This pandemic is driving people to despair
Shahab Jafry
I must say initially I was one of the optimists. The coronavirus was no doubt a scare and the speed with which new cases and deaths were mounting was indeed surprising. But how long could it be before somebody somewhere found a cure? This is, after all, the 21st century and we've made all sorts of advances in medical science, haven't we? Soon enough, surely, things would be back to normal. Everybody would grieve the many needless deaths but then they'd just get on with their lives.
Now, though, I'm beginning to feel that this is one of those either/or moments we're used to seeing in movies and books only. The world will either have to quickly get a handle on the coronavirus, or civilisation as we know it might itself be in peril. And, to be honest, I don't feel very optimistic at the moment. Neither does anybody I talk to, especially for comments for news stories, and especially if they're from the economic/financial sector.
Why? Because, for one thing, the way it has transformed the whole world in a matter of three to four weeks is unprecedented. And while the global lockdown, of sorts, is necessary as well as understandable, how long can this really go on? The idea no doubt was to shut everybody in their homes - so the virus doesn't spread any further, of course - and pepper the economy with liquidity just long enough for some vaccine to be produced and then things would be as they were in no time.
As US Federal Reserve (American central bank) Chair Jerome Powell said recently, after admitting that the US "may well be in recession," this is not really a typical downturn as there was nothing fundamentally wrong with the economy. The purpose of the American $2.2 trillion stimulus bill that US President Donald Trump signed into law a few days ago, therefore, is to let an otherwise healthy economy pause long enough to keep people safe before what could be a strong rebound later in the year, Powell said.
That's pretty much the thinking all over the world. But how long is long enough? Most other economies have been able to come up with miniscule stimulus packages at best. And even the American bazooka hasn't been able to keep a lid on the hemorrhaging in financial markets for long. There was a brief relief rally late last week; safe havens bled a little and Asian equities bounced back somewhat, but it was back to range bound risk off trading with the new week. The new worry everywhere is what if all the stimulus packages run their course and we're still no closer to a cure? What Powell said makes sense because this crisis has not stemmed from some systemic failure in the economy. It's a complete outsider.
And how do you think risk assessment exercises of various governments are working out right now? They must naturally calculate the worst case scenarios as well. So, what about the day after the stimulus? Suppose, since it's a very real possibility now, that the bailouts are exhausted and infections and deaths are still rising. How will the lockdown be enforced, rather financed, any further? With entire sectors of economies shut down across the world, and only very negligible international trade taking place, surely the smaller economies run the very real risk of going bankrupt if there's no success to speak of in the laboratory.
And once governments are unable to provide economic support won't people be forced out on the streets to look for things like money and food? If there's still no cure the virus will only spread even further when everybody comes out again, won't it? No cure and no more free money sounds pretty much like the kiss of death for life as we know it. Come to think of it, the concept of normal life has already completely changed for practically everyone in the world - from beggars on the roads to heads of state and kings in their palaces.
Countries like Pakistan, with their small economies and large number of poor, are at a disadvantage to begin with. We will be able to withstand this storm for a very brief period of time before the economy, already pretty much on its knees, completely collapses. To think all this happened because a strange virus appeared in another country and will only come to an end if scientists, also in some far off country, are able to prepare an antidote in time only compounds the feeling of helplessness in people.
Hopefully a vaccine will be developed sometime soon. America's FDA (Food and Drug Administration) says that even if there's some breakthrough, the quickest a vaccine can come to the market is between 12 and 18 months.
That's a long time, but the outlook should change dramatically once there's some light at the end of the tunnel. Yet, even if a miraculous turnaround is just round the corner, the coronavirus has caused a very deep wound in a very short period of time, and the world will carry this trauma for quite a while.