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- The current situation in the economy and in the stock market
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FOCUS Online : The crash in the stock markets in the past few days was very hard. What is the reason?
Ralf Borgsmüller: , The financial markets were already prepared longer for big trouble. I have stressed this in my last interview at this point again and again. The only thing missing was the trigger that brings the avalanche.
FOCUS Online : What do you mean?
Borgsmüller: On the one hand, the shares were valued already before the break-in is very high, especially in the United States. Especially Tech stocks were extremely expensive. Added to this was a historically unique concentration of investors in only a very few shares. So 20 per cent of the market capitalisation of the us S&P was just a few weeks ago 500 Index in just five companies: Apple, Amazon, Google, Facebook and Microsoft. This was a tremendous euphoria, and the reviews had nothing to do with reality.
On the other hand, the total debt of the world – countries, companies, financial and consumer debt have increased – to the end of the year 2019 to a new high of 250 trillion dollars and are 50 percent above the level before the last financial crisis in 2008.
FOCUS Online : the trigger for the current slump in share prices was now the Corona Virus.
Borgsmüller: Yes, the Virus is a serious trigger for the problems we had before. It could also be to a different event. The Person
Ralf Borgsmüller of PSM vermögensverwaltung GmbH in grünwald near Munich, The PSM was founded in 1965 and is the oldest Bank is an independent private wealth management in Germany since 2003. (Contact address borgsmueller@psm-vermoegensverwaltung.de).
“now, If Gold falls, not is not a good sign,”
FOCUS Online Now only the stock markets but. Also, Gold is losing.
Borgsmüller: First of all, the price of gold since the beginning of 2020, in spite of the price declines on the stock markets, but also by today with approx. four per cent in the Plus. If two current market turbulence, but also Gold, that is not a good sign. Investors separate from such safe investments, if they are forced to. Many market participants need to liquidate, to go bankrupt. Perhaps we will see in the next few months and Stocks liquidation in the Grand style, because In the US, loans to the value of 580 billion dollars are loaned on shares. If the need to be sold because the banks are nervous and the values of the shares fall below the loan values, there may be turbulent times. Gold in Euro 1.424,28 EUR +12,61 (+0,89%), except over-the-counter To fear the price data
FOCUS Online The stock markets are in panic because of the Corona Virus, because they have serious economic consequences. Economists, however, expect a rapid recovery.
Borgsmüller: Central banks, politicians, and most Economists estimate that the Problem is completely wrong. The currently-launched rescue packages so far are much too small. The losses of the world economy in the trillion range, and the height of the crisis before us, because the epidemic is a time delay of around the world travels. After China, Europe is now off, and again some time in the USA. Thousands of business models are no longer in the short term on the on the Dump, because people go out their and their consumption massively restrict. So Hotels, Bars and Restaurants are often empty, and often, revenue falls from 100 to below 30 percent. We are experiencing a massive decline in Consumption will bring down the consumption-dependent Western world into a severe recession. The problems come on the side of the company because of the logistics chains of collapse and lacking the supplies. The world economy is experiencing a severe recession, this is highly likely.
FOCUS Online Can spread the problems on the real estate market?
Borgsmüller: , of Course. We are sliding into a recession, with rising unemployment, will have its effect on Rents and real estate prices negatively.
“We need a massive bailout by the governments and Central banks”
FOCUS Online : What now needs to happen in order to calm the Situation?
We need to quickly set up a massive bailout by the governments and Central banks, especially for the huge number of non-performing small and medium-sized enterprises. No government can afford today, mass bankruptcies and mass unemployment. The States and Central banks would have to help with three – digit to four-digit Billions to the economy by this time. Especially, the Central banks are now required. You will once again give States huge amounts of money and many companies have to save. A new banking crisis is conceivable, because the company debt worldwide has risen to a new high of 75 trillion dollars. Many companies are no longer able to service in the next few quarters their loans. The Central banks are the only institutions that is truly capable of action. I can even imagine that we will see helicopter money, like the people in Hong-Kong in February 2020.
FOCUS Online : the Corona Is the crisis worse than the financial crisis of 2008?
Borgsmüller: you can be in the next few quarters, at least to a systemic crisis. At that time, the private debts were due to bad real estate debt, which brought the banking system to the brink of collapse. This Time, it could be the company’s debt. Everything depends on politicians and Central banks to assess the crisis once and for all in your Dimension properly. There’s a lot of, a lot more needs to happen. I hope that the US Central Bank, the Fed lowers at its next meeting only the benchmark interest rate radically, but also a huge money-printing program announced, and thus shows that We have understood. The few, what the ECB so far as a crisis response, shows that the Dimension of the current developments is not yet clear.
“benefit of the Rising price for sale”
FOCUS Online How should investors behave in the best way?
Borgsmüller: share markets worldwide are oversold in the short term, total. Therefore, it may be in the next few weeks, a recovery in the share price, which can also be stronger. Which one should but don’t be fooled, but the rise in the share use the courses to reduce risk and sell stocks. Investors should consider, in addition, also be sure to the quality of their borrowers, some of it even larger Bankrupt companies can come.
Because of the leverage in the world, and especially of the companies, this crisis will not be over so quickly. You will in all probability lead to a world recession, which can also go beyond the year 2020. Now to are in demand for the monetary system of experience and caution. Financial expert: Our money is broken – and a radical turn, we can save it FOCUS Online financial expert: Our money is broken – and a radical turn, we can save it
