Fandango’s Provocative Question (1 April 2020)

It is Wedgesday, and time for Fandango’s Provocative Question. I’m gonna take care to answer his question meticulously, to fulfil his FOWC prompt too! Today he’s including a post/comment in the question, centered on whether the world will or won’t change as a result on COVID-19, and he asks:

When we finally get through this COVID-19 pandemic at some point in the future, do you think the world is going to change from what is was like before anyone ever heard of coronavirus? Or will things quickly return to “business as usual”?

Straight away, Fandango states that he doesn’t think it will. But I think, while some people will want the world to go back to normal, that some change is inevitable.

We’ve just had a round of panic-buying in the shops. Hopefully it is over now, but who’s to say it won’t happen again. Think about that. For hundreds of years, money has been the definition of wealth, but now it is half-a-dozen eggs! Looking at things that way, you can easily see why governments all over are so worried – because the systems that they have built, which are money-centric, are at stake. So, they want money back at #1. Every day, we’re used to hearing on the news how valuable the pound is against other major currencies, and I wonder how useful that information is now?

I have a mortgage. In common with most every other house-purchaser at the time, I was sold an endowment mortgage. The bank loaned me the money to buy the house, and I pay interest on that loan every month. When the loan matures, I need to repay the original amount. At the same time as I bought the house, I bought this endowment policy. I pay an amount every month which gets invested for me. When the mortgage loan matures, so too does this endowment policy. The thinking is (was) that the policy will be worth enough to offset the mortgage. And the house is mine. Easy!

Except the stock market hasn’t been doing so well since 2008. Periodically, I get “red alert” messages to tell me that this endowment policy is now only projected to pay one half of the original loan back. So, how do I repay the rest? The point here is that it’s not just me, it is millions of other people (in the UK alone) too. Everybody with an endowment policy is in the same boat. That’s why all these equity release schemes have come about, because nobody’s endowment will cover their mortgage!

My point here is that at the time, this was the key type of product that was sold, certainly in the UK. And if people thought they’d maybe escaped the effects of 2008, look at the stock market after corona! And again, there are millions of us! And what about all those additional people thrown out of work by Corona, who now can’t affort their mortgage (whatever type of mortgage it might be)? What are they going to do? Reposess everybody’s house? Everybody?

So, I think something will have to change so as to allow people to keep roofs over their heads.

And, what is another big thing that is invested into the stock market? That’s right, people’s pensions. So, we’ll have all these pensioners walking around, once rich, but now poor. All those people who lost their purchasing power? That’s gonna change the High Street quite drastically, I think.

Plus, of course, when people lose their purchasing power to the extent that they can’t afford the basics? There’s going to be pressure on states [governments] to step in even more.

Those are just a few effects. I think most of them, we haven’t even begun to imagine, yet.

I must admit I have not thought this idea through, but I do see a chink of light at the end of the tunnel. Some thinking out-of-the-box. Blue sky thinking, we used to call it. What if, when all this was over, the world’s stock markets were to reset their values, to before any of this happened? Okay, jiggery pokery. And my expertise is in IT, not in the markets, so there are bound to be better suggestions out there. But somebody needs to be thinking of the question what happens afterwards? I do think that because this virus has pretty much hit us all equally, that there is scope for some kind of global reset. So, maybe somebody will come up with some idea which almopst does allow us to go back to normal?

There is, though, an area where I fear that there will be no change. What are the current shortages? Ventilators, in-date PPE, testing abilities… Does anybody seriously think that governments will start stockpiling these things, lest it happen again? In that respect at least, I’m with Fandango.

Author: Mister Bump UK

Formerly Stroke Survivor UK. Designed/developed IT systems for banks, but had a stroke in 2016, aged 48. Returned to developing from home, plus do some voluntary work. Married, with a grown-up, left-home daughter.

13 thoughts on “Fandango’s Provocative Question (1 April 2020)”

  1. I don’t know about the future. I know that usually the normal people end up paying for everything. The weakest people will feel it the hardest. I think they will cut back all payments. I hope that the world will reset but I’m that optimistic.
    I know nature is resetting quickly and that is one thing to be happy about.

    Liked by 3 people

  2. I’m no financial expert but I do think there’s going to be a whole financial downturn for a long time after COVID. That’s just my thinking and I can see a financial crisis for a long while afterwards. Like you and Kacha said, it’s always the poor people at the bottom that suffer and while the rich try to get back some of their losses, it will affect us, lowly peeps, even more.

    Liked by 1 person

    1. I think how the banks approach reposessions might be key. And everybody who is reposessed is also a voter. It depends how in-your-face it is. People get away with all sorts when they think nobody is watching, e.g. Windrush

      Liked by 2 people

        1. But that must have already happened to people after 2008. After all, we never used to hear about equity release schemes, now they are every other ad on tv. All these weird and wonderful new financial products which have been invented by the industry to gloss over its own failings.

          Liked by 1 person

  3. Excellent post. Even in the times of Covid-19 it is still not true that we are all in this together. We hear today of overpaid footballers still receiving their full pay alongside the news that the owners have cut hours and pay of their non playing staff. I very much doubt that Boris has been queueing to try to get toilet rolls and bread. I sadly believe that the 1% will want things to return to “normal” as soon as possible!

    Liked by 1 person

    1. Yes, I heard something about soccer players just now. I think that the courts have a role here by shutting down. Maybe keep them open for criminal cases. But any landlords seeking evictions, tough. If soccer stars want to sue their client for non-payment, tough. Soccer is a funny one because while 1% are super-rich, 99% must earn a pittance. So I guess most of them will be strapped for cash too.

      Liked by 1 person

  4. Here’s a further effect which I should have put in the post. Social Security. Just in the last few weeks in the UK, there have been 1,000,000 fresh claims. Normally, the entire system supports about 100,000. With all these people living on social security, experiencing it firsthand, perhaps there will be a realisation that it is not enough for somebody to live on? I see this with my disability benefit. There are an awful lot of things that I cannot afford to do, because of this benefit. So, maybe the experience will raise people’s awareness?

    Like

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