The Five Days When World Economy’s Guardians Fought Virus and Market Turmoil
The guardians of the world economy are in a two-front war. They are having to defend businesses and consumers that suddenly look frighteningly vulnerable to the coronavirus — and contain a rout on financial markets that threatens to make things even worse.
Those battles amid a unique pandemic this week forced political leaders and central bankers into action at a pace that puts even that of the 2008 financial crisis in the shade. Their economies are on course to post historic slumps in output over the coming weeks, a prospect that is panicking investors.
After a week of turbulence, markets showed flickers of optimism Friday. It’s a positive sign, but if investors, executives and the general public can’t be persuaded that there’s light at the end of the tunnel for the U.S. and Europe in the second half of this year, then they risk turning darker scenarios into self-fulfilling prophecies – and pushing the world into a deeper downturn and perhaps even a Depression.
Among monetary policy makers, the state of red-alert began on Sunday night with Jerome Powell chairing an unscheduled Federal Reserve meeting – the first of several that officials would have to convene and sign off in a hurry on new emergency moves.
“Monetary policy decisions at midnight,” said Torsten Slok, Deutsche Bank AG’s chief economist, “tells you how serious they are about trying to stabilize things.”