Kent State and the War That Never Ended

Kent State and the War That Never Ended

The deadly episode stood for a bitterly divided era. Did we ever leave it?

By Jill Lepore The New Yorker

Ten days after the Kent State shootings, policemen killed two young black men on the campus of Jackson State, in Mississippi.

Phillip Lafayette Gibbs met Dale Adams when they were in high school, in Ripley, Mississippi, a town best known as the home of William Faulkner’s great-grandfather, who ran a slave plantation, fought in the Mexican-American War, raised troops that joined the Confederate Army, wrote a best-selling mystery about a murder on a steamboat, shot a man to death and got away with it, and was elected to the Mississippi legislature. He was killed before he could take his seat, but that seat would have been two hundred miles away in the state capitol, in Jackson, a city named for Andrew Jackson, who ran a slave plantation, fought in the War of 1812, was famous for killing Indians, shot a man to death and got away with it, and was elected President of the United States. Phillip Gibbs’s father and Dale Adams’s father had both been sharecroppers: they came from families who had been held as slaves by families like the Jacksons and the Faulkners, by force of arms. 

In 1967, after Gibbs and Adams started dating, he’d take her out to the movies in a car that he borrowed from his uncle, a car with no key; he had to jam a screwdriver into the ignition to start it up. After Dale got pregnant, they were married, at his sister’s house. They named the baby Phillip, Jr.; Gibbs called him his little man. Gibbs went to Jackson State, a historically black college, and majored in political science. In 1970, his junior year, Gibbs decided that he’d like to study law at Howard when he graduated. He was opposed to the war in Vietnam, but he was also giving some thought to joining the Air Force, because that way, at least, he could provide his family with a decent apartment. “I really don’t want to go to the air force but I want you and my man to be staying with me,” he wrote to Dale, after she and the baby had moved back home to Ripley to save money. 

The Jackson State campus was divided by a four-lane road called Lynch Street, named for Mississippi’s first black congressman, John Roy Lynch, who was elected during Reconstruction, in 1872, though a lot of people thought that the street honored another Lynch, the slaveholding judge whose name became a verb. It was on Lynch Street, just after midnight, on May 15, 1970, that policemen in riot gear shot and killed Phillip Gibbs. He was twenty-one. In a barrage—they fired more than a hundred and fifty rounds in twenty-eight seconds—they also fatally shot a seventeen-year-old high-school student named James Earl Green, who was walking down the street on his way home from work. Buckshot and broken glass wounded a dozen more students, including women watching from the windows of their dormitory, Alexander Hall. Phillip Gibbs’s sister lived in that dormitory. 

That night, as the historian Nancy K. Bristow recounts in “Steeped in the Blood of Racism: Black Power, Law and Order, and the 1970 Shootings at Jackson State College” (Oxford), students at Jackson State had been out on Lynch Street protesting, and young men from the neighborhood had been throwing rocks and setting a truck on fire, partly because of something that had happened ten days before and more than nine hundred miles away: at Kent State University, the Ohio National Guard had shot and killed four students and wounded nine more. They fired as many as sixty-seven shots in thirteen seconds. “Four dead in Ohio,” Crosby, Stills, Nash & Young would sing, in a ballad that became an anthem. “Shot some more in Jackson,” the Steve Miller Band sang, in 1970, in the “Jackson-Kent Blues.” In the days between the shootings at Kent State and Jackson State, police in Augusta, Georgia, killed six unarmed black men, shot in the back, during riots triggered by the death of a teen-ager who had been tortured while in police custody. At a march, on May 19th, protesters decorated coffins with signs: 2 Killed in Jackson, 4 Killed in Kent, 6 Killed in Augusta. 

Two, plus four, plus six, plus more. In 1967, near Jackson State, police killed a twenty-two-year-old civil-rights activist—shot him in the back and in the back of the head—after the Mississippi National Guard had been called in to quell student demonstrations over concerns that ranged from police brutality to the Vietnam War. And, in 1968, at South Carolina State, police fatally shot three students and wounded dozens more, in the first mass police shooting to take place on an American college campus. Four dead in Ohio? It’s time for a new tally. 

This spring marks the fiftieth anniversary of the Kent State shootings, an occasion explored in Derf Backderf’s deeply researched and gut-wrenching graphic nonfiction novel, “Kent State: Four Dead in Ohio” (forthcoming from Abrams ComicArts). Backderf was ten years old in 1970, growing up outside Kent; the book opens with him riding in the passenger seat of his mother’s car, reading Mad, and then watching Richard Nixon on television. “Kent State” reads, in the beginning, like a very clever college-newspaper comic strip—not unlike early “Doonesbury,” which débuted that same year—featuring the ordinary lives of four undergraduates, Allison Krause, Jeff Miller, Sandy Scheuer, and Bill Schroeder, their roommate problems, their love lives, their stressy phone calls with their parents, and their fury about the war. As the violence intensifies, Backderf’s drawings grow darker and more cinematic: the intimate, moody panels of smart, young, good people, muddling through the inanity and ferocity of American politics yield to black-backed panels of institutional buildings, with the people around them saying completely crazy things, then to explosive splash pages of soldiers, their guns locked and loaded, and, finally, to a two-page spread of those fateful thirteen seconds: “boom!” “bang!” “bang! bang! pow!” 

Backderf’s publisher has billed his book as telling “the untold story of the Kent State shootings,” but the terrible story of what happened at Kent State on May 4, 1970, has been told many times before, including by an extraordinary fleet of reporters and writers who turned up on campus while the blood was still wet on the pavement. Joe Eszterhas and Michael Roberts, staff writers for the Cleveland Plain Dealer, both of whom had reported from Vietnam, reached campus within forty-five minutes of the first shot—they rushed in to cover the growing campus unrest—and stayed for three months to report “Thirteen Seconds: Confrontation at Kent State,” their swiftly published book. Eszterhas went on to become a prominent screenwriter. Philip Caputo, a twenty-eight-year-old Chicago Tribune reporter who later won a Pulitzer Prize and wrote a best-selling memoir about his service in Vietnam, was driving to Kent State, from the Cleveland airport, when the news about the shots came over the radio. “I remember stepping on the gas,” he writes, in the introduction to “13 Seconds: A Look Back at the Kent State Shootings,” a series of reflections on his earlier reporting. “I entered the picture late,” the best-selling novelist James A. Michener wrote. “I arrived by car in early August.” He stayed for months. The Reader’s Digest had hired him to write “Kent State: What Happened and Why,” providing him with reams of research from on-the-spot reporters. The political commentator I. F. Stone cranked out a short book—really, a long essay—titled “The Killings at Kent State: How Murder Went Unpunished.” So many books were published about the shooting, so fast, that when NBC’s “Today” show featured their authors the result was a screaming match. Before introducing them, the host, Hugh Downs, gave a grave, concise, newsman’s account of the sequence of events: 

On Thursday, April 30th, 1970, President Richard Nixon announced that American forces were moving into Cambodia. On Friday, May 1st, students at Kent State University in Kent, Ohio, expressed their displeasure at the President’s announcement. That night, there was violence in the streets of Kent. On Saturday, May 2nd, the R.O.T.C. building was burned, National Guardsmen moved onto the campus. On Sunday, May 3rd, students and Guardsmen traded insults, rocks, and tear gas. On Monday, May 4th, the confrontations continued. There was marching and counter-marching. Students hurled rocks and Guardsmen chased students, firing tear gas. The Guardsmen pursued the students up an area called Blanket Hill. Some Guardsmen pointed their rifles menacingly. And suddenly, it happened. 

Nearly all accounts of what happened at Kent State begin the way the “Today” show did, on April 30, 1970, when, in a televised address, Nixon announced that the United States had sent troops into Cambodia, even though, only ten days earlier, he had announced the withdrawal of a hundred and fifty thousand troops from Vietnam. Students on college campuses had been protesting the war since 1965, beginning with teach-ins at the University of Michigan. By 1970, it had seemed as though U.S. involvement in the war in Vietnam was finally winding down; now, with the news of the invasion of Cambodia, it was winding back up. Nixon, who had campaigned on a promise to restore law and order, warned Americans to brace for protest. “My fellow Americans, we live in an age of anarchy, both abroad and at home,” he said. “Even here in the United States, great universities are being systematically destroyed.” 

Nixon’s Cambodia speech led to antiwar protests at hundreds of colleges across the country. Campus leaders called for a National Student Strike. Borrowing from the Black Power movement, they used a black fist as its symbol. The number of campuses involved grew by twenty a day. Most demonstrations were peaceful, but others were violent, even terrifying. In some places, including Kent, students rioted, smashing shop windows, pelting cars, setting fires, and throwing firebombs. In Ohio, the mayor of Kent asked the governor to send in the National Guard. 

Nixon hated the student protesters as much in private as he did in public. “You see these bums, you know, blowing up the campuses,” he said the day after the Cambodia speech. He had long urged a hard line on student protesters: antiwar protesters, civil-rights activists, all of them. So had Ronald Reagan, who ran for governor of California in 1966 on a promise to bring law and order to Berkeley, a campus he described as “a rallying point for communists and a center for sexual misconduct.” In 1969, he ordered the California Highway Patrol to clear out a vacant lot near the Berkeley campus which student and local volunteers had turned into a park. Patrolmen fired shots, killing one student, and injuring more than a hundred. Reagan called in the National Guard. Weeks before Nixon’s Cambodia speech stirred up still more protest, Reagan, running for reëlection, said that he was ready for a fight. “If it takes a bloodbath,” he said, “let’s get it over with.” 

May 4, 1970, the day of that bloodbath, fell on a Monday. The Guardsmen at Kent State started firing not long after noon, while students were crossing campus; there seems to be some chance that they mistook the students spilling out of buildings for an act of aggression, when, actually, they were leaving classes. Bill Schroeder, a sophomore, was an R.O.T.C. student. “He didn’t like Vietnam and Cambodia but if he had to go to Vietnam,” his roommate said later, “he would have gone.” Schroeder was walking to class when he was shot in the back. Jeff Miller, a junior from Plainview, Long Island, hated the war, and went out to join the protest; he was shot in the mouth. Sandy Scheuer had been training to become a speech therapist. Shot in the neck, she bled to death. Allison Krause, a freshman honor student from outside Pittsburgh, was about to transfer. She’d refused to join groups like Students for a Democratic Society, which, by 1969, had become increasingly violent. (Her father told a reporter that she had called them “a bunch of finks.”) But she became outraged when the National Guard occupied the campus. On a final exam, she had tried to answer the question “What is the point of history?” “Dates and facts are not enough to show what happened in the past,” she wrote. “It is necessary to analyze and delve into the human side of history to come up with the truth.” She had lost her naïveté, she told her professor, in a reflection that she wrote at the end of the exam: “I don’t take the books as ‘the law’ anymore.” Her professor wrote back, “A happy thing—that.” She had gone out to protest the invasion of Cambodia. 

Thirteen seconds later, with four students on the ground, the shooting seemed likely to start up again, until Glenn Frank, a middle-aged geology professor, grabbed a megaphone. “Sit down, please!” he shouted at the students, his voice frantic, desperate. “I am begging you right now. If you don’t disperse right now, they’re going to move in, and it can only be a slaughter. Would you please listen to me? Jesus Christ, I don’t want to be a part of this!” Finally, the students sat down. 

Students elsewhere stood up. Campuses across the country erupted. Demonstrations took place in four out of every five colleges and universities. One in five simply shut down, including the entire University of California system, and sent their students home. Students marched on administration buildings, they burned more buildings, they firebombed, they threw Molotov cocktails. And they marched on Washington. This magazine declared it “the most critical week this nation has endured in more than a century.” 

But one of the most violent protests was a counterprotest, as David Paul Kuhn points out in his riveting book “The Hardhat Riot: Nixon, New York City, and the Dawn of the White Working-Class Revolution” (Oxford). For all the talk of tragedy in the nation’s newspapers and magazines, a majority of Americans blamed the students. They’d had it with those protests: the destruction of property, the squandering of an education. Hundreds of thousands of U.S. servicemen were fighting in Vietnam, young people who hadn’t dodged the draft; most of them came from white, blue-collar families. Kent State students were shattering shop windows and burying the Constitution and telling National Guardsmen to go fuck themselves? Four dead in Ohio? Fifty thousand servicemen had already died in Vietnam, and more were dying every day. (It’s worth noting that both Trump and Biden avoided the draft: Trump said he had bone spurs; Biden got five student deferments and later cited asthma.) 

On May 7th, three days after the shooting at Kent State, as many as five thousand students thronged the Manhattan funeral service of Jeff Miller. As the mourners marched through the city, scattered groups of construction workers, up on girders, threw beer cans at them. The mayor, John Lindsay, had declared May 8th a “day of reflection,” and closed the city’s public schools. A thousand college students turned up for an antiwar rally, hoping to shut down Wall Street: “One-two-three-four. We don’t want your fuckin’ war! Two-four-six-eight. We don’t want your fascist state!” They were met by construction workers, many of whom had come down from the Twin Towers and not a few of whom had buried their soldier sons, or their neighbors’ sons, in flag-draped coffins. 

Joe Kelly, six feet four and from Staten Island, was working on building the elevators at the World Trade Center. He said he’d reached his “boiling point,” and headed over to the protest during his lunch hour, joining hundreds of workers in yellow, red, and blue hard hats, some carrying American flags, many chanting, “Hey, hey, whaddya say? We support the U.S.A.!” and “Love it or leave it!” Kelly thought the students looked “un-American.” The students called the hardhats “motherfucking fascists.” Kelly punched a kid who, he said, swung at him and knocked the kid down. While police officers looked on, more or less approvingly, the workers attacked the protesters, clubbing them with tools, kicking them as they lay on the ground. Some of the policemen dragged hippies out of the fight by their hair. Even some Wall Street guys, in suits and ties, joined the hardhats. Lindsay had called for the flag at City Hall to be lowered to half-mast. The construction workers swarmed the building and forced city workers to raise the flag back up. Other workers chased undergraduates from Pace University back to campus, breaking into a building on which students had draped a white banner that read “vietnam? cambodia? kent state? what next?” Pace was next. Students tried to barricade the buildings while construction workers broke windows and leaped inside, shouting, “Kill those long-haired bastards!” 

Two weeks later, at the White House, Nixon received a memo from his aide Patrick Buchanan. “A group of construction workers came up Wall Street and beat the living hell out of some demonstrators who were desecrating the American flag,” Buchanan reported. “The most insane suggestion I have heard about here in recent days was to the effect that we should somehow go prosecute the hardhats to win favor with the kiddies.” He advised the opposite tack: abandon the kiddies, and court the hardhats. The day before, a hundred and fifty thousand New York construction workers, teamsters, and longshoremen marched through the streets of the city. The Daily News called it a “parade for nixon.” They were trying to make America great again. Nixon invited the march’s leaders to the White House, where they gave hard hats as a gift. Nixon was well on his way to becoming the hero of the white working class, men and women, but especially men, who left the Democratic Party for the G.O.P. “These, quite candidly, are our people now,” Buchanan told Nixon. They were Nixon’s, and they were Reagan’s, and they are Trump’s. 

On May 7th, the day of Jeff Miller’s funeral in New York, signs were posted all over the Jackson State campus: 

Be Concerned 

Meet in Front The Dining Hall 

At 2:00 P.M. Today 

To Discuss Cambodia. 

A small crowd showed up. Two days later, only about a dozen Jackson State students went to a rally in downtown Jackson. One student leader recalled, “The kids at Kent State had become second-class niggers, so they had to go.” They had found out what he and his classmates had known their whole lives: what happens when the police think of you as black. 

It’s not clear that Phillip Gibbs went to any of those rallies, but, in high school, in Ripley, he’d joined sit-ins aiming to integrate the town swimming pool, an ice-cream shop, and the Dixie Theatre. In “Lynch Street: The May 1970 Slayings at Jackson State College,” published in 1988, Tim Spofford argued that Jackson State had never been a particularly political campus. But Jackson had in fact been very much in the fray of the civil-rights, antiwar, and Black Power movements. In 1961, students at Mississippi’s Tougaloo College—another historically black school—had held a sit-in in an attempt to desegregate the Municipal Library, in nearby Jackson. After the Tougaloo students were arrested, students at Jackson State marched down Lynch Street, toward the jail where the Tougaloo protesters were being held; they were stopped by police with tear gas, billy clubs, and attack dogs. Two years later, the civil-rights activist Medgar Evers was assassinated at his home in Jackson. The next year, his brother, Charles Evers, who had replaced Medgar as head of the state’s N.A.A.C.P., tried to calm campus protesters after a female student was nearly killed by a hit-and-run as she crossed Lynch Street. Police came and shot at the students, wounding three. The local press was not inclined to support the protesters. “Did you hear about the new NAACP doll?” a columnist for the Jackson Daily News had asked. “You wind it up and it screams, ‘police brutality.’ ” 

A lot of students at Jackson State couldn’t afford to get involved. In the wake of the 1970 shootings, one student said, “Mothers are out scrubbing floors for white folks and sending these kids to Jackson State. ‘You’re doin’ better than I ever did,’ they tell the kids. ‘You better stay outta that mess.’ ” 

Still, by May 13, 1970, five days after the Hardhat Riot in New York, there were plans, or at least rumors about plans, to burn the Jackson State R.O.T.C. building. That night, students threw rocks at cars driving down Lynch Street. “Havin’ nigger trouble on Lynch Street?” one squad car asked over the police radio. When students started setting fires, the governor called in the Mississippi National Guard, but, before they could arrive, the all-white Mississippi Highway Patrol turned up. Jackson State’s president, an alumnus, met with students the next morning; they told him that they were angry about Cambodia, the draft, and Kent State, and also about the curfew for students in the women’s dormitory and the lack of a pedestrian bridge over Lynch Street. He called the police chief and asked him to close Lynch Street overnight; the police chief initially refused. 

That night, a rumor spread that Charles Evers, who was now the mayor of Fayette, Mississippi, and who had a daughter at Jackson State, had been shot. As the National Guard had done at Kent State, the authorities at Jackson State insisted that the police and patrolmen had identified a sniper. (No evidence has ever corroborated these claims.) A few minutes after midnight, law-enforcement officers began firing. In the morning, the college president closed the campus and sent the students home. 

Time called what happened in Mississippi “Kent State II.” After Phillip Gibbs’s wife, Dale, learned that her husband had been killed, she found out she was pregnant, with her second child. This one, Demetrius, graduated from Jackson State in 1995, and has had a hard time explaining what happened to the father he never knew. “If I try to tell people about the shootings at Jackson State, they don’t know about it,” he has said. “They don’t know until I say, ‘Kent State.’ ” 

In “Steeped in the Blood of Racism,” Bristow insists, “Jackson State was not another Kent State.” Bristow blames white liberals for failing to understand the shootings at Jackson State as a legacy of the Jim Crow South’s brutal regime of state violence, and for deciding, instead, that what happened at Jackson State was just like what happened at Kent State. She faults the Beach Boys, for instance, for a track on their 1971 album, “Surf’s Up”; even though they had noted the specific racial nature of the events at Jackson State (“The violence spread down South to where Jackson State brothers / Learned not to say nasty things about Southern policemen’s mothers”), these lines appeared in a song called “Student Demonstration Time,” which, Bristow laments, “told listeners the Jackson State shootings belonged in a litany of crises on college campuses.” 

That was more or less the verdict of the President’s Commission on Campus Unrest, appointed by Nixon in June, 1970. It wasn’t a bunch of whitewashers. The nine-person commission, chaired by William Scranton, the former Republican governor of Pennsylvania, included the president of Howard University; the first African-American justice to sit on the Louisiana Supreme Court; a black member of the Harvard Society of Fellows studying the history of racism; and, as its only active military member, the first African-American Air Force general, a former commander of the Tuskegee Airmen. After holding public hearings in Kent and Jackson, the Scranton Commission concluded that most campus unrest had been peaceful, that it was a response to racial inequality and the war in Vietnam, that it wasn’t mayhem, and, also, that it wasn’t unusual. “It is not so much the unrest of the past half-dozen years that is exceptional as it is the quiet of the 20 years which preceded them,” the report asserted, noting that Americans who attended college from the nineteen-forties to the early nineteen-sixties had formed a “silent generation.” As far as the commission was concerned, the modern era of campus unrest began on February 1, 1960, when four students from North Carolina Agricultural and Technical College sat down at a “Whites Only” lunch counter in Greensboro. Nixon rejected the report. 

It’s this argument—that white and black student protesters can be understood to have been involved in a single movement, for racial justice, free speech, and peace, led by the fight for civil rights—that Bristow, bizarrely, rejects as a white-liberal fantasy. If it was a fantasy, it was also Martin Luther King, Jr.,’s fantasy. In 1967, after King first spoke out against the war in Vietnam, people asked him why, saying, “Peace and civil rights don’t mix.” Their response saddened him, he said, because it suggested that “they do not know the world in which they live.” 

Aquestion, lately, is: Which world do Americans remember? The Scranton Commission concluded that the shootings at both Kent State and Jackson State had been unjustified. It did not, however, urge the prosecution of the shooters, something that a lot of people who wrote books about Kent State urged but that James Michener opposed. “It would be an exercise in futility,” he said during his commencement address at Kent State, in December, 1970. In his five-hundred-page book, “Kent State: What Happened and Why,” Michener blamed the protesters and, especially, outside radical agitators, who, like the snipers, seem to have been mostly an invention of the authorities. Joe Eszterhas and Michael Roberts called Michener’s book “a Magical Mystery Tour of innuendo, half-truth, carefully-structured quotation and anonymous attribution.” They concluded that the National Guardsmen, exhausted, poorly trained, and badly led, had committed murder. “There was death, but not murder,” Michener insisted. 

A week short of the first anniversary of the shootings at Kent State, Michener, Eszterhas, Roberts, and I. F. Stone appeared on that panel on the “Today” show. “Hugh—obviously, this will be a free-swinging affair,” Downs’s producer noted, in the show overview. By the end of the hour, the guests had nearly come to blows. “Jim, don’t you believe in American justice?” Eszterhas asked, after Michener continued to insist that a federal grand-jury investigation would be a waste of time, because no jury would convict the Guardsmen. “How do you know that?” Roberts asked. Michener: “Because it has been the history throughout our country. The law doesn’t run its course.” At this point, even Downs jumped in: “Aren’t you in effect indicting the American system of justice?” Stone tried to read out loud from a statement by Kent students. Michener shouted him down: “I won’t let you read that.” 

That spring, the New York Times ran a long investigative piece, “jackson state a year after,” by Stephan Lesher, a legal-affairs correspondent. Alexander Hall was still pockmarked with bullet holes. Lynch Street had been closed to traffic, but with a tall chain-link fence, which made the campus feel like a prison. “No one has been punished,” Lesher wrote. “No one is going to be”: 

No one—least of all Jackson’s blacks—expected a different outcome. . . . Yet, there is a barely perceptible chance that the Jackson State violence will be remembered as more than simply another brutal chapter in Mississippi’s disregard for black humanity. 

No one has been punished, and no one is going to be. Except everyone’s been punished, the whole nation has suffered, and will keep on suffering, until the shooting stops. That will take a political settlement, a peace, that the nation has needed for a half century. And it will require a history that can account for Greensboro, and Berkeley, and Kent State, and the Hardhats, and Jackson State, all at once. King made a prediction: “If we do not act, we shall surely be dragged down the long, dark, and shameful corridors of time reserved for those who possess power without compassion, might without morality, and strength without sight.” It turns out that the corridor of time is longer than he could have known. ♦

Published in the print edition of the May 4, 2020, issue, with the headline “Blood on the Green.”

Jill Lepore is a professor of history at Harvard and the host of the podcast “The Last Archive.” Her fourteenth book, “If Then,” will be published in September.

We Can’t Go on Like This Much Longer

We Can’t Go on Like This Much Longer

By Andrew Sullivan New York Magazine

I began to lose it this week.

I know, I have it very easy. I’m not required to put myself at risk every day as a hospital or essential worker. I’m still employed. I’ve got some savings, and don’t have to worry about basic survival. I get food delivered. I haven’t lost any family members or friends from COVID-19 (though I did lose my dad in a horrible accident, and couldn’t get to the burial). My apartment gets plenty of sun and I have two dogs who love me. I get a couple of good walks in a day, and have plenty to read. I don’t have kids. I have direct, personal experience of living through a plague once before in my life. 

All of that should make me a prime candidate to hang in, take this period as a disciplinary exercise, and generally be a good citizen. And I have been — I haven’t had any physical human contact for two months now, I wear a mask everywhere, I use rubber disposable gloves for groceries, I keep my six-feet distance so far as I can, even though it’s impossible in my neighborhood to walk on a sidewalk or in a park and not be accosted by joggers, who routinely come within inches of my face. I have no intention of breaking any of these rules, although I am tempted by homicide if any of these fit, entitled motherfuckers actually spit on the ground near me. 

But I can recognize signs of psychological and physical stress, and I’m beginning to lose it. This week, for some reason, Wednesday was a bad day. Or at least I think it was Wednesday. What day is it again? 

My sleep patterns are totally screwed up, and I find myself waking up tense several times a night, or crashing out for 10 or 12 hours at a time. I wake up and want to go back to sleep. My appetite is waning, and my body longs for some weights to push and pull. My teeth grind all night long and my jaw is tense. I have all the time in the world to read and write, and yet I find myself anesthetized with ennui, procrastinating and distracting myself. Yes, I scan the news every day, often hourly, to discern any seeds of progress. 

And here’s the thing: I can’t see much on the horizon. 

Yes, it’s a big relief that our hospitals are no longer overwhelmed and daily deaths have plateaued or even declined a little. Yes, the epidemiological worst has not happened — largely because of the new behavioral rules — even though we could well be headed past the White House’s estimate of 60,000 casualties in the medium term, and countless more whose bodies will be permanently wracked by the damage this virus does to the lungs and heart and kidneys. 

But I’m also aware that even this modest arrest of a previously exponential disease has only delayed the inevitable. “Flattening the curve” has actually been a remarkable success — but its very success will likely draw this epidemic out for months and years. Yes, if you’re being super-realistic: years. Vaccines do not happen overnight — and even an 18-month deadline for vaccine salvation is being optimistic. We still don’t have a vaccine for HIV, and probably never will. HIV is a retrovirus, which is far harder to vaccinate against than a coronavirus, but COVID-19 is exponentially more contagious than HIV, if not as fatal. Remove constraints and it will spread like ink on a napkin. 

A study yet to be peer reviewed from China suggests that the virus has so far about 30 mutations, some far more severe than others. It is also unclear that antibodies can even succeed in preventing the disease, and for how long: “Preliminary studies on monkeys suggest COVID-19 antibodies provide partial, short-term protective immunity to reinfection, but, as Harvard epidemiologist Marc Lipsitch recently wrote for the New York Times, these early results are just ‘educated guesses.’” Notice the word: “short-term.” We are going to be dealing with some form of this virus for the indefinite future, and it has a good chance of becoming endemic: “Other coronaviruses, which cause common cold symptoms, lead to a very weak immune response and people can catch the same bug multiple times in their lifetime.” A preliminary study of convalescent patients in China was not encouraging: It found that 30 percent of those who had been infected by COVID-19 had so few antibodies to the disease it was unlikely they’d have any immunity. If this finding turns out to be true, we’re truly, royally fucked. 

Treatments? That’s at least worth some limited optimism. It was treatments — not a vaccine — that allowed us to turn the corner on HIV. And that’s why I still do get up in the morning. The trouble is that it took years to develop effective treatments for the vast array of opportunistic infections, and more than a decade for scientists to come up with an effective treatment for the virus itself. When a virus is brand new, and we don’t know much about it, it simply takes time to figure out its weak spots, and develop treatments to exploit them. We’re talking several months at best, and — as with HIV treatments — we will be disappointed most of the time. Hydroxycholoroquine turns out, in some patients, to make things worse, not better. Gilead’s remdesivir is one reason I have some hope. Seven clinical trials are underway, and anecdotal studies in Chicago have raised hopes. Yesterday, leaked data from one trial suggests it might be a flop, but that particular trial may also be misleading. We don’t know. 

This pattern of hopeful rumors that were later dashed is a familiar one for HIV survivors. There were countless possible treatments for various aspects of AIDS opportunistic infections in the late 1980s and ’90s, and trials were constant. Many succeeded in arresting some aspects of the disease — but many very promising trials turned out to be duds. What looked like breakthroughs in phase three trials often became crushed hopes in phase four. Remdesivir is an already existing drug, designed for Ebola (and eventually rejected in favor of better treatments). AZT was also a preexisting medicine that seemed promising at first, and then we discovered, through rigorous trials, that mono AZT therapy was basically useless, and usually toxic. It took years for researchers to come up with drugs that could, sometimes in combination with AZT, bring viral loads to zero. It may take just as long to develop brand-new treatments that could make a decisive difference with COVID-19

The obvious massive difference between the race to find treatments for HIV and those for COVID-19 is also that HIV in America was relatively contained within the world of anal sex and intravenous drug use (and still is). The broader society could go on as normal, even though the gay world was experiencing medieval levels of death. With COVID-19, in stark contrast, we have shut down almost our entire economy and restricted all human interaction in unprecedented ways. Even in 1918, there was no national shutdown similar to the one we’ve imposed more than a century later. Yes, there were masks and social distancing and business restrictions, but the most draconian measure, in Saint Louis, shut down all economic activity in only one city for just 48 hours. 

So we have created a scenario which has mercifully slowed the virus’s spread, but, as we are now discovering, at the cost of a potentially greater depression than in the 1930s, with no assurance of any progress yet visible. If we keep this up for six months, we could well keep the deaths relatively low and stable, but the economy would all but disintegrate. Just because Trump has argued that the cure could be worse than the disease doesn’t mean it isn’t potentially true. The previously unimaginable levels of unemployment and the massive debt-fueled outlays to lessen the blow simply cannot continue indefinitely. We have already, in just two months, wiped out all the job gains since the Great Recession. In six months? The wreckage boggles the mind. 

All of this is why, one some days, I can barely get out of bed. It is why protests against our total shutdown, while puny now, will doubtless grow. The psychological damage — not counting the physical toll — caused by this deeply unnatural way of life is going to intensify. We remain human beings, a quintessentially social mammal, and we orient ourselves in time, looking forward to the future. When that future has been suspended, humans come undone. Damon Linker put it beautifully this week: “A life without forward momentum is to a considerable extent a life without purpose — or at least the kind of purpose that lifts our spirits and enlivens our steps as we traverse time. Without the momentum and purpose, we flounder. A present without a future is a life that feels less worth living, because it’s a life haunted by a shadow of futility.” Or, in the words of the brilliant Freddie deBoer: “The human cost of the disease and those it will kill is enormous. The cost of our prevention efforts are high as well. You’re losing something. You’re losing so much. So you should mourn. We’ve lost the world. Mourn for it.” 

We have done what we had to do, and I am not criticizing the shutdown strategy so far. I’m simply saying that it cannot last. We keep postponing herd immunity, if such a thing is even possible with this virus. A massive testing, tracing, and quarantining regime seems beyond the capacity of our federal government in the foreseeable future. And we are a country without a functioning president — ours thinks we should inject bleach to kill COVID-19, and is also doing what he can to divide the nation to keep his fast-diminishing candidacy from imploding. And we know this much after three and a half years: The worse this gets, the worse he will get. Already he is lambasting shutdown orders as well as Georgia’s attempt to end the shutdown. He is an incoherent, malevolent mess of a human being. I used to be disgusted by him. I am now incandescent with rage at him and the cult that enables his abuse of all of us. 

And so we wait. Absent a pharmaceutical miracle, we are headed, if we keep this up, toward both a collapse in the economy and an inevitable second wave that will further cull the population. Yes, I’m a catastrophist by nature. I hope and pray something intervenes to save us from this uniquely grim future. But I learned something from the AIDS years: Sometimes it is a catastrophe. And sometimes the only way past something is through it. 

Not Her Year 

I’m pretty open-minded about who will be Biden’s vice-presidential pick. For reasons of identity politics, he has excluded anyone male in advance, regardless of their abilities — showing how captive Biden is (despite his reputation) to wokeness. But some left identitarians are pushing him to go even woker and exclude white women from consideration too. (A majority of white women voted for Trump last time around, after all!) 

Whatever you make of that argument, it is quite true that black women are critical to the Democratic Party base. In that context, Stacey Abrams’s name keeps coming up. So let me state for the record that as a pure political calculation, I think she’d be a bad candidate for the job. 

Abrams is hobbled for reasons that have nothing to do with her race or gender. She has no national experience, and her only political record is in being a state legislator and House minority leader in Georgia’s House of Representatives, and a failed gubernatorial candidate. As a legislator, she never faced a Republican candidate, running unopposed in all her elections for the 89th District. 

The only competitive election she ran in, for governor, she lost, with a massive black and white turnout. Even the young and untested Barack Obama had won a Senate race in a landslide, with 70 percent of the vote in a seat previously occupied by a Republican, before he ran for president. That option would have been open to Abrams in Georgia after her defeat in 2018, and she could have proved her strength and elevated her profile in the Senate. Democrats awarded her the response to Trump’s State of the Union address — the first ever for someone holding no elected position. And she was recruited hard to run for the Senate — but, after toying with the idea, she decided against it. According to her, she is focused on becoming president and this will happen within the next 20 years. 

The main problem is that she continues to claim that her loss in her only competitive election was a function of a rigged electoral process. This is a stance that could legitimize any complaints Trump might have if he loses narrowly in November. Abrams doesn’t just claim that voter suppression was real (it was) and that she was therefore running with one hand tied behind her back (like most Democrats in the South, she was). She goes further: “I cannot say that everybody who tried to cast a ballot would’ve voted for me, but if you look at the totality of the information, it is sufficient to demonstrate that so many people were disenfranchised and disengaged by the very act of the person who won the election that I feel comfortable now saying, ‘I won.’” 

She strongly implies that no one responsible for the voter rolls — as Kemp was in his role as Georgia’s secretary of State, and who can thereby theoretically rig them — should be able to run. But by that logic, all governors could be barred from running for reelection. She could have conceded the race and then drawn attention to voter suppression, which is indeed a vital issue. But she didn’t. She still won’t concede. If Trump does the same later this year, after a close (or even not-so-close) defeat, he’ll be able to use it against her and thereby Biden. He’s already teeing up the argument. In his presser yesterday, asked whether an election result while a pandemic is still raging in some parts of the country could be challenged, Trump responded: “Good question!” I’ve long feared that Trump will not be able to concede a close election, because he is psychologically incapable of conceding anything. We may well face a constitutional crisis in November. Stacey Abrams must not be Trump’s trump card, allowing him to muddy the waters. 

The other problem is her open identity politics. Hovering just beneath the surface in her current media campaign for herself is a form of leverage: She is all but claiming outright that being a black woman is indeed a central credential within the Democratic Party, and that a white female candidate could thereby divide the party and fail to attract the high black turnout the Dems need to win. On The View this week she said: “I share your concern about not picking a woman of color because women of color, particularly because black women are the strongest part of the Democratic Party.” 

No argument on the latter, but are black women overall demanding a black female candidate? Not really. In the primaries, black voters overwhelmingly voted for a white man, Joe Biden, and showed no real enthusiasm for any of the black candidates. And the data do not suggest that black voters will only show up for a black candidate. In fact, polling says they are much less concerned than white liberals with the race and gender of their nominee. 

If you want a minority woman, think Senator Kamala Harris, who has national experience, the courage to run for the highest office, and a record of actually winning competitive elections. If you want a white woman, there are also plenty to choose from. But Abrams? She herself has said it is inevitable she will be president within the next 20 years. So why not wait? 

The Government’s Failure Is Much Bigger Than Trump 

In the middle of this pandemic, I can’t get out of my mind that the budget for the Centers for Disease Control and Prevention last year was $7.2 billion. This year, it will set a record of $7.9 billion — an all-time record. That’s an incredible sum. The FDA, the other critical agency for controlling disease, has a comparable $5.7 billion budget. The WHO is funded by the U.S. to the tune of $453 million, by far the biggest contributor. 

The federal agencies tasked with preparing for a pandemic response are also numerous and absorb a huge amount of federal dollars. Judge Glock, a policy analyst at the Cicero Institute, explains: “The acronyms of those agencies that are supposed to organize a response to a communicable disease crisis include, but are not limited to, the ASPR, CDC, DGMQ, NCEZID, USSG, HHS, FEMA, FDA, NIAID, DOD, DHS, NSC, CTF, and associated sub-agencies and divisions and offices.” 

And one might imagine that all of this kind of spending would help us, you know, control disease. But nah. COVID-19 took a brief glance at these hugely expensive bodies and carried on its culling of the population unmolested. In the most critical disease outbreak in a century, all these well-funded groups turned out to be incapable of making any kind of difference when it mattered. Their lines of command are confusing, and their legislative mandates overlap. Plans for preparedness are so manifold, no one knows quite which one to pick. The result is that we were ready for an epidemic like the one we’re enduring. In fact, we were perhaps overly prepared. The trouble has been incompetence. 

Yes, it did not help that the Trump administration significantly cut the CDC presence in China in the last two years, but it should have been perfectly possible for the staff that remained to stay on top of the most infectious and deadly pandemic disease in a century. In December 2019, after all, the heroic whistle-blower, Li Wenliang, had broken the news of a new SARS-like coronavirus spreading in Wuhan. You could find the rumors on the fucking internet. 

But the CDC and the WHO trusted the Chinese government to help them — and the communist dictatorship was determined at first to hush the outbreak up: “Health and Human Services secretary, Alex Azar, did make the effort to get U.S. experts inside. The department reached out to China in the first week of January, and secretary Azar asked his Chinese counterpart again in late January. China resisted outsiders, both from the U.S. and WHO.” But it is also true — and this is critical — that the WHO head, Tedros Adhanom Ghebreyesus, was in direct communication with the Chinese dictatorship, and was naïve to trust them; and on January 10, the Chinese published the genetic sequence for the disease. Maybe we lost a couple of weeks, but after that, we no longer needed the Chinese, or the WHO. We had the data; we needed a plan of action. 

The CDC initiated an attempt to create a test for COVID-19, achieving it in a mere seven days. But somehow they fucked it up, and we still have no good explanation why. Did they rush it? Or were they the most incompetent disease control agency on the planet? The test, first used in New York, turned out to be flawed and effectively useless. More to the point, once a public emergency had been declared, FDA regulations prevented private parties from creating a more effective test. A test emerged from the WHO, but the CDC did not throw everything overboard to adopt it. And, again, we still don’t really know why. 

The FDA, for its part, refused to lift the mind-numbing bureaucratic procedures to expedite independent labs from creating a viable test. And so we were flying blind — and we still are. Billions and billions of dollars over decades for multiple agencies and legislation passed last year precisely to prevent such an outbreak — and here we are, with no end in sight, forced to stay inside because the fully funded federal machine could not move fast enough, and when it did, failed a core competency test. 

You can assail Trump’s pathetic and incoherent response. I’m not going to quibble. But this was much deeper than merely Trump’s failure. It was and is the failure of the entire federal bureaucracy, which has been exorbitantly funded to prevent exactly such an emergency and spectacularly, unforgivably, failed. 

See you next Friday

How coronavirus almost brought down the global financial system

How coronavirus almost brought down the global financial system

The crisis has brought the economy to a near halt, and left millions of people out of work. But thanks to intervention on an unprecedented scale, a full-scale meltdown has been averted – for now. 

By Adam Tooze London Guardian

In the third week of March, while most of our minds were fixed on surging coronavirus death rates and the apocalyptic scenes in hospital wards, global financial markets came as close to a collapse as they have since September 2008. The price of shares in the world’s major corporations plunged. The value of the dollar surged against every currency in the world, squeezing debtors everywhere from Indonesia to Mexico. Trillion-dollar markets for government debt, the basic foundation of the financial system, lurched up and down in terror-stricken cycles.

On the terminal screens, interest rates danced. Traders hunched over improvised home workstations – known in the new slang of March 2020 as “Rona rigs” – screaming with frustration as sluggish home wifi systems dragged behind the movement of the markets. At the low point on 23 March, $26tn had been wiped off the value of global equity markets, inflicting huge losses both on the fortunate few who own shares, and on the collective pools of savings held by pension and insurance funds.

What the markets were reacting to was an unthinkable turn of events. After a fatal period of hesitation, governments around the world were ordering comprehensive lockdowns to contain a lethal pandemic. Built for growth, the global economic machine was being brought to a screeching halt. In 2020, for the first time since the second world war, production around the world will contract. It is not only Europe and the US that have been shut down, but once-booming emerging market economies in Asia. Commodity exporters from Latin America and sub-Saharan Africa face collapsing markets.

It is now clear that we can, if circumstances demand, turn the economy off. But the consequences are catastrophic. Across the world, hundreds of millions of people have been thrown out of work. From the street hawkers of Delhi to the personal trainers of LA, the service sector – by far the most important employer in the modern economy – has been poleaxed. Never before has the global economy suffered a shock of this scale all at once. In the US alone, at least 17 million people have lost their jobs in the last three weeks. A severe global recession is now inevitable.

The crucial question is how much of the world economy will survive the lockdown, and this depends on the availability of credit. Business runs on credit. The bits of the economy that do continue to function – the warehouses, the mobile phone providers and internet firms – all need credit. Wage bills for those still working are financed through credit. Even greater is the need of those who are not working. If they can’t get loans, bills will go unpaid, which spreads the pain. To survive the lockdown, millions of families and firms around the world are relying on grants and loans from the state. But tax revenues have collapsed, so states need credit, too. Across the world we are witnessing the largest surge in deficits and government debt since the second world war.

But who do we borrow from? Banks, financial markets and money markets provide the financial fuel of the world economy. Normally, credit is sustained by the optimistic promise of growth. When that dissolves, you face a self-reinforcing cycle of collapsing confidence, contracting credit, unemployment and bankruptcy, which spreads a poison cloud of pessimism. Like an epidemic, if left uncontrolled, it will sweep all before it, destroying first the financially fragile and then much else besides. It is not for nothing that we speak of financial contagion.

What began with the lockdown in Wuhan in January is more intense and more fast-moving than any recession we have seen before. In a matter of weeks we have been confronted with an economic outlook that is as grim as at any moment since the 1930s. But it could have been even worse. Imagine a situation in which, on top of the pain of the lockdown and the hellish scenes in hospital wards, we also face calls for austerity because the government cannot safely finance extra spending. Imagine that interest rates were surging, and the terms for credit cards, car loans and mortgages were suddenly getting stiffer. All of this may still happen. It is already happening to the weaker economies around the world. But for now at least, it has not happened in Europe and the US – even after the turbulence of March 2020, when the pandemic hit with full force.

What Europe and the US have succeeded in doing is to flatten the curve of financial panic. They have maintained the all-important flow of credit. Without that, large parts of their economies would not be on life support – they would be stone dead. And our governments would be struggling with a financial crunch to boot. Maintaining the flow of credit has been the precondition for sustaining the lockdown. It is the precondition for a concerted public health response to the pandemic.

During major crises, we are reminded of the fact that at the heart of the profit-driven, private financial economy is a public institution, the central bank. When financial markets are functioning normally, it remains in the background. But when they threaten to break down, it has the option of stepping forward to act as a lender of last resort. It can make loans, or it can buy assets from banks, funds or other businesses that are desperate for cash. Because it is the ultimate backer of the currency, its budget is unlimited. That means it can decide who sinks and who swims. We learned this in 2008. But 2020 has driven home the point as never before.

The last six weeks have seen a bout of intervention without precedent. The results have been momentous. A giant public safety net has been stretched out across the financial system. We may never know what went on behind the closed doors of the US Federal Reserve, the European Central Bank and the Bank of England during those critical moments in March. So far, only muffled sounds of argument have reached the outside. But as the virus struck, the men and women in those three central banks held the economic survival of hundreds of millions of people and the fate of nations in their hands. This is the story of how global financial meltdown was averted by central banks taking decisions that, just a month earlier, they would have dismissed as utterly impossible.

The financial markets scan the world for risk. Even the slightest disruption in the vast networks of finance, production and trade offers the opportunity for profit or the threat of loss. So the news on 23 January, that the outbreak of an unknown virus was serious enough for the Chinese authorities to impose a gigantic quarantine, hit the traders on their Bloomberg terminals hard. Bank economists struggled to get a grip on the dimensions of the problem. Would this be a minor disruption like Sars in 2003? Or were we facing the nightmare scenario of the Hollywood film Contagion?

In late January, investors began to move more and more money out of things like commodities and shares in companies, and into the relative safety of government bonds. What comforted them was the idea that the virus was a problem contained in China. The day that illusion burst – the day that investors realised that Covid-19 was becoming a global pandemic – was Monday 24 February. Over the weekend the Italian government had announced that it was imposing a quarantine in parts of northern Italy. It was the first place in the west to do so. 

Ever since the financial crisis of 2008, Italy’s economy had been stagnating. Both its banks and its public finances were in a precarious state. Italy’s debt levels were high enough to cause bond markets to periodically panic. Now the country would become the frontline in the virus fight. The coronavirus would test the solidarity of the eurozone at its weakest link.

At this point, not everyone was taking the threat seriously. The caseload in the US still looked tiny. Donald Trump dismissed the virus as a “scare”. But investors were now seriously worried. Over the week that began on 24 February, America’s main stock market index, the S&P 500, lost 10% of its value. The chair of the US Federal Reserve, Jerome Powell, was concerned enough to signal that he would soon be bringing forward a cut in interest rates, in order to stimulate consumption and investment. It was a conventional reaction, but Covid-19 was no longer looking like a conventional threat.

By early March, whatever complacency had prevailed was long gone. The death toll in northern Italy was rising into the hundreds and it was only a matter of time before the government in Rome would be forced to declare a nationwide lockdown.

Investors around the world started to panic. In times of uncertainty, they want safe-haven assets. What makes a government bond a safe investment is not only the financial standing of the borrower, but the depth of the market in which lenders can sell them if they want to get their money back sooner. There is no deeper market than that for US Treasuries, as US government bonds are known. The greater the demand for safety, the lower the interest rate the US government generally has to pay to borrow. In the first week of March, those rates were at record lows.

For the rest of the world economy, this run to safety was an alarming signal. One sector that knew it was heading for trouble was oil. When the global economy slows, so does the demand for energy. The oil industry of the 21st century consists, on the one hand, of large, state-controlled producers – above all the Opec group dominated by Saudi Arabia and Russia – and, on the other hand, of the US’s upstart fracking industry. To match falling demand for oil, the Saudis wanted to cut overall production and thus prop up the price. For this they needed the agreement of the other big producers, but Russia refused to go along with them. As Moscow saw it, cutting production with a view to propping up prices was an invitation to American shale producers to fill the gap. If the politics of climate change meant that the future really would bring a transition away from fossil fuel, winning the end game involved seizing as much of the market as possible for as long as oil was being pumped. So Russia decided not to cut production, but to launch a price war. Not wanting to be outdone, over the weekend of 7-8 March, Saudi Arabia took up the challenge. It announced that it would be maximising production and discounting its prices.

On Monday 9 March, as markets opened, oil prices plummeted. The benchmark Brent crude fell 24% by the end of trading. By the end of the month its value had halved. From the point of view of the financial markets, the ferocity of the competition in the oil industry was a harbinger of things to come. Falling demand would force industry after industry to either slash prices or contract production. Either way, it was bad news for profits.

When trading opened on Wall Street that morning, the situation was so dire that the circuit-breakers – automatic stops to trading that are triggered when prices fall by a certain amount – were soon activated. This was supposed to slow a wild selloff. But it sent a message of panic. As soon as trading resumed, everything sold.

A rout like the one that began on 9 March has a perverse logic. When fund managers face withdrawals from the people whose money they manage, they need cash and have to choose which assets to sell first. They might prefer to sell the riskiest investments, but those can be disposed of only for a large loss. So instead, they attempt to sell their most liquid and safe assets – government bonds. That means the prices of those bonds fall, dragging them into the maelstrom. This has the knock-on effect of unravelling a basic relationship on which many investors rely: typically, when shares go down, bonds go up, and vice versa. So to protect yourself against risk, you buy a portfolio made up of both. If everything works as it’s supposed to, the swings should balance each other out. But in the panic that began on 9 March, this was no longer happening: rather than balancing out, the price of shares and bonds were collapsing together. The only thing that anyone wanted to hold was cash, and what they wanted most of all were dollars. The surging US dollar in turn spread the pressure worldwide to everyone who owed money in that currency.

The Fed had desperately tried to halt the run. To signal its willingness to support the economy and ease the pressure on the world economy from the strong dollar, it had brought forward an interest rate cut that had been expected for the middle of the month. But with the darkening horizon, lower interest rates did little to help. Who would borrow or invest under such circumstances? Confidence was broken. Just how badly would become clear over the following two weeks.

It was a cruel twist of fate that Italy was the first European country struck by the virus. Italy has a sophisticated medical system; Lombardy, the region worst affected by the virus, is among the richest places in the world. The weakness lies in the country’s public finances. To fight the crisis, Italy needed to be spending money on public health and to support the economy during the lockdown. But would the corset of the euro give it the leeway?

The problem was that spending to meet the coronavirus crisis would raise Italy’s public debts. The more indebted you are, the higher the price you pay to borrow. For a European government, that premium is measured by the difference, or “spread”, between your interest rate and that paid by Germany, the highest-ranked borrower in Europe. With its pre-crisis debt at just under 135% of GDP, Italy was perilously close to the point at which rising spreads would drive up its deficit and thus, in a vicious circle, make its debts less and less sustainable.

To ensure that investors stay calm, it is the job of central banks to act as the buyer of last resort. But because Italy is a member of the eurozone, it no longer has an independent national central bank that can buy its debt. Its monetary policy is set by the European Central Bank, which is prohibited from directly buying a member country’s newly issued debt. That left the Italians exposed. As the coronavirus crisis intensified in late February and investors became concerned by the prospect of greater state spending, the spread to German interest rates increased. If they rose too far, Italy would face not only a public health disaster but a financial crisis, too. What could Europe do to help?

Italy already had reason to feel abandoned by its European partners: they had done little to help it tackle its chronic unemployment problem, or to take in the refugees arriving from north Africa. The coronavirus was a new test. The signs were not good: other member states were grudging in their reaction to Italy’s appeals for help. But what really mattered, for the country’s financial survival, was the stance taken by the ECB.

Under its former president, Mario Draghi, the ECB had emerged in the course of the last financial crisis as the pivot of the European economy. Draghi’s promise to do whatever it takes to hold the eurozone together, uttered at the height of the crisis in July 2012, has become a mantra of modern economic policy. Faced with a financial panic, restoring confidence is key – and because a central bank is in charge of issuing currency, it is the only crisis-fighter with truly unlimited firepower.

Northern European fiscal and monetary conservatives had always been suspicious of Draghi’s interventions, which they saw as a way to transfer Italy’s liabilities on to Europe’s balance sheet. And his final round of bond-buying, in 2019, proved particularly controversial. By the time he ended his stint at the ECB that autumn, it was all Angela Merkel’s government in Berlin could do to ensure that there were no unseemly scenes at his retirement party.

Christine Lagarde, the former finance minister of France and IMF boss, took over as head of the ECB in October 2019, and inherited Draghi’s extraordinarily difficult position. Now she would have to demonstrate that she could handle a major financial crisis. The ECB press conference on 12 March was the crucial test.

The ECB had good news for Europe’s banks: they would receive a huge amount of low-cost funding. It was also going to buy an additional €120bn in assets – although if that was spread across the members of the Eurozone, as the rules demanded, it would hardly give Italy the support it needed. But the critical moment came when Lagarde was asked a question about the ECB’s attitude to sovereign debt. Her response was remarkable. “We are not here to close spreads,” she said. “This is not the function or the mission of the ECB. There are other tools for that, and there are other actors to actually deal with those issues.”

“Spreads” meant Italy. And what Lagarde seemed to be saying was that it was somebody else’s problem. But if the ECB wasn’t going to help Italy, who would? Did it really expect the other member states of the eurozone to string together a fiscal safety net for Italy? Obviously, given the bad blood between Italy and the northern Europeans, Lagarde had to walk a fine line. But with hundreds of people dying every day, with global financial markets in a state of repressed panic, was the ECB seriously suggesting that it would wait for Berlin, Paris and Rome to settle their differences before putting out the fire? It was breathtaking.

For investors, Lagarde’s comment came like a bolt of lightning. And within minutes, she started to backtrack. She went in front of the cameras to promise that the ECB would use the flexibility of its €120bn programme to prevent the fragmentation of the euro area – code for helping Italy. But the damage was done. The markets slumped, and the price that Italy had to pay to borrow leaped: averaged out, the spread moved by 0.65%. That may not sound like a big difference, but when applied to a mountain of debt the size of Italy’s, it raises the interest bill by as much as €14bn for just one year. It was the last thing Italy needed. In a rare public rebuke, both Paris and Rome distanced themselves from the ECB. The crisis was pulling Europe further apart.

After five terrifying days of market turmoil, the weekend of 14-15 March was a moment for central banks around the world to coordinate their response. What everyone wanted was dollars, so it was above all the Federal Reserve that needed to take the lead. And as its chair, Powell did. He called an unscheduled press conference for the afternoon of 15 March. What he announced was remarkable.

With immediate effect, the Fed was cutting interest rates to zero – something it had done just once before, at the height of the crisis in 2008. To stabilise the US Treasury bonds market, it would be buying $700bn in a new round of so-called quantitative easing. And it would start big, buying $80bn by 17 March. In the space of just 48 hours, it would spend more on treasuries than the Fed spent in most months in the aftermath of 2008.

 The New York Stock Exchange on 16 March. Photograph: Spencer Platt/Getty Images

These were measures for the US economy. But the coronavirus was a global problem. The flight to safety and the ensuing rise in the dollar had put pressure on everyone who had borrowed in the US currency. So, to ensure that dollars could be piped to every financial institution in every major financial centre in the world, the Fed announced that it was improving the terms on the so-called liquidity swap lines – deals by which the major central banks agree to exchange dollars for sterling, euros, swiss francs and yen in unlimited amounts.

Powell was deploying the main weapons of the 2008 crisis with far greater speed than his predecessors ever had. But it was still not enough. When the markets opened the next day, 16 March, the fall was vertiginous. The circuit-breakers are supposed to come into effect if the market falls by more than 7%. That morning, the fall was so quick that the S&P 500 dropped by 8.1% before trading could be stopped. The so-called fear index, VIX – a measure of market volatility – surged to levels last seen in the dark days of November 2008.

The fear in the markets was now feeding on itself. If the Fed’s magic of 2008 no longer worked, then what would?

The foreign exchange market, where currencies are traded, is the biggest market in the world. And the place where the most transactions are booked is the City of London. On an average day, transactions back and forth total $6.6tn. But on Wednesday 18 March, there was only one trade: people wanted to sell everything. The only thing they wanted to buy were dollars. Every other currency was falling.

The central banks’ failure to calm the markets had set the stage for the worst days of the panic. Coronavirus cases were piling up in Europe more rapidly than at the peak of the crisis in Wuhan. Hedge funds were placing multi-billion-dollar bets that the recession in Europe would be protracted. Blue chip companies like Apple were facing stiff premiums to borrow for as little as three months ahead. Even gold, a classic safe haven, was selling.

That Wednesday, on his third day as governor of the Bank of England, Andrew Bailey organised a press conference in an effort at reassurance. But as he was speaking, sterling plunged by 5% to its lowest level since 1985. Meanwhile, the market for UK government bonds, also known as gilts – the oldest major asset market in the world – was witnessing unprecedented turmoil. It was, in Bailey’s understated phrasing, “bordering on the disorderly”.

In response, the Bank of England monetary policy committee met the next day in emergency session and announced that the Bank would be buying £200bn in gilts. Unlike in 2008, it would not be doing so on a prearranged schedule. As Bailey explained: “We will act in the markets promptly and rapidly as we see appropriate.” This was no time for timetables. The central bank was, by its own admission, flying by the seat of its pants. 

 The governor of the Bank of England, Andrew Bailey. Photograph: Tolga Akmen/PA

On an emergency conference call on the evening of 18 March, the ECB executive board decided that it, too, needed to act. Under a pandemic emergency purchase programme, it announced that it would begin by buying €750bn of government and corporate debt. But the ECB was willing to go even further than that. It said that, if necessary, it would revise some of its “self-imposed limits”.

For an institution as hidebound as the ECB, this amounted to a revolution. Self-imposed limits – inflation targets, rules on which European government’s debt it could buy and in what quantities – are what the ECB lives by. It is clear that conservative members of the bank’s governing council continued to resist such a move. But in the end it was the turmoil in the markets that decided the issue. The ECB needed to send a signal of determination. If Lagarde had fluffed her “whatever it takes” moment, the ECB was now at least promising to do whatever was necessary.

By the end of the third week of March, 39 central banks around the world, from Mongolia to Trinidad, had lowered interest rates, eased banking regulations and set up special lending facilities. To ease the pressure on emerging markets, the Fed widened the network of liquidity swap lines to cover 14 major economies including Mexico, Brazil and South Korea. This was a remarkable wave of activism. But the pandemic itself was only beginning to bite. Central banks could cushion the financial shock, but not address the actual economic implosion, let alone the health crisis.

European governments had been quick to move. Germany had thrown aside its fiscal caution and was committed to a gigantic programme of government guarantees for business lending. But this made all the more glaring the gap to Italy and Spain, which were not only hardest hit by the virus, but also constrained by the financial legacy of the eurozone crisis. They did not want to risk sliding back into a debt crisis.

In the US, the Fed had leaped into action. But where were the politicians? Congress was distracted by the upcoming presidential election. What was needed was an unprecedented rescue package for an economy in freefall. How were Republicans and Democrats to reconcile fundamental differences over health care and unemployment insurance, or the notorious cronyism of the president and his clan? Since the Democrats had won control of the House of Representatives in 2018, legislation had been largely paralysed. Now, in the face of a tsunami of job losses, the two parties had to come to an agreement.

As trading began in Asia early on the morning of Monday 23 March, the news from Washington made it clear that there had been no deal on Capitol Hill. The futures markets plunged so violently that circuit breakers were activated again – by now this had happened an unprecedented five times in two weeks. If it wanted to avoid a meltdown when Wall Street opened, the Fed would have to make another move.

Until this point, Jerome Powell had been moving in the shadow of his predecessor, Ben Bernanke, who had been Fed chair in 2008. But by 23 March, Powell had activated all the basic elements of the 2008 repertoire – slashing interest rates, using quantitative easing, supporting money markets. But it had not worked, partly because it could not reach the source of the crisis itself – that is, the virus and the lockdown – and also because it was not reaching the bit of the credit system that was most vulnerable in 2020: the borrowing by big corporations. 

The Fed has always steered clear of corporate debt, which it considered politically sensitive. If you bought debt from individual firms, you were vulnerable to accusations of favouritism. If you bought a cross-section of debt you ended up holding many very poor-quality loans. But by the early hours of 23 March, it was clear that something had to be done to stabilise the corporate debt market. Since 2008, bonds issued by non-financial corporations have surged from $3.3tn to more than $6.5tn. If their value fell too far, US corporations would not only face shutdowns and a complete loss of revenue, but also a crippling credit squeeze.

Ideally, the Fed would have made a grand announcement in conjunction with a Congressional stimulus package. But by the evening of 22 March, it was clear that the package being proposed by the Republicans was unacceptable to the Democrats. It might take days for them to square the difference. The financial markets would not wait.

On 23 March, 90 minutes before markets opened, Powell made his move. He announced that the Fed was setting up legal entities – off the books of the Fed, but guaranteed by it – that would have the capacity to buy highly rated corporate debt, or at least any debt that the ratings agencies were still willing to declare investment-grade. In effect, the Fed was establishing itself as the backstop to the trillion-dollar corporate bond market. The Fed ramped up its asset-purchase programme, to an astonishing $375bn in Treasury securities and $250bn in mortgage securities in a single week.

It was an extraordinary move to widen the scope of central bank intervention into the corporate economy. And it was understood as such by the markets. Since the start of the year, the S&P 500 and the Dow Jones, as well as the FTSE 100, had lost 30% of their value. That day, they began to recover.

Two days later, on 25 March, backing arrived from Congress when the Senate passed its giant package of $2tn – more than twice the size of the stimulus bill passed in 2009. It provided funds to top up unemployment insurance, to support small businesses and the US’s privatised hospital system. Crucially, it also set aside $454bn to cover Fed losses. Since most loans would not be expected to go bad, this would enable the Fed to make more than $4tn in loans, if necessary.

In the US, the public health campaign against the virus was still a shambles. But as far as economic policy was concerned, the full power of the American state was now being deployed behind the emergency programme. And the Fed was also acting as a provider of dollar liquidity to the world economy. In the UK, too, the Treasury and the Bank of England were working closely to link the huge increase in government spending to efforts to stabilise financial markets.

But in the eurozone, that kind of coordination was lacking. The ECB had managed to stop the immediate panic. Yet there was still the question of whether the member states could come up with a financial plan to support their hardest-hit neighbours, Italy and Spain. The obvious solution was to issue debt jointly to fight the crisis together – an idea raised repeatedly during the eurozone crisis, when it had been bitterly resisted by a conservative northern European coalition led by Germany. This would ensure that Italy was not constrained by its pre-existing financial weakness.

For a coalition of nine states led by France, Italy, Spain and Portugal, the case was obvious. On 25 March they called for a “common debt instrument” to fund a crisis response. The ECB threw itself energetically behind the proposal. But, once again, the Netherlands and Germany refused to budge. The issue was shoved off into the Eurogroup, a meeting of the eurozone’s finance ministers, where the outline of a deal did finally emerge two weeks later. By then the immediate panic had passed. As Lagarde and her central banking colleagues had feared from the outset, it was on their shoulders that the stability of the eurozone continued to rest.

Will the massive financial firewalls built by central banks on both sides of the Atlantic be enough to withstand the bad news that is headed our way over the coming weeks and months? It is too early to tell. But the first test came on Thursday 26 March, when the US Department of Labor announced that, in a single week, 3.3 million Americans had signed on for unemployment insurance. It was completely unprecedented. A graph stretching back half a century simply turns upwards in a vertical surge. In the next two weeks, another 13.5 million people would be added to the insurance rolls. And there was no end in sight. America is on pace for national unemployment to reach 30% by the summer – greater than during the Great Depression of the 1930s.

The shutdown spelled disaster for millions of American families, at least half of whom have no financial reserves to speak of, and for businesses up and down the land. How would the markets react? Astonishingly, they ended 26 March up 5%. The largest surge in unemployment ever recorded in history was met with a relaxed shrug.

Why weren’t investors more terrified? Because the scale of Congressional stimulus made clear that, no matter how divided American politics were, that wouldn’t stand in the way of a huge surge of spending. And the Fed, for its part, would make sure that the huge flow of new debt was absorbed, if necessary on to its own accounts. The private credit system, the government budget and the balance sheet of the Fed were welded together in a closed loop.

What the Fed, the Bank of England and the ECB managed to do in March was prevent the damage caused by the shutdown being made even worse by an immediate collapse of corporate credit. At the same time, by stabilising sovereign debt markets, they have enabled a huge surge in public spending to fight the crisis and cushion its social and economic side effects. To do this they have both widened the safety net to parts of the financial system never before protected, and intervened on a scale far greater even than in 2008.

In the final days of March, the Federal Reserve was buying Treasury bonds and mortgage-backed securities at the rate of $83bn per day, or just shy of $1m per second. On 9 April, at the same moment as the latest horrifying unemployment numbers were released, it announced another $2.3tn in support targeted specifically at municipal debt and lower-grade corporate debt. That same day, the Bank of England adopted an even more radical approach. Rather than going through the process of having the Treasury issue debt that would then be bought by the central bank, it announced that it would be offering direct monetary finance to the government, to provide it with whatever funding it needed. This would be temporary, but it was still a radical move. The government’s current account at the Bank of England would be repurposed to allow, if necessary, tens of billions of pounds in coronavirus spending. The last time the British government resorted to this mechanism was at the height of the crisis in 2008.

What we have seen in the financial system, over the past few weeks, is a victory of sorts – but it is a defensive one. Once again, we are propping up a fragile, profit-driven system to avoid something even worse. It is also a victory limited in scope.

By flattening the curve of financial panic, the central banks of advanced economies have managed to ensure that life under the lockdown is not made even more unbearable by the shutting off of credit to business and households. They have also ensured that the public health response to Covid-19 can proceed at any scale that is required. Within Europe, there are questions about the differences between eurozone members: Germany has been able to deliver a conspicuously larger fiscal response to the crisis than have Italy or Spain. But those inequalities pale next to the problems facing much of the rest of the world. There the crucial supply of credit is being cut off even before coronavirus cases begin to mount, meaning, once again we have confirmed that the global financial system is hierarchical. At the apex stands the US Federal Reserve. The ECB, the Bank of Japan, the Bank of England and their advanced-economy counterparts all enjoy the Fed’s direct support. Thanks in no small part to that support, the advanced-economy central banks enjoy great latitude in propping up their credit systems. They might face moderate movements in their currency’s exchange rate, but no devastating financial squeeze.

‘We can’t go back to normal’: how will coronavirus change the world?

That is what the emerging-market economies have been suffering since February. Covid-19 is hitting every part of the world economy. The World Bank is warning of a devastating setback to the economies of Nigeria, Angola and South Africa, along with the rest of sub-Saharan Africa. Almost half the countries in the world – more than 90 so far – have been forced to apply to the IMF for financial assistance.

If flattening the curve in Europe and the US was the battle of March, the next challenge is to reduce the shockwaves radiating out to the rest of the world. The last few weeks have seen a remarkable display of technocratic energy and imagination in western financial centres. That same level of commitment now needs to be brought to bear in supporting the rest of the world. We cannot control the epidemic or restore the world economy without it.