The Coronavirus Is a Human Credit Crunch
A sudden stop in the flow of money triggered the global financial crisis. A halt in the movement of people is potentially even more damaging.
Where did all the people go?
Photographer: HECTOR RETAMAL/AFP/Getty Images
It is the flow of people, as much as money, that keeps the global economy ticking over. It follows that a sudden halt to the movement of workers, shoppers and tourists should worry us just as much as the drying up of credit during the global financial crisis in 2008. With fewer obvious quick fixes, the virus outbreak should perhaps concern us even more.
A little over a decade ago, it was the U.S. housing market that soured. Investors lost confidence after years of unbridled lending and poor regulation, and an American credit crunch went global. To fight it, central banks unleashed an unprecedented policy response; governments increased spending and in some cases snapped up teetering assets.