The Bible informs us that there is nothing new under the sun; and that what has been, will be again. Eccl 1:9. While, globally, people are seeking to cope with the ‘new norm’ of living in a pandemic society, some are sounding the alarm that we are heading for a global financial depression. An economic downturn, unlike anything previously experienced; worse than the Great Depression of the 1930s in America. Therefore, through outlining some of the effects of the depression and then looking at the what is expected and transpiring now, I hope to show a pattern, finally offering some advice on how we can survive what is coming.
During “The Great Depression” America witnessed people’s spending habits change, as the average person had no capital. This change affected business, as people could not afford to purchase essential items, never mind non-essential. The depression impacted on the already increasing levels of unemployment, as businesses laid off staff, because they could not afford to keep the doors open.
Those most affected by the depression were the working class. People could only afford the bare essentials, food and rent. Still, when the money dried up, people/families moved into shantytowns and had to queue in food lines.
During these times, many people became desperate to survive, to feed themselves and their families. Starving children led parents to steal from those more well off , in an attempt to provide something for their starving children. Parents watched helplessly as their children died of starvation or illness because they could not afford food and medicines.
Many people, because of the depravity, death and despair they had witnessed and overwhelmed by the depression, lost hope. To escape from the harsh realities, many people turned to alcohol as a means of numbing the pain, resulting in an increase in alcohol dependency during this period. Men often left their wives in search of a better life, leaving women to look for work to support themselves and their children. This led to an increase in “poor man’s divorce” which resulted in a surplus of single women.
People struggled to find honest work; many ladies turned to providing domestic services for wealthier families, to enable them to provide for their own children/families. People learnt how to be thrifty, far different from today’s throwaway society, and self-sufficient, as people grew small kitchen gardens in an attempt to provide food for themselves.
While hardships affected predominantly the working class, they did reach all sectors of society. However, those affected the worst were those who had nothing. The Great Depression was compounded by the debt accumulated by the pervasive increase in the average person investing in the stock market. Investing was encouraged as a person could borrow to invest, and then borrow against what they had invested, even though some of what they had invested was debt. Accounts of the stock market making people rich grew, encouraging the average joe to borrow to invest. It was this fervent debt frenzy that led to the Great Depression. The high levels of unsecured debt and excessive borrowing brought about the perfect conditions for a cataclysmic fall, one that resulted in what we refer to today as “the Great Depression”. The question is, could this happen again?
In the wake of the global pandemic, many financial leaders are openly stating that we are heading for a worldwide depression, worse than the aforementioned Great Depression. In the UK, debt is now spiralling out of control, as people are only just beginning to start to recover from the 2008 recession. Figures released in 2020, before the UK Covid-19 lockdown show a stark picture.
At present the UK national debt grows at a rate of £5,170 per second, with the government national debt, standing at 2.4 trillion. However, the real debt figure, inclusive of state and public sector pensions, is estimated to be closer to £4.8 trillion, equating to £78,000 per person in the UK.[1] These figures do not account for the effects of Covid-19 and the national lockdown.
The average UK household is already in significant debt. In January 2020 the money charity assesses the average total debt per UK household to stand at £60,363, with a projected increase in March 2020, made before Covid-19, to be £86,388 per family. In the UK, 12.8 million households have either no or less that £1,500 in savings. A further 4.8 million homes are without at least one essential household appliance, fridge, freezer, washing machine or cooker, due to financial hardship.[2]
To exacerbate things, there is speculation, both in the UK and the US, that we will witness an increase in divorces once the lockdown ends.[3] People, due to being faced with their own mortality, have assessed their lives during the lockdown, leading many to seek to change their lives. Others, due to the financial stress and being confined have felt pressure upon many marriages, to such an extent they see divorce as the only door/solution.[4] If we do see a surge in divorces post lockdown, this will, in turn, affect the financial position of those affected.
Will we witness a depression, and what is the solution?
I believe it is only inevitable that we witness a financial backlash from the global pandemic. A person would have to be inept and blind not to expect financial repercussions. Professor Roubini, who predicted the 2008 recession, has warned that globally, we face a ten-year global depression due to the Coronavirus.[5] Professor Daron Acemoglu has also stated that “A great depression lasting several years is not out of the question, if we continue to mismanage the crisis.”[6]
To understand these stark predictions, one only needs to look at the effects of the pandemic on the travel and tourism industry, and the hospitality industry. It is estimated that half of UK Indian restaurants will permanently close if the two-meter rule is maintained. It is further estimated that 40% of British pubs will close in light of the coronavirus measures.[7]
At the time of writing, Rolls Royce, as a result of the pandemic, axed one-fifth of its staff, affecting 9,000 people. Easy jet has cut its staffing team by 30%, affecting 4,500 people. British Airways and Virgin Atlantic have also announced staffing cuts due to the pandemic.[8] International Air Transport Association (IATA) estimates that airlines globally will lose at least $314 billion due to the pandemic. Therefore, it is no wonder this sector is having to lay off staff or face bankruptcy.[9]
Avianca, one of Latin America’s largest airlines, which served more than 30 million passengers, last year on the 10th May 2020, filed for bankruptcy.[10] Hertz, the car rental company, filed for bankruptcy in the US, laying off 10,000 staff, due to a debt of $18 billion.[11] Latam Airlines filed for bankruptcy on the 26th May 2020.[12] Virgin Australia, filed for bankruptcy on the 21st April 2020.[13] Carluccio’s, a UK Italian restaurant chain with 73 restaurants, entered into administration on the 30th March 2020.
Forbes reports that oil and gas drillers like Whiting Petroleum and Diamond Offshore, filed for bankruptcy in late April, and J.Crew became the first major U.S. retailer to do the same on 4th May. More are on the way.[14] BrightHouse, a UK cash loan company, entered into administration on the 30th March 2020.[15] Debenhams, which employs 20,000 people in the UK, entered into administration on the 6th April 2020.
It is evident from the above statistics that the Coronavirus has significantly affected the global economy. These effects are, aptly, summed up in an article in the Independent, which stated “Coronavirus’s economic danger is exponentially greater than its health risks to the public. If the virus does directly affect your life, it is most likely to be through stopping your going to work, forcing your employer to make you redundant, or bankrupting your business”.[16]
While many people have lost their lives from the Coronavirus, the global depression that will emerge will transcend the effects of the virus, affecting everyone. The effects of the depression will be further compounded by future waves of infection. What was witnessed in the Great Depression will be witnessed globally in a greater intensity. So how can we survive?
First, while many will be concerned about their lives, which is understandable, the most important question is not when a person dies, but rather where they spend eternity and how they stand before God. Scripture asks us “What does it profit a man to gain the whole world but lose his soul?”[17] Therefore, our first priority is to put ourselves right with God, and when I speak of God I mean the one true God, mentioned in the Bible, who sent His only begotten Son, Jesus, to die for humanity, so that whoever believes in Him and confesses their sin, He, God, is faithful to forgive.[18]
Then we must seek to walk a righteous life, a life according to God’s word, as we work out our salvation in fear and trepidation.[19] As we do this we need to make preparation for the times ahead, times that are mentioned in the Bible, referred to as the Tribulation, or Jacob’s Trouble. This is a time that will see global pandemics, famines, economic depressions, wars, natural disasters and much more, prior to the return of Jesus the Messiah.
Start to learn skills; use the time in lockdown to understand how to forage for food, fish, purify and make water fit to drink. Seek out likeminded people, make relationships, have an emergency supply of food, get out of debt. In essence, put your house/life in order — first spiritually and then practically. Ensuring that you and your family prepare psychologically by understanding that great disasters are going to come upon the earth. God can and will give you peace, as He directs, guides and protects you if you seek Him. Spend time each day, praying and reading God’s word, as you seek His leading and direction.
I understand that many will discard what I have written. That is up to you; I have warned you. I do pray that in the days ahead, when these things transpire, God will bring to your mind this article and you will seek God. For those who accept and have a quickening in their spirit to take on board what I have written, I pray God will give them His wisdom and bestow peace upon them as they seek to make preparations for the return of Jesus the Messiah.
[1] National Debt Clock, no date, ‘The UK national debt clock’. Online, National Debt Clock, accessed 2rd June 2020, available from https://www.nationaldebtclock.co.uk/
[2] The money charity, March 2020, ‘The money statistics March 2020’. Online, The Money Charity, accessed 3rd June 2020, available from https://themoneycharity.org.uk/money-statistics/
[3] Laura McGuire, 6th May 2020, ‘COVID-19: Law firms brace themselves for surge in divorce rates during coronavirus lockdown’. Real Businesses UK, Online, accessed 3rd June 2020, available from https://realbusiness.co.uk/divorce-rates-covid-19/
Andy Fies, 17th April 2020, ‘Surge in divorces anticipated in wake of COVID-19 quarantine’. Abc News, online, accessed 3rd June 2020, available from https://abcnews.go.com/US/surge-divorces-anticipated-wake-covid-19-quarantine/story?id=70170902
[4] Fies.
[5] Karishma Vaswani, 22nd May 2020, ‘Coronavirus: Leading economist warns of 10 years of depression and debt’. BBBC News, online, accessed 3rd June, available from https://www.bbc.co.uk/news/business-52752172
[6] Tom Fish, 25th May 2020, ‘Coronavirus crisis: MIT expert warns COVID-19 Great Depression ‘not out of the question’’. The Express, online, accessed 3rd June 2020, available from https://www.express.co.uk/news/world/1285647/coronavirus-news-global-economy-great-depression-recession
[7] Henry Martin, 3rd June 2020, ‘Traditional British pubs could be scrapped for Bavarian-style beer halls with pints replaced for steins to follow social-distancing rules – as up to 40% of UK watering holes face closure’. The Daily Mail, online, accessed 3rd June 2020, available from https://www.dailymail.co.uk/news/article-8383469/Traditional-British-pubs-scrapped-Bavarian-style-beer-halls.html
[8] Lucy Middleton, 28th May 2020, ‘EasyJet to cut 4,500 jobs and shrink fleet due to coronavirus impact’. Metro, online, accessed 3rd June 2020, available from https://metro.co.uk/2020/05/28/easyjet-cut-4500-jobs-shrink-fleet-due-coronavirus-impact-12768243/
[9] David Slotnick, 12th May 2020, ‘Some of the world’s airlines could go bankrupt because of the COVID-19 crisis, according to an aviation consultancy. See the carriers that have already collapsed because of the pandemic’. Business Insider, online, accessed 3rd June 2020, available from https://www.businessinsider.com/coronavirus-airlines-that-failed-bankrupt-covid19-pandemic-2020-3?r=US&IR=T
[10] Hank Tucker, 3rd May 2020, ‘Coronavirus Bankruptcy Tracker: These Major Companies Are Failing Amid The Shutdown’. Forbes, online, accessed 3rd June 2020, available from https://www.forbes.com/sites/hanktucker/2020/05/03/coronavirus-bankruptcy-tracker-these-major-companies-are-failing-amid-the-shutdown/#28b92cc23425
[11] Ibid.
[12] Ibid.
[13] Ibid.
[14] Ibid.
[15] Ibid.
[16] Omar Hassan, 11th March 2020, ‘Coronavirus will bankrupt more people than it kills- and that’s the real global emergency’. The Independent, online, accessed 3rd June 2020, available from https://www.independent.co.uk/voices/coronavirus-deaths-trump-stock-market-pandemic-economy-bankrupt-italy-a9394891.html
[17] Mark 8:36.
[18] John 3:16
[19] Philippians 2:2