COVID19 — Is it World War III?

COVID-19 has created worldwide chaos. None of us would have experienced or foreseen an event of such magnitude in the last 100 years. The unique thing about this pandemic is the velocity with which it’s spreading, causing damage — Socially and Economically.

Now, when I try to dig deeper into the origin of this virus — Accidental or Intentional — The house is split. I am not sure which way I can vouch but the theory or rather the hypothesis which I have in mind is as follows (Picked the lines from a book):

THE GREAT CHINESE STAGE

  1. Create a virus and antidote.
  2. Spread the virus.
  3. A demonstration of efficiency, building hospitals in a few days. After all, you were already prepared, with the projects, ordering the equipment, hiring the labor, the water and sewage network, the prefabricated building materials and stocked in an impressive volume.
  4. Cause worldwide chaos, starting with Europe.
  5. Quickly plaster the economy of dozens of countries.
  6. Stop production lines in factories in other countries.
  7. Cause stock markets to fall and buy companies at a bargain price.
  8. Quickly control the epidemic in your country. After all, you were already prepared.
  9. Lower the price of commodities, including the price of oil you buy on a large scale.
  10. Get back to producing quickly while the world is at a standstill. Buy what you negotiated cheaply in the crisis and sell more expensive what is lacking in countries that have paralyzed their industries.

Source: Book by Chinese colonels Qiao Liang and Wang Xiangsui, from 1999, “Unrestricted Warfare”

Since its early days, the situation is changing every minute, it may be too early to call it a World War but certainly if it’s true then it has arrived in a different form — Biological War. Chinese being smart enough to attack the Infra of the Two key 3 Key global powerhouses if we start thinking on those lines:

  • PowerHouse 1 (Asia — South Korea, Japan, Singapore) — Countries were smart enough to impose a complete lockdown in initial days to cut down the spread of infection, economies are well in shape, the path to recovery will be V-shaped as the downturn disruption was minimal.
  • PowerHouse 2(Western Europe — Germany, France, Italy, Spain) — Attack on the Healthcare Infra which showcased that these developed countries, in case, of such difficult situations are not very different from 3rd world folks. Italy and Spain — Given the old age population, the incremental GDP build-up will be very slow and hence not sure if these two countries will follow the same path what Greece did post 2010 crisis — Go back to not so easy recovery. Germany is the central hub of Europe — Technically, Industrially, and Financially. The capability has been built with the help of Leverage. Germany is currently sitting at a peak Leverage (never seen such a sharp uptick). Leverage in case of a downturn is the same as a leak from a Nuclear power plant — we all know the consequences.
  • PowerHouse 3 — The United States of America — №1 economy in the world, true, and so did their charts in terms of no. of infected patients. Surprisingly, ~50% of the cases are just from one state — New York, rest is yet to come. Our very old friend who entertained all of us as a Business Tycoon, WWE surprise entry guest, and now wearing the hat of the president has pulled all the fiscal and monetary triggers required to pump in the optimism in the economy — “Life is fine, do not worry about what’s happening in the east” — This attitude will now lead to significant damage to the US. Without a doubt, Wall Street loves Leverage — Talking with few Analyst friends in the US — The focus in terms of Forecast building has shifted from ‘Growth Projections’ to ” Credit Rating Analysis” — Large chunk of Category B rated bonds are just turning into Junk — In short, Bankruptcies are emerging in the system as wildfire. So, Uncle Sam will really have to introduce some thoughtful initiates vs impulsive ones to contain/curtail the double-sided fire — COVID and Bankruptcies.

Now. when we look at China, Life is coming back to normal. 70–80% of the manufacturing plants will start operating at 70–80% utilization levels by month-end. Chinese players are sending invitational emails for the exhibitions in May/June 20, Chinese talking about business travel plans, infection curve post 80k patients have suddenly become flat (Looks like the graph is put from a textbook).

Happy Reading!

| Private Equity Professional | Startup Mentor | Visiting Faculty, The Institute of Chartered Accountants of India (ICAI) | Global Economics & Finance Writer |

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