The Dow Jones Industrial Average, despite gains made last week, nonetheless closed Tuesday with its worst first quarter results ever in all of history, and the first day of the second quarter did not look much better.

Tuesday saw the Dow lose 410 points at close, resulting in total first quarter losses of 23 percent, its worst results ever. Wednesday, as of 2:52 p.m., it had continued to slide, with CNBC reporting that the index had lost 800 points, which actually represented an improvement from the 950 point drop Wednesday morning. Other indices weren't doing much better, as the S&P 500 had lost 4.2 percent (after having the worst first quarter since 2008) and the Nasdaq had lost 3.8 percent (after having its worst quarter since 2018). CNBC says that the markets are likely reacting to new White House estimates that the U.S. could ultimately see a death toll between 100,000 and 240,000.

Echoes of the global financial crisis are becoming more persistent in these times. For instance, the Wall Street Journal is reporting that factories in the United States, Europe and Asia have cut production and jobs with a speed not reported since that dark time in the economy. As it was during that period, this sharp contraction is spurred on by a combination of falling demand, and falling numbers of workers to meet that demand, something that is likely to intensify as the pandemic grinds on. Meanwhile, the New York Times is reporting that corporate earnings earnings projections for S&P 500 companies haven't been this bleak since 2009, a sharp change in perspective after reporting at the beginning of this year that they would grow 6 percent. Now analysts are predicting a 10 percent overall year over year decline in the second quarter. Particularly hard hit in this area will be the energy sector, estimated to experience a 92 percent decline in earnings.

This is because oil prices have taken a beating this quarter, with the benchmark barrel price having earlier fallen to an 18-year low of $21.65, according to Reuters. One major driver of this drop has been an ongoing oil price war between Russia and Saudi Arabia, which has led to a glut in oil that has raised the possibility that the world might literally run out of places to store it.

Another major driver, though, is the ongoing chaos in the corporate debt market. Energy companies are the biggest issuer of high-yield, or 'junk,' bonds in the market today, responsible for 11 percent of the roughly $1.9 trillion U.S. market. The reason that they are often called junk bonds is that they are the lowest possible credit quality a company's debt can have before it's officially considered distressed, at which point a default is a real possibility. This previously did not trouble investors who bought these bonds anyway, fueling a massive expansion in the energy sector. But since the COVID-19 crisis began, demand for corporate debt in general, let alone junk bonds, has plummeted to the point where, as an emergency measure, the Federal Reserve intervened by taking the unprecedented move of buying corporate bonds itself.

This is in stark contrast to, and also a product of, the more than a decade of near-zero interest rates that, ironically enough, were instituted to mitigate the 2008 crisis. This low-interest rate environment, maintained by central banks across the world, made credit ultra cheap for the better part of this decade, which caused corporate debt to balloon up to $13.5 trillion. A report from the Organisation for Economic Co-operation and Development (OECD), however, warned that much of this debt is low quality, and that it has dragged overall quality of corporate debt to lower than it was right before the financial crisis. Yet companies continued to borrow as if money were free (which it practically was), allowing some companies to survive well past the point when they would have ordinarily collapsed, existing in a state of undeath that persisted so long as credit remained cheap. 

Because markets are now much more risk-averse, new borrowing costs have been introduced to companies that, previously, barely ever had to consider them at all. Indeed, maturing debt is what recently brought low the shale oil company titan Whiting Petroleum, which today declared bankruptcy. The company was staring down the barrel of a quarter-billion dollar debt maturity, and it realized it could not actually pay all of that. As many as 40 percent of U.S. oil and gas companies may share the same fate, or worse, by the end of two years.

The Federal Reserve, meanwhile, is trying to stop a mass sell-off of U.S. Treasury bonds, over $100 billion worth so far, sparked by nation states trying to raise cash for their own pandemic responses, according to Bloomberg. On Wednesday, the central bank in response announced the formation of a new repurchase agreement facility that will allow other countries to swap their Treasury bonds for dollars, as cash is what they're really looking for. This way, they don't have to force liquidate their Treasuries in the middle of a dysfunctional market. The Wall Street Journal said that this move effectively makes the Federal Reserve the world's central bank, cementing its position as the global lender of last resort.