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A stock market crash is a decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of wealth. In this padlet, I will be covering the effects market crashes have on the economy and directly or indirectly in each and everyone of us.

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"Canada's stock market collapse is nothing like we have seen before"

More than $1 Trillion has been wiped out of Canadian stock as the S&P and TSX Composite Index tumbled by one third since the outbreak of the Covid-19.

There have been stimulus put in place to calm the panicked investors by stop trading or selling their shares but yet they have failed. Even drastic cuts on rate from central banks and Bank of Canada have not worked in such crisis.

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That doesn't mean the stock market should be shut down until Covid-19 panic has passed

It can be difficult to comprehend the scale of the wealth destruction seen over the past month on global stock markets. Each plunge has come with a comparable statistic - "Worst one-day decline since [ insert date here]" - but to understand what's happened it helps to step back and see how the Covid-19 crash compares to past market collapses.

Simply put, we've never seen anything like this before.

The chart uses monthly data for the Toronto Stock Exchange going back to the 1920s, and looks how how stocks performed relative to the peak prior to each crash. In additional to the current sharp downturn, illustrated in red, the other market crises included are the 2008 Great Recession, the collapse of the dot-com bubble, Black Monday in 1987, the 1981 recession, the oil shock of 1973 and the 1929 stock market crash. The chart covers 33 months, which was how long it took for Canadian stock prices to reach their lowest point after the 1929 crash.

READ: Canada needs crisis basic income now

As the chart shows, no crash has been as sharp and as deep as what we're seeing now. To date more than $1 trillion has been wiped out from Canadian stocks as the S&P/TSX Composite Index tumbled by one-third since Feb 20. Circuit breakers put in place to calm panicked investors by halting trading when markets drop precipitously have triggered multiple times, yet markets have continued to fall. Even dramatic rate cuts by central banks, including the Bank of Canada, have failed.

There have been some calls for stock markets to be put on ice until the panic passes. That's what happened after the Sept. 11 terrorist attacks - U.S. stock exchanges didn't open again until Sept. 17. American markets also closed during Hurricane Sandy in 2012.

MORE: The Dow fell below where it was when President Trump first tweeted about the stock market in 2017

So far, that idea hasn't taken hold. John McKenzie the interim chief executive and chief financial officer of TMX Group, which owns and operates the Toronto Stock Exchange, said it a message on the company's website that he believes markets should remain open. "The markets are functioning well and doing what they are designed to do: provide investors with liquidity and ensure issuers have a world-class venue to raise capital," he said. "We pledge to continue working with all our partners to ensure that remains the case and will share any further updates as necessary."

Far from reassuring investors, a market shut down could signal further panic by officials, in the same way that emergency rate cuts by the Federal Reserve seemed to worsen the market rout.

Nor can anyone say at this point how long the Covid-19 crisis will last, or how bad the situation could get. The longer markets were closed in such a scenario, the more detached they would get from reality. If the situation on the ground had deteriorated, then anxious investors might panic sell out of fear of another shutdown and having their assets frozen, making the crash even worse than it might have been without the halt.

Thursday brought some respite, with the S&P/TSX scraping back some of its recent losses. But the end of pain for global stock markets is far from certain. We already know the economic devastation from the widespread shutdown will be immense. A new report by Deutsche Bank predicts a severe global recession will occur in the first half of this year.

If a recession happens again on the scale of the 2008 financial crisis, stocks could have further to fall. In that downturn Canadian stock prices ultimately fell 45 per cent over a nine-month period.

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Canada's stock market collapse is like nothing we've ever seen before - Macleans.ca

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That doesn't mean the stock market should be shut down until Covid-19 panic has passed It can be difficult to comprehend the scale of the wealth destruction seen over the past month on global stock markets.

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"How the current stock market collapse compares to others in history"

Dow Jones Industrial Average Index (DJIA) reached it's all time high mid February of 2020 by crossing over the 30,000 points mark. This event was followed afterwards by the COVID-19 pandemic.

Within a week of reaching the highest level in the history, DJIA began to sink and so far the index has lost over 35% of its value and years of growth were lost in a matter of weeks.

This collapse is almost as big as the great financial crisis of 2009 which came as a result of the housing market. There is yet to come from this situation as we are only in the second week of the virus outbreak.

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In mid-February 2020, the Dow Jones Industrial Average reached nearly 30,000 points, the highest level in its more than 100-year history. And then, the severity and scale of the COVID-19 pandemic came into sharper focus.

Within a week of hitting an all-time high, the DJIA began to tank. So far, the index has lost over 35% of its value, wiping out years of growth in only about a month's time.

So far, over a quarter million cases of coronavirus have been confirmed worldwide, resulting in over 10,000 deaths. In the United States, there were more than 19,600 total cases and at least 260 deaths as of March 21 - with health experts projecting a sharp rise in cases in the coming days and weeks. To halt the virus's spread, non-essential businesses and services have been shut down across the country, and government officials have been urging Americans to stay home, effectively halting economic activity.

The current sell-off on Wall Street is the worst many Americans have seen - or will see - in their lifetimes. Still, it is hardly the first time investors have scrambled to pull their money out of the stock market. For context on how the current market collapse compares with others throughout history, 24/7 Wall St. reviewed the largest declines in the history of the Dow Jones Industrial Average. Some of the sell-offs that rank on this list spanned just a few days. In other cases, they lasted for weeks and even months.

It is important to note that market conditions are not static, and the prevailing opinion of government officials and health experts is that the effects of the coronavirus will worsen before they improve. Though lawmakers are scrambling to put together a comprehensive economic stimulus package, markets remain volatile, and the full economic impact of the pandemic remains to be seen.
Contact your mortgage lender: Goldman Sachs: 1. Panic of 1901 Unemployment claims, a gauge of layoffs, may hit record 2.5M this week Payments may be deferred as coronavirus pandemic causes worker hardships
* DJIA decline: -10.8% from 5/6/1901 to 5/9/1901

* Largest single-day decline: -6.1% (5/9/1901)
2. Panic of 1907
The first major panic after the Dow Jones Industrial Average was introduced in the stock market in 1896 occurred just half a decade later, in May 1901. The panic came after several major American businessmen, including famous banker J.P. Morgan, sought to gain ownership of the Northern Pacific Railway. They began purchasing millions in shares of the company, driving the company's stock price above $1,000 and sending the rest of the market into a panic. On May 9, the worst day of the panic, share prices of a number of companies fell between 10% to 25%. On that day, shares of U.S. Steel, at the time one of the largest companies in America, plummeted by 45%.

The selloff was relatively short-lived, and stocks rebounded on May 10th, with the Dow Jones increasing by 6.4% in value.

* DJIA decline: -45% from 1/07/1907 to 11/15/1907

* Largest single-day decline: -8.3% (3/14/1907)
3. Wall Street Crash of 1929
Though it was preceded by the Panic of 1901, the Panic of 1907 is recognized as the first global financial crisis of the 20th century. Before the Panic actually began, the stock market began selling off during the first half of 1907, including a staggering 8.3% decline on March 14, which at the time was the second largest single-day decline in the history of the index.

A broader panic began on Oct. 15, when both the Knickerbocker Trust and the Westinghouse Electric Company failed. The failure lead to a chain reaction of stock panic due to limited liquidity and waning confidence in banks. The federal government and private financiers, including J.P. Morgan and John D. Rockefeller, helped stabilize the markets through bailouts and other means, but not before the DJIA lost 15% of its value in a month. The event gave way to monetary reforms that eventually led to the formation of the U.S. Federal Reserve System.

* DJIA decline: -46.6% from 9/16/1929 to 11/13/1929

* Largest single-day decline: -12.8% (10/28/1929)
4. Recession of 1937-38
The Wall Street Crash of 1929 was the worst event in the history of the Dow Jones Industrial Average. On October 29th that year, on what is now known as Black Tuesday, investors lost billions of dollars on the New York Stock Exchange, as the Dow Jones fell by roughly 12% for the second day in a row, accelerating the economic collapse that would give way to the Great Depression. Over the period of about two months starting in mid-September, the Dow shed a staggering 46.6% of its value.

The historic crash was precipitated by wild speculation and reckless investing throughout the 1920s. When unemployment began to climb and production fell at the end of the decade, stocks were trading at prices well in excess of their true value.

* DJIA decline: -42.6% from 9/4/1937 to 3/31/1938

* Largest single-day decline: -5.9% (11/19/1937)
5. Germany invades France
On Sept. 4, 1937, the Dow closed at 172.55. The following day, the index fell nearly 5%, in the first of many major dips over the coming months. On March 31, the DJIA closed below 100 points for the first time in years, capping off the worst of the decline when the Dow lost more than 20% of its value in a two week period.

That decline of approximately 43% over 200 days came during the Recession of 1937-38, a period in which real GDP fell 10% and U.S. unemployment reached 20%. The recession, which officially lasted from May 1937 through June 1938, came as the United States was in the midst of a recovery from the Great Depression and the beginning of World War II.

* DJIA decline: -24.5% from 5/10/1940 to 6/10/1940
Need a job amid coronavirus crisis?:6. End of World War II Walmart announces plan to add 150,000 employees to meet 'demand in our stores'
* Largest single-day decline: -6.8% (5/14/1940)

Though World War II had started in 1939 with Germany's invasion of Poland, U.S. stocks did not react much until the German army invaded France in 1940. In a matter of weeks, Hitler forced one of Europe's great military powers into submission, and U.S. stocks cratered. The fall of France began in early May, and over the month that followed, the DJIA fell by 24.5%. The largest single-day drop occurred early on May 14, with the index falling by nearly 7% in a single day.
7. Kennedy Slide of 1962
* DJIA decline: -23.2% from 5/29/1946 to 10/9/1946

* Largest single-day decline: -5.6% (9/3/1946)

Though the end of WWII marked the beginning of an era of historic prosperity in the United States, at the time, the end of the war marked an era of economic uncertainty and anxiety. Many investors assumed that the end of wartime spending would lead to an economic downturn. The sell-off started as the war began to wind down and continued for a while after its end. Between late May and early October 1946, the Dow Jones shed 23.2% of its value.
8. Tech Stock Crash of 1970
* DJIA decline: -26.8% from 12/28/1961 to 6/26/1962

* Largest single-day decline: -5.7% (5/28/1962)

The Kennedy Slide of 1962 occurred in the first months of 1962. On Dec. 28, 1961, the Dow closed at 731.51. It closed at 535.76 about six months later, on June 26. The sell-off came after a long period of growth, and some have explained it as a correction of inflated stock values. The biggest single-day decline during the slide occurred on May 28, when the Dow lost 5.7% of its value.

* DJIA decline: -18.7% from 4/20/1970 to 5/26/1970
9. 1973-74 Stock Market Crash
* Largest single-day decline: -3.1% (5/25/1970)

During the second quarter of 1970, the U.S. stock market fell sharply, led by tech stocks like Ross Perot's Electronic Data Systems, which lost 85% of its value, as well as companies like supercomputer and mainframe maker Control Data and data entry system maker Mohawk Data, which fell in value by more than 80%.

The start of the crash was catalyzed by computer manufacturer IBM's legal battle with the Justice Department about its strategy of bundling its software with hardware, as well as its apparent inability to produce enough of its new System 370 computers to match demand. Analysts have attributed the decline to an overconfidence in the plausibility that compound growth rates could continue at a high rate for an unsustainable amount of time as well as low to no earnings of many tech stocks.
10. Black Monday
* DJIA decline: -45.1% from 1/11/1973 to 12/6/1974

* Largest single-day decline: -3.5% (11/18/1974)

Due in part to a series of economic policies implemented by the Nixon administration, inflation began climbing out of control in early 1973. The unforeseen decline in purchasing power led President Richard Nixon to order a wage and price freeze. With the Watergate scandal gaining momentum around the same time, the Dow lost over 20% of its value in the first eight months of 1973. The market fell further that October in the wake of an OPEC oil embargo to the United States. Inflation, long lines at the pump, and Nixon's resignation wreaked havoc on Wall Street for much of the following year.

* DJIA decline: -22.6% on 10/19/1987
11. Invasion of Kuwait
* Largest single-day decline: -22.6% (10/19/1987)

On Oct. 19, 1987 - a date known as Black Monday - the DJIA lost over one-fifth of its total value, the largest single-day decline in trading history up to that point. The record point plunge was not broken until the recent pandemic-driven sell-offs, although terms of a percentage decline, Black Monday still holds the record.

Unlike most other massive single-day sell-offs, Black Monday was not triggered by a major news event. Rather, several factors lead to anxiety and panic among investors. These included the growing U.S. trade deficit, the growing use of computerized trading, and a simmering conflict between Iran and Kuwait that threatened U.S. oil supplies - all factors that were hyped by the media.

* DJIA decline: -18.4% from 8/2/1990 to 10/11/1990
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* Largest single-day decline: -3.3% (8/6/1990)

While most of the 1990s can be characterized by a dramatic rise in stock prices, a recession at the beginning of the decade caused temporary panic and drove the markets down. The Federal Reserve continued to worry that the government deficits that helped contribute to Black Monday just a few years prior would persist, and so it sought to preempt those issues by maintaining a highly restrictive monetary policy.

When Sadaam Hussein's Iraq invaded Kuwait on Aug. 2, 1990, oil prices jumped sharply, resulting in a nearly 20% decline in the Dow Jones over two months. The decline came during a broader economic recession, which lasted from July 1990 through March 1991.
13. Dot-com Bubble
* DJIA decline: -19.2% from 7/19/1998 to 8/31/1998

* Largest single-day decline: -6.4% (8/31/1998)

Long-Term Capital Management, or LTCM, was a Connecticut based hedge fund that managed over $100 billion at its height. Managed by Nobel Prize winning economists and Wall Street veterans, the fund, founded in 1994, was initially highly successful - but it nearly destroyed the global financial system when it failed after just four years.

The firm's strategy of arbitrage trading in securities prices proved flawed when Russia defaulted on its debt in the summer of 1998. When LTCM losses were mounting to billions of dollars, sell-offs followed. In a single day that summer, the Dow lost 6.4% of its value. Ultimately, a global financial crisis was averted by a government bailout that allowed LTCM to survive long enough to liquidate.
14. Lehman Brothers Collapse and the Great Financial Crisis
* DJIA decline: -31.4% from 5/19/2002 to 10/9/2002

* Largest single-day decline: -4.6% (7/19/2002)

The turn of the 21st century saw rapid growth in the U.S. tech sector, fueled by massive capital investment in tech companies capitalizing on the seemingly limitless growth opportunities in the world wide web. However, it would eventually become clear to investors that many of these companies were highly overvalued, and between the close on March 19 and the close on Oct. 9, 2002, the Dow Jones recorded a decline of over 30%.

The tech-heavy NASDAQ index dropped even more, with the overall index losing over three-quarters of its total value, with major companies like Cisco, Oracle, and Intel each losing more than 80% of their value. Meanwhile, dozens of large internet-based tech companies went bankrupt.
15. US Debt Downgrade
* DJIA decline: -53.7% from 10/9/2007 to 3/9/2009

* Largest single-day decline: -4.6% (10/15/2008)

Years of risky policies on Wall Street ultimately led to the subprime mortgage crisis and set off a series of events that would culminate in the Great Financial Crisis. Lehman Brothers, the fourth largest investment bank in the world at the time, was the largest bank to fold as a result. The Dow fell precipitously, with only a few minor periods of gain, from over 14,000 points in Oct. 2007 to barely 6,500 Feb. 2009. Over nearly that entire period, the U.S. slid into a recession, as did most nations worldwide.

In a considerable effort to avert global catastrophe - in a combined effort of government bailouts and expansionary monetary policy - the global recession and stock markets began to recover. It took until October 2013 for the Dow to regain the value it had lost.
16. Chinese Stock Market Turbulence
* DJIA decline: -11.7% from 8/1/2011 to 8/10/2011

* Largest single-day decline: -5.5% (8/8/2011)

In the first eight months of 2011, a brewing crisis over the U.S. debt ceiling came to a head, and there were fears that a continued impasse would cause the government to run out of money. In late June, 2011, ratings agency Standard & Poor's managing director John Chambers told Reuters that if the United States failed to make a scheduled debt payment on Aug. 4, it would cut the country's long-touted perfect AAA credit rating down to a D.
17. COVID-19 Outbreak
On Aug. 2, President Barack Obama signed a compromise plan into law, avoiding a national default, but the agency downgraded the U.S. rating anyway a few days later, to AA+. The stock market responded, with the Dow plunging by more than 11% over roughly a week, including a 5.5% drop on Aug. 8.

* DJIA decline: -13.6% from 6/24/2015 to 8/25/2015

* Largest single-day decline: -3.6% (8/24/2015)

After posting extraordinary gains of around 150% between June 2014 and June 2015, China's Shanghai Composite index plummeted, losing nearly one-third of its value in less than a month. There were numerous factors at play in the Chinese economy that caused the boom-bust cycle, and the effects were felt throughout global markets as commodities prices fell, and Wall Street was not spared. The Dow dropped from about 18,100 points in June 2015 to about 15,600 by September. The effects did not last, however, as the index regained its losses by October.

* DJIA decline: -35% from 2/12/2020 to 3/20/2020

* Largest single-day decline: -12.9% (3/16/2020)

When the first cases of a disease caused by a novel coronavirus appeared in Wuhan, China, in December 2019, officials speculated that it was an unknown form of pneumonia. In mid-January, there were over 100 new cases of the illness in China, and the first case was identified in the United States.

In the weeks and months since, the virus has spread across the globe, and the World Health Organization declared the outbreak a pandemic on March 11, 2020. Confirmed cases today total a quarter million and over 10,000 people have died. To combat the spread of the virus, countries have taken extraordinary measures, including closing the borders and implementing lockdowns of entire populations. This has, in effect, led to life grinding to a halt throughout the world.

U.S. investors have remained largely unconcerned at the beginning of the outbreak, with the Dow reaching an all-time high of nearly 30,000 in mid-February. However, as the disease spread across Europe and began to affect the U.S., the outbreak's devastating economic impact became increasingly clear.

Despite economic stimulus packages of unprecedented size and scope moving rapidly through Congress and in other countries worldwide, between Feb. 19 and March 19, the Dow shed over 9,000 points, losing over 35% of its value. As many businesses remain closed and Americans are urged to stay in their homes to contain the spread of the virus, the full breadth and depth of the economic toll of the pandemic remains to be seen.

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How the current stock market collapse compares with others in history

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In mid-February 2020, the Dow Jones Industrial Average reached nearly 30,000 points, the highest level in its more than 100-year history. And then, the severity and scale of the COVID-19 pandemic came into sharper focus. Within a week of hitting an all-time high, the DJIA began to tank.

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"How does the stock market affect the economy?"

The stock market is not the real economy. Daily movements in the stock market can have less impacts on the economy than we might think. There are different reason to daily price changes or short time declines in prices such as correcting over valuation or panicked investors shortening their stock because of current events happening that they think will affect the stock market.

Economic effects of the stock market:
a) Wealth effect
b)Effect on pensions
c)Confidence
d)Investment
e)Bond market

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Movements in the stock market can have a profound economic impact on the economy and individual consumers. A collapse in share prices has the potential to cause widespread economic disruption. Most famously, the stock market crash of 1929 was a key factor in precipitating the great depression of the 1930s. Yet, daily movements in the stock market can also have less impact on the economy than we might imagine. The stock market is not the real economy. Share prices can change for many reasons - such as correcting an over-valuation and even large falls in share do not necessarily lead to lower growth.

One well-known joke is:

Stock markets have predicted 10 out of the last three recessions.

The point is a rapid fall in share prices, doesn't necessarily mean the economy is doing badly.

For example, the stock market crash of 1987, didn't cause any economic damage in the real economy. (though it did influence monetary policy). The UK cut interest rates in fear the stock market crash would cause a recession. Instead, low-interest rates caused an economic boom with rapid rates of economic growth.

The 1987 stock market crash (where shares fell 25% in value) didn't reflect serious economic problems, and the world economy continued to grow at a decent pace.

2008 Share price falls

However, the fall in share prices 2008/09 was reflecting the real economic problems and after the share price falls of 2008, we did get a steep recession starting at the end of 2008 early 2009. The falling share prices and financial uncertainty contributed in a small way to the economic downturn.

2020 Share price falls

The fall in share prices since the start of the year primarily reflect concern and uncertainty over the global spread of Coronavirus. Share prices have fallen 15% and could fall further. There are good reasons to believe these share price falls do reflect a real economic shock and could be the precursor to a recession in 2020. The share price falls reflect - not market adjustment - but an awareness of disruption of supply chains, a disruption to the free movement of people and goods, and a shock to aggregate demand as consumers and business cut back on consumption and investment.

2000- 2004 Bear market

Between 2000 and 2004, share prices fell steadily (especially in 2002). This did not cause an economic recession, but economic growth was quite strong from 2000-2007 - see great moderation. Share price falls were partly an adjustment to overvalued tech stocks, uncertainty following the 9/11 terrorist attack and just a general bear market. However, this shock was not significant to the economy - the Federal Reserve responded by cutting interest rates, and the economy soon recovered from the temporary blip after Sept 2001.

In other words, share prices alone do not cause economic recessions, but if share prices reflect a fundamental weakness in the economy - then they may be the harbinger of an economic slowdown.

Plummeting share prices can make headline news. But, how much should we worry when share prices fall? How does it impact the average consumer? And how does it affect the economy?

Economic effects of the stock market
1. Wealth effect
The first impact is that people with shares will see a fall in their wealth. If the fall is significant, it will affect their financial outlook. If they are losing money on shares they will be more hesitant to spend money; this can contribute to a fall in consumer spending. However, this effect should not be given too much importance. Often people who buy shares are wealthy and prepared to lose money; their spending patterns are usually independent of share prices, especially for short-term losses. Also, only around 10% of households own shares - for the majority of consumers, they will not be directly affected by a fall in share prices.

The wealth effect is more prominent in the housing market. (e.g. falling house prices affect more consumers)
2. Effect on pensions
Anybody with a private pension or investment trust will be affected by the stock market, at least indirectly. Pension funds invest a significant part of their funds in the stock market. Therefore, if there is a serious and prolonged fall in share prices, it reduces the value of pension funds. This means that future pension payouts will be lower. If share prices fall too much, pension funds can struggle to meet their promises. The important thing is the long-term movements in the share prices. If share prices fall for a long time, then it will definitely affect pension funds and future payouts. This may cause households to have lower pension income, and they may feel the need to save more in other terms.
3. Confidence
Often share price movements are reflections of what is happening in the economy. E.g. a fear of a recession and global slowdown could cause share prices to fall. The stock market itself can affect consumer confidence. Bad headlines of falling share prices are another factor which discourages people from spending. For example, the stock market falls of 2008/09 reflected the fall in confidence. On its own, it may not have much effect, but combined with falling house prices, share prices can be a discouraging factor. However, there are times when the stock market can appear out of step with the rest of the economy. In the depth of a recession, share prices may rise as investors look forward to a recovery two years in the future.
4. Investment
Falling share prices can hamper firms ability to raise finance on the stock market. Firms who are expanding and wish to borrow often do so by issuing more shares - it provides a low-cost way of borrowing more money. However, with falling share prices it becomes much more difficult.
5. Bond market
A fall in the stock market makes other investments more attractive. People may move out of shares and into government bonds or gold. These investments offer a better return in times of uncertainty. Though sometimes the stock market could be falling over concerns in government bond markets (e.g. Euro fiscal crisis)

How does the stock market affect ordinary people?

Most people who do not own shares will be largely unaffected by short-term movements in the stock market. However, ordinary workers are not completely unaffected by the stock market.

1. Pension funds. Many private pension funds will invest in the stock market. A substantial and prolonged fall in the stock market could lead to a fall in the value of their pension fund, and it could lead to lower pension payouts when they retire. Similarly, if the stock market does well, the value of pension funds could increase. Even if people don't own shares, it is quite likely people with a private pension will have some connection to the stock market.

However, most shares are owned by the richest 10% of income owners. According to this paper on middle-class wealth, the poorest 90% of income earners - own just 7% of all equity. So a fall in share prices primarily affects the top 10% of wealthy households.

2. Business investment. The stock market could be a source of business investment, e.g. firms offering new shares to finance investment. This could lead to more jobs and growth. The stock market can be a source of private finance when bank finance is limited. However, the stock market is not usually the first source of finance. Most investment is usually financed through bank loans rather than share options. The stock market only plays a limited role in determining investment and jobs.

3. Short-termism. It could be argued workers and consumers can be adversely affected by the short-termism that the stock market encourages. Shareholders usually want bigger dividends. Therefore, firms listed on the stock market can feel under pressure to increase short-term profits. This can lead to cost-cutting which affects workers (e.g. zero contract hours), or the firm may be more tempted to engage in collusive practices which push up prices for consumers. It has been argued that UK firms are more prone to short-termism because the stock market plays a bigger role in financing firms. In Germany, firms are more likely to be financed by long-term loans from banks. Typically, banks are more interested in the long-term success of firms and are willing to encourage more investment, rather than short-term profit maximisation.
Related

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How does the stock market affect the economy? - Economics Help

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Movements in the stock market can have a profound economic impact on the economy and individual consumers. A collapse in share prices has the potential to cause widespread economic disruption. Most famously, the stock market crash of 1929 was a key factor in precipitating the great depression of the 1930s.

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"Oil crash deepens, Canadians' debt worries intensify"

The insolvency experts show that 49% of the respondents are $200 away of not being able to cover their bills and 34% of them are worried about job security.

Western Canada Select is down almost 87% year to date and Alberta's Premier warns of the largest single contraction of our economy in history.

Inter Pipeline's dividends are being slashed 72% to 4 cents per share and the sale process for Europe is being suspended.

The COVID-19 Pandemic has paralyzed the economy while the only businesses still running are the essentials ones.

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It's been another choppy morning, with U.S. futures moving in and out of positive territory, as the deluge of COVID-19 developments continues. Over the weekend, top U.S. infectious disease expert Anthony Fauci warned his country could see up to 200,000 deaths from the virus and President Donald Trump gave up on his Easter target for a return of normalcy. Meanwhile, as of last night Canada's case count had reached 6,289; and 66 deaths were being blamed on the virus. From a policy perspective, Ontario Premier Doug Ford put price gougers on notice yesterday with an emergency order that includes the threat of potential jail time and fines of up to $10 million for corporations that jack up prices for goods including personal protective equipment and disinfectant wipes.
BRACING FOR 'BURSTING OF THE CANADIAN CONSUMER DEBT BUBBLE'
That's the warning from MNP's president this morning, as the insolvency experts release their latest snapshot of household finances, which shows 49 per cent of respondents saying they're within $200 of not being able to cover their monthly bills and 34 per cent saying they're worried about job security. The data was gathered in the first week of March, so we can only imagine how sentiment would have deteriorated in the interim.CTV's Chief Financial Commentator Pattie Lovett-Reid will have more on this for BNN Bloomberg and BNNBloomberg.ca today, and we'll also weave in the implications of the Big Five banks matching the Bank of Canada's surprise rate cut Friday with half-point cuts to their prime rates.
OIL CRASH
West Texas Intermediate has been down as much as 7.4 per cent today, pushing it to the lowest level since 2002 amid what Bloomberg News frames as a "broken market" that's drowning in crude. The price erosion is even more stunning here, with Western Canada Select down almost 87 per cent year-to-date and Alberta Premier Jason Kenney warning of "the largest single contraction of our economy in history" as the province contends with oil and health crises. Kenney also said late Friday he's planning talks with American officials about potential coordinated measures to insulate the continent's producers from the Saudi-Russia price war. We'll explore what that could look like.
AWAITING MORE AID
This was supposed to be Finance Minister Bill Morneau's day in the spotlight, with the federal budget having been scheduled for delivery. Instead of tabling the government's most important annual fiscal roadmap, he instead enters the week as the subject of anticipation as the oil and gas and airline industries await support packages to help get them through this crisis. The Globe and Mail is reporting airlines are "seeking all forms of help", while their unions reportedly pushed Morneau this weekend to clamp down on executive compensation, dividends, and buybacks. Meantime, the oil patch is reeling and waiting for assistance. Those are the high-profile stakeholder groups, but they're by no means alone. To wit: this morning the Fitness Industry Council of Canada warned of "massive closures and bankruptcies" in the absence of emergency support from provincial governments.
OTHER NOTABLE CORPORATE COVID-19 DEVELOPMENTS
-Inter Pipeline today said its monthly dividend is being slashed 72% to four cents per share. It's also suspending the sale process for its European bulk liquid storage business.

-Cominar REIT withdrew its forecasts late Friday and said it's not expecting to execute any asset sales this year. Keep in mind our Bloomberg partners previously reported Cominar had enlisted banks to help shop the main Montreal train hub. The REIT also said it's reducing its construction workforce. (NOTE: Rob chasing CEO)

-Freshii today warned of a "material impact" on its business and financial performance as a result of the virus. It also said it has "temporarily streamlined" head office staff as part of its cost-management strategy.

-Shares of Abbott Laboratories are soaring in pre-market trading after the company launched a new rapid coronavirus test that's been fast-tracked by the U.S. Food and Drug Administration. 50,000 units are expected to be made available daily as of Wednesday.

-Claire' Stores has disclosed furloughs affecting the majority of its in-store staff and 250 head office employees.

-Porter Airlines confirmed late Friday afternoon that it arranged $135 million in financing via Export Development Canada.
OTHER NOTABLE NEWS
-Some M&A in the mining sector: Argonaut Gold announced it's buying Alio Gold in a friendly, all-stock at-market deal. Alio shareholders will receive 0.67 of an Argonaut share for each ALO-TSX share held.
NOTABLE RELEASES/EVENTS
-Notable data: China releases official Purchasing Managers' Index (late tonight)

-11:15 a.m. ET: Prime Minister Justin Trudeau addresses Canadians from Ottawa

-1:00 p.m. ET: Ontario Premier Doug Ford leads provincial COVID-19 briefing

-5:00 p.m. ET: U.S. Coronavirus Task Force hold briefing at the White House
Every morning BNN Bloomberg's Managing Editor Noah Zivitz writes a 'chase note' to BNN Bloomberg's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe.

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The Daily Chase: Oil crash deepens, Canadians' debt worries intensify - BNN Bloomberg

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It's been another choppy morning, with U.S. futures moving in and out of positive territory, as the deluge of COVID-19 developments continues. And a new survey out by MNP Ltd.

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"Stock Market News | Explaining Money Printing, Recession, Currency Collapse, Stock Market Rebound"

World banks are cutting the interest rates and also printing more money so that they would not go into recession or face this economic disaster brought by the pandemic COVID-19. The government is stimulating the economy in order to lower the effect of this economic crisis and their actions were the reason why the stock market had a boost and is sort of "recovering" now.

One of the consequences of these economic policies is inflation since the greatest economies of the world are now spending so much into easing the "crash" and in the same time, printing so much money which can have a large impact on inflation.

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Stock Market News | Explaining Money Printing, Recession, Currency Collapse, Stock Market Rebound

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"The Worst Economic Collapse In History Is Starting Now: Be Prepared"

Over the course of just 21 days, the market has dropped by roughly 20%.
The first outbreak of the virus was in China, and while the Chinese government had to go on a lock down, the whole world suffered from that knowing that 1/3 of the world's supply chain is based in China.

There are ways to face the destruction of this pandemic and several countries like the U.S and Canada have set up a loan program for small business owners to take out free interest loans in order to prevent their businesses from shutting down in the next 6-12 months.

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The Worst Economic Collapse In History Is Starting Now: Be Prepared

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"How Will A Stock Market Crash Affect You?"

Right now, we are in a midst of a stock market crash and unless you don't own stock, a stock market crash will not directly affect you. In cases you do, your net worth will be going down but you won't be losing money, until you sell your stock.

Steps to take on a stock market crash:
1) Update your net worth
2) Update you asset allocation
3) Get an estimate of the amount of stock you own and then do a calculation of a 33% plunge during the bear market and whether you can financially survive it
4) Research the stocks you own for current updates and the end of a economic crisis, is one of the greatest time to purchase shares. So, that's another thing that should be kept in mind.

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How Will A Stock Market Crash Affect You?

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"Three Rock Solid Canadian Stocks to Buy During This Stock Market Crash"

Canada’s stock market has gone from a bull market to bear in just 14 trading days, wiping out $454.2 billion in value on the escalating spread of the coronavirus and plunging oil prices.
Stocks have buckled under concern that the virus and a new downturn in the oil sector will hammer the economy.

What an investor should do in a stock market crash is not to sell/panic and ignore the short term. They should boost their emergency fund and also invest further to buy stocks& ETFs at a discounted price.

Three Canadian stocks worth looking into and buying as the rest of the stock market keeps plunging are Dollarama, Royal Bank of Canada and Telecom's stock.

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Three Rock Solid Canadian Stocks to Buy During This Stock Market Crash

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A stock market crash could be caused by unexpected events or as know in the investment world, "black swan".
A market crash is a sudden plunge during a single trading day or several days but it's more severe than a market correction.

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How to prepare for a stock market crash?
1)Don't loose your coolness
2)Check short-term spending plans
3)Resist the urge to sell your stocks
4)Re-balance your portfolio
5)Buy dividend stocks
6)Use robo-advisors during the crash

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1) What did you learn about this topic that surprised you the most?
I wasn't aware that of how the pandemic had affect the stock market and lead it into collapse at such high level.
2)Provide a real life example of how this topic is relevant or interesting for you?
The whole stock market has been fascinating to me and I started learning about it when I was 15 and that is also the time, I started learning about currency and cryptocurrency and also trading forex.
3)If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?
In my opinion, the most important part to share is how a crash affect everyone directly or indirectly and also how to prepare for such an economic crisis and why not, take advantage of it when possible.