The Last Three Weeks Have Made The Great Depression Look Like A Gentle Drive Down A Moderately Steep Hill

In the dozen years since the global financial crisis broke out, many have wondered if the world’s central banks had stretched themselves too far, left themselves without the tools to deal with the next major crisis, had burned through all of their dry powder to stand naked and afraid before the coughs and gobs of the COVID-19 afflicted. Well, the Federal Reserve is doing quite literally all it can do: It will buy all of the government debt it can print, as many just-the-right-side-of-junk bonds as people will sell, it will inject whatever liquidity it can wherever and whenever it can. And here’s what all of the billions going on trillions buys:

Stocks are falling faster than they did during the financial crisis, the crash of 1987 or the Great Depression. Investors are retreating from corporate bonds at the swiftest pace ever. An index of raw materials is at all-time lows. And funding shortages around the world have fueled a race for dollars, powering the U.S. currency to a nearly 18-year high.

Yes, part of this is due to the fact that further stimulus is currently held up in Congress over whether or not our entire economic future should be placed in the hands of Steve Mnuchin, but still, the message from Wall Street seems to be: None of this matters, we’re all fucked.

Even as stocks extended their drop in recent days, volatility also fell, an abnormal development that adds to a laundry list of exceptional market moves pushing some investors to brace for further declines.

Many analysts and portfolio managers warn that neither those declines nor recent extraordinary actions by the Federal Reserve are likely to signal the end of the market crunch. They note that by historical standards, stocks’ declines look modest compared with some prior downturns, given the early indications of how much damage virus-related shutdowns are likely to do to global growth. The S&P 500 is down 32% from its February peak. In comparison, stocks tumbled 57% during the financial crisis and 49% after the dot-com bubble burst in 2000 before beginning to rebound.

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The Last Three Weeks Have Made The Great Depression Look Like A Gentle Drive Down A Moderately Steep Hill