Economists have said with certainty that due to the pandemic, the global market and the economy of the world will inevitably crash. Blame it all on the outbreak of this deadly disease called the Coronavirus. Some have even said that it is worse than the Great Depression of 1929, or the 2008 Great Recession wherein the Lehman Brothers have filed for their bankruptcy. In both these instances, the major stock market has collapsed. The recession has followed.
Could it be happening to the global economy at this time? In truth, nobody can say what will happen at this time because we are not God who can see the future. Also, the dynamics are different from that of the ’29 Depression and the ’08 Recession. The latter happened because of the subprime mortgage crisis. As for the former, it was due to a stock market crash, lessened consumer spending, and a decline in investments. Both situations involved a crisis in stocks, investments, and the economy. This time is different. We were forced to close down or shut down our businesses and offices in the meantime because of an illness. The economy is declining, and the stock price is lowering because our economic activity was disturbed by a sickness.
The difference between the 1929 and 2008 economic catastrophes and this COVID-19 pandemic wherein everything was put into a halt, the asset prices of the former went down and did not recover. The latter has no sign of doing so because it is not about the money. It is about the pandemic and sickness. The money is there. It cannot move because people are staying at home and not working. Some experts believe that it will revert soon. Pharmaceutical companies are in a race to create a vaccine for COVID-19, as we all want to get back to how it was before. In reality, though, we are adapting the new normal. And what is that? We are all learning how to work from home, do business in a workstation within your dwellings, and contactless transactions. It is unique and different from what we are used to, but it makes the economy move slowly with these online transactions.
Another difference is that in 2008, the banks were majorly blamed for the meltdown. Right now, banks and the government are helping one another to rise back up. It is not the fault of the banking industry, nor is it the doing of the government that slowed down the economy. That is why both bodies are making sure that companies with cash flow issues during this pandemic are assisted.
Lastly, corporations did not show any sign that they are undervalued, nor do they feel that this setback has caused a significant drop in their worth. Buyback programs were canceled to preserve working capital, and Trump responded on this as well.
These little signs are a ray of light. Economists and stakeholders are hopeful that everything will eventually go back, the economy will soar, and people will start to enjoy the freedom that they once had. This COVID-19 has temporarily taken away our freedom, but it will not stay that way. Months after the last COVID-19 case on this planet have been recovered, the economy will surely flourish, and the people will go back to trading and providing services.
For now, what can we do? Adhere to the policies of your government. Be cautious. Stay at home so you can be safe from the disease. If you always go out, you risk contracting the illness, and you will be bringing it with you to your home. You may even transmit it to your family. Let us just enjoy the time that we have for now, and if you can make money from home, then do it. Leave your stocks alone, for now. And do something traditional. We have to accept the new normal, and that is staying inside, working from home, and utilizing the internet to earn. Always keep a positive mind.