Coronavirus and Fear Itself

There is only one story this week.

It is about something that none of us have seen but which all of us have heard of, namely, coronavirus.

We have all watched with mounting feelings of disbelief as a virus that started back in late December to infect humans in a remote region of China has gripped the world, and with it spread panic. Blighted by an eerie uncertainty, the world is shutting down, bit-by-bit, day-by-day.

Italy was and is the most shocking example of this. The whole country, that’s over 60 million people, are in some sort of lock down, confined to their homes, forbidden to gather with others, told to “self-isolate”. The sight of a modern European democracy with one of the largest economies in the world being brought to its knees in a matter of weeks is shocking beyond words.

The coronavirus pandemic has spread across sixty countries on six continents—all in just nine weeks. If there ever was any doubts about the impact of the virus on the world those doubts have now vanished. So too has the illusion that the contagion can be contained. It is not coronavirus that can be contained but we, the world’s population, that must be contained away from it.

Experts estimate that between forty per cent and seventy per cent of the world’s population, that’s roughly five billion adults, will be infected.

This virus from the Communist People’s Republic of China is truly democratic, however. It infects everyone: every nationality, every race, men and women, rich or poor, sick and healthy, old and young, although mainly the old it seems.

The numbers in most countries are small, outside China and Italy that is, but then so too is the testing. The truth is we do not know how many people are infected. We do not know how many will die. Some estimate that the United States has tested about one per cent in terms of numbers in comparison with the number of tests carried out by the Chinese.

The rest of Asia has reacted quickly to the outbreak, with resultant disruptions across many counties being great. The virus has impacted virtually every aspect of public life in many more countries. Japan has closed all schools until April. The Japanese government ordered thirteen million students to return home, causing instant joy to many school kids while leaving their parents scratching their heads as to what to do with them and how to reconfigure their lives so as to still go to work. Horse races at the Nakayama Racecourse ran without spectators; baseball games across Japan are played now without any audience, after the Japanese government’s edict that all sporting and entertainment events must be cancelled or postponed. The fate of this summer’s Olympics, due to be held in Tokyo, hangs in the balance. There was the equally strange sight of models at a Tokyo spring collection walking around in the latest fashions with no one in attendance to look or admire them – people’s minds are on other things. No one in Japan or anywhere else knows how when – and even if – this is going to end anytime soon.

Nowhere is this more so than in a place that is neither a country nor a continent, namely, the money markets of the world. There may be panic buying across the world for hand sanitizers and such like, but on the world’s stock exchanges there has been panic selling.

Wall Street’s record-breaking 11-year “bull market” finally has come to an end.

US stock markets had had an unprecedented run since 2009 with a bull market of gains and yet more gains for investors.  However, as the news of the pandemic spread so too did panic among those investors across the globe. Shares have been sold off shares in all sectors. The Dow Jones Industrial Average has now fallen 20% from its most recent highs – thus finally signaling the beginning of a “bear market”. Tellingly, the Dow Jones had a period of six days recently when it went high and then low by 1,000 points or more. This sort of fluctuation has only occurred on three other occasions in all its history.

Banking executives have tried to stress that the US financial system is robust. “This is not a financial crisis,” said Brian Moynihan, chief executive of Bank of America. Yet, economists predict more falls to come and with that the specter of the US moving into recession.

President Trump said: “Prior to the coronavirus it was all go. The numbers were fantastic. Now we are hitting a patch. We are going to do something about getting rid of this virus as quickly as possible. … I think there will be a pent-up demand when this is gone”. Let’s hope so.

The first inauguration of Franklin D. Roosevelt as the 32nd President of the United States took place on Saturday, March 4, 1933. It came at a bleak time in the country’s history with the economy in deep recession. The new president had this to say:

“So, first of all, let me assert my firm belief that the only thing we have to fear is… fear itself — nameless, unreasoning, unjustified terror, which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and of vigor has met with that understanding and support of the people themselves, which is essential to victory. And I am convinced that you will again give that support to leadership in these critical days.”

True then, true today.