The other coronavirus contagion concern

As governments around the world put their countries on lockdown to slow the spread of the coronavirus, there is a growing fear that the global economy and financial system could soon experience another kind of contagion. This week, as the scope of the outbreak became clearer, dire economic data from China and forecasts of a looming global recession started rolling in. Some experts are even starting to use the dreaded D-word, drawing comparisons with the 1929 financial and economic crash that led to the Great Depression.


Coronavirus, and the responses to it, pose two major risks to the economy and financial system. The first is the hit to companies' sales and profits, and workers' wages and jobs. The worse the outbreak, and the harsher the social and economic clampdown needed to manage it, the worse the economic hit will be. Airlines are already warning they may face bankruptcy by May without government assistance. Carmakers and other large manufacturers are closing assembly lines. Millions of restaurant and other service industry workers that are forced into lockdowns may soon be out of jobs and unable to pay bills, student loans, and make rent or mortgage payments. That's one reason stocks have been hammered this week, despite attempts by the US Fed and other central banks to stem the bleeding and shore up confidence.

The second big risk is harder to pin down – that's the risk of financial contagion. Companies going bankrupt and firing workers is bad enough, but it can become an even worse problem if it creates a domino effect where companies can no longer pay back loans, generating losses that could shake confidence in banks and the broader financial system.

Offsetting the coming economic shock would reduce the risk of wider financial contagion, but will require governments around the world to unleash huge resources: both fiscal stimulus to help workers and companies (Italy has already suspended mortgage payments and declared a holiday on household bills, while President Trump has promised support for the airline industry and is now considering sending cash directly to Americans) – and possibly other measures to ensure the smooth operation of the financial system that go beyond what central banks have done to date.

The catch: Decisions about whom to bail out and whom not to will be every bit as politically fraught as they were in 2008-09, when governments around the world were forced to intervene to prevent a much worse collapse – and during a US election campaign, to boot. This time, though, the political wrangling will also take place during an ongoing pandemic that is already stretching many governments around the world to their limits.

Brazil's governors take on Bolsonaro: We've previously written about the tensions between local and national governments over coronavirus response, but few places have had it as bad as Brazil. As COVID-19 infections surged in Brazil, the country's governors quickly mobilized – often with scarce resources – to enforce citywide lockdowns. Brazil's gangs have even risen to the occasion, enforcing strict curfews to limit the virus' spread in Rio de Janeiro. But Brazil's president, Jair Bolsonaro, has mocked the seriousness of the disease and urged states to loosen quarantines in order to get the economy up and running again. "Put the people to work," he said this week, "Preserve the elderly; preserve those who have health problems. But nothing more than that." In response, governors around the country – including some of his allies – issued a joint letter to the president, begging him to listen to health experts and help states contain the virus. The governor of Sao Paulo, Brazil's economic powerhouse, has even threatened to sue the federal government if Bolsonaro continues to undermine his efforts to combat the virus' spread.

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The major outbreaks of coronavirus in China, Europe, and the United States have garnered the most Western media attention in recent weeks. Yesterday, we went behind the headlines to see how Mexico and Russia are faring. Today, we'll look at three other potential hotspots where authorities and citizens are now contending with the worst global pandemic in a century.

Start with India. For weeks, coronavirus questions hovered above that other country with a billion-plus people, a famously chaotic democracy where the central government can't simply order a Chinese-scale public lockdown with confidence that it will be respected. It's a country where 90 percent of people work off the books— without a minimum wage, a pension, a strong national healthcare system, or a way to work from home.

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In the end, it took the coronavirus to break the year-long deadlock in Israeli politics. Prime Minister Benjamin "Bibi" Netanyahu will still face corruption charges, but he has yet another new lease on political life, as he and political rival Benny Gantz cut a deal yesterday: Bibi will continue as prime minister, with Gantz serving as Speaker of the Knesset, Israel's parliament. After 18 months, Gantz will take over as prime minister, but many doubt that will ever happen.

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With large parts of the American economy shuttered because of coronavirus-related lockdowns, the number of people filing jobless claims in the US last week exceeded 3.2 million, by far the highest number on record. Here's a look at the historical context. The surge in jobless claims, which may be an undercount, is sure to cause a spike in the unemployment rate (which tells you the percent of work-ready people who are looking for a job). At last reading in February, unemployment was at a 50-year low of 3.5 percent. Economists warn that it could reach 5.5 percent in the near term. Even that would be far lower than the jobless rates recorded during previous economic crises such as the Great Depression or the Great Recession. Have a look.