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A worldwide credit crunch triggered by the coronavirus will set in motion a wave of corporate bankruptcies that will make the global financial crisis look like “child’s play”, investors have warned.

“With the world’s most advanced economies all entering a shutdown that could last months, companies that have gorged on cheap money for the past decade face going out of business thanks to a huge spike in borrowing costs on international money markets.”

https://www.theguardian.com/world/2020/mar/20/coronavirus-crisis-could-lead-to-new-credit-crunch-as-companies-struggle-with-debt


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As corporations draw down on revolving credit lines to combat the expected adverse effects on earnings of the coronavirus pandemic, the ability of US and global banks to provide liquidity has come into question.

“The decision to borrow typically undrawn financings has echoes of the 2008 financial crisis when companies drew down on unfunded credit lines, taking the banks by surprise, and putting a significant strain on their deposits.”

https://www.reuters.com/article/ford-motor-loan/banks-face-liquidity-strain-as-corporations-tap-revolving-credits-idUSL1N2BC2NT


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David Stockman warns the pandemic is exposing risky speculation and shaky market fundamentals.

““Wall Street is toast,” he told CNBC’s “Trading Nation” on Thursday. “It’s going to end as a financial crisis because the illusion that central banks always have your back and the economy would keep expanding and growing forever and ever … was complete nonsense.””

https://www.cnbc.com/2020/03/19/stockman-coronavirus-sparking-financial-crisis-wall-street-is-toast.html


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I don’t think anybody’s really ready for shock that’s coursing through the United States economy right now, thanks to the coronavirus. Last week, 281,000 Americans filed for unemployment, an increase of 33 percent.

“On Thursday morning, the New York Times reported that more than 629,000 had done so this week in just 15 states.

“Now, Goldman Sachs is estimating that more than 2.25 million people will apply for jobless benefits this week.”

https://slate.com/business/2020/03/economy-coronavirus-unemployment-bad-bad-bad.html


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…millions of US households don’t have even $400 in savings to draw on in an emergency like this.

“Those households will now have to struggle even more to pay rent or keep the lights on which, in turn, means even fewer customers for a wider array of businesses. The vicious cycle of recession has begun.”

https://edition.cnn.com/2020/03/19/perspectives/cash-payments-economic-disaster/index.html


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US consumers’ confidence in the economy is tanking as the coronavirus strangles spending activity and closes business throughout the country

“A drop in consumer comfort threatens to suppress the economy’s biggest driver. Consumer spending accounts for two-thirds of economic activity, and the virus’ hit to demand will likely create revenue shocks across a wide range of sectors.”

https://markets.businessinsider.com/news/stocks/economic-outlook-consumer-confidence-plunges-financial-crisis-coronavirus-recession-fears-2020-3-1029013996


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At a special Monetary Policy Committee (MPC) meeting held today, the members voted unanimously to reduce the Bank of England Rate by 15 basis points to 0.1%. This is the lowest ever level in the history of the Bank.

“This comes just over a week after the Bank cut rates from 0.75% in an attempt to support the economy in the wake of the coronavirus crisis.”

https://www.yourmoney.com/saving-banking/bank-of-england-cuts-bank-rate-to-lowest-ever-0-1/


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The sums promised by central banks in a succession of announcements over the last two weeks are likely to increase significantly, economists believe.

“They predict that the cash injections needed over the next three months will ultimately dwarf those made a decade ago during the banking crisis.”

https://www.theguardian.com/world/2020/mar/19/europes-economic-rescue-packages-worth-combined-17tn


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Italy’s prime minister has demanded the EU use “the full firepower” of its €500bn rescue fund to confront the continent’s economic crisis, as he warned against relying on monetary policy to counter a “global shock that has no precedents”.

“His call for Europe to tap the bailout fund it established for the eurozone debt crisis came as central banks around the world attempted to calm fearful markets with a fresh round of aggressive rate cuts and bond buying.”

https://www.ft.com/content/5b8205ac-6a06-11ea-800d-da70cff6e4d3


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Deputy President of the Senate, Senator Ike Ekweremadu, has said the global pandemic, Coronavirus and the dwindling oil price will hit Nigeria most hard

“…because the country operates a mono economy, dependent only on oil.”

https://www.vanguardngr.com/2020/03/oil-slump-nigeria-worst-hit-with-mono-economy-ekweremadu/


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What are heavily oil/commodity dependent nations like, for example, Nigeria, Iraq, South Africa, Argentina and Chile supposed to do? They will have both the coronavirus and crashing oil and commodity prices to deal with. Their currencies are already tanking. They can’t initiate helicopter money and bail outs without hyperinflating their currencies and causing their borrowing costs to rise.

“Between plummeting oil prices, political deadlock and reduced global appetite for a bail-out, Iraq is on the cusp of financial calamity that could force austerity measures and renew anti-government protests.”

https://thearabweekly.com/iraq-faces-financial-crisis-after-crude-crash


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Copper languished near four-year lows on Thursday as the spread of the coronavirus intensified fears about global economic growth and demand for industrial metals.

“Economic activity in top consumer China and other major economies has been shredded by government measures to contain the virus…”

https://af.reuters.com/article/metalsNews/idAFL4N2BC314


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The global spread of coronavirus has sent airlines reeling but the expansive supply chains that make their operations possible are facing an even more acute and uncertain future.”

“I don’t think anyone has processed the shock that’s about to go through,” said the Chief Executive of one such large supplier to the worlds airlines.

https://theaircurrent.com/supply-chain/the-financial-crisis-brewing-in-the-supply-chain-underneath-the-worlds-airlines/


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In terms of economic health — which is inextricably intertwined with personal health and life — we face the extraordinarily difficult challenge of balancing a terrifying health crisis with a virtually inevitable financial one.

“In the long-term, that financial crisis may be the greater of the two.”

https://thehill.com/opinion/finance/488383-from-viral-infection-to-financial-armageddon-could-a-recession-kill-more-than


The global economy is already in a recession as the hit to economic activity from the coronavirus pandemic has become more widespread, according to economists polled by Reuters amid a raft of central bank stimulus actions this week.”

https://uk.reuters.com/article/uk-health-coronavirus-global-economy-pol/global-economy-already-in-recession-on-coronavirus-devastation-reuters-poll-idUKKBN21701J


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What’s worse: a steep recession or falling prices? Answer: A steep recession AND falling prices. That’s is the underlying reality that is shaking markets to the core right now.

“When conditions become intolerable, as they are today, something’s gotta break. And it will, soon.”

https://seekingalpha.com/article/4332991-recession-deflation-real-panic


Read the previous ‘Economic’ thread here and visit my Patreon page here.