When The Clock Stop Ticking

(Originally published in LinkedIn – March 2020)

Yesterday, WHO Chief, Adhanom Ghebreyesus announced coronavirus outbreak as pandemic. In his announcement, he explained that the number of cases outside China had increased 13-fold in two weeks and he was “deeply concerned” by “alarming levels of inaction”. One day after the announcement, global market reacted today with massive sell-offs that also affected commodity prices as well. The announcement seemed effective in alarming market participants over what they have been anticipating, another recession. The large difference this time than the last one in 2008, it can create a large both supply and demand shocks in global economy.

After seeing one video related to how people reacted on the virus outbreak circulating in social media, I thought to myself, “This video is just over toilet paper, what if the next one is over food?”. Growing up in Indonesia through the economic crisis of 1997-1998, I learned how nasty people can be over basic needs. With looming risk of supply shortage, I cannot imagine the mass hysteria and riots that may take place in the near future.

Today, the Dutch Prime Minister, Mark Rutte, asked for the patience of healthcare professionals all over the country and, also, public workers to keep coming to work and serve their community. Some of them, I thought, must also have family that would be worried if their loved ones got affected in their lines of duty. So, while goods markets were affected, the next worrying situation that we might experience is labor shortage, outside healthcare professionals working in hospitals, as what Italy is already experiencing right now, because of the coronavirus fear.

I believe, people around the world right now, not only market, are waiting. Not only fiscal, nor monetary policy, they are waiting for a real policy, for a real plan, when everyone is working together to solve this crisis. I am sure some policymakers already factored various risk scenarios, but I do hope they also factored in the worst scenario when there’s no cooperation for actions; when everyone just work for themselves, caring only for themselves, posting and sharing in social medias over doctors that have worked very hard without actually caring for them, nor their loved ones waiting at home.

In this scenario, my greatest fear is with the growing sentiment lately over making social walls in the society, people will start to build boundaries instead of thinking and working together. Here, the scenario would impacted productivity, then basic goods supply, and with stockpiling speed accelerating, there will be not enough basic goods (e.g. foods) for everyone, triggering riots, and so on. We have learnt how Wuhan city in lockdown, we have seen pictures how the city commercial district was left empty, as if time stood still, where gear of economy stop grinding.

Since 2008, market has experienced one of the longest bull markets ever, fueled with cheap money. In this macroeconomic environment, people take risk, but my belief is that the risk appetite is as much as due to abundant supply of money in the market and not because of natural risk appetite of the general market participants. When people built companies, most people motivated with the fact that there are founders exited with tons of money, and considered as successful. Call me old-fashioned, but I am not sure how many businesses can last, when the people who built them left their inventions solely for money, and how much real intrinsic values can be added to the society made in this way. So, when I heard the news in CNBC a couple of weeks ago, (again, I am pretty sure I heard it) that the last week of February was the fastest sell-off ever experienced by the market, I started to doubt the risk appetite quality of our risk-takers in our economy.

Now, what that left us with? Are we really living in such instant society, where raison d’être of an economic idea is very profit-oriented to the point that the so-called risk-takers are bailing out so fast at the face of a pandemic? Do we really live in such segregated society where coordinated action was so far out of the horizon, to the point that a WHO Chief needs to address it publicly for others to take action? If so, I hope I am not the only one, factoring the risk, that we are at the start of a grinding halt, converging to a place where the economy, the clock, stop ticking.