The markets are doing something weird. No — something else.
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What started as a market sell-off story is, it emerges, straining the inner workings of the financial system itself. As even the most basic economic relationships are starting to go a little haywire, the Federal Reserve, the traditional lender of last resort, is pumping more than a trillion dollars into the bond market.
Marketplace’s David Brancaccio spoke to Neil Irwin, a senior economic correspondent for The New York Times, about what all of the strangeness means.
“What we’re seeing is a lot of evidence from a lot of different markets that there’s a real cash crunch happening in the financial system right now. Big institutions are selling whatever they can to raise cash that they think they might need for handling this potential recession,” he said.
These kinds of credit freeze-ups are worrying because they’re reminiscent of what happened back in 2008 during the financial crisis. Irwin said it’s starting to feel like the beginning of a horror movie.
“There’s always this period of the horror movie when nothing actually bad has happened to the characters yet, but there’s all these ominous little things that you see and you as the viewer know that bad things are to come. I worry that we’re seeing a lot of those warning signs out there, that this could could be a really dark chapter in economic history.”
Click the audio player above to hear the interview.
COVID-19 Economy FAQs
What’s the outlook for vaccine supply?
Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.
How has the pandemic changed scientific research?
Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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