For the last three weeks the stock market has been crashing at rate never seen before and right now, history is being made in our eyes. In the previous six trading sessions, we have seen the stock market register historic single day point crashes. For example on Monday the Dow Jones Industrial Average crashed by 2,997 points. Words like devastating and shocking are not enough to express what is happening in the markets. When this is put into perspective, it means that the crash we witnessed on Monday is several times bigger than the worst day in the 2008 financial crisis. In the worst day in 2008, the market dropped by 777 points and this means that the 2,997 points drop on Monday is nearly four times than the 2008 worst day in the markets. This volatility is as a result of the global panic that is freaking investors causing them to liquidate their positions in the markets.

On Monday the Dow had it worst drop since the 1987 black Monday market crash. This has happened despite the efforts by the Federal Reserve to stimulate economic growth. The whole stock market has crashed and overall the Dow Jones Industrial Average is down 31 percent from the all time highs the market had registered at the beginning of the year. This crash means that we have lost all the value that the market had gained for the last 3 years in less than 20 trading days. The banking sector stocks have been hit in a big way. On Monday, the JPMorgan Chase and the Bank of America were down more than 14 percent. The Citigroup stocks have already lost 19 percent of their value while Morgan Stanley is down 15 percent. This is how bad things are in the markets and this can only tell us that we are already in an economic collapse.
Many companies within and outside the financial sector are experiencing a lot of disruption and financial difficulties. Exxon has maintained an A+ credit rating for years but now they rating have gone down. Their stock price has also collapsed from $350 to$130 within a month. Boeing is also in big trouble and the S&P committee has reduced the credit rating of Boeing by two notches from A- to B because it cash flow for the next few years will be weaker than expected because of the troubles they have with the 737 MAX. At the same time, this global disruption in air travel means that Boeing will receive fewer orders and this will further hurt their cash flow. Boeing is an example of how giant American companies are registering week cash flow because of this economic crisis. It is just a matter of time before we see many companies being bailed out.
It looks as if the whole economy is shut down and in the last few days we have seen bars and restaurants being closed all over the united states. Schools have also suspended learning activities for a foreseeable future. The whole nation is literally shutting down and in the first quarter of the year our economic numbers will be an absolute disaster. Because of this economic downturn, many businesses are already collapsing and they are crying to get bailouts from the government. The airline sector is suffering and some companies will have to file for bankruptcy by the end of this month if this economic situation does not change. The American airlines right now needs about $50 billion aid from the government in form of loans, tax reduction and grants to help them recover from the loses they are making. At the same time, millions of Americans are losing their jobs. The government has already taken a move to close movie theaters, bars, restaurants and gyms and this means that many people are just about to flood the Department of Labor to applying for unemployment benefits. According to experts, more than 80 million jobs will be affected and this will be more than half of the jobs in the entire economy. According to Moody’s Analytics, this will be in form of layoffs, fewer working hours, wage cut and furloughs. In one way or the other, millions of American workers will be affected.
Some conservative and liberal economists have been suggesting that the government should give every adult American citizen $1,000 to help people in these tough economic times. Of course this is bad idea because the economy is not doing well and pumping more cash to the system will result to a painful inflation. This is just the beginning and things are already unbearable and the question is what will happen a few months down the road. This is just the beginning of a big economic storm and what has happened so far is nothing compared to what is coming. This is the edge of the storm and it looks as if things are getting out of control; the stock market is plummeting and economic numbers are horrible. This might be just the beginning of the collapse of the entire system.

Read the full transcript here: https://www.epiceconomist.com

Music:
CO.AG Music https://www.youtube.com/channel/UCcavSftXHgxLBWwLDm_bNvA

Epic Economist

View all posts

Add comment

Your email address will not be published. Required fields are marked *