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Triggering a Global Financial Crisis
Whether a black swan or a scapegoat, Covid-19 is an extraordinary event. Declared by the WHO as a pandemic, Covid-19 has given birth to the concept of the economic “sudden stop.” We need extraordinary measures to contain it.
Initially referred to as the novel coronavirus 2019, the coronavirus disease (Covid-19) originated late in 2019 in Wuhan, China and was first reported to the World Health Organization (WHO) Country Office in China on 31 December 2019. Rapidly becoming an endemic, it was declared by the WHO a “Public Health Emergency of International Concern” on 30 January 2020.
Covid-19, now present in more than 100 countries, has been declared a pandemic by the WHO. However, the global financial markets had declared it a pandemic in the week that started on Monday, 24 February 2020, by overwhelmingly vouching for pandemic. They did this through the fastest equity market correction of all time that took place in about six to seven days, where a correction is defined as at least a 10% drop from the peak. There remains a second question which still is debated, and it is about whether Covid-19 is a swan or a goat.
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