Trump and Congress are working on programs to reduce the number of bankruptcies.
“beware of it triggering a financial crisis”
And what do you think that would look like?
There’s no financial bubble to collapse like we had in 2008.
This is mass unemployment among people who are already itching to get out of their houses.
Hard to know where the problems are, but extreme situations like this cause stress throughout the system. If I had to look someplace first, it would be corporate debt.
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It has to do with various financial derivatives, where a lot of the institutions playing, are in the position more like a naked short, than a covered call. There is simply not enough debt in the world to match the derivatives. And there is not enough cash to even pay the debt.
So when someone finds they bet wrong, they have to sell other things, so come up with the money, because they don't have it sitting around in cash.
Or, if someone else, bought on margin (borrowed), they are required to hold collateral worth such-and-such proportion, as collateral. If they end up underwater, they might have to sell some of their collateral; or the brokerage doing the short for them, just might grab part of their collateral and sell it anyway (that's the risk of shorting). But guess what happens when a lot of people try to sell at once? That's right. The price goes DOWN. And the price going DOWN, means a new set of people, who had been doing OK, suddenly find they are underwater too, on something else, or their collateral suddenly was worth less, so their brokerage had to sell, too. Pretty soon it's a blood bath, with people selling almost anything, at any price, just to lay hands on some cash. The banks either are too suspicious of each other, or have been happily borrowing money to buy back their own shares and keep the price up, rather than LENDING to other people. Which is, you know, kind of the supposed reason for having a bank. Which is why the Govt. has been pouring in so much money: not to bail people out, but so that there's some cash available to move around in the first place.