In 30 days the global economy has been brought to the brink of depression. In February the DOW was soaring at record highs and the U.S. economy was in the midst of its greatest economic expansion in history.
A global recession for 2020 was all but unthinkable.
Now the U.S. government is set to inject $1trillion into the U.S. economy to stop mass lay offs, and the U.K. government has agreed to pay 80% of the nation’s wages. As economies are grinding to a halt across the globe the affects of Covid-19 could be hear for a long time.
As the pandemic continues experts are now thinking how it will shape the world once the health emergency has ended. Many think the world will see major shifts in global supply chains and how global trade is conducted.
Many have been warning the West about the threat of a global pandemic. In 2013 the World Bank said, “A severe pandemic would resemble a global war in its sudden, profound, and widespread impact”
Monday saw global markets plummet and oil prices fall heavily, as fears around Coronavirus fuel the prospect of a global recession.
Analysts are now warning that if the economy is severely affected by the global outbreak of Corvid-19 it could harm Trump’s re-election bid.
“President Trump’s re-election likely hinges on the economy — a medical and/or economic shock from COVID-19 are arguably the biggest threats to his re-election,” Raymond James analysts said in a note on Sunday, referring to the virus’s official name.
“To preserve the economy and prevent a further market sell-off, it is in the best interest of President Trump to aggressively push for a large-scale fiscal response,” they wrote.
“If we go into recession, history speaks for itself. No sitting president has ever been re-elected in a recession,” said Peter Cardillo, chief market economist for Spartan Capital Securities.
The Feds reduced interest rates this week by 0.25%. The rate reduction not only reduces repayments on variable rate loans; but also affects yields on investments.
Seniors are bing told to re-evaluate their investments to ensure they are yielding enough. In the past retirees would take on more risk with their investments. This has paid off with the long term bullish market. However, economists are warning that when this gives out these yields will fall, and high risk portfolios will be at particular risk.
“The stock market has been hitting all-time highs, but the reason we’re facing lower interest rates is because the economy seems to be slowing down and we’re heading toward a recession,” said Leon LaBrecque, certified financial planner and chief growth officer at Sequoia Financial Group in Troy, Michigan.
Nouriel Roubini, head of Roubini Macro Associates, sometimes known as Dr. Doom, is famed for his pessimistic ecomomnic predictions. He has said that he believes next year will see the global economy tip into recession. He thinks the trade war between the US and China, as well as mounting oil prices fuelled by tensions in Iran will tip the economy next year.
Stephan Moore, Federal Reserve Nominee, has said that one of the biggest problems facing the economy is the decline in male earnings.
Moore observes that where female earnings are rising, male earnings- for both black and white males- has been steadily declining. He argues that this is bad for both the economy and society. And that he would like to see earning rise for everyone regardless of gender.
Italy’s second largest Bank, Mediobanca, has warned the nation could need a rescue deal in the next six months. The economic crisis within Italy is deepening, and even large companies are feeling the effects of the credit crunch in the country.
Italy’s €2.1 trillion debt is the third largest sovereign debt in the world after the US and Japan.
Any stress in the markets could threaten to reignite the eurozone crisis once more.
The German Chancellor Angela Merkel has been visiting Athens today, for the first time in three years. She comes at a time when Greece is looking for the next €31.5bn tranche of aid. Without the aid Greece will run out of money by the end of November. Recent figures show Greece has been in recession for 5 years, it’s economy has shrunk by 22%, and youth unemployment is currently at 55%.
Mrs Merkel was met with angry protestors and required 6,000 police officers to protect her. Greeks, and the Greek media, greeted her with Nazi insults.
Both the EU and IMF have been insistent that Greece steps up austerity measures in order to receive the money. However, Mrs Merkel came to Athens with a softer tone than Athens has previously heard.
There has been mounting pressure on Germany not to allow Greece to default, thus forcing her out of the eurozone. If Greece were to exit, then Spain would likely follow, and the euro would break up. Also tougher austerity measures could result in the collapse of the pro-Europe ruling coalition. If the Greek government collapses it would likely be replaced by either a far-right or far-left alternative. That could destabilise the entire region, affecting the Balkan region and Turkey, something no one wants to see.
It is likely Greece will receive the next instalment of money, however the €31.5bn will only keep Greece afloat a few more months. And as time passes both Spain and Portugal are edging closer to requiring more bailouts.
By Thomas Pascoe Economics Last updated: October 4th, 2012
Barack Obama was dreadful in the first presidential debate. He seemed confused and hesitant; his thoughts were incoherent.
There seems to be confusion among the Left as to how this could have happened. How could such a celebrated orator underperform? The answer is simple: Obama did not underperform.
Mr Obama is in the midst of an election campaign he is attempting to win without policies. He claims he will cut debt despite having ruled out reductions to the most significant area of spending, welfare entitlements. He wants to avoid war in the Middle East, which is commendable, but not, in itself, a policy. He is against a “war on women”, he is against the Boy Scouts of America banning gays. This isn’t anywhere close to being a prospectus for governing the world’s most important country through a period of crisis – it’s a manifesto for election to a student union.
The argument has always been that we should not expect Mr Obama to share his innermost thoughts with us. The man, so we are told, is such an intellectual giant that we would not understand him if he did.
That is one explanation. The other is that Mr Obama’s intellectual development froze around the time he first encountered socialism. He is exceptionally good at reading out from a teleprompter, be that on the campaign trail or when addressing an audience of 12-year-olds. When he is left to articulate complex thoughts of his own, he fails.
The fact is that Mr Obama has a talented, cynical team around him who have been succesful in constructing a narrative in which Mr Romney is a comic villan who wants to ruin the poor and open windows on aeroplanes. Stripped of these people, he has no memorable policies and very few discernible convictions. The emptiness we saw on Wednesday was the real thing.
Jay Leno took some surprising jabs at Obama and his handling of the economy and jobs on Thursday. “I love how the politicians capitalize on this kind of thing, like the minute the replacement refs were fired, President Obama said, See, sometimes losing jobs can be a good thing. Its a good thing…. A new survey out today shows how much time we waste every day in our lives. For example, we waste seven minutes in line every time we go to get coffee, 28 minutes getting through airport security, four years waiting for Obama to do something about the economy. Every year, we waste a lot. We wasted a lot of time.”
The General Confederation of Greek workers (GSEE), the union of civil servants (ADEDY) and unionists affiliated with the KKE communist party began their first face-off with the young Greek coalition government.
These unions have prevented flights, created havoc with local transportation and have closed the services of public offices. The demonstrations are occurring in about sixty five cities and villages including Athens.
The strike includes air traffic controllers, hospital workers, ship workers and even tax collectors.
Unionist Despina Spanou… “We call on everyone to take part in the strike and resist the austerity measures that hurt Greek people and the economy,”
The Federal Reserve has announced it will begin another round of quantitative easing. The central bank has said it will buy up $40bn of mortgage backed bonds a month to try and stimulate the housing market.
Economists believe QE3 could see the Fed buying up $1.5 trillion in total. This latest bid to stimulate the economy is being called “Operation Twist”. The Fed have also pledged to keep interest rates at the current record low until 2015.
However, critics argue that QE 1 and 2 were largely ineffective; that you cannot keep printing money indefinitely; and that it may do more harm than good. Some Republicans are saying the move is political, and Romney has said that he would replace Ben Bernanke as chairman of the Federal Reserve if elected.