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COVID new world order

May 07, 2020 Letters

DEAR EDITOR,

The US debt is $25 trillion . This debt grew by US$1trillion in 37 days (April 1 to May 7). The US will likely not be able to permanently stop quantitative easy (money creation). The US treasury announced it will barrow an additional US$3 trillion for the second quarter. This level of debt is similar to the US debt after World War 2 but the US is no longer the factory of the world.
China executed a coup de grace (death blow to a weak organism). China lowered import from Saudi Arabia and increase its import from Russia. China increased Russia oil import by 30% in March. China import of oil was 9.86 million barrel 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 price 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 petrodollar 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 but they will be pulverized if oil price remains like this for an extended period of time. 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 coldwar so they will be reluctant to persue 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 manifactuted goods like television or cars. This geopolitical competition between the US and China is a non zero sum game- one lost is not the others gain; both could lose or both 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 too essential to sustain life for a couple years. Guyana should adjust to a Covid and post Covid new world order. It is not business as usual.

Your truly,
Brian E Plummer

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