{"id":51511,"date":"2020-03-01T18:53:46","date_gmt":"2020-03-01T23:53:46","guid":{"rendered":"https:\/\/olduvai.ca\/?p=51511"},"modified":"2020-03-01T18:53:53","modified_gmt":"2020-03-01T23:53:53","slug":"coronageddon-can-a-minsky-moment-be-avoided","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=51511","title":{"rendered":"Coronageddon: Can a “Minsky Moment” be Avoided?"},"content":{"rendered":"\n

Coronageddon: Can a “Minsky Moment” be Avoided?<\/a><\/h3>\n\n\n\n
\"\"\/<\/a><\/figure>\n\n\n\n

There\u2019s a chance that the coronavirus will be contained in the United States and that fewer people will be infected than in China or Iran. But there\u2019s also a possibility that the highly-contagious virus will spread and that there will be sporadic outbreaks across the country. If this latter scenario takes place, then the ructions in the stock market will intensify making it impossible to form a bottom or spark a relief rally. If stocks can\u2019t find a bottom, then pressure will build on the weak players, who purchased securities with borrowed cash, to sell their good assets along with the bad in order to repay their debts. These massive selloffs can quickly turn into firesales where it\u2019s nearly impossible to find a buyer regardless of price. This is what the financial media calls \u201cpanic selling\u201d, a vicious, self-reinforcing downward spiral in which stock prices collapse in a frantic, disorderly selloff. The phenomenon has also been described by Pimco\u2019s Paul McCulley as a \u201cMinsky Moment\u201d. Here\u2019s a definition from Investopedia:<\/p>\n\n\n\n

\u201cMinsky Moment crises generally occur because investors, engaging in excessively aggressive speculation, take on additional credit risk during prosperous times, or bull markets. The longer a bull market lasts, the more investors borrow to try and capitalize on market moves. Minsky Moment defines the tipping point when speculative activity reaches an extreme that is unsustainable, leading to rapid price deflation and unpreventable market collapse. What follows, as hypothesized by Hyman Minsky, is a prolonged period of instability.\u201d (Investopedia)<\/p><\/blockquote>\n\n\n\n

So, how close are we to a Minsky Moment?<\/p>\n\n\n\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

Coronageddon: Can a “Minsky Moment” be Avoided? There\u2019s a chance that the coronavirus will be contained in the United States and that fewer people will be infected than in China or Iran. But there\u2019s also a possibility that the highly-contagious virus will spread and that there will be sporadic outbreaks across the country. If this […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,4],"tags":[28817,481,7202,3018,19452],"class_list":["post-51511","post","type-post","status-publish","format-standard","hentry","category-economics","category-environment","tag-coronavirus","tag-leverage","tag-mike-whitney","tag-minsky-moment","tag-the-unz-review"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51511","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=51511"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51511\/revisions"}],"predecessor-version":[{"id":51512,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51511\/revisions\/51512"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=51511"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=51511"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=51511"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}