NEW YORK – The shock to the global economy from COVID-19 has been both faster and more severe than the 2008 global financial crisis (GFC) and even the Great Depression. In those two previous episodes, stock markets collapsed by 50% or more, credit markets froze up, massive bankruptcies followed, unemployment rates soared above 10%, and GDP contracted at an annualized rate of 10% or more. But all of this took around three years to play out. In the current crisis, similarly dire macroeconomic and financial outcomes have materialized in three weeks.
Earlier this month, it took just 15 days for the US stock market to plummet into bear territory (a 20% decline from its peak) – the fastest such decline ever. Now, markets are down 35%, credit markets have seized up, and credit spreads (like those for junk bonds) have spiked to 2008 levels. Even mainstream financial firms such as Goldman Sachs, JP Morgan and Morgan Stanley expect US GDP to fall by an annualized rate of 6% in the first quarter, and by 24% to 30% in the second. US Treasury Secretary Steve Mnuchin has warned that the unemployment rate could skyrocket to above 20% (twice the peak level during the GFC).
Read more
Blogger's
note: subterrnews.blogspot.com does not send cookies, or collect any
information on those using the blog. However, the blogspot is on google,
and google may collect information, and send cookies. Many of the links
that we connect to do not send out cookies or collect information, but
some do. You are keying in to this blog, and you have agreed to this.
The
views expressed in the articles do not necessarily represent the opinions of
this blog. They are the views, and opinions
of the author(s) of the article.
0 comments:
Post a Comment