It was the worst day for share prices since the financial crash of 2008, but Monday’s action felt entirely rational. Financial risks have fundamentally changed for the worse, even over the course of a weekend. And, since aggressive risk-taking has been rewarded for years by free-and-easy central banks, a sudden rush for safety always had the potential to become ugly.

Back in the post-Lehman days, one could glimpse a route out of the mess. The banking system would be bailed out by governments to save economies; states’ balance sheets would take the strain. A healthcare crisis caused by the spread of a deadly virus is plainly different and investors are also having to recognise a couple of hard economic and political truths.

First, monetary handouts will be of limited use in preventing the arrival of a global recession, if that’s what’s now on the cards, and will do nothing to hasten the arrival of a vaccine. The US Federal Reserve cut interest rates only a week ago, an action that already feels like an exercise in singing the wrong words to the wrong tune. Worse, by pressing the emergency button at the first whiff of worry in markets, the Fed advertised policy-makers’ panic.

Second, the outbreak of a price war in the oil market has demonstrated a breakdown in international cooperation. In place of the gathering of grown-ups at the G20 summit in 2008, investors now see political tensions, opportunism and, so far, no sign of policy coordination, even within the eurozone.

An unpredictable Saudi leader is playing games of brinkmanship with President Putin. Moscow, meanwhile, spies an opportunity to put the debt-laden US shale industry out of business, albeit at a hefty short-term cost to its own budget and currency. And the US president is still pretending he’s an epidemiologist and is tweeting about “fake news” as the Dow Jones opens down 2,000 points.

On the plus side, the 20% plunge in the price of Brent holds the promise that recovery from the coronavirus crisis could be swift. A combination of cheap oil, low interest rates and free-spending governments usually reignites growth, and there is no reason to think the formula won’t work again eventually (though let us hope that de-carbonisation measures don’t become a casualty).

Yet the dislocations beforehand also matter – and on that score we wait for the market to spit out its losers in the weeks ahead. Any fund with an oversized bet that the Opec oil cartel would hold a firm line on production will be nursing heavy losses.

Over-leveraged companies that were betting their survival on the junk bond market are waking up to radically changed circumstances. Last week’s marginal refinancing proposals will look unfeasibly optimistic in the current climate; as with Flybe last week, governments won’t be able to help all corporate casualties. And the stock market looks essentially closed for fundraising until further notice.

Note that banks have not been spared in the sell-off. There’s no reason (so far) to doubt regulators’ assurances that a better-capitalised system can withstand most knocks, including a sudden global recession, but the market can smell loans turning sour rapidly. Shares in Lloyds Banking Group, which has passed all recent stress tests with ease, are down almost 30% since mid-February.

The big-picture analysis from Mohamed El-Erian, economic adviser to German insurer Allianz, sounds correct: markets are struggling to find something to cling to. “It’s going to be messy because we’ve basically lost all our anchors,” he said. “We lost the economic anchor with the coronavirus. We’ve lost the policy anchor with people losing confidence in the Fed’s ability to turn things around. And over the weekend, we lost a market anchor with Opec”.

El-Erian’s advice for private investors, incidentally, is that “there will be opportunities, but they’re not now”. That also feels roughly right. The stock market was probably too high in the first place, so a 20% fall in global share prices since mid-February needs to be seen in context; it could easily get worse.

It’s win-win for the executive crew

Interesting tweet from Robert Talbut, former chief investment officer at Royal London Asset Management: “Disturbing to hear that already some corporates are asking for their incentives/bonuses to be rebased because of coronavirus!”

If this is correct, it would be outrageous since, as Talbut says, the executive crew never asks for higher hurdles when Lady Luck smiles upon them – Persimmon being the prime exhibit.

The whisper, though, has a ring of truth about it. Never underestimate a boardroom’s ability to plead that prizes must be awarded in all circumstances.