St. Louis Federal Reserve Bank president James Bullard has warned that a growing number of bankruptcies due to the coronavirus outbreak could lead to a financial crisis, the Financial Times reported.
“Without more granular risk management on the part of the health policy, we could get a wave of substantial bankruptcies and [that] could feed into a financial crisis,” Mr. Bullard said in an interview with the newspaper on Wednesday.
He warned of “twists and turns” in the health crisis and said “it’s probably prudent to keep our lending facilities in place for now, even though it’s true that liquidity has improved dramatically in financial markets.”
New U.S. COVID-19 cases rose by nearly 50,000 on Wednesday, according to a Reuters tally, marking the biggest one-day spike since the start of the pandemic. The surge in cases across the country, including the populous states of California, Florida and Texas, threaten the budding recovery.
Mr. Bullard said that it is possible that the country could “take a turn for the worse at some point in the future,” but added that it was not his base case, according to the report.
The CBO is predicting that without more fiscal stimulus, we'll have another lost decade. Jawsome! pic.twitter.com/7zyKMWWT5Y
— Jordan Weissmann (@JHWeissmann) July 2, 2020
The Fed’s stress tests bit Goldman! End of an era? Sure they get paid, dividends flow, Mnuchin is Treasury Sec, they remain insiders. But the relative shift is dramatic, is it not? No revolution. Of course. But these are the stakes these players play for. t.co/iu2swZlDmh pic.twitter.com/L1WpMapOV6
— Adam Tooze (@adam_tooze) July 3, 2020
CBO projects that from 2020 to 2030, annual real GDP will be 3.4 percent lower, on average, than it projected in January. The annual unemployment rate, which was projected to average 4.2 percent, is now projected to average 6.1 percent. Read more: t.co/h4nTBj7e4S pic.twitter.com/ZwwrUWSVoJ
— U.S. CBO (@USCBO) July 2, 2020
Risk-averse US companies are hoarding cash at at the highest rate ever seen pic.twitter.com/oW5fCNH7N0
— Variant Perception Research (@VrntPerception) July 2, 2020
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