In just a few weeks, since the Coronavirus pandemic hit the world, the crisis has proved to cause a huge crisis to a third of the global market cap.
Since the last financial crash of 2008, the world is witnessing a big fall in the stocks and a blow to the economy.
As the virus continues to spread, supporting asset prices will require a level of market intervention we’ve never seen before. The debt expansion in history has increased, blowing any response to previous global disasters, whether World War II or the Great Depression, out of the water. The biggest bubble ever requires the biggest amount of debt to let the party continue.
The question, though, is whether extreme monetary and fiscal easing is enough to stop a further stock market collapse. In the past, loose conditions failed to prevent a sharp decline in stock prices during both 2001 and 2008 recessions until the market fell enough to what price discovery considered fair value, and by that time stock prices dropped more than 50%.