4, 2020
Home Letters “It is not business as usual”

“It is not business as usual”

Dear Editor,
The US debt is $25 trillion. This debt grew by US$1 trillion in 37 days (April 1 to May 7). The US will likely not be able to permanently stop quantitative easing (money creation). The US Treasury announced it will borrow an additional US$3 trillion for the second quarter. This level of debt is similar to the US debt after World War II, but the US is no longer the factory of the world.

China executed a coup de grâce (death blow to a weak organism). China lowered imports from Saudi Arabia and increased its imports from Russia. China increased Russian oil imports by 30% in March.

China’s import of oil was 9.86 million barrels in March, which is a 4.5 % increase compared to last year.

Since Saudi Arabia is the world’s largest exporter of oil and oil prices have been around US$20 a barrel for over a month, and they need US$80 a barrel to balance their budget, they are extremely vulnerable.

The Washington-Rhyad pact is what created the petro-dollar, thus ensuring the US dollar world reserve status. According to Capital Economics, the budget deficit of Saudi Arabia will increase from 6.4 % to 20% of GDP.

Russia is less oil-centric than Saudi Arabia. Although their debt-to-GDP ratio is 19.48% and their foreign reserve is larger than their debt, becoming debt-ridden was their downfall in the Cold War, so they will be reluctant to pursue that strategy.

China is an export-driven economy. With the world in a financial crisis, that’s comparable to the Great Depression —people will not be buying much manufactured goods like televisions or cars. This geopolitical competition between the US and China is a non-zero-sum game; one’s loss is not the other’s gain; both could lose or both could gain.

In this global financial crisis triggered by the coronavirus, the country that can efficiently produce food can prosper. The largest percentage of global spending will be on commodities that are essential to sustain life for a couple years.

Belize should adjust to a COVID and post-COVID new world order. It is not business as usual.

Yours truly,
Brian E. Plummer

- Advertisment -

Most Popular

Belize in the eye of the storm; let’s stay there

BELIZE CITY, Mon. June 1, 2020-- With the latest easing of restrictions in the State of Emergency, athletes and sports fans may be getting...

Nimrod Tillett charged for brutal murder of Yo Creek caretaker

ORANGE WALK TOWN, Fri. May 29, 2020-- An  investigation into the brutal death of Abner Novelo, 30, a farm caretaker of Yo Creek, Orange...

Tacos, gyms and boledo are back!

BELIZE CITY, Sat. May 30, 2020-- The national lockdown resulting from the COVID-19 pandemic that brought Belize’s economy to a standstill has been eased...

Police killing of unarmed black man ignites fiery protests in US cities

BELIZE CITY, Mon. June 1, 2020-- The death of an unarmed African-American man at the hands of a white police officer has triggered a...