Business has to live with social distancing to save lives. But what if the money shuts down, too?

The Great Coronavirus Crash has been frightening in its speed and breadth.

- By Peter Coy, with Vildana Hajric and John Ainger

Stocks have lurched lower worldwide, with brief rallies between the falls, like wounded bulls in a corrida. Through 1 p.m. on March 18 the S&P 500 index was off 27% for the year to date, Germany’s DAX was down 38%, and Japan’s Nikkei was off 29%. In the credit market, investors have fled junk bonds. Even U.S. Treasury bonds— traditionally a safe harbor in crisis times—have come under pressure, possibly because investors are selling them to cover losses elsewhere.

“This is different. The thing that is scarier about it is you’ve never been in a scenario where you shut down the entire economy,” Steve Chiavarone, portfolio manager and equity strategist with Federated Hermes, told Bloomberg News on March 16. “You get a sense in your stomach that we don’t know how to price this and that markets could fall more.”

The scariest aspect of the crash is that, for once, it’s about something real. The crash of October 1987, which featured the largest one-day decline ever, was a hiccup, a market malfunction that didn’t even cause a recession. The crash of 2008 also had an internal cause: the popping of a debt bubble inside the financial system, which was addressable with fiscal and monetary stimulus. This crash hasn’t been caused by an imbalance in balance sheets but a life-and-death struggle with a microscopic invader, the virus that causes the lung disease Covid-19. Investors are wrapping their minds around the awful reality that the pandemic is out of control. The coronavirus infects stealthily: It’s too late to stop it at the border or to seal off hot spots within a nation. It has spread so widely, the only way to halt it now is to operate on the assumption that anyone could be a silent carrier.