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This recession will rival The Great Depression:

“First, there’s evidence that the main reason people are staying at home is not lockdowns but the threat of the virus itself.

“Data from online restaurant-reservation websites shows that in major cities, most of the decline in restaurant attendance happened before stay-at-home orders were issued. And polls indicate that most Americans are very wary of returning to their normal activities. This means that unless virus suppression regimes give people confidence that coronavirus isn’t a threat to their personal safetyy’re unlikely to come out and shop even if the government says there’s no need to worry…

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Next, there’s the global nature of the downturn. Gross domestic product is set to decline in almost every country. Finally, there’s the possibility of long-term financial market turmoil… keeping banks on a government lifeline during years of business weakness, although better than the alternative of letting the financial system collapse, might still not equip the financial industry to do its traditional job of lending to productive enterprises. The threat of repeated coronavirus outbreaks, along with continued business failures, may make banks just as afraid to lend as they were as they were after 2008…

“…an unprecedented slump followed by years of pain seems inevitable.”

https://www.bloombergquint.com/gadfly/the-coronavirus-recession-will-rival-the-great-depression


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The recent liquidity crisis in the $17 trillion (13.8 trillion pounds) U.S. Treasury market has exposed structural problems that are unlikely to be fixed any time soon, which could lead to new bouts of volatility and make it more costly for the U.S. government to sell bonds.”

https://uk.reuters.com/article/uk-health-coronavirus-treasuryliquidity/u-s-treasury-market-faces-structural-issues-even-as-liquidity-improves-idUKKCN22431D?il=0


New York — Investors pulled a net $33bn from hedge funds in the first quarter, the most in more than a decade.”

https://www.businesslive.co.za/bd/companies/financial-services/2020-04-22-hedge-funds-suffer-biggest-quarterly-withdrawals-since-global-financial-crisis/


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Mitch McConnell said Wednesday that he is OK with states going bankrupt instead of increasing federal bailouts even further – as Democrats demand more money for state and local governments be included in the next coronavirus relief bill…

“‘I would certainly be in favor of allowing states to use the bankruptcy route,’ the Kentucky Republican senator said. ‘

“”It saves some cities. And there’s no good reason for it not to be available.'”

https://www.dailymail.co.uk/news/article-8246925/Mitch-McConnell-tells-states-BANKRUPT-ask-federal-bailouts.html


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The coronavirus pandemic has upended food supply chains, led to closures of meat producing plants and left Americans with the unsettling experience of seeing empty shelves at supermarkets.

“Coupled with the run on toilet paper that led to severe shortages, recent events are leading Americans to wonder if the nation’s food supply is secure.”

https://thehill.com/homenews/news/494014-five-threats-to-us-food-supply-chains


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The “oil extraction sector in the United States faces tough times,” Carl Weinberg of High Frequency Economics told investors in a report.

“”That may require support from the government, either for the drillers or the banks that financed them.””

https://www.msn.com/en-us/money/markets/oil-slump-could-cost-texas-1-million-jobs-this-year-alone/ar-BB1338bS?li=BBnbfcN


Britain is in the midst of its deepest downturn in peacetime as the coronavirus pandemic wreaks havoc on the economy, a Reuters poll of economists found, while an expected recovery in the second half is already in jeopardy.”

https://uk.reuters.com/article/uk-britain-economy-poll/britain-suffering-worst-peacetime-downturn-ever-recovery-may-falter-reuters-poll-idUKKCN225040


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Youths have clashed with riot police in suburbs around Paris on the fourth consecutive night of trouble as strict lockdown rules to tackle the coronavirus have heightened social tensions.”

Video:

https://www.irishtimes.com/news/world/europe/fourth-night-of-unrest-in-paris-amid-coronavirus-lockdown-1.4234990


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European consumer confidence tumbled this month towards the record lows seen during the financial crisis in 2009 as the continent braces itself for a deep recession caused by coronavirus lockdowns.”

https://www.cityam.com/eurozone-consumer-confidence-hits-lows-last-seen-in-financial-crisis/


Europe domiciled long-term funds suffered record outflows throughout March – a month defined by Covid-19 caused market volatility.Net redemptions reached €246 billion – “a staggering number that dwarfs even the darkest month of the 2007-09 financial crisis”, said Morningstar, which published the data.”

https://www.funds-europe.com/news/european-funds-suffer-worst-month-since-financial-crisis


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The European Central Bank on Wednesday said it would allow some debt to continue to be used as collateral by banks in the event of downgrades to below investment-grade status.

“The ECB said assets, with the exception of asset-backed securities, that were rated BBB-, the lowest investment grade, as of April 7 would remain eligible to be used as collateral for loans from the ECB…”

https://www.marketwatch.com/story/ecb-will-allow-some-junk-rated-debt-to-be-used-as-collateral-in-event-of-downgrades-2020-04-22


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It has been a day of major civil unrest in Cape Town, as frustrations on day 27 of the nationwide lockdown boil over in some of the province’s most desperately affected areas.

“Clusters of rioting residents have kept law enforcement engaged all day, with looting rife in the Cape Flats areas.”

https://www.thesouthafrican.com/news/western-cape-mitchells-plain-vredenburg-looting-riots-lockdown-2020/


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India’s stakes are unusually high, given its high population density and weak medical infrastructure. India runs the risk of a colossal health disaster if it compromises on prevention.

“On the other hand, an aggressive lockdown to contain the pandemic will push millions to the margins of subsistence, driving small and large businesses alike into bankruptcy and shattering financial stability.”

http://archive.vn/v4RxI#selection-1887.98-1895.37


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The city-state [Singapore] is “very likely” to see a sharper fall in GDP, trade and industry minister Chan Chun Sing said Thursday in an interview with Bloomberg Television’s Haslinda Amin.

““We are really concerned that worldwide, this is going to lead to a more serious problem than many had anticipated just a month ago.””

https://sg.news.yahoo.com/singapore-sees-sharper-economic-slump-as-virus-spreads-globally-024258726.html


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South Korea’s economy just recorded its most severe contraction since the 2008 financial crisis as the coronavirus pandemic weighed on consumer demand and exports.

“And the worst may not be over.”

https://edition.cnn.com/2020/04/22/economy/south-korea-economy-coronavirus/index.html


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“…high rates of inequality, poverty and an informal workforce have led to civil unrest in countries [Central America] where more than 30 percent of the population lives on $5.50 a day or less.

“In some cases, desperate citizens have been met with repression and arbitrary detentions as police and military take the front line in a public health crisis.”

https://www.aljazeera.com/indepth/features/central-america-unrest-repression-grow-coronavirus-crisis-200422202713659.html


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It is difficult to envision how Argentina, the region [Latin America] and the world will come out of this mess unless a generalized, global set of solutions is put on the table. One example is a debt moratorium for low- and middle-income nations…

“But that would still not be enough, as other factors including falling global demand and commerce, and tanking commodity prices asymmetrically hit the world’s poorer nations.”

https://www.forbes.com/sites/afontevecchia/2020/04/22/poor-countries-dont-have-what-it-takes-to-face-this-economic-crisis/#4ad9838b4914


In the largest slum in Kenya’s capital, people desperate to eat set off a stampede during a recent giveaway of flour and cooking oil, leaving scores injured and two people dead. In India, thousands of workers are lining up twice a day for bread and fried vegetables to keep hunger at bay. And across Colombia, poor households are hanging red clothing and flags from their windows and balconies as a sign that they are hungry.”

http://archive.vn/cFJJq#selection-641.17-661.136


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The amount of money migrant workers send back to their home countries is expected to decrease by almost $110bn this year as the Covid 19 pandemic increases unemployment across the world.

“Remittances to low- and middle-income countries (LMICs) are projected to fall by nearly 20% to $445bn (£360bn), “representing the loss of a crucial financial lifeline for many vulnerable households”, the World Bank said.”

https://www.theguardian.com/global-development/2020/apr/22/world-bank-warns-of-collapse-in-money-sent-home-by-migrant-workers


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Oil prices recovered from earlier losses overnight, but it might not be a rebound and could simply be markets taking a “breather,” analysts said, warning that crude prices could turn negative again.

“That’s because the underlying issues with weak demand and storage running out have not been resolved…”

https://www.cnbc.com/2020/04/23/rebound-in-oil-is-temporary-prices-will-turn-negative-again-analysts.html


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The price of oil, the Russian economy’s lifeblood, is at its lowest level in nearly two decades, and the rouble is now one of the world’s worst performing currencies.

“Gross domestic product could fall by 15% if oil prices drop below $10 per barrel, Russia’s biggest bank says… There are… some early signs of social unrest over the situation…”

https://www.reuters.com/article/us-health-coronavirus-russia-putin-analy/putins-problems-mount-as-coronavirus-hits-russian-economy-idUSKCN2242WO


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International government bailouts in 2020, as a response to the coronavirus pandemic, have been the largest in history, and a chart published by Deutsche Bank Monday shows the truly staggering scale of 2020’s interventions…

“”We are once more in too big to fail territory,” the analysts said in relation to authorities doing all they can to minimise defaults from the crisis.”

https://www.businessinsider.com/deutsche-bank-government-bailouts-are-the-biggest-in-history-2020-4?r=US&IR=T


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Remember that the global economy is in recession if it runs below around 2.5% GDP *growth* for two consecutive quarters. Even bearing this in mind, Fitch’s estimate of a -3.9% for 2020 still seems wildly optimistic to me:

Fitch Ratings now expects world GDP to contract by 3.9% in 2020, a recession of unprecedented depth in the post-war period. This is twice as large as the decline anticipated in our early April GEO update and would be twice as severe as the 2009 recession.”

https://www.fitchratings.com/research/sovereigns/global-economic-outlook-crisis-update-late-april-2020-coronavirus-recession-unparalleled-22-04-2020


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