Authored by Marc Saxer via ConsortiumNews,com,
The corona-crisis sends shockwaves through political, economic and social systems. The status quo simply cannot continue…
No one knows how long the pandemic will last, how many people will fall ill, how many lives the coronavirus will claim. But the economic and political consequences of the outbreak are already emerging. Measures to contain the pandemic are disrupting public life around the world.
Starting with China, production has come to a standstill in one country after another. Global supply chains are broken. You don’t need a lot of imagination to see a wave of bankruptcies approaching in many industries where every last cent counts.
In the past few days, panic buying has dominated media coverage. However, anxious consumers tend to postpone larger purchases. When shortages appear, consumption also drops. These upheavals are likely to cause the already sluggish European economies to slide into recession.
The sudden slump in Chinese demand has shaken the commodity markets. After the Organisation of Petroleum Exporting Countries (OPEC) could not agree with Russia to cut production in order to stabilise prices, Saudi Arabia changed its strategy and flooded the markets with cheap oil. As a result, the oil price plummeted to historic lows. In the short term, this might provide a measure of relief to industry and consumers. However, oil price wars, fears of recession and calamities on the bond markets are causing the stock markets to crash. Only a far-reaching intervention by all major central banks has so far staved off a financial crunch.
The Economic Response
Some countries, Germany in particular, have quickly launched extensive packages of measures to cushion the impending economic crisis. After some initial wavering, the United States is also planning a comprehensive economic stimulus, including the unprecedented dispersal of helicopter money. Whether …
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