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  • Daniel#MD

    2019-2020 Financial Crisis

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    The world is moving towards a new global economic crisis, amplified by the abolition or withdrawal of major actors from the free trade agreements that led to growth and efficiency, but also the prospect of the American-Chinese commercial war, postponed in the last moment of the signs of the collapse of the New York Stock Exchange by President Donald Trump.

    The economic crisis caused by wrong policies and the hand of man

    The pessimists have made a reputation from all the annual global economic crises, or at least regionals. If it is not a problem if they come and behind the predictions, a serious theory meets the domain's requirements, a Nobel prize can also come.

    The case of Robert Shiller predicted the 2008 crisis, which is famous through the estrogenic announcements of numerous crises and after that moment. Crises that never happened before.

    On the other hand, the cruel reality translates into clear figures and data that can no longer be challenged. The reduction of economic growth and the breaking of economies occur and are announced daily on various meridians.

    But the last quarter has brought the most powerful signs of entry into the global economic crisis, mainly targeting the most important economies, which are not feeling very well either.

    Moreover, global organizations, the IMF in particular, had to keep reviewing overall economic growth, reaching 3.2% for 2019 and 3.5% for the next year. This is about the smallest global growth since the global economic crisis of 2008.

    When over the natural course of economies comes from step-by-step developments, predictable, direct human action – sanctions, leaving trade agreements, Brexit – then entering the recession are more likely clearing formulas. They're getting tougher.

    All the more so in the case of the US-China commercial war, between the two largest economies of the world, with the introduction of a 10% tax on 1 September for products worth 300 billion dollars by the US, and in December a new tax on new product categories, on account of the significant continuation of the rebalancing of the Sino-American trade balance.

    The recession of 5 major global economies

    Cutting-edge data sends alarming messages. It is not just a repeated decline in global economic prospects and forecasts, but even concrete data, dry, that give a harsh verdict and show that at least 5 of the first global economies are in the lip of the recession. And we're not talking here about the US and China.

    In the SECOND quarter, Germany's economy, the Fourth of the world, contracted. Germany is a massive exporter in China and the US. The two countries enter the commercial war, mainly aimed at manufacturing areas, which advertise fewer products required from Germany.

    Also, in the IT area, digitization, new technologies, Germany is under pressure from the US and the debates on Huawei, technology, and partner that could be missing from the 5G market.

    Moreover, the unreported EU trade war with the American Giants does not help. There is no competitive force producer in the continent that can compete with the American and Chinese giants.

    The German automobile industry is in trouble.

    Also, the Brexit prospect, which buries London, fundamentally affects, in perspective, Germany, and the EU entirely, by losing the second economy in the European conclave.

    Incidentally, Britain is already in recession in the 2nd quarter, for the first time since 2012, and the chance of a miraculous return over the summer, to avoid the formal recession, is meager. Moreover, an unagreed Brexit will blow up the British economy and stronger.

    Italy encounters the new government crisis, determined by Salvini's bind, with a debt that is difficult to compensate, and especially with the famous zero growth, with the prospect of entry at any time in a formal recession, if creative accounts and fireworks still compensate the informal one.

    China is at the lowest historical growth, while the prospects of the trade war with the US do not look good. Threats with the sale of American Treasury bills and the game with currency to compensate for American supra-taxes only announce a spiral of Constraints and collapse for the two conflicting actors, the US and China, and all global players.

    800 to puncture the fall of Dow Jones, an infallible indicator until today announcing the global crisis.

    And the stock markets around the world have also reacted to the unpredictability and especially to the American-Chinese trade war and the prospects of Beijing's manipulation of the Renminbi Chinese currency. And on a financial level, the measures announce the crisis.

    Concerned investors see themselves in the advertise softening Bank of America, which announces a global recession in the next 12 months with an overwhelming degree of probability, from the relevant customers' questionnaires.

    Mexico and Brazil are also on the list of poor industrial production and services, combined with rising unemployment. In the coming weeks, the data will formally confirm the recession in the two Latin American states.

    The US Federal Reserve cut interest rates on loans for the first time 11 years after the derivatives crisis. At the same time, the European Central Bank announced the resumption of economic stimulus funding in September.

    China is under pressure to cut interest rates for the first time in four years. And central banks in India and Thailand, to quote only the economies of the world's top 20 countries, are drastically cutting interest rates in a bid to inject credit, money, and activity - a stimulus to the economy.

    Across the line, the data looks increasingly discouraging for the world economy.

    Here are three major reasons for entering a global crisis:

    The trade war between Beijing and Washington, which affects investor and market confidence. A continuation of the trade war, not a worsening of it, leads to the loss of half a percentage of growth in 2020, globally, the IMF argues.

    The ability of banks and global finance to recover the situation

    Then there's a big concern about the inability of central banks to intervene effectively and on time to adjust markets and panic, hence investors' negative reaction.

    Thirdly, the services sector, which has raised the global economy so far, could follow the manufacturing production curve on a sharp downward curve, hence the current world economy's worsening situation.

    These are the last moments to predict the entry into the global economic crisis by business economists, who are listened to in such predictions. After September, it will already be too late. Not because the crisis would no longer have happened, but because the whole world will already know the recession.

    And the mechanisms of economic recovery are still under debate. They are confined to austerity policies - challenged by populists, integrated global markets - challenged by anti-globalists, integration, and wider spaces of free trade, actions, and policies challenged by nationalist-sovereignists mosaic majorities and chronic instability in countries where majorities that can still exclude populists from the government.

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