House Mountain Partners

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Coronavirus and the Tipping Point for Globalization

Chris BerryComment

By Chris Berry (@cberry1)

For a PDF version of this note, please click here.

As I wrote last week, this is the first of five posts on the rapidly changing nature of global supply chains.

One thing I have continued to tell my daughters (ages 8 and 12) in the wake of what we’re all experiencing is to constantly pause and try to remember as much as you can about what’s happening to the world right now. Though concepts as abstract as bond yields, trade flows and globalized supply chains are hard for an eight and twelve-year-old brain to grasp, it is clear that these macro factors are changing irreparably before our eyes due to the coronavirus outbreak. After this and things return to some semblance of “normal”, the world my daughters grow up in will almost certainly be different than the one I thought they would grow up in and contribute to.

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Chris Berry3 Comments

In July 2008, then Treasury Secretary Henry Paulson touched off the greatest banking crisis of our generation stretching back to the 1930’s.   On Sunday, July 20th 2008 before the markets opened in Asia, the Treasury Secretary of the United States stepped in to guarantee the US bond portfolio owned by China.  Earlier that same day he had commented on national TV, 

“I think it's going to be months that we're working our way through this period, clearly months. Of course the list [of difficulties] is going to grow longer given the stresses we have in the marketplace, given the housing correction - but again, it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”

We have now spent 72 months - or 6 years - in the economic malaise that followed the US housing bubble’s implosion.