Orange Room Supporter
I see what you're saying, but that's sort of the problem, isn't it? Besides a vaccine or really reliable treatment, the only measures that can be put in places to effectively combat or slow the public health crisis are ones that would perpetuate the financial crash and slow demand to a halt: increasing movement restrictions, moving all education, large gatherings, etc online, and increasing work from home. If not more draconian (and effective) measures a la China. In order to increase confidence in the long term, you have to majorly hit the economy, especially the service industry, in the short term. So at least in the medium term all of that would perpetuate a sustained downturn, no? And the increase on the demand side of the economy would really depend on how many people can get back to work as normal quickly.But the moment there is a vaccine this will climb and if there is no vaccine, we can't keep living in everything closed and people can't go anywhere it just doesn't work on the long term. Eventually people will either find a vaccine or live with the possibilty that people will get the sickness and 2% will die and 98% will recover. So whatever this 2% dying is for the economy this is what the drop should be and it is not 20%, 20% is just panic over panic.
If there is one thing to remember from previous crashes, it is that they are always a black swan that nobody factore or has foreseen, however the recovery starts once the black swan is being tackled with measures. So far there have been no measures for the Coronavirus.
Maybe you're right though. Much of this for me is based on the assumption that the overwhelming majority of people will be perfectly comfortable reducing most non-essential participation in the economy due to sustained panic rather than just accepting the 2% mortality rate and the much higher severe cases rate. I don't think it's as severe as going nowhere and holing ourselves up at home, but vacations canceled, less movie theaters more netflix, less going to gyms, more eating at home, less work travel and hence less hotel stays, weddings delayed, etc. There's just no really good comparison market-wise and nothing other than a really effective vaccine that will quell the panic (at least a year away, if ever).