Nearly 3.3 million Americans have applied for in the last week for the first time unemployment assistance. The previous record, this figure exceeded by almost five times – a first taste of how strong the Coronavirus pandemic will hit the US economy and a sign on it, bags how rapidly the global economy is currently in.
a Crash greater than the Great Depression
even now, the shock of the world economy was rapid and stronger than during the 2008 financial crisis, and even during the Great Depression in the 1930s, says the Economist Nouriel Roubini of New York University in an article in the British “Guardian”. During these two crises, the stock markets collapsed by 50 percent and more, followed by a massive wave of insolvencies, an unemployment rate in excess of ten percent and a GDP-followed by decline by an annualised rate of ten percent.
all that, However, as Roubini, have suffered during the financial crisis and the Great Depression, over three years. “In the current crisis, similar to a bad macro-materialized economic and financial consequences in just three weeks,” wrote the for his pessimism, and partly wayward views known expert. Small Caps Champion: your 3 pillars for a successful wealth accumulation. Successfully and safely in addition to values invest. (Partner quote) Here is an exclusive free trial!
there is No hope of a V-shaped recovery in the economy
“Even Mainstream financial institutions like Goldman Sachs, JPMorgan or Morgan Stanley now expect an annualized GDP decline of six percent in the first quarter and 24 percent to 30 percent in the second quarter,” wrote Roubini, “In other words, each component of the demand – consumption, investment and exports – are in a never-seen-before, free-fall.” Everything about the development of the Corona-crisis
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According to Roubini, no one on a V should hope-shaped development, with a rapid recovery. The Corona of the crisis was “something completely different”. The Economist does not expect, once again, with a U-shaped or L-shaped recession followed by Stagnation. “It looks more like a ‘I’: A vertical line, which reflects the case of the financial markets and the real economy,” said Roubini.
not Even during the Great Depression or the Second world war, there had been a literal Shutdown of the economy, as is currently the case in China, the USA and Europe, as Roubini points out in addition. Even in his most optimistic scenario, Roubini expects a greater, albeit short-lived – economic collapse as the financial crisis. You Protect Your Assets!
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What needs to be done for the Best Case all
However, Europe and the USA would have to test more, faster therapies, and uncompromising quarantines as China’s force – in a gigantic scale. In addition, Central banks have to take unconventional measures: Zero or negative interest rates and purchase programs for virtually all types of Bonds, even for the papers of large corporations.
In addition, governments would have to provide massive fiscal policy support, including “helicopter money” – the direct cash distribution to households. However, when the size of the shock, the industrialised countries have to increase your budget deficit spending “of about 2 to 3 percent of economic output to about ten percent.”
However, these deficits will have a price, warns Roubini. “If they are financed by government debt, will rise to the interest is steep, and threatens the recovery in the age of the child to suffocate,” says the Economist. And all of this is still the Best Case – however, the States in the course of time, to take the right measures. With Stock Selection in Europe, you will achieve excess Returns with System! (Partner offer) Now 30 days free of charge test!
A second Crash is imminent – even with containment,
Therefore, the risk of a new Great Depression increases with each passing day, “worse than the Original – a ‘Greater Depression’,” warns Roubini. As long as the pandemic is not stopped, would economies and markets continue their free fall continues.
Even in the case that the Virus is not soon contained, more or less, the economist, is pessimistic: “The growth could even return by the end of 2020. After all, it is very likely that until then, a new Virus starts to the season, with new mutations. And then economies will shrink again and the markets crash.“
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