US, WASHINGTON (ORDO NEWS) — Typically, governments and central bank governors know what to do in case of crises so that the economic gears continue to spin. But this time, it seems that their usual methods do not work, writes Aftonbladet, Sweden.
One large, hitherto unprecedented experiment is being conducted over the world.
Country by country, they close their borders and close in their own shells. Most economic activity is paralyzed. Airplanes do not fly. Restaurants, bars and cafes are closing. Hotels are empty. Students have to sit at home. Although Sweden is still the exception to this.
To freeze a large part of the world for a while, to introduce an indefinite period of isolation in order to defeat an invisible enemy – such a mankind has never seen.
On a global scale, it can save the lives of tens of thousands of people – but also destroy the wealth that the world has built for many years.
The world is forced to take self-destructive measures to avoid the coronavirus.
The scale of this crisis immediately became clear when the heads of central banks throughout the Western world tried to calm down the alarm by promising to inject an almost unlimited amount of money into financial systems. The Federal Reserve, acting as the central bank of the United States, lowered the already low key rate to almost zero.
Governments promise hitherto unprecedented measures and billions of dollars to help businesses and industries that are in danger of collapse.
But in response to this, exchanges plummeted. Such a decline in such a short time in modern history has not yet been observed.
Who will pay for it?
The problem is that not a single political leader or head of the central bank today can clearly explain how to maintain life in industries that in a week have gone from full activity to complete freezing. Someone has to pay salaries to employees of airlines and travel agencies around the world. But after them, other industries can be paralyzed.
Thousands of enterprises, which a week ago brought excellent income and developed, can now disappear.
Millions of people around the world will become unemployed.
There is no guarantee that the consequences can be easily eliminated in a few months, when the apotheosis of the epidemic, I hope, will be left behind.
Take, for example, the proposal of the Swedish government: if the company introduces a short working day with reduced payments, take on 50% of the salaries of employees who would otherwise be fired. How will this help small firms, which are now completely lost their income? After all, they will not be able to pay half of the salary to employees, having no profit.
Due to the high degree of uncertainty, exchanges are plummeting. No one understands how to resolve the crisis and what the outcome of this incredible experiment, which a few weeks ago seemed unthinkable, could be.
One can only guess
To aggravate the instability of the situation and the fact that no one knows how long this will last. Are we talking about six weeks or six months? Or will it last even longer?
There are no economic models for this.
President Donald Trump yesterday expressed a killer hunch that the situation will not change until July-August. And the screen at this time showed how the fall of exchanges is accelerating.
When will bars and hotels reopen? When will the children return to school?
All today’s assessments of the situation are just guesses, because no one knows how quickly the number of seriously ill patients will increase or decrease. Nobody knows whether the virus will back down when it gets warmer, or in China, where it has now been partially managed to suppress it, on the contrary, a new outbreak will begin.
For now, we can only sit in our voluntary isolation and watch our economies go to collapse by leaps and bounds. A recession is almost inevitable. Depression cannot be ruled out after the model of the 1930s.
Moreover, all production necessary for life should go on as usual. The supply of goods must not stop. In any case, food, oil and medicines must be produced and transported around the world. Garbage – to collect. Doctors, nurses, firefighters, police, nursing home employees, and so on, should be able to get to and from work.
Third world war
But otherwise, society has stopped — and how long will it last?
Today, perhaps, exchanges will rise again. Truly serious crises are characterized precisely by the fact that they are accompanied by constant sharp ups and downs. But how much will our pension funds suffer as a result?
The situation places high demands on those who are responsible for the levers that can gradually return society to a normal state.
Sweden has not fought for 200 years. But now she was at war, like the rest of the world. Isn’t this the Third World War? A very unusual war against an invisible enemy.
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The article is written and prepared by our foreign editors from different countries around the world – material edited and published by Ordo News staff in our US newsroom press.