Drowning Financial Liabilities

With higher fluctuations in crude price and unstable liquid crunch, by each day investors are losing their hopes in reviving stable stock and CFD markets. What are the factors which shook the entire world’s economy day by day down the track since the end of 2019? for this, we have to understand the world’s economic system far by since capitalism holds the power.

Early Wealth Dispersal!

The wealth of the world is divided into few and this difference widens after the effect of WWII and the Cold War, the purpose of all the international welfare organizations was to narrow this class gap but eventually here today in 2022 we are on the verge of collapse which is the failure of both our worlds elite and governments. After the French industrial revolution, the world defined the gaps between rich and poor, any person who tends to make money for a living can work according to their approach, time, and any person who wants to be a white collar, can by studying, researching, and industrialization.

But unfortunately, what would have been done, loopholes in the taxation system, Contract awarding system, and unequal wealth management system divides this gap worsens. What this gap result is, it eliminates the middle class which holds the power to run any economy. In the past already equal wealth distribution makes the rich even richer and pushes the poor under the line but after 2019 world faced the worst epidemic which led the world to close each and every station from markets to parks and every revenue-generating means to chase this disease.

This effect the wealth of the common middleman as in most of the world from daily wage workers to daily working artists each collapsed and got themselves on the verge of governments that were already under tremendous debts and liquid crunch for infrastructures and investments they planned. As a result, after losing millions of precious lives we started again when markets started gaining momentum again.

Back to Old Principal??

But this closure and reopening of commodities, currency, and stock markets started the feeling of an equal supply, demand ratio which led them to leave many deserving nations more dependent on the few producing these goods. The growth rate of the world become a station and started to move gradually up when in 2022 we started facing another conflict the Russian-Ukraine war. This trembles the crude, gold, and commodities markets so heavily that from single fund running middle class to big investors lose their money in market upshifting. Also, this makes a ravishing effect on investors’ confidence, crude WTI started varying from 130+ to 76 $ per barrel. Forex Currencies started getting below the threshold point lowest in history.

Moreover, U.S. Treasury increases the interest basis point to the highest since 1981, which makes speedy inflation slow in the U.S., but on another hand also narrow downs the nation in debt to uphold its economy on the verge of default risk. Moreover, commodities prices take a massive hit due to this increase as all the investors, governments and multinational organizations skipped their plans to upscale their plants, construction sector takes a massive hit as becoming a treasury bondholder is far better than becoming a debt holder on such higher rates.  Even this increase worsens the loan return ability of many developing countries which makes them print high currency notes and causes inflation.

Consummated Liquid Crunch!!

Whether it’s notable companies like Drilling, Shipping, Apparel Companies, or banks, many filed for bankruptcy in the last 8 months due to the absence of liquid crunch and disrupted cash flows, their free fall stock prices, and losing investor confidence in financing the company ventures. This all forced to close down these companies which make a huge impact on Stock Exchanges, Loan Division Ratio, and economic growth. Now today, all the markets are wondering what will happen to their market value if the demand for goods, crude, lifestyle, and even cars goes down the way where excessive supply can impact their breakeven ratio which may result in further layoffs and closure of different production plants, sites, restaurants, food chains, supermarkets, and financial leasing corporations.

Do we have Solutions?

The solution to this lies in the core of world leaders and their interests, not by sitting in their fancy offices, UN conferences, and table talks. Time is needed to identify the problem of the common person and its requirements, the elite needs to give away part of their wealth in reviving the world’s food and basic necessities. The problem started when companies stopped depending on their production and sale and start emphasizing Stocks, Listing their Companies, and Investment by People, which makes them trapped under the debt cycle of massive loans and short of cash flows.

Reforms in the basic structure of companies’ finance and incorporation rules can reset this whole liquid and wealth crunch. Scaling under one umbrella under huge loans is not the solution. It may not affect the owners as they are already full of pockets but it may close the kitchen of the working, manager serving in that company.

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