With a bit of encouragement from central banks, financial markets quickly regained their poise after the 1987 crash and resumed a long upward climb that only came to an end with the financial crisis of 2007. The Crash Monday panic marks the moment when a decade of denial finally ended and traders woke up to the fact that the financial markets had been bobbing along on a giant wave of debt. As in 1973-74, events in the oil markets have been a crucial factor, only this time the problem has been that the cost of crude has been tumbling rather than rising fourfold. This is clearly a race to the bottom which, if sustained, will drive the global oil price below $20 a barrel before very long. This makes it much harder for central banks to stimulate their economies through lower interest rates, since there is a realistic limit to how low borrowing costs can go.

Source: The Guardian March 09, 2020 15:37 UTC