As the circuit broke once more on the US Stock Market yesterday within moments of the opening, the fear that has taken over the market shows no sign of abating. Yet there are deeper worries to this issue, in particular the human cost.
Drastic action has been taken throughout the world via central banks in an effort to stop the decline. Yet, none seem to be working as of yet.
On Sunday the US Federal Reserve cut their rates to a range of 0.00 and 0.25. Steps that haven’t been taken since 2015. Added to this, they announced further measures including an additional $700 billion pumped into the market.
S&P 500 is now down 28.9%. Comparison to two other recessions is scary pic.twitter.com/Cu0s5pRt3y
— Larry Cermak (@lawmaster) March 16, 2020
The above chart shows the disparity when comparing these sell offs to other chaotic market events, plus how much further we could go.
Where does the stock market stop?
Currently, the fear that has grasped economies worldwide shows no sign of slowing down. Many economists have also claimed that after Sunday’s effort by the Federal Reserve to prop up the market they have very few tools left in their arsenal left to use.
There are suggestions that major businesses will need bailouts from the government. These include airlines, casinos and hotels. Yet there will be many more small businesses that are facing a crisis.
Special federal relief now on table 4 following industries:
— Oil & gas (enacted)
The next congressional package — on which work began today — will be where all this is expected to be fought outhttps://t.co/kbhv1NOlXy
— Jeffrey Stein (@JStein_WaPo) March 16, 2020
With people told to isolate and worse, lockdown, the hospitality industry will take many months to recover if they can at all. Unfortunately, many of these are small businesses, sometimes family run.
The human cost
This ultimately is the problem governments now face. While the stock market appears as numbers on a screen going up and down, their effects on real life is very real.
Companies have already begun to lay off staff or ask them to take voluntary paid leave. In a society where zero-hour contracts have become more popular this can be devastating to the public.
Governments have bailed out large banks before in 2008. They are likely to bail out large businesses again. The question remains though how they will bail out the people who have no income due to the effects of the Coronavirus.
In desperate times society needs to work together. A government’s responsibility is the safety and wellbeing of its people. Urgent measures are needed to ensure that the priority is us, the people, and not large business. There makes little sense in bailing out an airline when people could lose the ability to pay for their rent, or even food. The effects of the virus are likely to be long-term. This means that airlines and businesses are unlikely to recover for many months.
Measures have already been taken in major European nations to ease the burden on their citizens. France has suspended all rents, water, gas and electricity bills for its people. A proactive response is required, one that has not been forthcoming in the UK so far.
Responsibility of citizens
As citizens we too must take responsibility for our actions. This includes following governments advice to perform social distancing and ensure the spread of the virus is reduced. People are encouraged to work from home where possible and avoid going to restaurants, pubs and clubs.
As we live in unprecedented times unprecedented measures must be taken. Not just from governments, but, from society as a whole.