Credit ratings agency Moody’s claimed that global airline capacity may fall up to 35% this year. For some airlines the cut back could be as high as 40% to 75% or more in the second quarter. The travel industry has been crushed by the Chinavirus as tourists stay home and business travel is curtailed in and effort to curb the spread of the pandemic. The crashing oil prices have increased the burden on airlines because of jet fuel contracts that were signed months ago when the economy was robust. The airlines will be asking government for tens of billions dollars to keep the companies solvent due to the Chinavirus pandemic.
This morning the Governors of New York and California imposed tough new restrictions on the people of their States ordering all non-essential workers to stay home. The States of Illinois and Florida followed with their own shelter at home directives and restricting all public gatherings. As the Chinavirus sweeps across America life is changing very quickly and every day sees a new restrictions being imposed by the government.
At a Federal level the US government has closed the boarders with Canada and Mexico except for commerce and essential travel. Tax filing day has been moved from April 15 to July 15 and interest and payments on federal student loans were suspended for at least the next 60 days. The Dept. of (Deep) State has implemented a travel advisory level of 4 across the board and suspended all routine visa services.
U.S. Federal Reserve worked with other major central banks to ease a global dollar-funding shortfall and support mortgage-backed securities. “The swap lines among these central banks are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets,” the joint statement from the central banks said. The global economic crash has made “King Dollar” very valuable and markets outside U.S. borders such as banks, companies and governments are making a run on America’s central bank. Last week the Fed slashed interest rates to near zero and the bank has been taking emergency actions every day since to help the deal with the economic fallout of the Chinavirus pandemic.
There is no resolution to the economic crisis because it results from a pandemic with no discernible end. Everyone in the world knows the infection rates will level off and start falling someday, but nobody on earth can forecast when that faithful day will arrive. Until there is a sense of certainty or termination of the Chinavirus pandemic the forecasts will continue to sink, mobility will be more restricted and the Fed will keep on printing money.