Analysis: The risks of a global recession have increased

Countries and investors are now afraid that the effects of the corona virus will be greater and stronger for the world economy than previously predicted and that the risks of a global recession will increase.

That the turmoil in the corona virus should enter our acquaintance, affect whether we buy a new home, a new kitchen or take that long planned trip. No one knows what it will be like, but few want to sit with black petters.

This weekend's quarantine of 16 million Italians means that there is now a concern that more countries are being forced into similar measures and that it could mean that factories cannot do what they should do and people of concern refrain from doing business.

But the panic in the markets is not only dependent on the new corona virus. Add that the Opec countries have gone into a price war with each other. This is in a situation where demand for oil has dropped dramatically. A stock analyst told the Financial Times that it's like watching the Opec countries and Russia commit collective suicide. A bit like that.

The oil price war in turn increases the risk of a global recession. Because it is not only oil companies and the oil industry that are affected when the oil price is in free fall. It also affects the state budget in oil-dependent countries such as Nigeria, Russia, Iraq and Norway.

Suddenly, they receive 30 percent less income. Suddenly, large oil giants and smaller fracking companies in the US receive 30 percent less revenue and that after the corona virus also reduces demand. Salmon on the salmon is just the first name. Then it can also be good to remember that gas and oil companies in the US are highly indebted and have more than $ 200 billion in debt that needs to be renegotiated over the next few years.

If the companies fail to pay their debts, there is a risk that there will be major credit crunches for the banks and this may affect the credit markets. In a normal situation, a low oil price would have been helpful for, for example, the airline and travel industry, but now, when travelers choose not to travel and a flight giant like Lufthansa reduced their flights by 50 percent, lower fuel prices play very little role.

Concerns about world markets are now increasing pressure on central banks and governments around the world to act to curb the effects. The question is how much they can affect when parts of countries are quarantined and people around the world are encouraged to work from home or self-isolate.

According to Bloomberg News Agency, it was frighteningly silent on the trading floor of the Tokyo Stock Exchange during the day - as a collective hypnosis hit it, and a stock market fall that no one could stop.

Some brokerage houses believe that it may also have been recorded that some stockbrokers were forced to work from home because of the risk of infection and without the support of colleagues, the nervousness is even greater than justified. Behind markets are people who are not rational. As just as you and I are worried about the future.