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US recession: What can the 2008 recession teach us about this one?

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A house up for foreclose in 2008, next to closed for Covid-19 sign in 2020Image copyright Getty Images

Layoffs, stock market crashes and bailouts – America has been through this before. Can we learn from the Great Recession of 2008, or are we doomed to repeat the mistakes of the past?

Then: Wall Street blew up the economy

The Great Recession was not caused by a deus ex machina or a stroke of bad luck – it was caused by some fundamentally poor choices made by Wall Street.

During the housing boom, bankers had given mortgages to people with credit and income challenges.

Many banks then sold these mortgages off as investments called mortgage securities to other banks, who bundled the debt with other similar loans. The idea was that these bundles would make the bank more money when the loans were paid off, but when foreclosures rose, many banks began to fail.

In order to fix the problem, the government passed reforms – like the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 – and created the Troubled Asset Relief Program (Tarp), a $700bn programme to let the government bail out failing banks.

At the time, bailing out big banks and failing industries like the auto sector was highly controversial – many felt it was rewarding companies for making bad decisions.

But ultimately, increased oversight, coupled with financial support from the government, has been credited with keeping the financial system from completely collapsing.

Now: Main Street has collapsed

The current recession is not caused by a broken link within the system, but from an external threat, a worldwide pandemic. In order to keep the disease from spreading, many governments forced non-essential businesses to close and brought in lockdown orders, bringing many industries to a grinding halt.

But luckily, the overall financial system is in much better shape this time around – in part because of some of the policy changes made in response to the 2008 the recession.

Markets have already partially recovered, and the Dodd-Frank act has helped make banks much healthier and able to withstand the market downturn, says Todd Knoop, an economist who researches the history of recessions at Cornell College.

“Policy makers have developed a script – while details of that script has changed over time, they have a much better idea of what to do during a crisis than they did during the Great Depression, or even in 2008,” he says.

But helping businesses has proven trickier, says Duke University economist Campbell Harvey.

“I don’t even call it a bailout. A bailout to me means you’re bailing out somebody that’s done a bad job. Whereas this is more like aid,” he says.

The scale and the complexity of delivering this aid has proved a challenge as well. In the US, about 40% of the population is employed by over 30m small businesses.

“In the Great Recession, the policy makers could summon the CEOs of the top 25 financial institutions into a room and literally hand out their bailout cheques,” he says.

“Whereas this recession, it’s not really the financial institutions that are being hit, but (millions of) small and medium-sized businesses.”

Then: The system broke down

Prior to 2008, the prevailing attitude amongst economists and regulators was that markets would take care of themselves. It seemed to be working – just months before the economy began to shrink, the stock market had reached an all-time high.

But the palace was built on quicksand. When foreclosures began to rise, banks that had heavily invested in mortgage-backed securities, which are investments tied to other people’s home mortgages, began to fail. People lost their retirement savings, and companies completely unrelated to either banking or real estate lost investments they needed to keep their businesses afloat.

It took many by surprise.

“I think the reason why most economists didn’t understand how bad this was, is most economists couldn’t wrap their mind around how stupid some of the players were being,” Mr Knoop says.

To fix the problem, the US officials unveiled a number of programmes and policies aimed at getting the country back on its feet, including passing two separate stimulus packages worth approximately $1 trillion (£800bn) between 2008-2009.

The Federal Reserve cut interest rates to near zero and launched a quantitative easing programme, which is when the Fed buys investments to increase cash flow.

Now: The system has transformed

It’s still early days, but politicians seem to have learned some of the lessons of 2008.

“Now we expect the government to take a very active role,” Mr Knoop says.

It took over six months from the collapse of the 85-year-old investment bank Bear Sterns – one of the earlier bank busts in the recession – for the Fed to drop the interest rate to zero in 2008.

Image copyright Getty Images

This time around, the Fed slashed interest rates to zero within days of President Trump declaring coronavirus a national emergency and spent $700bn on a new quantitative easing programme.

Just two weeks later, Congress passed a $2.2 trillion stimulus package to help the millions of Americans out of work, and a second stimulus may be on its way.

But how we go about our day-to-day lives, from taking public transport to working from an office, has completely transformed and the “new normal” could be here to stay for a while. Some companies like Canadian tech giant Shopify may get rid of offices altogether, while others may look into automating certain jobs.

“This is really destroying people and it’s destroying human systems, in the way we share ideas and technology and interacting with each other,” Mr Knoop says.

Then: It was like a slow-moving panic

One of the defining aspects of the Great Recession was its length.

The National Bureau of Economic Research retroactively noted that the economy first began shrinking in December 2007. Bear Sterns investment bank collapsed in February 2008, but it wasn’t until September that the Dow Jones Industrial Average fell 777.68 – its largest point crash in history, until 2020.

Meanwhile, jobs began to slowly disappear. By October 2010, the unemployment rate had peaked at 10%.

Recessions are fuelled by uncertainty – uncertainty that the financial system can really recover, uncertainty that one’s job is safe.

“If there’s a lot of uncertainty, companies don’t make capital investments and consumers don’t spend,” Mr Harvey says.

During the Great Recession, this uncertainty dragged on. Even after the stock market recovered, and production increased, employment lagged, and it wasn’t until 2017 that it returned to its pre-recession lows.

Now: It’s like a hurricane

If the Great Recession was a long-term degenerative illness, then the coronavirus economic downturn is like a natural disaster that takes out everything at once, says Mr Harvey.

“You just can’t pull out the playbook of 2008 and apply it to 2020,” he says.

“With a pandemic, there’s no place to really hide – everyone is affected around the world.”

Between March and April, the unemployment rate jumped 10 points to over 14%. GDP – the value of goods and services made in the US – dropped by nearly 5%.

But there is a silver lining, Mr Harvey says.

The uncertainty of this recession is mostly biological – in the beginning, we didn’t know how deadly the disease was, what its side effects were, or what kinds of treatments might be effective. But as time goes on, science advances.

As soon as a vaccine is developed, companies will be able to reopen without fear, which means they can rehire people, Mr Harvey says. Whereas in 2008, it wasn’t clear when it was going to end.

There are signs the economy is already starting to recover – data from May released on Friday shows that the unemployment rate has gone down to 13%, a slight decline from April’s high of 14.7%.

Everyone won’t make it, Mr Harvey says – some will close their doors permanently.

“The key thing for policy makers is to minimise the collateral damage,” he says.

That means ensuring that stimulus packages are hearty enough to keep good businesses on life support until they can reopen their doors.

But some are sceptical everything will start right back up again.

“When the economy starts up, when social distancing comes to an end, when we have a vaccine, will employment go right back up to where it was the day before the pandemic hit?” asks Mr Knoop.

“Who knows, maybe, but I think it’s kind of unlikely.”

Source: https://www.bbc.co.uk/news/world-us-canada-52815357

Coinpedia

Ethereum Price Smashed $2000, $3000 Incoming At Lightning Speed!

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Ethereum Price (ETH) May Hit $10,000 This Cycle!

The Ethereum price that is known to maintain a stable price movement, finally broke the previous ATH to form a new one. It took more than a months time to regain its lost position above $2000, yet sustained successfully. 

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The price took more time than expected to break the $2000 barrier, yet $3000 may be approaching at rocket speed. As predicted by founder of Gokhstein Media, David Gokhstein, the next stop for the ETH price is around $3,900. 

With the continued bullish trend and intensified rally, the price is expected to surge to the highest levels. According to an analyst and Crypto Youtuber, Young and Investing, the Ethereum price may hit $10,000 within the current bull run.

With the accelerated bull run, many analysts believe Ethereum could lead the market instead of Bitcoin too. Therefore providing a huge opportunity for the altcoins to boom within the ETH bull rally. 

Is Altcoin-Season On the Cards?

Many altcoins normally pop-up with the surge in the price of the second dominant crypto Ethereum. Currently, ETH price is trading around its new all time high around $2152 and expected to fly high. Therefore, many small cap altcoins are expected to rise from ashes and pump more than 50x or even 100x also.

Many analysts believe the Altcoin Season of 2021 is on the way and is expected to be the greatest season ever. According to a popular analyst, XRPcryptowolf, the season will reach its peak during the summer.

Moreover, the coins which are believed to be dead or not performing are also expected to rise. One of the analysts, MC also has given a brief idea on which all coins might pump in the current AltSeason.

Collectively, the breakout of Ethereum price has led to initialization of the most awaited AltSeason of 2021. The ETH price rally is expected to intensify in the coming days, that might smash $10,000 soon.

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Source: https://coinpedia.org/ethereum/ethereum-price-to-surge-to-3000-soon/

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Coinpedia

Lark Davis Addresses 3 Most Common Criticisms Tagged With Cardano

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Popular New Zealand-based crypto analyst Lark Davis pointed out the three criticisms faced by the Cardano project

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Cardano Is Overvalued

He says that Cardano’s biggest use case right now is staking. The current price of Cardano is based on speculation rather than real demand for the token based on usefulness and need among developers and users.

Right now, the basic economics that will drive future demand are simply not there. Also there’s nothing wrong or unusual about this. This is a fairly normal occurrence. We see that a lot with various assets, where the price of an asset can rise far higher than its value should be based on where it is now simply because of strong support from the market and it’s future predictions.

Even if cardano’s price is overvalued right now does not really mean that it will plunge or go down in the near future. Davis says that in such situations the opposite is likely to happen. The higher the market cap, the more serious an investment it is in the eyes of many investors, which makes the market cap go even higher and become even more serious.

Also Read : Top reasons why Cardano(ADA) Price is Poised For Massive Surge!

Nothing Is Built on Cardano

According to Lark Davis this statement is not technically true as he feels that few things are built on cardano but it lacks an ecosystem. He also states that it’s an incredibly dishonest critique of Cardano in his opinion because it is hard to have an ecosystem when there’s no smart contract functionality.

“Smart contracts are coming. The testnet is due in late April. Smart contracts are then scheduled to come on the mainnet around August… I think we’ll have at least a few dozen applications by Q1 of next year.“

Cardano Is Too Slow in Its Development

Davis says it’s fair to hope Cardano’s speed of development to pick up pace, especially considering the moderately fast rise of other projects with robust and successful ecosystems such as Elrond (EGLD) and Avalanche (AVAX).

Luckily cardano has a growing community and enthusiastic users who are willing to support the smart contracts from the day one of it’s launch. With such an optimistic community if cardano promises to deliver an ecosystem that mints people money, then it’s obvious for users and developers to eventually join this massive ADA community.

“I personally think that Cardano will prove the haters wrong this year, and that they will deliver a powerful and interesting blockchain that will become a big part of the cryptocurrency ecosystem…“

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Source: https://coinpedia.org/altcoin/criticisms-tagged-with-cardano/

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Coinpedia

CHZ Price | Chiliz Price Surged 650% in March, What’s Next for the Coin?

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The pseudonymous head of Coin Bureau who goes by the name guy, predicts that this coin has the potential to attract many users into the crypto space.

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Chiliz price has skyrocketed last month by 650% in value, making it a very important month for the cryptocurrency. In the last week, however, a pattern reversal occurred, with CHZ being overwhelmingly denominated by sellers. Things are shifting, though, as CHZ price rises once more. 

Read more : Chiliz Price Rose Like a Monster, Is It the Start of a ‘Low Cap Season’?

Chiliz is a cryptocurrency that can be used on sports and entertainment sites. Chiliz can be used like any other digital currency, but it is most commonly used on Socios.com, a website where investors and fans can use CHZ to receive exclusive rewards from their favourite teams. Special behind-the-scenes access and voting rights are among the perks.

It is worth noting that CHZ has established partnerships with top football clubs spread across the world, including FC Barcelona, AC Milan, and Juventus.

Guy says that,

“Have you been searching for that killer app that has the potential to open the floodgates and bring hundreds and millions of people into crypto? That elusive unicorn would likely be valued at a pretty penny, which means if you got into it at the right time, you could post some truly insane gains. What if that project combined NFTs, sports, and crypto? That’s the type of rocket fuel that could send it to the stratosphere… That would be Chiliz.”

I really like Chiliz as a project, the concept, and how they’re seemingly paving the way for unique digital sports memorabilia with NFTs in real-time. I also really love the idea of attaching tangible team-related perks to NFTs. That way, they have tangible real-world value and this should drive future demand.”

As of the time of publication, Chiliz price was $0.511948, with a 24-hour trading volume of $930,154,829. CHZ price also went up 1.5% over the last 24 hours. Besides, it has a circulating supply of 5.3 billion CHZ coins and a max supply of 8.89 billion.

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Source: https://coinpedia.org/altcoin/chz-price-chiliz-price-sentiments/

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Genesis Celebrates Official Launch In China, Unveiling Its All-new Vision Of Automotive Luxury To Chinese Consumers

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  • Genesis announced its arrival in China with an extraordinary event, introducing the brand to a new generation of Chinese consumers seeking true distinction in luxury
  • Athletic Elegance, the distinctive Genesis design philosophy was showcased with an unveiling of the Genesis G80 and Genesis GV80
  • To deliver the unique Genesis Experience, a new business model will be introduced in China aiming to design authentic relationships with Chinese consumers

SHANGHAI, April 3, 2021 /PRNewswire/ — Global luxury automotive brand Genesis marked its official entry into China with a spectacular Brand Night held on April 2 at Shanghai’s International Cruise Terminal, where Genesis showcased its unique Genesis brand identity, design and experience philosophy. With a stunning drone show titled the “Genesis of Genesis” sweeping over the Bund, Genesis signified its exceptional beginning in the Chinese market.

Genesis performing dazzling drone show, titled with “Genesis of You”

Jaehoon (Jay) Chang, Global Head of Genesis, said, “Today marks the beginning of another audacious chapter for Genesis. The Chinese market serves a critical role in the development of our global business, and we are very excited to present the next generation luxury for China.”

“We are excited to showcase our globally recognized products, Genesis G80 and Genesis GV80, known for the highest quality and distinctive design. We are driven by a purpose to design authentic relationships with Chinese consumers. This is our promise and our differentiator in China to deliver meaningful and stress-free experiences,” said Markus Henne, Chief Executive Officer of Genesis Motor China. “To do that, we will be implementing an all-new business model that will bring our commitments to life.”

New Luxury Defined by A Unique Brand Identity and Design Philosophy

Genesis is a brand that aspires to make true positive impact in our customers’ lives. With a fresh perspective, Genesis audaciously challenges expectations and brings a progressive attitude in order to build emotional bonds with customers based on new ideas in design and innovation. Genesis also desires to provide customers with a sense of thoughtful hospitality throughout the entire journey. More than an automotive brand, Genesis represents a lifestyle and an experience.

Every Genesis presents an intimate opportunity to explore the extraordinary Genesis vision. The distinctive design of Genesis was showcased through a special Brand Night unveiling of the Genesis G80, its mid-sized luxury sedan, and Genesis GV80, the first SUV in the lineup. Defined by their symbolic Two Lines architecture, both models are the expression of Athletic Elegance, Genesis’ design philosophy that achieves the perfect balance between two opposing characteristics: Athleticism and Elegance. Inside the cabin, the Beauty of White Space philosophy is expressed through a harmony of personal space and state-of-the-art technology.

China-tailored Strategy to Provide An All-New Experience

Genesis intends to inspire its customers of what new luxury can be. It addresses what the brand calls Generation Genesis, a generation with bold new perspectives in style and everyday life, whose refined taste in aesthetics and appreciation for distinctive design cultivates resonance with the brand spirit of Genesis. To underline this, Genesis unveiled its brand manifesto at the heart of which sits the  “Genesis of You” message-Every touchpoint with Genesis is designed to fuel the confidence of these consumers, as they embark on new beginnings, break boundaries and progress in their every endeavor. 

Genesis is establishing an all-new business model for the Chinese market, aiming to design authentic relationships with Generation Genesis and deliver meaningful, stress-free experiences centered on human-touch, convenience, trust and transparency. Genesis will gradually develop its presence in China through an omnichannel approach based on direct sales, supported by trusted agents and online sales. 

Furthermore, Genesis will ensure that every person interested in the brand receives the best one-to-one experience from a dedicated companion with the introduction of the Genesis Partner Concept. 

A transparent pricing model under the Genesis One Price Promise will be implemented to ensure a unified price across all sales channels. This unique and uncompromising brand experience will be enabled by the Genesis Digital Ecosystem.

Focus on Brand Building and Designing Genesis Experience

An essential part of the Genesis is lifestyle. Aesthetic ambition with the love for beautiful things are at the core of the brand. That’s the reason Genesis is never compromising anything on design and open to collaborate on a variety of canvases, where the Generation Genesis can be naturally met.

One of these forthcoming brand experiences, for instance, will be held in collaboration with the Shanghai Fashion Week, to create an elevated and in-depth exploration of progressive luxury style through world-class fashion concepts. Comprehensive and touchable Genesis Experience will come to life at Genesis Studios, a luxury lifestyle oasis where people can experience our cars, the arts and culture combined with Genesis hospitality. The first of Genesis Studio will soon launch in downtown Shanghai.

Markus Henne, Chief Executive Officer of Genesis Motor China, added, “Launching the brand in China represents a significant, perhaps the most important, new chapter in our brand’s history. Genesis will focus on brand building in the early stage. We will continue to reveal more highlights of how we plan to appeal to our Chinese audience. I am confident to deliver this promise and invite everyone to be a part of this journey.”

About Genesis

Genesis is a global luxury automotive brand that delivers the highest standards of performance, design, safety, and innovation. The Genesis brand is one of the highest-ranked brands in the automotive industry by respected, third-party experts including North American Car of the Year, Consumer Reports and J.D. Power and more. For more information on Genesis and its new definition of luxury, please visit https://www.genesis.com.cn

Speech of Markus Henne, CEO of Genesis Motor China, at Genesis Brand Night

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/genesis-celebrates-official-launch-in-china-unveiling-its-all-new-vision-of-automotive-luxury-to-chinese-consumers-301261651.html

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