“With each passing day, the 2008 global financial crisis increasingly looks like a mere dry run for today’s economic catastrophe. The short-term collapse in global output now under way already seems likely to rival or exceed that of any recession in the last 150 years.
“Even with all-out efforts by central banks and fiscal authorities to soften the blow, asset markets in advanced economies have cratered and capital has been pouring out of emerging markets at a breathtaking pace. A deep economic slump and financial crisis are unavoidable…
The problem, however, is that we are experiencing not just a demand shock but also a massive supply shock. Propping up demand may contribute to flattening the contagion curve by helping people stay locked down but there is a limit to how much it can help the economy if, say, 20-30% of the workforce is in self-isolation for much of the next two years.
“I have not even touched on the profound political uncertainty that a global depression can spark. Given that the 2008 financial crisis produced deep political paralysis and nurtured a crop of anti-technocratic populist leaders, we can expect the Covid-19 crisis to lead to even more extreme disruptions.”
“‘Universal stay-at-home is the most devastating economic force in modern history and it is man-made. It very suddenly reverses the gains of underprivileged groups, kills and creates drug addicts, beats and terrorizes women and children in violent now-jobless households, and more. It bleeds deep anguish and suicide.’”
“Nearly one-third of U.S. adults who anticipate receiving a stimulus check say the money wouldn’t be enough to sustain their financial well-being for one month, according to a new Bankrate. com report.”
“The U.S. government’s massive effort to nurse the economy through the coronavirus crisis was billed as a send-money-and-don’t-sweat-the-details flood of cash to people and businesses in a $22 trillion system that has ground to a halt.
“So far, the checks are not in the mail.”
“US coal production will fall by 22% in 2020, as coronavirus-related stay-at-home orders drag down demand for electricity and coal mines have been idled for extended periods as a result of Covid-19.”
“A higher proportion of Canadians are anxious about their economic situations during the COVID-19 outbreak than during the height of the global financial crisis in 2008, a new Research Co. poll has found.”
“Fears are growing of a crisis in the UK’s £75bn car loan market, where 6.5m vehicles have been financed through leasing deals with monthly payments that are already proving unaffordable for some laid-off as a result of the coronavirus.”
“Hidden within [UK Chancellor] Rishi Sunak’s announcement that he is to bolster his interruption loans for small businesses is a startling confession; as of last Friday, of 130,000 enquiries made by businesses, just over 900 had been approved by banks…
“Suddenly Sunak is asking the banks to take nearly half of the risk on loans to companies whose prospects are intrinsically uncertain as they face the greatest economic meltdown of our times.”
“In its worst performance since 1945, the French economy shrank around six percent in the first quarter of this year as the coronavirus pandemic decimated business activity, the Bank of France said Wednesday.
“Official figures showed previously that the economy shrank 0.1 percent in the last three months of 2019, meaning that with two consecutive quarters of negative growth, the country is now technically in recession.”
“The eurozone banking system entered the coronavirus crisis in a weakened state with the sector’s profitability declining in 2019 for the first time in three years, according to new data from the European Central Bank.”
https://www.ft.com/content/a1a62090-eb86-49e8-a326-dda868110d46
“Everyone knows that fighting a pandemic is costly. What’s even more worrying is how the costs of a slowdown—the sudden pressure on incomes and demand, in particular—will widen pre-existing cracks in the Indian growth story…
“The weakest link in the Indian economy is its banking sector.”
“Virus may swell China’s bad-debt pile by $790 billion: S&P…
“The economic dislocation from Covid-19 threatens to add 5.6 trillion yuan ($790 billion) of bad debt — more than double the amount Chinese banks already sit on — according to S&P Global Inc.”
https://www.bloomberg.com/news/articles/2020-04-07/china-braces-for-wave-of-soured-loans-with-new-bad-debt-manager
“Even with a record stimulus package, Japan’s economy is heading toward a record contraction of 25 percent this quarter after Prime Minister Shinzo Abe declared a state of emergency in Tokyo, Osaka and some other parts of the country, according to Goldman Sachs.”
https://www.japantimes.co.jp/news/2020/04/08/business/economy-business/japan-economy-25-percent-contraction/#.Xo2EPchKjIU
“Legitimate questions will arise about IMF resource adequacy… IMF staff are preparing for the possibility that more resources will be needed to weather the storm.”
https://www.omfif.org/2020/04/imf-facing-financing-quandary/
“Stock markets are “totally unprepared” for how long economies will take to normalize after the coronavirus crisis, one strategist told CNBC Tuesday.”
“The number of ratings downgrades is skyrocketing. Defaults and bankruptcies are sure to follow. The pandemic is going to open quite a few cans of worms. One of those cans is the new New York Fed plus FDIC rule that banks don’t have to disclose balance sheets for the duration of the pandemic.
“This is… government complicity in banks lying to the public and institutional depositors and investors. Little children are taught that lying is always Bad.”
“”…An induced economic coma over more than three months could cause a self-feeding credit and liquidity crisis. The economic and financial storms would then reinforce each other to overwhelm the defensive system.”
https://www.telegraph.co.uk/business/2020/04/07/world-banking-system-cannot-weather-long-lockdown/
“Unless the virus is contained within several weeks, declining output and falling demand for trade may provoke a vicious cycle that only worsens the outlook for corporate investment and employment, compounding the labor market’s problems.”
“Worldwide debt reached 322% of GDP last year, according to new figures which will worry governments planning post-coronavirus economic recoveries.
“Worldwide debt across all sectors rose by $10trn (£8trn) in 2019 to more than $255trn (£206trn), and that was before COVID-19…”
https://news.sky.com/story/warning-after-worldwide-debt-reaches-322-of-gdp-11969934
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