An imminent financial crisis?
I have recently heard a lot about a financial crisis that is upon us. I’ve seen so many YouTube thumbnails it began to worry me. Last week I wrote about a significant fall on the largest stocks worldwide; a spread of Corona Virus is getting many into panic mode. Although may are concerned, I believe there are many feel financial crises don’t impact them directly. A financial crisis does affect everyone but on different scales. I believe the word has been overused through the years and many times, causing people to become skeptics or feel that it’s more of a fuss than something they should be worried about. Nonetheless, there have been some financial crises that we have whiteness.
In the U.S:
“The financial crisis of 2007-08 has taught us that the confidence of the financial market, once shattered, can't be quickly restored. In an interconnected world, a seeming liquidity crisis can very quickly turn into a solvency crisis for financial institutions, a balance of payment crisis for sovereign countries, and a full-blown crisis of confidence for the entire world. But the silver lining is that, after every crisis in the past, markets have come out strong to forge new beginnings with some kind of turnaround. A small selection of investors even profited from the crisis.”
So why do financial crises occur?
“A financial crisis may have multiple causes. Generally, a crisis can occur if institutions or assets are overvalued, and can be exacerbated by irrational or herd-like investor behavior. For example, a rapid string of selloffs can result in lower asset prices, prompting individuals to dump assets or make huge savings withdrawals when a bank failure is rumored.”
2019 was a very eventful year in terms of politics and protests, and it has led to 2020, where stocks worldwide have decreased; most have pinned on the Corona Virus outbreak others on the social uprisings in different countries and elections. It may be a mixture of all these recent events.
Whether the financial crisis is imminent or not, the truth is different stocks have noticeably decreased. Including in the crypto world, altcoins and bitcoin have been getting crushed.
Besides these stocks deflating affect those who invest I them, does it affect those who are not directly investing in them? First, let’s keep in mind that stocks run pretty much everything. If stock markets crash, you might not necessarily know, but your employee or the company investors may have their money on stocks, and if they have a downfall, it will probably affect the company; thus, it can affect you as a worker. A large part of the workforce, in general, maybe affected in such events, from disemployment, wages, among others.
How can we prepare for a financial crisis?
Bottom line if we are upon a financial crisis, there is nothing we can do to change it, nonetheless we can do certain things that can help us. According to DavinciJ15, he advises buying certain everyday items that may go significantly high in price. When it comes to crypto, you must try to stay calm and not panic because of the situation; many tend to sell their assets, but it's not recommended because we will see Bitcoin Bullish again.
By: Carolina Pérez