The crisis has brought the economy to a near halt, and left millions of people out of work. But thanks to intervention on an unprecedented scale, a full-scale meltdown has been averted – for now. By Adam Tooze
In the third week of March, while most of our minds were fixed on surging coronavirus death rates and the apocalyptic scenes in hospital wards, global financial markets came as close to a collapse as they have since September 2008. The price of shares in the world’s major corporations plunged. The value of the dollar surged against every currency in the world, squeezing debtors everywhere from Indonesia to Mexico. Trillion-dollar markets for government debt, the basic foundation of the financial system, lurched up and down in terror-stricken cycles.
On the terminal screens, interest rates danced. Traders hunched over improvised home workstations – known in the new slang of March 2020 as “Rona rigs” – screaming with frustration as sluggish home wifi systems dragged behind the movement of the markets. At the low point on 23 March, $26tn had been wiped off the value of global equity markets, inflicting huge losses both on the fortunate few who own shares, and on the collective pools of savings held by pension and insurance funds.