‘Nothing Like Normal’: Covering an Infected Global Economy
A Times reporter who follows the Federal Reserve discusses the coronavirus’s impact on the world’s finances.
Economic strains around the world have led to Wall Street woes, and vice versa. And central banks haven’t been able to stop the damage. Credit...Devin Oktar Yalkin for The New York Times
By Emily Palmer
Times Insider explains who we are and what we do, and delivers behind-the-scenes insights into how our journalism comes together.
As the coronavirus tears across the world, factories are idling, stores are closing, and supply chains are breaking, bringing the global economy to a crawl, with repercussions that are still unfolding. Major cities, countries and central banks are taking measures to curb the outbreak and ease the financial strain, but to what effect? In a world of rising nationalism, such a universal crisis of health and finances points to nations’ interdependence. In Monday’s Times Insider, the reporter Matt Phillips talked in an interview about the volatility in the U.S. stock market. Below is a conversation with Jeanna Smialek, who covers the Federal Reserve from Washington. She discussed the pandemic’s impact on the world’s wallet.
How big of a hit was the plummeting of the U.S. stock market on the global economy?
The way to understand this is less about asking: “What do stock declines mean for the global economy?” but rather: “What does the global economy mean for stocks?” At no point in the modern economic era — in this globalized and heavily financialized world — have we seen something bring so many countries to a grinding halt simultaneously.
On Sunday, the Fed slashed interest rates to almost zero. How could that affect us going forward?
The move should help consumers borrow and spend. For example, it should make mortgages cheaper. But at the end of the day, nothing the Fed can do at this point is going to offset the full shock of coronavirus, because its tools are just not well-suited to making up for lost work hours or helping employees who have missed out on paychecks. They can do a few things to make sure that companies who are missing out on cash flow right now can get loans, but even then, they cannot force banks to lend to insolvent businesses that are bad bets. The Fed will never say it’s out of ammunition, because that is not in its DNA as an institution, but there is a lot of room for congressional action right now.
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How has the closure of Italy affected the global economy specifically?
Italy is actually a pretty large economy and people don’t appreciate that. But what happened is you saw a bunch of things going bad all at one time: Italy closed, cases in Germany jumped, cases in America began ticking up, cruise ships were lighting up with infections. All of those things together created a perfect storm that showed investors that this wasn’t going to be a blip on the radar.
Can nations work together to help the global economy rebound?
One big story that the coronavirus has brought to light is that global central banks do not have the firefighting power that they had going into the 2008 financial crisis. Many central banks, like in Japan and in parts of Europe, already had very low or even negative interest rates. And so they just have less room to act to soften the economic blow.
What matters right now is what happens to the companies getting clobbered in the moment. What does it mean for airlines, cruise lines, hotels? Is this a short-term blip that is painful but not devastating? Or will this kill companies, thereby having greater repercussions for financial markets, and be much more long-lived in its pain?
How does this pandemic compare to the influence of other major events?
This is almost entirely unprecedented. People try to compare this to SARS, but it’s bigger. And then people try to compare this to 9/11, but most people didn’t have to work from home for a month because of 9/11. People kept going to restaurants after 9/11. It didn’t have the same quarantining effect, which is really important here.
At the end of the day, the government can’t get people back to restaurants when it’s not perceived to be safe to go to them. That’s not something anyone can fix — whether you’re the U.S. government or the central bank.
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Continue reading the main story
Can you and your editors prepare for this type of coverage?
It really changes on an hourly basis. You could prepare to cover Brexit or the Trump election or any of those big economic moments, but here you just don’t know what’s going to crumble first or what’s going to experience problems next, so you just have to stay in touch with all of your sources and keep up to the moment.
What is a typical day like for you right now?
Nothing like normal. I’m working from home and I’ve worked pretty much every day since the middle of February. I’m camped out in my studio apartment, which looks like a war room. I have all the financial crisis books opened up to important pages and strewn across the floor, notes tacked up on the walls. The news breaks so fast it’s just a very different pace and reality.
Usually at The Times we step back and write the capital “I” important stories. Now everything is suddenly capital “I” important, so I’m writing several stories a day, and we have a live briefing that constantly updates.
If there’s one takeaway for readers on the global economy, what should it be?
It’s been said by every person on the planet at this point, but the single best thing for the global economy is for this virus to be contained. More than any fiscal or monetary package, the public health response here is most important.
The other thing to realize is this is going to be painful, but it should be temporary. As long as it doesn’t precipitate a financial crisis, things should calm down, but there is just epic uncertainty about when that comes: a couple of months, a year or 18 months.
A Times reporter who follows the Federal Reserve discusses the coronavirus’s impact on the world’s finances.
Economic strains around the world have led to Wall Street woes, and vice versa. And central banks haven’t been able to stop the damage. Credit...Devin Oktar Yalkin for The New York Times
By Emily Palmer
- March 17, 2020
- +
Times Insider explains who we are and what we do, and delivers behind-the-scenes insights into how our journalism comes together.
As the coronavirus tears across the world, factories are idling, stores are closing, and supply chains are breaking, bringing the global economy to a crawl, with repercussions that are still unfolding. Major cities, countries and central banks are taking measures to curb the outbreak and ease the financial strain, but to what effect? In a world of rising nationalism, such a universal crisis of health and finances points to nations’ interdependence. In Monday’s Times Insider, the reporter Matt Phillips talked in an interview about the volatility in the U.S. stock market. Below is a conversation with Jeanna Smialek, who covers the Federal Reserve from Washington. She discussed the pandemic’s impact on the world’s wallet.
How big of a hit was the plummeting of the U.S. stock market on the global economy?
The way to understand this is less about asking: “What do stock declines mean for the global economy?” but rather: “What does the global economy mean for stocks?” At no point in the modern economic era — in this globalized and heavily financialized world — have we seen something bring so many countries to a grinding halt simultaneously.
On Sunday, the Fed slashed interest rates to almost zero. How could that affect us going forward?
The move should help consumers borrow and spend. For example, it should make mortgages cheaper. But at the end of the day, nothing the Fed can do at this point is going to offset the full shock of coronavirus, because its tools are just not well-suited to making up for lost work hours or helping employees who have missed out on paychecks. They can do a few things to make sure that companies who are missing out on cash flow right now can get loans, but even then, they cannot force banks to lend to insolvent businesses that are bad bets. The Fed will never say it’s out of ammunition, because that is not in its DNA as an institution, but there is a lot of room for congressional action right now.
ADVERTISEMENT
Continue reading the main story
How has the closure of Italy affected the global economy specifically?
Italy is actually a pretty large economy and people don’t appreciate that. But what happened is you saw a bunch of things going bad all at one time: Italy closed, cases in Germany jumped, cases in America began ticking up, cruise ships were lighting up with infections. All of those things together created a perfect storm that showed investors that this wasn’t going to be a blip on the radar.
Can nations work together to help the global economy rebound?
One big story that the coronavirus has brought to light is that global central banks do not have the firefighting power that they had going into the 2008 financial crisis. Many central banks, like in Japan and in parts of Europe, already had very low or even negative interest rates. And so they just have less room to act to soften the economic blow.
- Thanks for reading The Times.
What matters right now is what happens to the companies getting clobbered in the moment. What does it mean for airlines, cruise lines, hotels? Is this a short-term blip that is painful but not devastating? Or will this kill companies, thereby having greater repercussions for financial markets, and be much more long-lived in its pain?
How does this pandemic compare to the influence of other major events?
This is almost entirely unprecedented. People try to compare this to SARS, but it’s bigger. And then people try to compare this to 9/11, but most people didn’t have to work from home for a month because of 9/11. People kept going to restaurants after 9/11. It didn’t have the same quarantining effect, which is really important here.
At the end of the day, the government can’t get people back to restaurants when it’s not perceived to be safe to go to them. That’s not something anyone can fix — whether you’re the U.S. government or the central bank.
ADVERTISEMENT
Continue reading the main story
Can you and your editors prepare for this type of coverage?
It really changes on an hourly basis. You could prepare to cover Brexit or the Trump election or any of those big economic moments, but here you just don’t know what’s going to crumble first or what’s going to experience problems next, so you just have to stay in touch with all of your sources and keep up to the moment.
What is a typical day like for you right now?
Nothing like normal. I’m working from home and I’ve worked pretty much every day since the middle of February. I’m camped out in my studio apartment, which looks like a war room. I have all the financial crisis books opened up to important pages and strewn across the floor, notes tacked up on the walls. The news breaks so fast it’s just a very different pace and reality.
Usually at The Times we step back and write the capital “I” important stories. Now everything is suddenly capital “I” important, so I’m writing several stories a day, and we have a live briefing that constantly updates.
If there’s one takeaway for readers on the global economy, what should it be?
It’s been said by every person on the planet at this point, but the single best thing for the global economy is for this virus to be contained. More than any fiscal or monetary package, the public health response here is most important.
The other thing to realize is this is going to be painful, but it should be temporary. As long as it doesn’t precipitate a financial crisis, things should calm down, but there is just epic uncertainty about when that comes: a couple of months, a year or 18 months.
This shit is literally 10x more lethal than the flu and we have no vaccine or treatments.
Get on it. 
