The Coronavirus Recession

 
 
 

Vocabulary

fall off	dramatic	get a grip on
revive	root (2)	real estate
growth	couple (2)	overheated
warn	spill over	aggressive
brace	decline	brace yourself
expect	major (2)	contraction
GDP	ahead (2)	fall/fell/fallen
cliff	recession	black hole (3)
repeat	antidote	across all sectors
lend	tank (3)	freeze/froze/frozen
intact	consumer	emergency
border	trade (2)	jump start (2)
induce	coma (2)	shut down
port	distance	shut/shut/shut
self-	isolation	eat/ate/eaten
sector	standstill	bring/brought/brought
try	deep (2)	central bank
reserve	federal	cut/cut/cut (2)
debt	virtual (2)	interest rate
cash	last (2)	buy/bought/bought
grip	meltdown	take/took/taken
mercy	back then	know/knew/known
guess	this time	break/broke/broken (3)
facility	right now	spend/spent/spent

 
 
 
 
 

Video: A Coronavirus Recession

 
 
 
 

Transcript

When it comes to the economy, 2020 may feel a lot like a repeat of the 2008 Great Recession.

Back then, deeply rooted problems in the banking system coupled with an overheated real estate market caused a major financial meltdown in the US. And that spilled over into the global economy.

But now, economists are warning, “Brace yourself: a deeper decline is still ahead.”

Kathy Bostjancic, Oxford Economist: “We and many others are expecting this to be the largest contraction of GDP growth that we have ever seen.

So it’s as if we have fallen off a cliff, or fallen into a black hole. It is that dramatic. And it’s across all sectors.”

What’s different this time?

In 2008, global markets tanked. And bank lending froze to a virtual halt.

But economists said nothing had changed with the real economy: consumers could still spend money. Trade across borders was still intact.

But this time, the coronavirus has put the economy into a self-induced coma.

From Beijing to Los Angeles to London, the deadly virus has shut down ports, planes, schools and offices. Social distancing and self-isolation have made it impossible to travel, eat at restaurants or go shopping.

And that’s brought the global economy to a standstill.

What’s the antidote?

To try to revive it, central banks like the US Federal Reserve are cutting interest rates and buying up debt to add cash to the financial system.

Kathy Bostjancic, Oxford Economist: “Many of the emergency lending facilities the Fed is using now, are actually taken from the playbook of what they learned in the Great Financial Crisis.

They know now that they work so they should use them very quickly, which they have, and can even be very aggressive.”

Those tools were able to get a grip on the broken banking system.

Another lessons learned from 2008: governments need to spend billions to jump start economic activity because right now, the real economy is at the mercy of a health crisis.

And it’s anyone’s guess just how long this virus will last.

 

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Questions

1. The economic situation of 2020 is completely unprecedented. True or false?

2. Was there a single cause of the 2008 Great Recession? What were the root causes of the 2008 Great Recession?

3. The economic slowdown will be gradual, shallow and imperceptible. Is this right or wrong?

4. Is there a fundamental difference between the 2008 recession and the 2020 economic downturn?

5. What is the fundamental cause of the 2020 economic slowdown?

6. How are government or financial institutions trying to solve the situation?

7. Is there certainty or uncertainty regarding the future?

 

A. I remember the 2008 Great Recession. Yes or no? If yes, did it have any effect on your or your family?

B. My family, friends and I are feeling the impact of the covid-19 epidemic. Is this entirely true, mostly true, in-the-middle, so-so, not a whole lot or none at all?

C. Are recessions avoidable or are the a natural part of business cycles?

D. What might happen in the future?

E. What can governments and individuals do to avoid or minimize economic downturns?