I thought I would start this issue by reproducing the opening paragraphs from the recent Kent, Surrey & Sussex Air Ambulance newsletter as it reflects one of the things I wanted to say rather well:
This week, on Friday 8th May, we mark the 75th Anniversary of VE Day – the day the guns fell silent at the end of World War Two (WW2) in Europe. The 75th anniversary provides everyone across our nation, and our friends around the world, with an opportunity to reflect on the enormous sacrifice, courage and determination of people from all walks of life who saw us through this dark and terrifying period. This day feels particularly emotional and poignant, given the current crisis we are all fighting on all fronts and as people continue to sacrifice and come together for the good of our nation.
Living in our current times, I am reminded of a Winston Churchill quote in reference to victory in the Battle of Britain, the turning point in WW2, ‘never in the field of human conflict was so much owed by so many to so few.’ Overall victory in WW2 was secured by the sacrifice of many, both military, personnel and those on the home front – a monumental international response to tyranny. In our current battle with Coronavirus, our nation’s debt is to the very many who have held and are continuing to hold the line in a range of brave and selfless ways, despite all the risks and challenges they face. We must never forget their dedication and sacrifice.
As we know, the second world war saw rapid advances in many areas of development and design, (not all for good purposes at the time), but which impacted the post war era and facilitated things like the jet engine in passenger aircraft making travel much more affordable for many – not that they are flying much at the moment!
It is in times of crisis when developments accelerate and I think we are seeing this in the financial sector already, with most firms having closed their main offices and staff working remotely from home, service standards in the main have been maintained in our experience.
One area of acceleration I am sure, will be in the extended use of technology in the industry. As you know, I like to find quotations to use and I never thought I would quote Vladimir Lenin who said “There are decades where nothing happens and there are weeks where decades happen”
Turning to the markets now, the last week has been relatively benign and the markets do seem to have entered a period where they can absorb bad news without over reaction, which may be temporary, but is nonetheless a good thing in the short term.
I have read some questions as to whether we are heading for a 1930’s style depression and perhaps there are some similarities – JP Morgan are forecasting that GDP in the US could drop by as much as 40% and that unemployment could hit 20%. By comparison, between 1929 and 1933, US GDP dropped by 30% and unemployment peaked at 25%. But that really is where the similarities end. Many people think it was the Stock Market crash of 1929 that caused the depression in the 1930s but in fact, it was a series of policy errors thereafter which compounded an ever-worsening economic crisis.
To ‘purge the system’ Government policy allowed the Banking collapses, the corporate bankruptcies, the homelessness and the poverty to spiral out of control. By the time the US Government did try to intercede, it was too late. The first attempts to shore up the Banking system weren’t until 1932 - by the end of the following year, a third of all US Banks had collapsed.
It would seem though the lessons from the past may have been learnt. In this crisis, the Federal Reserve and the US Government have done entirely the opposite. Within days of the crisis unfolding, interest rates have been cut to zero. Trillions of dollars have been pumped into the financial system to ensure that the Banks have adequate liquidity. Not one Bank should collapse in this crisis. Similar measures have been employed by many other countries, the UK included, that are determined to manage the process this time.
Of course, for most of us, and I include myself, the numbers are simply too huge to comprehend, and I do wonder at the benefit of so much information being thrown at us. In the last 2 years alone, more data has been created than previously in the history of mankind and it is the deluge of information which is recognised as a factor in high levels of anxiety.
I would suggest it is better not to try to digest all of the data but to focus on the things where we can make a difference, and let the professionals do their jobs for us as they enable us to navigate through this challenging time.
With best wishes and stay safe.
Richard, Chris and Lesley