The Fed Wants to Loosen Rules Around Big Banks and Venture Capital

A proposal from the federal reserve would loosen the restrictions on banks ability to make risky investments with customer deposits. “ Fed Chair Jerome H. Powell said the changes would “permit banks to provide limited services to covered funds in ways that do not raise the types of concerns the Volcker rule was intended to address.” Opposition claim the move will weaken the safety net and encourage the behavior the Volcker Rule was meant to prevent. The proposed changes would allow big banks to diversify the risk and make more money. It has been said this change could potentially help small banks to get involved in investments they currently could not get into on there own now. It would also allow tax advantages when investing in startups. The biggest concern is that the big banks capital investments would fail and destabilize the banks and need government bailouts which would drive up the price of insurance and hurt the small banks.

The coronavirus economic 'disaster' scenario: Stagflation

Due to the recent increase in cases of COVID-19 and global widespread, the U.S Federal Reserve has announced that they will be employing interest rate cuts down to zero, and the Trump administration is working on unveiling a stimulus plan. The virus has resulted in a global economic shock, and financial markets have taken a deep plunge. All three U.S indexes were nearly 20% below their average highs, and Italian stocks fell over 30%. Oil prices suffered their worst day since 1991 on Monday, concluding a price war between Saudi Arabia and Russia. U.S oil prices dropped over 34%, the greatest in a four year low, and all of this has happened in a matter of days. Most economists are predicted that even thought the threat of a recession is something that can be controlled, stagflation (slow growth coupled with high prices) is a real threat. Global supply shocks, labor shortages due to the fear of the virus, coupled with slashed interest rates could be a strong cause of possible stagflation. With China slowly recovering from the virus and somewhat stabilizing, the economic disaster is slowly creeping into the United States.

https://www.cnn.com/2020/03/10/investing/stagflation-economy-coronavirus/index.html

Virus Causes World Stock Markets to Plummet

World stocks have tumbled as the coronavirus continues to spread. Today, March 9th, Wall Street had its worst day since the financial crisis in 2008. The Dow fell more than 2,000 points and London's FTSE fell 100 points in three years. More than 9,000 people in Italy have the virus and over 650 people have it in the U.S. The Italian Prime Minister announced that he will issue a nationwide containment for the country as Germany and Spain have reported cases of the virus as well. Facebook even shut down it's office in London for the time being. Many small businesses and schools have closed down as well. Many people have been pulling out of the market for safety measures, it should be interesting to see how things turn around.

https://www.nbcnews.com/health/health-news/live-blog/coronavirus-updates-live-northern-italy-lockdown-anxiety-grows-d-c-n1152886

Italy Extends Virus Containment Measures to Entire Country

Italy Extends Virus Containment Measures to Entire Country  (link)

Amidst all of the coronavirus drama, Italy has taken another step to try and contain the virus by putting the entire country on lockdown until April 3rd. Italy is the second most effected country following China due to the fact that it has the 2nd oldest aging population, following Japan. According to the article, there is allowed to be no travel outside or into the country, no public gatherings, and schools have already been closed until further notice. In addition, most businesses are required to close by 6pm.

Italy has also been experiencing riots in their prisons and protests outside of them asking them to allow amnesty to its prisoners due to the virus.

What economic consequences could you see as a result of these drastic changes? Do you think Italy will remain on lockdown until April 3rd? Can you think of a more effective way this could've been handled?

Wall Street clobbered as crude plummets, virus crisis deepens

https://www.reuters.com/article/us-usa-stocks/wall-street-clobbered-as-crude-plummets-virus-crisis-deepens-idUSKBN20W1IF

As the oil prices continue to decrease, combined with the spread of coronavirus (COVID19), and its impact on world economy, Wall Street suffered its biggest one day loss since the 2008 financial crisis. Energy stocks were hit hard as the oil price war escalated between Saudi Arabia and Russia.  Slowly, but surely, we see panic among investors and shareholders. Some analysts believe that signs of recession can be seen quite clearly, and therefore there will be a slowdown in economic activity. Do you believe that we are nearing towards recession?