COVID 19 AND ITS FINANCIAL IMPACT

chanakyakripa

After the coronavirus crisis, the financial crisis will come. Eveneconomists, who are masters at making predictions, seem to be right this time. Forthere is a certain unanimity regarding this opinion. It remains to be seenhow big this crisis will be, as today's economy is guided by what happens inthe world of finance. The countries of Europe are now busy protectingtheir banks and are trying to find out how deep this other tragedy that threatensthe planet will be.

In recent years, at a later stage of industrialcapitalism, large multinational companies have been concerned primarily withthe value of their shares on the stock exchanges. The products theymanufacture mean only the basis and the pretext for the subjective valuation ofthe shares traded on the exchanges. Because that's where easy money andhigh financial compensation come from, millionaire bonuses at the end of eachyear for top executives responsible for successful strategies. Even in theformidable crisis of 2008, saved by the aid and help of the States, the bigcompanies did not fail to pay generous bonuses to their boards of directorsand, mainly, to their executives.

The stock exchanges, as well as the exchange rate, are, as weknow, manipulated by the great speculators, led by the powerful investmentfunds supplied by the savings of the very rich but also of the middle classesof the whole world.

That is how the financialized capitalist machine of moderntimes works. A new fact, however, emerged with the Covid-19 crisis, as theforced paralysis by quarantine made clear the dependence of capital in relationto work. Hence the anguish and radical urgency of conservative andfar-right governments to end the stage of worker confinement right away, whichdoes not consider the multiplication of the number of deaths in the sadscenario of this pandemic. Politicians panic at the prospect of food shortagesand social unrest. Cash aid paid to unemployed workers is a way to preventfire.

Covid-19 therefore came to affect the market and now we aretrying to assess what the impact on the economy will be. For the eurozone,the calculation is for a fall of between 3% and 10% in the Gross DomesticProduct (GDP) of the different countries, that is, the sum of everything thatis produced. Professor of History of Economics Albrecht Ritschl, of the London School of Economics , predicts a drop of around twentypercent. Before the virus, the outlook was no longer optimistic.

In a continent so dependent on tourism andexports, the effect of the new coronavirus was devastating. Spending onpublic health measures and unemployment aggravate the situation and therecession is more than likely, which also inhibits investment in production.

The governments of Europe are studying measuresto face the economic crisis that has already overcome the containmentfloodgates. They consider lowering company taxes and securing loans sothat they can meet their commitments to salaries, banks, suppliers and thestate itself. For small and medium-sized companies, they seek to make taxpayments more flexible and guarantee low-interest financing. For families,they advocate subsidies for those who are unemployed, facilities for payingdebts related to housing and price surveillance in basic necessities. TheEuropean Union has just approved a € 500 billion non-repayable aid to thecountries most affected by the crisis.

Once again the market asks the State for help. Those whopoint the accusatory finger and ask for the minimum state, as if thepolitically organized nation were responsible for society's problems, knock ongovernment doors for help. For a moment they forget the theses ofprivatization of public services because they were the only ones capable offacing a planetary disease.

Banks, which are an especially vulnerable sectorthat sways in the face of crises, are being capitalized by states, which meansa taxpayer debit account.

Measures capable of tackling the pandemic willcertainly increase States' debt. Europe discusses the launch of eurobonds, also called coronabonds,offer the sameinterest in all eurozone countries. And it expects the market to manifestitself in the face of the financial advantages offered.

There is a consensus that health and life arethe fundamental assets that must be preserved. And also that an economicand financial crisis must be avoided, which can represent, right after thepandemic, a new and also tragic experience for humanity.

SOURCE: https://www.cartamaior.com.br/?/Editoria/Politica/O-novo-velho-continente-e-suas-contradicoes-Apos-a-doenca-a-crise/4/47550