No one is coming to save the global economy this time

• During the financial crisis, two countries kept the global economy from cratering even further than it did — China and India.
• Unfortunately this time around — in the economic crisis caused by the corornavirus pandemic — no country is coming to save us.
• India has been on lockdown for months, and China is still feeling the debt hangover from the credit binge it went on to skip the financial crisis.
• This gives us all the more reason for Washington to pass another coronavirus aid bill as soon as possible.
• This is an opinion column. The thoughts expressed are those of the author.

The coronavirus depression will be much worse than the last worldwide recession, because this time no country is strong enough to rescue the global economy.

The story of the Great Recession goes like this: the US and Europe were crippled while working to clean up their devastated banking system, the global services sector suffered without its biggest player — the US consumer engine — but global economic growth didn't completely fall off a cliff because other countries kept money moving around the planet.

Over in China policymakers enacted a massive stimulus to skip over the recession entirely. The country's GDP grew 9.4% in 2009. India chugged along as if the crisis barely happened, with its GDP growing 7.9% in 2009.

But this time there is no corner of the globe that has been left untouched by the pandemic or its effects. And so, there's no country that can reasonably chug along and keep things from getting truly disastrous.

Economists over the Institute of International Finance (IIF) recently wrote in a recent note that it was the growth of these two countries that lifted the global economy while the US economy was on its knees. That is why global GDP only fell to -0.4% in in 2009. Conversely, without their help the economists estimate that global GDP to fall to -3.8% this year.

Holding out for a hero

The high growth countries that kept the global economy from free fall aren't coming to save us this time. Nobody is.

India is now on its 170th day of lockdown to slow the spread of the coronavirus. Credit rating firm Moody's expects economic growth to fall 11.5% in 2020.

And while the worst of China's lockdowns have passed (for now), it's expected GDP growth of around 3.2% for 2020 is a far cry from a decade ago. Plus, this time around China's policymakers are being much more cautious with their stimulus In some part this is because the government is concerned it may have to institute another lockdown.

Policymakers are also being cautious because China is still dealing with a massive debt hangover from 2009. Skipping a recession doesn't come cheap. China spent half a trillion dollars avoiding the financial crisis, and in the years that followed it built up a massive, opaque shadow banking system that it has since been trying to tamp down since 2015. This year China's total debt – corporate, household, and government — climbed to 303% of GDP.

So while the government is pulling some levers it pulled to spur economic activity during the financial crisis — like encouraging infrastructure investment — China's central bank, The People's Bank of China, has said it sees no need for additional emergency stimulus in 2020.

With weak demand coming from China and India, Latin America will sell fewer commodities, and the whole of Asia will slow, the IIF notes. We cannot expect exceptional growth from there.

Could the European Union could save us? The rapid response of Eurozone countries to the pandemic seemed to be a model for the rest of the world and a potential salve for the economic chaos. But now cases spiking in countries like Spain and France and it's unlikely that the bloc will have the economic power to boost the rest of the world for the time being.

In April I wrote that even when the coronavirus was brought under control we would live in a shrunken world — a world where human transactions would be limited. Since economic transactions are mostly human interactions, you can see the problem there. It was obvious that a slowdown was coming, how bad would depend on how we handled it.

April was a simpler time, back then the assumption was that the US would bring its first wave to heel and that a second wave may rear its ugly head in the fall. Of course, our first wave never ended. We have handled the coronavirus badly. The US unemployment rate is sitting at 8.3%. Testing is splotchy. Washington was able to get its act together to blunt the full force of the coronavirus' onset, but now Democrats and Republicans are locked in an argument over whether or not the country needs another rescue package.

It does. In fact, the whole world needs it.