2020 scares while some international crises. In place of the expectations of the US war with Iran came world panic about the coronavirus. Following this, talking about the actual collapse of the OPEC from-for start of a new "oil war". Monday, March 9, the stock indices fell by more than 7% — the largest drop since December 2008. Malek Dudakov — about how they see the situation in the US and what is expected.
Many economists and investors were flooded with memories of previous financial crisis. Since the collapse of the mortgage market in the United States and the collapse of two major banks — Bear Sterns and then Lehman Brothers — it's been more than 11 years. What is happening now is reminiscent of a new world crisis: Europe and China — industrial recession, world trade has stopped, the state of panic to save their business sector. Coronavirus is forcing the government to shut down for a quarantine entire regions of Wuhan in China or Tuscany in Italy, there is talk of a quarantine around the States of new York and Washington in America. Has not been canceled and going on as usual trade war: the United States and the European Union, and China.
For the first half of March 2020 the majority of global stock indexes fell back to levels three-four years ago. Alone American markets still show some "resistance": they lost about 58% of the total achieved over the presidency of Donald trump. But the General financial volatility grew to unprecedented during 30 years of values, and the quotations of energy companies in the U.S. fell below the minimum level of 2009.
Opponents of the current American President gleefully rubbing their hands: they are confident that a three-year rapid growth of stock indices is over, it is now a long and painful "bear market". At the same time, the White house itself discusses emergency plans on keeping the U.S. economy in crisis. The task is complicated by the fact that no one knows how long the threatening world economic crisis.
The epidemic of coronavirus stopped world trade and forcibly shut down production in the most active regions of China. Seriously affected South Korea, although there dynamics of new infections is on the decline, and Italy, where, on the contrary, the number of cases continues to grow rapidly. In the United States by mid-March there were a little over 500 cases of infection, two dozen people died from the coronavirus. It would seem that the numbers are quite small.
However, these statistics are largely due to the fact that the total number tested from the coronavirus in the United States remains minimal. If the government of Korea had to check half a million of its citizens, the United States only a few tens of thousands have passed the testing procedure. American doctors say that the real figures of infection is much higher than the official and may reach 10-15 million In the U.S. there is a serious shortage of testing kits from the coronavirus, and the procedure costs a lot of money for those who have no insurance, it will cost $ 2,200.
Overall, however, the damage of the coronavirus to the American economy is yet restrained. First we had those companies that have close ties with the Asian region: buy out goods and components, or, conversely, to send their products. Many of them have already managed to adapt to the rupture of relations with China in the ensuing trade war in 2018, so for them this situation was not unexpected shock. For the last 2 years from China took almost 6 000 foreign including American productions. Don't be such a trend, an epidemic of coronavirus could be much more painful for the United States.
That is why throughout the month of February the us stock markets like never even noticed global pandemic. Only in March, when the number of infected in the United States began to grow exponentially, investors panicked. An important role was played by the failure of the negotiation process of member countries of OPEC and Russia to limit production of oil to the market. In conditions when the demand for "black gold" is falling due to the slowdown in the global economy, and its proposal only increases the cost of oil fell by almost 30%. The largest drop in oil prices since 1991, affected the shares of American oil companies, although many kancevci and hope to sit out the season of low prices and wait for their growth after the completion of the epic with the coronavirus.
Against this background, American economists are working on various scenarios of the epidemic, from light to extremely heavy. According to the first of them, the "Asian tigers" will be able by early summer fully overcome coronavirus and restore the economy. In this case, world GDP in 2020 almost will not notice the consequences of the pandemic.
In the second scenario, Asian countries will not be able to the end of the year to cope with the consequences of the spread of coronavirus. Their economies will experience serious stress, also not easy to have and European countries. But the United States will emerge from the crisis with almost no consequences.
The third scenario involves a large-scale epidemic in South Korea, Italy, Japan, France and Germany, which will lead to a long economic recession. This would mean zero growth of GDP in America and the reduction of economies in the Asian and European countries as well as Russia.
And finally, fourth, the worst scenario is a global pandemic in the major countries of the world. It will lead to a new "great depression" for many years to come, and it is equally difficult for everyone, be it the EU, Russia, China or the United States.
At the moment the time economists from the United States believe that the chance to go for the easiest scenario is already missed. It remains to choose between the second and third, and hope that the situation will not deteriorate until the fourth.
Meanwhile, the administration trump is not sitting idly by: it is preparing preventive measures to save the us markets. On the real sector of the economy, the epidemic of coronavirus had not yet been affected: for example, the growth forecast for US GDP in the first quarter of 2020 remains high at 3.1% and the forecast for the unemployment rate fell to a record low of 3.5%.
However, the White house understand that such a favorable situation can change very quickly. Stock markets are already panicking, the real sector often follows them. But in a recession or crisis, the chances of trump's re-election will be low: after all, the economy is his strong point, the main aspect of the electoral program of the President of the United States.
It is now expected to apply a range of new measures to maintain economic growth. Planned new tax reform — this time, it touches is not income tax and social contributions from salaries. They can be cut, and for patients with coronavirus and does temporarily cancel. In addition, the U.S. government through the Federal budget to compensate for the prolonged paid sick leave for those affected by the epidemic.
The white house is almost officially promises to start the financial incentives most affected by the coronavirus and the fall in oil prices industries. The reference example will make the practice of saving the airline industry in the United States immediately after the events of 9/11. However, the administration trump already has similar experience: over the past two years she spent 28 billion dollars to support agricultural producers.
Parallel to this, the expected reaction from the Federal reserve. It can renew a policy of "quantitative easing" to replenish liquidity in the markets in an amount not less than $ 1 trillion. This will happen reduction of the key rate — probably back to the level of 0-0,25%. Also, the fed is able to subsidize the extension of credit crisis-affected companies, primarily small businesses.
However, the situation is complicated by the fact that for many of these measures will need to obtain approval in Congress. And he in epidemics can and do stop working. A number of legislators have already gone into self-imposed isolation: they suspect that they had a chance to contact with infected with the coronavirus. The question of when Congress will fully resume its work, is still open. For the presidential administration is not such a problem: in the extreme case, trump and his team can continue to work in a closed from all over the world underground bunkerunder the White house lawn.
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