Markets ride the Bliss trade on borrowed state backstops

Harvard economist Gita Gopinath argues that stock markets are buoyed by a 'Bliss trade'—the belief that governments will sustain large, lasting support via debt and central-bank backstops—despite energy shocks and rising public debt. The disconnect between rich markets and riskier bonds suggests fragility, and she calls for crisis response that is targeted, fiscally sustainable, and coordinated to avoid a long-term drag on growth.