30 Days That Brought The World To The Brink Of A Depression
By Charles Riley
Monday, February 17. The novel coronavirus outbreak is raging in China, but fewer than 1,000 people have been infected outside the country. With the virus out of sight and mostly out of mind, the Dow Jones Industrial Average stands just shy of 30,000 points, driven by the longest US economic expansion in history.
What investors couldn’t know is that over the next 30 days, the coronavirus would burst out of quarantine in China, with major outbreaks in South Korea and Italy, then Spain, France, Germany, the United Kingdom and the United States. It brought business to a sudden stop, sent stock markets into a meltdown and forced central banks to take emergency action on a scale even greater than during the 2008 global financial crisis.
A global recession, once unthinkable in 2020, is now a foregone conclusion and some experts warn that the pandemic could drag the world’s economy into a depression. More bad news: The coronavirus outbreak may just be getting started.
Central banks and governments are now unleashing a tsunami of interest rate cuts, loan guarantees and new spending, tapping emergency powers to reassure investors, cushion the shock to companies and workers and preserve the foundations of a functioning economy for the future.
In the United States, the Trump administration is asking Congress to approve a rescue bill that would inject $1 trillion into the economy to prevent mass layoffs as huge swaths of the world’s biggest economy shut down and airlines, hotels and restaurants run out of cash. In an extraordinary move, the UK government on Friday said it would pay 80% of the wages of anyone at risk of losing.