Exposing Key Economic Breaking Points as Chances of Global Conflict Escalate
The global economic loss ranges from $7.8T in the lowest severity scenario up to $50T in the most extreme scenario
As the world is inching closer to the worst case scenario and there is a new escalation virtually every week, insurance and reinsurance companies are pricing in incredible, sky rocketing risk premiums. In a recent report, one of the biggest in its industry, an insurance agency Lloyds of London, reported that geopolitical conflict scenario sees global economy exposed to $14.5 trillion loss.
Lloyd’s of London is the world’s leading marketplace for insurance and reinsurance.
In the event of a wider conflict, the company believes that there is a high probability of the global economy being exposed to losses anywhere between $7.8 trillion in the lowest severity scenario up to $50 trillion in the most extreme scenario. This would cause widespread, global disruption to trade and supply chains.
Lloyds reports that a major geopolitical conflict with multiple belligerents is now not a “remote possibility”, but a systemic risk:
“With more than 80% of the world’s imports and exports – around 11 billion tons of goods – at sea at any given time, the closure of major trade routes due to a geopolitical conflict is one of the greatest threats to the resources needed for a resilient economy.
Europe for example, which is heavily reliant upon other industrially advanced states for supplies like semiconductors for car and electronics manufacturing, could stand to lose up to $3.4 trillion.”
Is Europe in a position - economically, financially and politically - to risk incurring losses and severe damages of this magnitude? My guess is that the answer is quite obvious.
At the core of the systemic risk related to geopolitical escalations lie global supply chains.
“The stakes are very high indeed. Many of the world’s key shipping gateways control access to high concentrations of vital resources, and the ability to control or deny access to this critical part of the supply chain can be a key weapon in the arsenal of governments willing to exert pressure on opponents or other nations.”
Lloyds is emphasizing that other countries are likely to utilize all tools available at their disposal, similarly to the United States and the European Union weaponizing the U.S. dollar to wage economic warfare against its adversaries.
What are the major shipping routes to be aware of and where are they located? How does an increase in transportation risk affect us? I cover more details on the exposure of global economy to trillions in losses in the recent video:
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Hi Lena , if you look at the world map with the choke -points ,they will be less important ,the majority of the population is what they call the " the World Continent " Russia , East and West Asia and Africa .
The belt and road plan and the North-South ( Russia-Iran-India ) and Russia's Artic route will eliminate
much of trade which has been controlled by USA Inc /Brittant etc. now and pass history. As America /
Canada and European Union implode financial , Military and morally ,the population will not be able to buy things using their paper Fiat currencies and will become Isolated .
Russia can provide China with much of the energy and other commodities with pipe lines ( less expensive transportation cost and safer, faster cross-border ) Russia is having India build four Ice breakers for Russia's Artic route , the Artic route will be open all year around ,Russia is now the Forth largest economy world wide ( PPP) rating.
China and other BRICS Plus Nations will not have to be Buying the West (London ) expensive
insurance ,The Western alliance counties will.
Have a nice weekend
Thomas
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