Governments around the world are ditching the rules in a no-holds barred fight to halt the coronavirus outbreak which risks upending global growth.
Germany is doing the unthinkable, taking on debt to fund a rescue package for the biggest economy in Europe while the United States -- partisan feuding permitting -- will shortly announce trillions in new spending to keep the economy going long enough to get it through the crisis.
Huge loan guarantees, tax breaks, direct payments to workers, massive state intervention, everything is being considered.
AFP surveys the latest responses by major economies as COVID-19 has spread from China to infect the rest of the world, making a global recession all but inevitable:
Breaking taboos
Germany, the European Union's toughest fiscal hardliner, now recognises that extraordinary times call for extraordinary measures. On Monday, Berlin said it would abandon its hallowed zero-public deficit rules and raise 156 billion euros ($168 billion) in new borrowing in a bid to stop the economy from going under.
A few weeks ago, Britain was anticipating a free-market future outside the EU but it is now resorting to levels of state intervention unseen since World War II. The government rolled out a series of extra measures on Friday including direct grants to cover up to 80 percent of the wages of employees who have been temporarily laid off, as it ordered cafes, pubs and restaurants to close entirely.
France, which is already on lockdown, is vowing to let no company go under as it too embarks on a massive programme of intervention to safeguard jobs. Clearing the way, the EU has suspended limits on members' debt and deficit levels.
That is a particular relief to Italy, which has overtaken China to register the most deaths from COVID-19. Backed by France, Italy wants the EU to breach the ultimate taboo by allowing eurozone members to pool their debts and issue so-called coronabonds.
Germany -- which has opposed such moves in the past, even during the eurozone debt crisis -- is now not ruling it out.
Not so fast
While Europe vows to do whatever it takes, in Washington, President Donald Trump presides over a bitterly divided Congress where calls for a non-partisan response to the crisis appear to get only lip-service.
US lawmakers failed on Sunday to agree on a trillion-dollar emergency package to shore up the crumbling American economy. The package -- likely the largest federal intervention in US history -- would cushion the blow for households and backstop ailing businesses. It would also likely send the federal deficit soaring.
But Democrats said the plan pushed by Trump's Republicans failed adequately to protect millions of workers or the under-equipped healthcare system. A separate package from US financial overseers including the Federal Reserve would provide a stunning $4 trillion in liquidity to juice up the economy.
Measures agreed already include $100 billion directed at paid sick leave and expanded unemployment benefits, which Trump signed into law last week.
Central banks centralise
The Fed has issued a near-daily series of announcements to reassure panic-stricken markets and keep dollars flowing, in addition to slashing its benchmark lending rate to a zero to 0.25 percent range. On Monday, the US central bank said it would soon unveil a programme to lend directly to small- and medium-sized companies.
The European Central Bank, after being criticised for a lacklustre response when it kept interest rates on hold, last week announced a 750-billion-euro scheme to buy government and corporate bonds, thereby pumping huge amounts of cheap cash into the system to keep the economy afloat. The Fed and ECB have joined other central banks in enhancing currency swaps to maintain a plentiful supply of dollars running through seized-up credit markets.
Missing in action
So far, global bodies such as the G7 and G20 have yet to forge a collective response to fight the pandemic and help poorer nations who lack the borrowing capacity of their richer peers. Angel Gurria, secretary-general of the Organisation for Economic Co-operation and Development (OECD), said at the weekend that that needs to change "to avoid a protracted recession".
He called for a "sizeable, credible, internationally coordinated effort" bigger even than the 1930s New Deal and the Marshall Plan, which rebuilt Europe after World War II. Saudi Arabia, which holds the G20 presidency, has called for a videoconference summit of leaders this week.