Chapter 331: The Effect on the Economy
Rümeysa collected the stack of papers and left for her room, planning to go through the entire document and see for herself what Odin Analytics had written and explained in detail.
As she walked upstairs to her room, her mind was complicated. Initially, when her son said he wanted to create an analytics company, although his reason sounded completely sound, she didn’t expect much from it. As it cost only a few million dollars to make it a reality, she didn’t try to argue against it, as she saw it as an opportunity for her son to learn something, whether the company failed or succeeded. So she had left most of the direction to Fatih and the new head of the company, John, whom she had trusted to keep Fatih’s ideas in check. She was only involved when they were requesting additional funding.
But it seemed like they lived up to their company’s name, Odin.
When she entered her room, she immediately picked up her reading glasses, got on the bed, and started reading the stack of documents. It seemed like she had misunderstood something, as by the time she was only through a quarter of the document, she was already fully convinced that this was happening, based on the amount of evidence shown and how they used all of the different sources to reach the conclusion that something was definitely happening.
But she was still curious, as she found herself asking what the reason was they were looking for something like this anyway. If it was a test run, that would have been understandable, but the final paragraph on the paper in her hand was recommending they notify the WHO organization for them to at least go and check or inquire about the situation, but it also highlighted that the chances of their notification being taken seriously were close to none.
She turned to her right and looked at the three-fourths of the documents remaining to be read as she wondered what that even contained, considering she felt that the quarter she had read was pretty conclusive and self-contained.
However, she still wanted to take a look at it, and the moment she removed the empty page, she finally understood exactly what the rest of the document was going to contain, as the paper that was now on top of the remaining stack had a large bold heading saying, "STUDY ON THE EFFECTS ON THE WORLD’S ECONOMY IN THE HIGHLY CONNECTED 21ST CENTURY BASED ON THE ACTIONS THAT WILL BE TAKEN BY THE WHO (WORLD HEALTH ORGANIZATION) AND THE AFFECTED COUNTRIES IN CASE OF A PANDEMIC."
That bold and capitalized title alone was enough for her to understand the reason he was informing her of it. Although the title sounded bold and arrogant, as she started going through it one page after another, she saw with her own eyes that it was actively living up to the expectations.
The new document broke down from the beginning how the world would react and how the economy would react in response to that in a very neat format.
The first point was highlighted with a bold heading saying, "The First-Order Effect: Demand Destruction."
It immediately got to the point, highlighting that the most immediate economic effect of a pandemic was not supply destruction but demand destruction through fear, which precedes, amplifies, and outlasts any actual policy mandate by weeks or even months. When people believe that they can die by going outside, they stop going outside. They do not take cruises, they do not board planes, they do not check into hotels, they do not eat at restaurants, they do not go to shopping malls, they do not attend concerts, sporting events, conferences, cinemas, or anywhere that large numbers of people will be gathering in close proximity.
It described that all of those things mentioned would suffer catastrophically during this period, so any company that specialized in those things would also suffer, with the cruise lines being worst at 100% revenue loss because vessels would legally be prohibited from operating.
Once that was explained in exhaustive detail, she immediately arrived at the second heading, "The Second-Order Effect: Supply Chain Disruption."
This part highlighted how a Wuhan-centered outbreak was particularly significant due to it being the capital of Hubei province, which was a major industrial hub and, critically, a major logistics and manufacturing node for the automotive industry, while also sitting at the intersection of major rail and river freight networks. All of the supply chains running through Wuhan would be disrupted first, followed by broader Chinese disruptions when domestic travel restrictions were imposed.
And with China being where approximately 28 percent of global manufactured goods by value are made, this part highlighted everything that would be disrupted, from pharmaceutical active ingredients, Personal Protective Equipment (like gowns, masks, gloves), electronics components, and automotive components, all the way to consumer goods across virtually every category, followed by how long this disruption would take to affect the rest of the world.
It then moved to the third heading, "The Third-Order Effect: The Credit Cascade," highlighting the significant debts modern corporations carried, which were taken under the assumption of reasonably stable cash flow. When those cash flows go to zero, even companies that had strong pre-pandemic balance sheets would face solvency risks, and companies with worse debts would face imminent bankruptcy.
Then to the fourth heading, "The Fourth-Order Effect: The Policy Response and Its Beneficiaries," which highlighted the most likely policy response modeled after major crises in the past and how those benefits would be distributed, for what reason, and who would be benefiting at the receiving end of it.
What followed that was the list of all the companies worldwide that fell under any of those orders of effect and were going to be negatively affected that were of a certain scale.
As she read about all of those companies, she couldn’t help but feel goosebumps, but the document still had pages remaining that she had yet to read, so she calmed herself down and continued reading.
The document seemed to be done with the negative impacts of the pandemic on the economy and was now moving to the companies that would be the winners of the pandemic. At the top were the video conference companies, which was something they were already actively using within the family office’s companies, and Helios, the CUDA competitor, who were currently running at full power with its hundred-million-dollar funding for its first year.
The others were delivery companies like Amazon, as they would be the ones moving things to houses when people were not going outside, and Shopify, as small and medium businesses established their presence online. Streaming companies would also win, as they would be the largest way for people to entertain themselves.
The more she read, the more impressed she got that the small company had come up with all of this, but she was yet to see the investment plan that she imagined would be there. She knew whether the economy fell or was on the rise, you only lose money if you are on the wrong end of it, but if you are on the right end, then you are capable of earning more money when the economy is going down than even when it is rising. She got her answer on that just a few pages later, as a page with a large bold title of "Investment Plan" finally appeared.
