Commentary: A financial crisis is underway, as demand collapse ripples through companies across the world

Unlike the crash from 2008 to 2009, which was triggered by liquidity shortages in financial markets, the COVID-19 crisis involves fundamental solvency issues for firms and industries well beyond the financial sector.

The US economy has come to a virtual standstill, with most of the services sector shut down, industrial activity disrupted, and a red-hot labour market giving way to a tidal wave of unemployment in the space of just a few weeks. In some respects, China’s command economy is better positioned than market economies to withstand such massive shocks, because the state can marshal national resources beyond the limits of conventional macroeconomic tools and provide direct support to enterprises and banks.

Making matters worse, some of these countries must cope with capital-flow reversals, depreciating currencies, and plummeting export demand. Others face formidable debt loads that are becoming only more difficult to finance. Central banks, at least, are stepping up to the challenge. The US Federal Reserve has taken extraordinary measures to bolster financial markets through asset purchases, and to provide dollar liquidity to many foreign central banks.

United Kingdom United Kingdom Latest News, United Kingdom United Kingdom Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Football: Premier League's transfer market bubble set to burstThe financial squeeze put on Premier League clubs by the coronavirus crisis could be felt across the continent in the coming months as the well to ...
Source: ChannelNewsAsia - 🏆 6. / 66 Read more »

Grab CEO says virus is 'biggest crisis' in company's history[SINGAPORE] Grab Holdings chief executive officer Anthony Tan warned that the coronavirus is creating significant challenges for the South-east Asian ride-hailing startup that will require 'tough decisions' about cutting costs and managing capital. Read more at The Business Times. GrabSG Probably glad they diversify into food delivery earlier and offset losses from ride hailing. GrabSG Companies like this are built on series funding from investors who look to capitalise on valuation from stocks which does not match the profit/losses. So will investment money dry up now and these companies left to drown in their debt?
Source: BusinessTimes - 🏆 15. / 51 Read more »

Dash for emergency cash provokes fund industry backlashAs companies pull the emergency cash cord to help them through the coronavirus crisis, shareholders have been split by an easing of the rules to ...
Source: ChannelNewsAsia - 🏆 6. / 66 Read more »