Is an economic/market crash happening or about to happen?

[Vendrah]

Here it is the google fast-lazy translation of a superficial news on a Brazilian website from the left:
Title: 2020 crash: the global financial bubble bursts
Sub-title: After the Brazilian stock exchange triggered the circuit breaker and suspended operations on Monday (9), the US stock exchange also paralyzed negotiations. The Dow Jones, the main index of the New York Stock Exchange, opened down 6.71% and business shutdown raised the perception that the global economy is close to a crash

"After the Brazilian stock exchange triggered the circuit breaker and suspended operations on Monday (9), the United States stock exchange also paralyzed negotiations amid a sharp drop in international oil prices and a retraction in the market world financial system. The fear of investors is that the crisis will spread and there will be a crash, a bursting of the speculative bubble, pushing the stock price down.

In the United States, the Dow Jones, the main New York Stock Exchange index, dropped 6.71%. Business was interrupted for about 15 minutes when the S&P index reached 7%, in an attempt to prevent a further sharp decline in stocks. In the Brazilian market, on the other hand, the stock market opened in a fall and dropped by more than 10% in the early hours of the morning and the dollar shot up, trading at R$ 4.80, despite the fact that the Central Bank burned international reserves by injecting US $ 3 billion the market to try to stem the surge in the US currency against the real."

Google translate seems to got better.
Any international sources on this? Is it real or some sort of "leftist drama"?

 

[Virtual ghost]

My media say that oil price is also crashing.

 

[Virtual ghost]

 

[Vendrah]

My media say that oil price is also crashing.

Brazilian oil/petrol company, "Petrobras", dropped about 20% on the market just today.

 

[Tennessee Jed]

The stock market decline is not that big a deal right now. It's mostly just a signal that the markets are starting to get genuinely concerned about all this coronavirus stuff.

All told, over the last couple weeks the stock market has declined to back where it was a year ago. It has declined 18% from its peak in mid-February of this year. To put that in perspective, a decline of 10% is called a correction. A decline of 20% is called a bear market.

The stock market is basically predicting that the economy will slow down due to people being afraid of the coronavirus and staying home and NOT spending money on things like cruises, restaurants, travel, etc. With less spending going on, that means less profits and less growth for business. The bad news about the coronavirus is really grabbing headlines right now, so the stock market is correcting downward quickly to factor in that news.

Once the stock market hits bear market territory (20% decline from its peak), it means that stockholders are expecting a recession. The US hasn't seen a recession in a decade or so. Recessions can be pretty ugly. If consumer spending shuts down enough, business that depend heavily on recreational spending could go under and the economy could really shrink a bit.

On the other hand, if the coronavirus starts to taper off and be less of a crisis in coming weeks, the stock market could pop right back up to its peak again in a matter of days. A lot is simply going to depend on what happens with the coronavirus.

Tl;dr version: The stock market is just reflecting the coronavirus news. The stock market is trying to figure out and predict how much the coronavirus will eventually slow down the economy. So far the losses are merely "paper losses." But if the stock market remains depressed long enough, it becomes a strong signal that a recession may be approaching.

 

[Vendrah]

Some people on the comment section are saying that this could be the new 1929 crysis, and that it should get worse in the next few days.

 

[Tennessee Jed]

By the way, oil prices are a different market from the stock market. Oil = commodity markets. The two markets (stocks vs commodities) interact, but they're not the same thing.

Oil prices are dropping because oil fuels the world economy. So like stocks, the oil market is predicting an economic slowdown. But oil reflects other things as well. The Saudis and the Russians are kind of having a price war on oil, and that's driving down oil prices as well.

 

[Tennessee Jed]

Some people on the comment section are saying that this could be the new 1929 crysis, and that it should get worse in the next few days.

The markets will follow the coronavirus news for a while. If the coronavirus news continues to be highly negative, the stock markets will stay depressed for a while. If the coronavirus news improves, the stock market will improve.

At this point, the decline in the stock market is more of a "prediction" of bad times ahead rather than anything fundamentally wrong with the economy currently. But if the coronavirus news continues to be highly negative, people will get increasingly spooked, and it really will start affecting the economy negatively.

 

[The Cat]

Some people on the comment section are saying that this could be the new 1929 crysis, and that it should get worse in the next few days.

Some people say that about any dip.

 

[Virtual ghost]

Some people on the comment section are saying that this could be the new 1929 crysis, and that it should get worse in the next few days.

Of course, the world is sitting on downright bizarre amount of debt and this virus is likely to disrupt the income of just about everything on the plant. Global debt is somewhere around 280 TRILLION $. Therefore once a real avalanche starts there is no one that can really hold this.

 

[Tennessee Jed]

Of course, the world is sitting on downright bizarre amount of debt and this virus is likely to disrupt the income of just about everything on the plant. Global debt is somewhere around 280 TRILLION $. Therefore once a real avalanche starts there is no one that can really hold this.

Nope. At least, not in the US. A bear market move is pretty fierce, but by itself it isn't the sort of thing that starts "avalanches." Again, the market is "predicting" trouble ahead, and right now it's doing a big move downward to factor in the coronavirus. But bear markets occur without triggering "avalanches."

A lot will depend on what happens with the coronavirus in coming weeks.

 

[Vendrah]

Of course, the world is sitting on downright bizarre amount of debt and this virus is likely to disrupt the income of just about everything on the plant. Global debt is somewhere around 280 TRILLION $. Therefore once a real avalanche starts there is no one that can really hold this.

You kind of got a point, but I think there is one thing about these debt... And its the interest rate.
Does these debts, without interest, are already paid?
I think yes is a good guess. And if it is, this is means that the people who are on the side that give loans wont truly care to really wanting anybody to really pay the whole debt. As long as they keep money flowing into them and them being able to control governments and stuff, they will never come to charge these debts for real. They will keep these debts into generations if they can. At least, I really think so.

At the same time, these debts are the tool for the neo-"liberalism" and libertarian stuff.
The process is simple, they wait irresponsible/dumb/disonest leftist politicians to put government into some debt (if they dont do it themselves) with high interest rate, and then just later they put some politician related to their cause to use the debt to justify the reduce of the state by selling state companys and reducing/limiting services access. Then the market takes control, and guess who controls the market but wants we to think nobody controls it...

I dont think its going to crash. Its their tool, these people wont create a crisis out of it because they would lose that tool.

 

[Lark]

what is this "leftist drama" you speak of?

 

[Vendrah]

what is this "leftist drama" you speak of?

Leftist drama is when a website/news source, aligned with the left, amplify the size of a crisis or some issue, when right-wing is in power.
Rightist drama is when a website/news source, aligned with the right, amplify the size of a crisis or some issue, when the left-wing is in power.

They do it all the time, both sides, at least here in my country.

 

[Virtual ghost]

You kind of got a point, but I think there is one thing about these debt... And its the interest rate.
Does these debts, without interest, are already paid?
I think yes is a good guess. And if it is, this is means that the people who are on the side that give loans wont truly care to really wanting anybody to really pay the whole debt. As long as they keep money flowing into them and them being able to control governments and stuff, they will never come to charge these debts for real. They will keep these debts into generations if they can. At least, I really think so.

At the same time, these debts are the tool for the neo-"liberalism" and libertarian stuff.
The process is simple, they wait irresponsible/dumb/disonest leftist politicians to put government into some debt (if they dont do it themselves) with high interest rate, and then just later they put some politician related to their cause to use the debt to justify the reduce of the state by selling state companys and reducing/limiting services access. Then the market takes control, and guess who controls the market but wants we to think nobody controls it...

I dont think its going to crash. Its their tool, these people wont create a crisis out of it because they would lose that tool.

Well the news is that neigbouring Italy as a whole is going into a quarantine in order to save the continent. However the country has weak economy and public debt of 135% of GDP. However since most of income comes from tourism and food exports that means they will not be able to pay anything to anyone if this goes south. What will probably cause "traffic jam" in global economy that will have domino effect.


Yes, this is a tool for certain groups. However those people didn't plan that something can just sweep away the economy with one blow. This is exactly why there seems to be panic, they didn't really plan for this.

 

[Vendrah]

Well the news is that neigbouring Italy as a whole is going into a quarantine in order to save the continent. However the country has weak economy and public debt of 135% of GDP. However since most of income comes from tourism and food exports that means they will not be able to pay anything to anyone if this goes south. What will probably cause "traffic jam" in global economy that will have domino effect.


Yes, this is a tool for certain groups. However those people didn't plan that something can just sweep away the economy with one blow. This is exactly why there seems to be panic, they didn't really plan for this.

Makes sense, but...

Dont forget that, if these groups are intelligent enough, they can do some sort of replacement to the government, so they could pay something to solve the crisis and then pose in the end as philantropic heroes and tell everybody that market can self-heal with an invisible hand (theirs).
That is, if their stupidity from pride and greed dont prevent them to doing so. They could come with that idea that nothing comes from free, try to use the crysis to charge high prices, and then.. Then it will blow.

 

[Virtual ghost]

Makes sense, but...

Dont forget that, if these groups are intelligent enough, they can do some sort of replacement to the government, so they could pay something to solve the crisis and then pose in the end as philantropic heroes and tell everybody that market can self-heal with an invisible hand (theirs).
That is, if their stupidity from pride and greed dont prevent them to doing so. They could come with that idea that nothing comes from free, try to use the crysis to charge high prices, and then.. Then it will blow.

Maybe, but that is in the case that situation stabilizes fairly quickly. What maybe will be the case. However if global chain reactions start this will be very hard to control. Hopefully that will not happen but it is possible. The whole global economy is both interconnected and pretty improvised, therefore just one serious glitch over time can make serious damage.

 

[Vendrah]

Maybe, but that is in the case that situation stabilizes fairly quickly. What maybe will be the case. However if global chain reactions start this will be very hard to control. Hopefully that will not happen but it is possible. The whole global economy is both interconnected and pretty improvised, therefore just one serious glitch over time can make serious damage.

We will have to wait.

Please keep posting news.

My family complains by my lack of disconnection to these news. I hate if my country´s mainstream media, some news you post helps me avoid them.

 

[Virtual ghost]

We will have to wait.

Please keep posting news.

My family complains by my lack of disconnection to these news. I hate if my country´s mainstream media, some news you post helps me avoid them.

Here is official version of what I said. This will be a serious economic disaster.


Italy orders total lockdown over coronavirus

 

[Luminous]

Warren Buffett: Don't panic about coronavirus

The fewer people who panic, the better.