Coronavirus and finance: Living through history

News and opinion on finance

“History never looks like history when you’re living through it.”

So claimed John Gardner, who was secretary of health, education and welfare during the administration of US president Lyndon B Johnson. It is hard to imagine any health secretary agreeing with him today.

Not since the financial crisis has it been so clear that we are living through a key moment of history, one that will be analyzed, discussed and written about for years to come. 

The coronavirus has now infected more than one million people: it has spread to almost every country in the world, leading to mass quarantines and alarming projections about the global economy.

The facts make for depressing reading, but there is reason to be optimistic.

The virus has spread much more rapidly – and more widely – than the Sars epidemic did in 2003, in large part because of the way that globalization has transformed supply chains and personal travel over the last two decades. 

“History never looks like history when you’re living through it.” 

But globalization will also make it easier and faster to find a cure. There are at least 20 different vaccines being developed around the world. The World Health Organization has begun four multinational trials.  

Central banks have also acted in concert, correctly identifying that a global problem requires a global solution. The US Federal Reserve has made two emergency rate cuts and unveiled a $700 billion asset purchase programme. 

Central banks across Asia have followed its lead with their own rate cuts, asset-purchase programmes and lower capital requirements for banks.

Fiscal responses have been less coordinated, but governments in Asia have acted decisively. 

Singapore’s S$55 billion ($38.2 billion) spending plan is the most ambitious, but Hong Kong, Malaysia and Indonesia are among the countries to have announced much-needed fiscal stimulus measures.

Banks have also been quick to do their bit. Interest payments for the worst-hit companies have been postponed, as have some mortgage payments. Employees have been reassured they will be looked after. Even those banks that had previously announced staff cuts have decided to wait until after the coronavirus abates. 

That is the right thing to do: now is not the time to be looking for a job.

Dramatic shift

Bankers have adjusted, swapping globe-trotting glamour for life at home. The cause of this dramatic shift in working patterns is horrifying, but the change is welcome. It has given banks ample data on flexible working hours, something that should lead to more staff being allowed to work from home in future.

Banks were better prepared than in 2008. That is partly because, unlike the global financial crisis, the root cause of this emergency was completely divorced from the financial markets. But it is also because lessons were learned from the last crisis: capital buffers, in particular, are much stronger than before.

What will the historians write about the coronavirus? The causes, and the responses of governments, will no doubt be the subject of many books. But there are positive stories for social historians, too. Most people have proved resilient, reacting with humour, tolerance and patience.

Journalism, as the old saying goes, is the first draft of history. Asiamoney takes that responsibility seriously. But despairing voices should remember that they are not about to read the last draft. 

We will endure this crisis, as we have previous crises. We will learn, we will adapt – and we will move forward.