Mere days ago, in what feels like a different era now, the biggest thing people in control of money appeared to fear was complacency. Stock markets in the United States were surging, enthralled by the regulation-slashing, tax-shrinking predilections of President Donald Trump. Every major economy in the world was expanding.
The worst that could happen, the money masters averred, was that investors would be lulled into reckless investments, taking on too much risk in the belief the dangers of the marketplace had been tamed.
As it turns out, the dangers were already at work. A decadelong era of easy access to money engineered by central banks in Asia, Europe and the United States was ending, opening a new chapter in which corporations would have to pay more to borrow and ordinary people would have to pay more to finance homes, cars and other purchases.
People in control of money concluded interest rates would rise faster than they had anticipated, almost certainly in the United States, and perhaps eventually in Europe and Asia, too. Investors yanked their treasure out of stocks and entrusted it to safer repositories of wealth like bonds and cash.
A wave of selling commenced in New York on Friday, continued in Asia and Europe on Monday, then completed its Trans-global journey with a sharp drop where it had all started. The global rout continued into early Tuesday before the sell-off eased in the United States and investors rushed back into the market to push up the Dow Jones Industrials Tuesday by 567.02 to recover nearly a third of the previous day’s loss.