Moneyweb In Rome, the first signs of change came from overhead. Shortly before cocktail hour on Monday, the thrum-thrum-thrum of a helicopter could be heard above the winding lanes of the 2 000-year-old historic centre. The police were keeping an eye on the Trastevere neighbourhood, where smoke billowed from the windows of a jail as inmates rioted, protesting cramped conditions that put them at risk of coronavirus infection.
About the same time, the stock market was opening in New York, ushering in a week that would become the worst rout since 1987. A few hours later, Italian Prime Minister Giuseppe Conte gathered journalists for a televised, prime-time press conference. Rules that only 48 hours earlier had been imposed on Milan, Venice and other cities in the north — travel was restricted, schools were shut, and even the opera was called off — would be extended nationwide. The world’s eighth biggest economy, with more than 60 million inhabitants, entered virtual quarantine.
It was like flicking a switch. In just days, a Western democracy went from Aperol Spritz to lockdown, as the outbreak spread from a northern crisis to a national one, now with more than 15,000 known infections and more than 1,000 deaths, second only to China.
For those lucky enough not to be living through the Italian lockdown, pay attention: What’s happening in Milan, Florence and Rome offers a likely preview of what’s coming to New York, London or Paris in a week or two. Consider this our letter to you from Italy, written from the seclusion of our couches and dining room tables, with a taste of what you should expect.
Whether it’s shuttered shops, civil unrest, or the coronavirus itself, it will be difficult to avoid the trauma Italy has experienced in the past three weeks. President Donald Trump blamed the outbreak on a “foreign” virus Wednesday when he announced restrictions on European travel to the U.S. But it’s already there, in Seattle, New Rochelle and places yet undetected.
The prime minister took to Twitter with the hashtag #iorestoacasa: “I stay at home.” While hunkering down in your kitchen or bedroom makes epidemiological sense, it’s terrible for bars, boutiques and pizzerias. On Tuesday evening, as the streetlights flickered on, a flour-dusted pizzaiolo exited a restaurant near Piazza Navona while his boss taped signs on the window declaring the place shuttered. “‘Stay at home,’ they said!” the pizza maker railed. “Well, now we’re going to stay at home. We’re closed.”
Similar scenes are playing out from Italy’s boot-top to toe. Northern hospitals are approaching the limits of their ability to care for those whose lungs are being ravaged by the disease. The Rialto Bridge in Venice, normally teeming with selfie-stick-wielding tourists, is empty. Dolomiti Superski, Europe’s biggest ski resort, has shut its lifts for the season despite pistes buried under more than five feet of snow. In Naples, trucks that look like something out of “Blade Runner” trundle through the Piazza del Plebiscito dousing the cobblestones in disinfectant.
The unfolding financial crisis is deeply entwined with what’s happening in shoe stores, gelato shops, and hospital wards. Unlike the last financial contagion, which largely came from within the banking system, this is a shock to the entire economic corpus. As business grinds to a halt, the country risks a domino effect of unpaid bills and loans that threaten to ripple across the globe.
“Basically, it’s a natural-disaster case,” Philipp Hildebrand, vice chairman at money manager BlackRock Inc., told Bloomberg TV. “If they don’t have customers for a couple of weeks, it becomes very hard to service their debt, it becomes hard to pay the rent.”
Italy on Wednesday announced measures worth as much as 25 billion euros ($28 billion) to cushion the blow of the pandemic. Those include help for companies whose turnover has plunged, a moratorium on some mortgage payments, and support for workers facing temporary layoffs and parents who must stay home to take care of kids when schools are closed.
On Thursday, European Central Bank President Christine Lagarde unveiled her own stimulus package, but held off on cutting interest rates. When Lagarde said, “We are not here to close spreads,” the Italian bond market plunged and yields shot up to their highest level ever.
Hildebrand’s comparison to a natural disaster is apt. This isn’t like a sovereign-debt crisis, a credit crunch, or even the invasion of Iraq. The only thing that comes close is the apprehension before a hurricane. As anyone who’s spent much time in Florida can attest, you know it’s coming, but you don’t know exactly when or where it will hit or how bad it will be. So you lay in supplies and make sure your Netflix subscription is paid up, and when it hits you don’t go outside because you might get killed by flying debris. That’s what Italy feels like.