aslund57_Mark WilsonGetty Images_trump Mark Wilson/Getty Images

Trump’s Global Recession

As long as US President Donald Trump remains in office, it is difficult to envisage any credible international effort to resolve the financial crisis caused by the COVID-19 pandemic. As a result, there is now every reason to expect a long and severe global recession.

WASHINGTON, DC – On Monday, February 24, with stock markets close to all-time highs, the world was suddenly thrown into a financial crisis as a result of the COVID-19 pandemic. And ever since, international leaders have been making the worst of a bad situation. On March 6, Russia and Saudi Arabia started an oil-price war, which shook global markets further. And US President Donald Trump’s televised address on March 11, in which he announced a suspension of most travel from Europe to the United States, brought the crisis to an entirely new height and plunged financial markets into unmitigated panic.

The combination of a coronavirus-induced growth slowdown and worldwide financial panic means that a global recession this year is virtually certain. But recession might soon be the least of our worries.

Financial crashes follow a clear logic in both their evolution and resolution, as Charles Kindleberger taught us in his seminal book Manias, Panics, and Crashes: A History of Financial Crises. Argentina and Lebanon have already defaulted on their foreign debts since the COVID-19 outbreak. Major corporate bankruptcies will likely come next. Travel companies and airlines are natural candidates, but failures often come in surprising areas.