©
Reuters / Lucas Jackson
Source:
RT News
The
coronavirus has wreaked havoc on global stock markets, but this may just be the
start of a much bigger economic crisis.
Investment
professionals on Wall Street spend their days reading financial reports and
looking at numbers flash on screens. These numbers record the moment-to-moment
changes in the collective wisdom of markets about the value of stocks, bonds,
commodities and a distressing array of derivative financial products.
From
the comfort of the sealed caverns of Wall Street the actual physical and social
world is just an abstraction to be quantified and analyzed. One of Wall
Street's most prominent investment research and management firms released analysis that says the coronavirus won't be all that bad for the economy.
Analysts
from Morningstar Inc.—which is actually headquartered in Chicago's cavernous
downtown—say that this pandemic will be a "mild pandemic." I'm not
sure how pandemics can be mild, but the analysts outline cases for
"moderate" and "severe pandemics."
One
of the things that gives these analysts such a sanguine view, particularly in
the United States, is the country's advanced health care system which is
"likely much more prepared for the taxing of our hospital system, as we
appear to have a massive lead over other developed nations in the number of
intensive care unit beds per citizen."
And
yet, a first-hand report from a physician in those hospitals suggests
that there will be very little room for severe corona virus cases in any
hospital ICU. Those beds are already being used by patients and not just
waiting empty. In all likelihood, hospitals will be quickly overwhelmed and
forced to decide who gets critical live-saving treatment and who does not. The
"who does not" number could be very large if the Italian experience is anything to go by.
The
analysts do admit that lack of health insurance and paid sick leave will likely
lead to higher infection rates in the United States than would otherwise be the
case. Naturally, people without insurance will be reluctant to seek treatment,
and those without paid sick leave may come to work even when ill in order to
make enough money to pay their bills.
The
surprisingly upbeat report is based on the idea of a return to business as
usual. The assumption is that the coronavirus pandemic will not shatter
confidence in our institutions which are so clearly incompetent and/or
inadequate to the task of fighting this pandemic.
For
the first two months of this year the US markets virtually ignored the growing
dangers of a pandemic and assumed that any economic problems would be confined
to China. In fact, even as infections spread like wildfire in China, market
averages touched new highs. The idea that novel infectious diseases for which there
is no treatment do not recognize national boundaries just didn't occur to most
investors and investment advisors. Reality, however, began to sink in by late
February and led to the historic stock market collapse.
Even
now, a friend of mine who is retired reports that the week before last her
investment advisor responded sharply when she called to dump half of her
portfolio of stocks. The advisor won the argument saying that this is just a
temporary slide, and that in the long term all will be well.
The
political and social implications of the current meltdown seem lost on the Wall
Street crowd. They cannot see that when all is said and done, it is unlikely
that very many people will have faith in an advisor who tells them that stocks
always return to previous levels and move higher. This will be an indirect
result of shattered faith in government institutions that are supposed to
protect us in such emergencies and shattered faith in an economic system that
leaves so many without the means to respond to such a life-and-death situation.
Large-scale
and dramatic rearrangements of our current system worldwide and in the United
States are likely to come in the wake of the season of death that is upon
us—and in the wake of the economic carnage that results from the breakdown of a
system so vulnerable that a tiny virus could topple it at its base. That virus
is now calling into question deeply held assumptions about basic security,
protection, health care, and also economic and political arrangements that do not
seem able to respond in ways that preserve life in the face of one of the most
obvious and fundamental threats to it: epidemic infections.
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