The View | The real Great Recession is upon us – prepare for multi-year losses
- The 2009 financial crisis, dramatically named the Great Recession, was followed by a swift recovery; so too were the pandemic-induced downturns
- This time it’s different, given a long-term and uncertain shift in global geopolitics. Investors will need patience and the ability to play the long game
In the past 25 years, global stock markets have risen over 200 per cent, according to the MSCI World Index. Global property is up more than 130 per cent, with the Hang Seng Property Index up threefold, although now back to 2015 levels.
Global money supply (M1) is a staggering 280 per cent higher as central banks have provided the liquidity to inflate asset prices. Yet cash has remained stable, helped by low supply and demand-led inflation. Spare cash from mainland China, Russia and elsewhere has flooded into New York, London and Hong Kong.
If you have been an owner of capital, assets, an entrepreneur, or an intermediary, you have done much better than the poor old worker, with the non-farm payroll index up about 120 per cent.
The tide has turned. Global geopolitics is in transition, changed by an unnecessary and bloody war in Europe between two sovereign nations. It is shrinking the supply of oil and grain, driving inflation, and is likely to diminish Russia’s geopolitical influence. In a world of two megapowers, we will see a different and, perhaps, more tolerant relationship with each other.
