Abstract
The present corona crisis has damaged the global economy more gravely than any crisis before. This contribution discusses its effects on the financial sector and on debtors globally. Fighting this crisis needs enormous sums of money, resulting in highly increased debts, often on top of already high debt burdens. Unfortunately, COVID-19 seems to be used to reinforce neoliberalism, as were debt crises in the past. Anti-Keynesian Maastricht criteria are temporarily suspended but not abolished. Back into force after the crisis, they will be used to destroy the welfare state. The IMF, for example, is becoming more powerful due to present emergency lending. Higher debts will allow more neoliberal pressure for austerity, causing more poverty and more inequality, as well as weakening democracy.
Interest rates are bound to be kept low not to create problems for borrowing Northern governments and the EU – with grave impacts on market financed pension schemes and savers. Poor people in the South will suffer under increased debt pressure. While consequences are dire for people, especially the poor, and for democracy, there are also winners. International financial institutions are able to increase their importance, leverage and incomes. The EU is likely to be happy to have another “reason” to destroy democracy further, rolling back national legislations’ rights, especially regarding the budget. The financial consequences of COVID-19 thus go very much beyond financial markets only.
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Raffer, K. (2022). Financial Markets and COVID-19. In: Faghih, N., Forouharfar, A. (eds) Socioeconomic Dynamics of the COVID-19 Crisis. Contributions to Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-89996-7_8
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