to really get the memo about the coronavirus outbreak.

But I think it's safe to say they have done now.

Global markets have been in freefall for the best part

of three weeks or more even.

And global business confidence has collapsed.

Guys, from your points of view, how bad are things?

Jonathan, what is business confidence looking like now?

I think it's terrible.

I think that we're seeing a situation where

a large number of businesses, including

some quite large ones, are going to go bust, quite soon.

We'll see very large numbers of redundancies.

And this is really an emergency situation

where government needs to act.

And they need to act quite strongly and quite powerfully

in order to reassure people.

I think it's the point when we're

witnessing quite clearly who's in charge in the world.

And it isn't powerful entrepreneurs and people

on Wall Street or in the City of London.

It's politicians.

But central banks and slightly later

governments have really started pulling out all the stops

to try and rectify the situation, right?

So central banks over the weekend

put together swap lines to try and enhance dollars

flowing around the global financial system.

The Federal Reserve in the States

has absolutely thrown everything at this.

It's cut rates twice.

It's thrown money into the repo market.

It's buying $700bn of bonds.

It made a very unusual step of coming in and making

a big announcement right before markets opened on Sunday night.

They're doing everything here.

But can it work?

I mean, Robert, from where you're

sitting in New York what's the sense of how

the Fed can help here?

The sense is that the Fed can help at best, modestly.

So they are essentially a creature

of the financial system.

And at some point there is only so

much you can do by fixing the plumbing, as it were.

The problem is activity.

So for example, they've done a lot to support the banks.

Most recently they cut the cost of overnight lending

of what they call the Fed's discount window.

Made that money very cheap.

And they've cleared their throat loudly with the result

that the large banks have dutifully walked up

to this window and taken some money out.

Because they don't normally like doing that, right?

No, there's a stigma involved.

And it is similar to 2008, 2009 where

you had TARP funds, Troubled Asset Relief Programme funds.

And none of the banks want to take them.

But then the authorities tapped their foot.

And Jamie Dimon and co shuffled up to the TARP window

and took money.

Similarly, the banks are taking money now.

But the economic bottleneck is not

at the level of the financial system.

It's at the fact that, for example, New York City

closed all its restaurants today,

almost all its gyms today.

People are going to get fired today.

And they are going to need money next week.

You can see a whole series of sectors

that are in deep, deep trouble.

The epicentre of this is the travel industry

because they spend an awful lot of money

on capacity over the winter period, which they expect

to recoup in terms of bookings from the springtime

and onwards.

You can see TUI, which is a huge European travel business,

is in deep trouble.

Airlines around the world are going to go bust.

What they need is cash flow.

Their cash flow is choking off.

And that is what kills business.

And so this is where the government

would provide assistance.

Central banking is too indirect a means to provide reassurance.

What's needed is very large packages of loan guarantees.

Markets are perhaps not the best way

to judge how successful these central bank policies are

from the point of view that they're not trying

to support the equity market.

But nonetheless, the scale of the decline

that we've seen in stock markets since this massive package came

from the Fed on Sunday has been really something to behold.

I think we closed about 12 or 13 per cent lower on the S&P

on Monday.

So it's really clear to me that investors just

do not know what to do next.

There's quite indiscriminate selling going on at the moment.

And that, again, is building up concerns.

There's going to be more shoes to drop here, right?

There's going to be not just airlines and whatnot

that get themselves into financial trouble, but also

a lot of funds.

They're nursing extremely heavy losses at the moment.

Some of them are not going to make it through this process.

And a lot of them are having to sell liquid assets just trying

to stay afloat in the short term and to meet redemptions

and that sort of thing.

Again, we're looking at what can stop the bleeding here.

I mean, Jonathan, what's going on on the fiscal front?

I know France, for example, has announced

a pretty heavy-hitting package.

They have 300bn euros of loan guarantees.

And I think about 1tn overall are floating around

inside the European system.

And I think this is the type of thing

that governments have to do.

They have to embrace it.

They have to forget about moral hazard, which is the worry

that if you bail businesses out, that they, therefore, will not

take proper risk controls.

We already dealt with that over the period

of the financial crisis, where we forgot about moral hazard

for banks.

I think we have to do it again for ordinary businesses that

employ lots of people.

I always say the problem isn't the financial system.

We shouldn't worry about them too much.

I personally am not going to shed too many tears

if some hedge funds go out of business.

The question is whether they carry,

they create systemic risks.

Systemic risks should be pretty well contained,

one would hope, because of the very high capital buffers

that we've got now.

I have produced solely and exclusively for this programme

this small chart, which I'm going to show you here.

And the finance ministers of the world can have this for free.

There's no royalties required.

And I think it's showing really what the strategy is proposed

to be, which is that the cash flow in businesses

are collapsing because they don't have

any much demand from customers.

You put loan guarantees in place so that the banks

can lend them at very low risk with underwriting

from the state.

And when you do some sort of big demand stimulus

when coronavirus is attenuating, hopefully in three months, four

months' time.

Hopefully, then, you see cash flowing

back through the system more naturally

again without government support.

That's a good point.

In a way, what a lot of people are talking about now

is all the stimulus that's coming from central banks

and from governments.

It's not really stimulus.

These are crisis measures.

These are mitigation methods.

They always try to fire things up.

They're just trying to stop greater disaster

and move quickly.

I don't think demands, this isn't

the moment for demand stimulus.

It's no good trying to persuade Americans or Britains

to go out and go to parties and go to cinemas

and pubs and clubs and bars.

Because it's precisely no longer the thing

to do in terms of health.

I think that stimulus, then, needs to happen a lot later

down the track.

One thing that bothers me, amongst many at the moment,

is that the experience we saw in China

is that certain cities were shut down

for relatively short spaces of time.

And then they're starting to try and get things back up

and running.

What if in the US and the UK and across Europe

these shutdowns prove a lot longer?

It's clear that governments are struggling

with the right model for how long

people need to be kept indoors.

I mean, Robert, like culturally, financially,

how long can Americans stay indoors?

How long can people hold out?

Well, having been homeschooling my own children for one day

now, I think two days is probably the absolute limit.

At which point it's going to be anarchy in the Armstrong

household, if not in the wider world.

Well, one question is decisions have

to get made about which workers are essential

and under what conditions they will work.

So, for example, in the city of New York,

they are setting up special schools for the children

of first responders.

If we're stuck at home, we need the internet.

We need water to keep running and the heat

and the electricity and everything else.

The miracle of this all is made possible by workers somewhere.

So who are the essential workers going to be?

Who's going to take care of them?

What are the measures for them?

And so, who is in?

And who is out in terms of the work

- the mobile, the ambulatory workforce?

But do you think the assumption amongst corporate

America now is that this will be a short shutdown?

Or, do you think that the world is waiting for something

much longer now?

I think it's important to emphasise here how little we

really know at this point.

We're staring into, off the edge of a precipice now.

So, for example, American Express

had an investor call this morning.

And they said, actually, as of Friday, spending

was holding up.

Patterns were changing.

Obviously, there was some dislocations.

But they think their Q1 revenue will still grow a little bit.

But no one thinks that is going to keep happening this week.

So actually, we are waiting to see what the patterns

of consumer behaviour and business behaviour are like now

that it's real.

It's not just the scale of the decline

that we've seen in stock markets or in high-yield bonds,

for example.

It's the speed of this thing.

I mean, we've gone back to '08 levels on a lot of metrics

of stress in the high-yield bond markets.

But this has happened in a straight line

in a way that doesn't really, that we don't really

have any precedent for.

And investor confidence has, just like consumer confidence,

like you were saying, Robert, has just

effectively fallen off a cliff.

You can't overstate the level of ignorance

that we are all operating under.

So I think we all fall into the trap

of thinking that somebody out there

really knows what the coronavirus is

going to look like in a month.

Nobody knows that.

Somebody knows what bank stocks are worth right now,

we'd like to think.

Actually, nobody knows that.

That's why they're off the curve.

That's not showing you that banks are worth a third less

than they were a month ago.