#ActiveAllocator Research – If the corporate sector is increasingly distressed, won’t the financial sector follow? Historically, governments have used a variety of tools to address financial crisis and recessions with policies of either containment or resolution. For example, in 2008, government intervention moved from the provision of short-term liquidity, through distressed asset funds to medium-term guarantees to full-scale bank capital injections, nationalization and brokered rescues. Whilst the banking system seems secure in the coronacrisis, I think it is inevitable that governments will borrow from previous playbooks.
As one who was a front row participant in the 2008 crisis here are some of my takeaways to what may be an inevitable sector restructuring – if not in the U.S., then most certainly in many countries where the contagion is already spreading from the real to the financial sector.