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The coronavirus pandemic has made us allarmchair epidemiologists. Master these eight terms to become an armchair economist.
Bailout: This is when the government helps a business or industry avoid collapse by giving it financial assistance. If it helps you, however, you’ll probably prefer to call it “emergency assistance,” “bridge financing,” or maybe “liquidity support.”
Bear market rally: A bear market is declared when stocks fall 20% from their peak. This year it took just a month for that to happen, from mid-February to mid-March. But since then, the Dow Jones Industrial Average and the Standard & Poor’s 500 index have risen more than 20% from their lows. Technically, then, the bear market is over, and a new bull market has begun. But people who still feel pessimistic about the market tend to call the gains a “bear market rally,” a “blip,” or a “dead cat bounce.”
Force majeure: The term, French for “superior force,” wasexplained best by a Bloomberg QuickTake headline, “When God Appears in Contracts, That’s ‘Force Majeure.’” According to QuickTake, “It’s a clause that can be found buried in many contracts that lets a party off the hook in the event of some unforeseen ‘act of God.’” Expect lawsuits over whether Covid-19 constitutes force majeure.
26,889 in U.S.Most new cases today
-16% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23
-1.111 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23 -0.5% Global GDP Tracker (annualized), March