The current coronavirus strategy of most governments is a recipe for a worldwide economic disaster. In many countries, the strategy of confinement and forcing shops to close is a sure-fire path to large-scale business failures. The cascade of economic and financial repercussions to come is likely to lead to another Great Depression.
The Costs of Prolongation
Italy, for example, already had a 135 percent debt-to-GDP ratio before the crisis. It is hard to imagine how it will be able to borrow more without a commitment from other European countries to jointly be responsible for more Italian debt—something the northern European countries are still strongly opposed to. The ECB is already printing money like crazy, and another Greece-like situation will make it ramp up the printing presses even more.