Investors are panicking. The markets are in freefall. Companies are on the brink of collapse, and stock indices are flying in every possible direction. The coronavirus has created the biggest crisis the financial world has seen for a couple of generations.
By comparison, the collapse of 2008 is starting to look like little more than a minor tweak to the banking system, easily fixed with some printed money and a few emergency bail-outs.
There is, unfortunately, no simple solution to the medical emergency. There is, however, a relatively simple fix to the financial crisis. Simply close the stock market down for three months. Why?
The why there being that some damned idiot of a journalist wishes to write a column.
So, think it through. Say we closed the markets two weeks back. Aston Martin would now be bust. Because Aston launched a – fully underwritten – rescue rights issue last Friday. Without which it would indeed go bust. Can’t launch a rights issue if the markets are closed.
Sure, maybe Aston should go bust. But now extend that to the rest of the market. The primary purpose of a stock market being to – well, it’s to raise capital, isn’t it? And firms right now rather need to raise capital. So, we’re going to close the capital raising thingie just as people need to raise capital?
It’s entirely true that we don’t like what the markets are telling us right now. We’re all poorer as a result of the chaos. But then we are all poorer now. There’s a pandemic ripping through the global economy – we’re poorer.
He’ll be recommending price controls to limit black markets next…..