(Bloomberg) --

The pandemic that turned the global economy upside down is also threatening to rewrite the rules of capitalism itself.

The stringent lockdowns enforced by governments to contain the virus have triggered unprecedented intervention into not just financial markets, but also the day-to-day wheels of global commerce. From buying bonds to paying wages, authorities are playing a role in the economy that was unimaginable even a few months ago.

To be clear, it’s not like they had much choice. The alternative would have been to stand back and watch as companies fell and workers were left stranded, ultimately digging an even bigger economic hole to fill once the crisis passes.

The challenge is how and when to unwind all of this support without setting off the kind of political and ideological bushfires that will burn for years. The longer authorities remain in the market — whether it’s a controlling stake in an airline or backstopping loans to energy companies — the greater the risk of collateral damage.

The dilemma is real and will play out in legislatures and policy meetings for years to come. Cutting and running too soon risks stripping away a vital safety net that both companies and workers may still need. Staying too long risks crowding out private players.

Big government may be back, but how long it’s welcome is another story.

Global Headlines

Phase two | President Donald Trump fixed his course on reopening the nation for business, acknowledging that the move would cause more illness and death from the pandemic but insisting it’s a cost he’s willing to pay to get the economy back on track. Trump presented the imminent easing of stay-at-home rules as a fait accompli, as governors across the South and Midwest have begun returning people to work.

• Trump said White House officials are discussing disbanding the task force that has helmed the federal virus response efforts so far.

Blame game | China’s ambassador to the U.S. said allegations faulting Beijing for the spread of the coronavirus risked a “decoupling” of the world’s two largest economies. In a column published in the Washington Post, Ambassador Cui Tiankai called for an end to the “blame game,” saying that increased suspicions threatened to hurt U.S.-China cooperation to fight the pandemic and restart the global economy. “It’s time to focus on the disease and rebuild trust between our two countries,” he said.

Spreading charges | Brazilian President Jair Bolsonaro wanted to replace the chief of the federal police in Rio de Janeiro, where he built his political career, former Justice Minister Sergio Moro told investigators. The accusation adds to his previous one that Bolsonaro tried to meddle in police work by naming a family friend as top cop at the institution akin to the U.S.’s Federal Bureau of Investigation.

Abandoning caution | The unusual unity that has permeated Germany since the pandemic arrived is starting to fray as pressure grows on Chancellor Angela Merkel to speed up the country’s exit from lockdown. With Europe’s biggest economy forecast to shrink 6.3% this year, business and industry lobbies are clamoring for Merkel to throw off her caution and allow more commerce. Merkel meets with state leaders today to forge a consensus on reopening.

Getting closer | With a Friday deadline looming, Argentina and its biggest creditors are suggesting possible revisions to the country’s $65 billion debt restructuring proposal that could help break an impasse. While both sides are uncompromising in public, behind closed doors they are showing some willingness to improve the terms of the exchange and continue talks, Bloomberg reports. The pressure is still on, however: crucial bond payments come due May 22.

What to Watch

• The EU warned today that the 27-nation bloc is facing the deepest economic downturn in its history, threatening the future of the euro if the crisis is badly handled.
• Trump supports Russian President Vladimir Putin's proposal for a summit of the five UN Security Council permanent members and sent him a message describing the initiative as a “good idea,” the American ambassador to Moscow told the Interfax news service.
• Russian mercenaries are engaged in a large-scale effort in Libya to bolster eastern commander Khalifa Haftar providing technical support, direct involvement in combat operations and sophisticated influence campaigns, according to United Nations experts.
• Ivory Coast arrested 14 soldiers and five civilians on allegations of planning a coup linked to presidential hopeful Guillaume Soro, who was sentenced in absentia last week on charges of embezzlement and money laundering.

Tell us how we’re doing or what we’re missing at balancepower@bloomberg.net.And finally ... Long a target of the Philippines’ outspoken president, Rodrigo Duterte, the country’s largest media company was ordered to close overnight after its franchise expired. ABS-CBN has more than 50 TV and digital stations along with 20 radio stations, and its closure has sparked a wave of criticism directed at Duterte’s administration. Along with ABS-CBN, Duterte has attacked several media outlets since he came to power in 2016 for their reporting on his drug war that has killed thousands.

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