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How This Crisis Differs from the 2008–2009 Financial Crisis

How This Crisis Differs from the 2008–2009 Financial Crisis

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There are several important differences between the global financial crisis of 2007–08 (GFC) and the coronavirus crisis (CC).

Origin and Nature of the Crisis

The GFC resulted from financial imbalances, primarily the housing bubble, while the CC was triggered by the external negative shock (the pandemic and the following economic shutdown) that dramatically reduced the labor supply. In other words, the GFC was a financial crisis, a bust phase of the business cycle triggered by a misallocation of resources toward housing and construction sectors, while the CC is a shock to the real economy triggered by the health crisis and the containment measures.

Importantly, the exogenous nature of the CC does not imply that we will see a V-shaped recession (even the central banks do not expect it). There are three reasons for this. First, the fear of coronavirus and social distancing will not disappear overnight, but will stay with us for a certain period, perhaps until an effective medical treatment is developed. Second, there will be a hysteresis effect. It is easy to become unemployed or to go bankrupt, but finding a job or starting a new company might be more difficult (especially given the high ratio between the unemployment benefit and median salary in many states). Third, the monetary and fiscal policies being pursued can hamper the pace of recovery, just as they did in the aftermath of the Great Recession.

Depth, Scope, and Pace of the Crisis

The first economic reports (on initial jobless claims, retail sales, or industrial production) suggest that the CC will be deeper than the GFC. According to the International Monetary Fund's (IMF) recent World Economic Outlook report, “the global economy is projected to contract sharply by 3 percent in 2020,” much worse than during the GFC — when the global economy shrank by 0.1 percent in 2009. And since the COVID-19 pandemic is an international phenomenon, the crisis is truly global. According to the IMF, a much larger fraction of countries is expected to experience negative per capita income growth than during the GFC. But what is really striking is the pace of the crisis. In just a few weeks, the CC's economic losses will likely surpass those related to the Great Recession, which lasted an entire year and a half. For example, more than 30 million Americans have applied for the unemployment benefit in just six weeks compared to the 37 million jobless claims filed during the whole GFC, as Figure 1 shows.

Figure 1: US Initial Jobless Claims from January 2007 to April 2020
US Jobless Claims Unemployment
Source: Own elaboration based on Federal Reserve of St. Louis.

Implications

The differences listed above have serious economic and political implications.

The standard measures to stimulate aggregate demand, such as interest rate cuts, will not help during the CC, in which people are being encouraged to stay home and social distance. Neither will investors be encouraged by lower interest rates in times of disrupted supply chains and significant economic uncertainty. Interest rate cuts cannot solve the health crisis or end social distancing and official lockdowns. Because the CC is not a financial crisis and the overindebted corporate sector constitutes a greater threat than the financial sector today, the monetary policy aimed at adding liquidity to financial markets will be even less useful than it was during the GFC.

Because the US financial institutions have more capital than they did before the GFC, and because the CC has affected them less than it has the nonfinancial sector, they are more inclined to grant new loans, especially since central banks' actions, aimed at supporting the flow of credit in the economy, are encouraging them to do so. Moreover, reserve and capital requirements have been loosened, while entrepreneurs eagerly clamor for new loans to stay afloat. All this means that the credit supply can increase more than it could during the GFC. As new money is created when banks grant new loans, the money supply will also be able to rise faster than during the GFC. 

As Figure 2 shows, in late March, the growth rate of bank credit and M2 money stock started to expand above 10 percent year over year, much faster than in the aftermath of the GFC. Please note that the Figure 2 displays the broad money supply, not the monetary base — the increase of the latter does not automatically translate into higher price inflation rates, as bank reserves do not enter the wide circulation within the real economy. 

Figure 2: Annual Percentage Change in US Bank Credit and M2 from December 2007 to April 2020
Bank Credit M2 Money Supply Growth
Source: Own elaboration based on Federal Reserve of St. Louis.

It might be too early to draw authoritative conclusions, but if the current trend in the broad money supply continues, the CC could be more inflationary than the GFC, especially since it is both a negative demand and supply shock. Indeed, as Figure 3 shows, the market expects a higher inflation rate five years from now than it did during the GFC.

Figure 3: US Five-Year Breakeven Inflation Rate (Derived from Five-Year Inflation Indexed Treasurys) from December 3, 2007, to April 30, 2020
5-Year Treasury Inflation
Source: Own elaboration based on Federal Reserve of St. Louis

This does not, of course, mean that a high US inflation rate in the near future is a sure thing. The CC is also a negative demand shock, and the recent declines in oil prices will create downward pressure on the Consumer Price Index (CPI) inflation rates.

Therefore, although in the short term the disinflation scenario seems more likely, in the long run the risk of stagflation increases, especially with too-fast credit growth and excessive debt monetization (the government may be tempted to get out of its large public debt through high inflation, which lowers real interest rates). The possibility that the CC will be more inflationary than the GFC should be acknowledged by economists, policymakers, and investors.

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CURV LAWSUIT ALERT: Levi & Korsinsky Notifies Torrid Holdings Inc. Investors of a Class Action Lawsuit and Upcoming Deadline

CURV LAWSUIT ALERT: Levi & Korsinsky Notifies Torrid Holdings Inc. Investors of a Class Action Lawsuit and Upcoming Deadline
PR Newswire
NEW YORK, Dec. 1, 2022

NEW YORK, Dec. 1, 2022 /PRNewswire/ — Levi & Korsinsky, LLP notifies investors …

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CURV LAWSUIT ALERT: Levi & Korsinsky Notifies Torrid Holdings Inc. Investors of a Class Action Lawsuit and Upcoming Deadline

PR Newswire

NEW YORK, Dec. 1, 2022 /PRNewswire/ -- Levi & Korsinsky, LLP notifies investors in Torrid Holdings Inc. ("Torrid" or the "Company") (NYSE: CURV) of a class action securities lawsuit.

CLASS DEFINITION: The lawsuit seeks to recover losses on behalf of Torrid investors who were adversely affected by alleged securities fraud. This lawsuit is on behalf of all persons who purchased Torrid common stock in or traceable to the Company's July 2021 initial public offering. Follow the link below to get more information and be contacted by a member of our team:

https://www.zlk.com/pslra-1/torrid-holdings-class-action-submission-form?prid=34168&wire=4

CURV investors may also contact Joseph E. Levi, Esq. via email at jlevi@levikorsinsky.com or by telephone at (212) 363-7500.

CASE DETAILS: The filed complaint alleges that defendants made false statements and/or concealed that: (i) in the first half of 2021, Torrid had experienced a temporary surge in demand as a result of changed consumer behaviors in response to the COVID-19 pandemic and government stimulus and that such ephemeral demand trends had dissipated and were not internally projected to continue following the initial public offering ("IPO"); (ii) Torrid was suffering from severe supply chain disruptions caused by the emergence of the Delta variant of COVID-19, which had first emerged in May 2021; (iii) Torrid was running materially below historical inventory levels as a result of supply chain disruptions; (iv) as a result, Torrid did not have sufficient inventory to meet expected consumer demand for its fiscal third quarter of 2021; (v) as a result, late inventory arrival had materially impaired the Company from effectively matching consumer buying trends, creating an undisclosed risk of increased markdowns and promotional activities necessary to sell undesirable inventory; (vi) Torrid's Chief Financial Office planned to retire shortly after the IPO; and (vii) as a result of the above, representations made in the Company's registration statement regarding Torrid's historical financial and operational metrics and purported market opportunities did not accurately reflect the actual business, operations, financial results, and trajectory of the Company at the time of the IPO, and were materially false and misleading and lacked a reasonable factual basis.

WHAT'S NEXT? If you suffered a loss in Torrid during the relevant time frame, you have until January 17, 2023 to request that the Court appoint you as lead plaintiff. Your ability to share in any recovery doesn't require that you serve as a lead plaintiff.

NO COST TO YOU: If you are a class member, you may be entitled to compensation without payment of any out-of-pocket costs or fees. There is no cost or obligation to participate.

WHY LEVI & KORSINSKY: Over the past 20 years, the team at Levi & Korsinsky has secured hundreds of millions of dollars for aggrieved shareholders and built a track record of winning high-stakes cases. Our firm has extensive expertise representing investors in complex securities litigation and a team of over 70 employees to serve our clients. For seven years in a row, Levi & Korsinsky has ranked in ISS Securities Class Action Services' Top 50 Report as one of the top securities litigation firms in the United States.

CONTACT:
Levi & Korsinsky, LLP
Joseph E. Levi, Esq.
Ed Korsinsky, Esq.
55 Broadway, 10th Floor
New York, NY 10006
jlevi@levikorsinsky.com
Tel: (212) 363-7500
Fax: (212) 363-7171
www.zlk.com

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SOURCE Levi & Korsinsky, LLP

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RENT LAWSUIT ALERT: Levi & Korsinsky Notifies Rent the Runway, Inc. Investors of a Class Action Lawsuit and Upcoming Deadline

RENT LAWSUIT ALERT: Levi & Korsinsky Notifies Rent the Runway, Inc. Investors of a Class Action Lawsuit and Upcoming Deadline
PR Newswire
NEW YORK, Dec. 1, 2022

NEW YORK, Dec. 1, 2022 /PRNewswire/ — Levi & Korsinsky, LLP notifies investors…

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RENT LAWSUIT ALERT: Levi & Korsinsky Notifies Rent the Runway, Inc. Investors of a Class Action Lawsuit and Upcoming Deadline

PR Newswire

NEW YORK, Dec. 1, 2022 /PRNewswire/ -- Levi & Korsinsky, LLP notifies investors in Rent the Runway, Inc. ("Rent the Runway" or the "Company") (NASDAQ: RENT) of a class action securities lawsuit.

CLASS DEFINITION: The lawsuit seeks to recover losses on behalf of Rent the Runway investors who were adversely affected by alleged securities fraud. This lawsuit is on behalf of all persons or entities who purchased Rent the Runway Class A common stock in or traceable to the Company's October 2021 initial public offering. Follow the link below to get more information and be contacted by a member of our team:

https://www.zlk.com/pslra-1/rent-the-runway-loss-submission-form?prid=34167&wire=4

RENT investors may also contact Joseph E. Levi, Esq. via email at jlevi@levikorsinsky.com or by telephone at (212) 363-7500.

CASE DETAILS: The filed complaint alleges that defendants made false statements and/or concealed that: (i) Rent the Runway was continuing to face extraordinary business headwinds, such as transportation headwinds and labor wage rate increases, from the COVID-19 pandemic; (ii) Rent the Runway's active subscriber enrollments had sharply decelerated from the growth trajectory represented in the offering documents and, as a result, Rent the Runway was several months away from approaching its pre-pandemic levels of active subscriptions; (iii) Rent the Runway needed to substantially increase marketing and advertising costs from historical figures in order to attempt to grow its active subscriber network; (iv) Rent the Runway was suffering from ballooning fulfillment and transportation costs; and (v) as a result, Rent the Runway was suffering accelerating operational losses at the time of the initial public offering and was far less likely to achieve profitability in the near term, if ever, than represented.

WHAT'S NEXT? If you suffered a loss in Rent the Runway during the relevant time frame, you have until January 13, 2023 to request that the Court appoint you as lead plaintiff. Your ability to share in any recovery doesn't require that you serve as a lead plaintiff.

NO COST TO YOU: If you are a class member, you may be entitled to compensation without payment of any out-of-pocket costs or fees. There is no cost or obligation to participate.

WHY LEVI & KORSINSKY: Over the past 20 years, the team at Levi & Korsinsky has secured hundreds of millions of dollars for aggrieved shareholders and built a track record of winning high-stakes cases. Our firm has extensive expertise representing investors in complex securities litigation and a team of over 70 employees to serve our clients. For seven years in a row, Levi & Korsinsky has ranked in ISS Securities Class Action Services' Top 50 Report as one of the top securities litigation firms in the United States.

CONTACT:
Levi & Korsinsky, LLP
Joseph E. Levi, Esq.
Ed Korsinsky, Esq.
55 Broadway, 10th Floor
New York, NY 10006
jlevi@levikorsinsky.com
Tel: (212) 363-7500
Fax: (212) 363-7171
www.zlk.com

View original content to download multimedia:https://www.prnewswire.com/news-releases/rent-lawsuit-alert-levi--korsinsky-notifies-rent-the-runway-inc-investors-of-a-class-action-lawsuit-and-upcoming-deadline-301690971.html

SOURCE Levi & Korsinsky, LLP

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Alternative Lending Platform Market to be Worth $14.47 Billion by 2030: Grand View Research, Inc.

Alternative Lending Platform Market to be Worth $14.47 Billion by 2030: Grand View Research, Inc.
PR Newswire
SAN FRANCISCO, Dec. 1, 2022

SAN FRANCISCO, Dec. 1, 2022 /PRNewswire/ — The global alternative lending platform market size is expected to…

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Alternative Lending Platform Market to be Worth $14.47 Billion by 2030: Grand View Research, Inc.

PR Newswire

SAN FRANCISCO, Dec. 1, 2022 /PRNewswire/ -- The global alternative lending platform market size is expected to reach USD 14.47 billion by 2030, growing at a CAGR of 23.6% from 2022 to 2030, according to a new study conducted by Grand View Research, Inc. The growing integration of technology in the financial sector worldwide is anticipated to drive the growth. The strong emphasis by market players on offering enhanced lending solutions to revolutionize the financing ecosystem also bodes well for the development of the industry.

Key Industry Insights & Findings from the report:

  • The lending analytics segment is expected to witness the fastest growth during the forecast period. The rising prevalence of alternative lending increased the need to track and analyze loan data points which thereby created the need for lending analytics.
  • The managed services segment is expected to witness the fastest growth during the forecast period. The rising adoption of technology and rapidly changing industry trends are expected to increase the demand for managed services.
  • The cloud segment is expected to witness the fastest growth during the forecast period as the cloud-based deployment model aids in reducing operational costs and increases efficiency.
  • The peer-to-peer lending segment is expected to grow at the fastest CAGR. The increased utilization of internet applications and smartphones is expected to create growth opportunities for the segment growth during the forecast period.
  • The Asia Pacific is expected to witness the fastest growth during the forecast period. The rapid technological developments and acceptance of algorithm-based modern credit solutions that can match borrowers with a best-suited lender offered by companies such as Wechat and Lendingkart in China, India, and Japan are the primary factor boosting the growth.

Read 160-page full market research report, "Alternative Lending Platform Market Size, Share & Trends Analysis Report By Solution (Loan Origination, Lending Analytics, Loan Servicing), By Service, By Deployment, By End-use, By Region, And Segment Forecasts, 2022 - 2030", published by Grand View Research.

Alternative Lending Platform Market Growth & Trends

In June 2022, HES FinTech, a loan management platform provider, based in Lithuania, collaborated with Nordigen, a transaction analytics platform based in Latvia. This partnership was aimed to revitalize the lending ecosystem in the European markets by delivering integrated and seamless solutions for end-to-end digital lending. They are focused on a technologically advanced approach to making the lending sector more accessible by eliminating the hassle of traveling to offices and signing documents.

Industry incumbents across the globe are focused on customer acquisition by providing attractive products. For instance, in December 2021, Kabbage from American Express launched Kabbage FundingTM, providing flexible lines of credit between USD 1,000 and USD 150,000 to qualified small businesses. Small businesses may apply for loans in minutes with Kabbage Funding to get working capital available around the clock to help them manage their cash flow.

The outbreak of COVID-19 is expected to play a vital role in driving the growth of the market during the forecast period. Although the outbreak took a toll on the lending market, the need for credit, on the other hand, increased as many individuals suffered financial losses. This created unique opportunities for alternative lenders to cater to the vast credit requirement globally.

Alternative Lending Platform Market Segmentation

Grand View Research has segmented the global alternative lending platform market based on solution, service, deployment, end-use, and region.

Alternative Lending Platform Market - Solution Outlook (Revenue, USD Million, 2017 - 2030)

  • Loan Origination
  • Loan Servicing
  • Lending Analytics
  • Others

Alternative Lending Platform Market - Service Outlook (Revenue, USD Million, 2017 - 2030)

  • Integration & Deployment
  • Support & Maintenance
  • Training & Consulting
  • Managed Services

Alternative Lending Platform Market - Deployment Outlook (Revenue, USD Million, 2017 - 2030)

  • On-Premise
  • Cloud

Alternative Lending Platform Market - End-use Outlook (Revenue, USD Million, 2017 - 2030)

  • Crowdfunding
  • Peer-to-Peer Lending

Alternative Lending Platform Market - Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America
    • U.S.
    • Canada
  • Europe
    • Germany
    • U.K.
  • Asia Pacific
    • China
    • India
    • Japan
  • Latin America
    • Brazil
  • Middle East & Africa (MEA)

List of Key Players of the Alternative Lending Platform Market

  • Funding Circle
  • On Deck Capital.
  • Kabbage
  • Social Finance, Inc.
  • Prosper Funding LLC
  • Avant, LLC
  • Zopa Bank Limited
  • LendingClub Bank
  • Upstart Network, Inc.
  • CommonBond, Inc.

Check out more related studies published by Grand View Research:

  • Micro Lending Market - The global micro lending market size is expected to reach USD 86.82 billion by 2030, growing at a CAGR of 13.4% from 2022 to 2030, according to a new study conducted by Grand View Research, Inc. The growth is anticipated to be driven by several advantages offered by micro lending to the loan providers, such as the easy accessibility to offer loans within and aboard the country and earning more interest rates compared to the traditional fixed deposit and other investments.
  • Digital Lending Platform Market - The global digital lending platform market size is expected to reach USD 44.50 billion by 2030, registering a CAGR of 25.9% from 2022 to 2030, according to a new report by Grand View Research, Inc. The growing adoption of digitalization in the BFSI sector is expected to create new opportunities for market growth. According to the European Central Bank, in 2020, 46% of European banks could process mortgages digitally in two days compared to 8% in 2015.
  • Payday Loans Market - The global payday loans market size is anticipated to reach USD 6.8 billion by 2030, registering a CAGR of 3.8% during the forecast period, according to a new report by Grand View Research, Inc. Demand for payday loans is likely to grow owing to advanced technologies such as Artificial Intelligence (AI), Machine Learning (ML), and analytics being adopted by payday lenders.

Browse through Grand View Research's Next Generation Technologies Industry Research Reports.

About Grand View Research

Grand View Research, U.S.-based market research and consulting company, provides syndicated as well as customized research reports and consulting services. Registered in California and headquartered in San Francisco, the company comprises over 425 analysts and consultants, adding more than 1200 market research reports to its vast database each year. These reports offer in-depth analysis on 46 industries across 25 major countries worldwide. With the help of an interactive market intelligence platform, Grand View Research Helps Fortune 500 companies and renowned academic institutes understand the global and regional business environment and gauge the opportunities that lie ahead.

Contact:

Sherry James 
Corporate Sales Specialist, USA
Grand View Research, Inc.
Phone: 1-415-349-0058
Toll Free: 1-888-202-9519
Email: sales@grandviewresearch.com
Web: https://www.grandviewresearch.com
Grand View Compass | Astra ESG Solutions
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SOURCE Grand View Research, Inc

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