The virus is an alarm for the economy as well

Today's main question is how deep and long health emergencies will be. There is hope that the closure of countries (such as Spain) or parts of countries (as in China) will eliminate the virus. Yet, even if this proves true, it will not be the same. One view on the opposite extreme is that up to 80 percent of the world's population can be infected.

With a possible mortality rate of one percent, this can mean as many victims as in World War II. This disaster will also take a long time: the Spanish flu of 1918 came in three waves, over a year. However, it is more likely that this will end in half a year and the mortality rate will be lower. But the disease will not disappear.

The world may not become normal behavior until 2021. Young people can become normal sooner. Old people don't. Moreover, even if some countries eliminate the disease, quarantinens will remain to be preserved by others. In conclusion, the body's influence is likely to be heavy and extended. At least, policymakers have to plan this.

Pandemia has already suppressed both supply and demand. Fuels ban basic supplies and a wide range of purchases, especially travel and entertainment services. The result will be a major decline in their activity in the first half of this year.

Above all, depression is threatening. Many families and businesses will likely run out of money soon. Even in wealthy countries, a large part of the population has no monetary reserves. The private sector is also covered in debt. So consumer demand will weaken even further. Business is going down. People and businesses will refuse to sell except on preliminary payments. Doubt over the health of the financial system will resurface. There is the danger of a collapse of demand and economic activity that goes far beyond the direct impact of health emergency. It will be especially difficult to maintain the spread of the disease in countries with limited social security and poor social control. This will affect the United States, where, above all, many sick people will refuse to go to the hospital and will also be forced to work.

As the lender of the latest tool, central banks must secure liquidity by keeping the cost of low, direct and indirect borrowing. But central banks can't pay you back. They cannot support income for families or secure businesses in the face of falling demand. As borrowers and recent providers, governments can and should do so.

The government's long-term debt is so cheap they don't have to fear to do this: Germany, Japan, France, the United Kingdom, Canada and the United States.

This, then, is a crisis where we are limited in time, with serious economic and health consequences and that governments must manage. Within the country, the minimum is providing salaries and unemployment schemes, including self-employees, for the crisis period. Though it may be very difficult, governments must send everyone a check.

However, this too will not be enough if bankruptcy costs and a depression are to be avoided. Emmanuel Saez and Gabriel Zucman from Berkeley argue: the most direct way to make sure... is for the government to act as the last buyer. If the government fully replaces the dropped demand, each business could continue to pay its employees, as if it worked... as usual.” Anatole Kaletsky recommends a similar response.

Providing such relief will not create a moral danger. Being helped in an pandemic will hardly encourage irresponsibleness. If businesses borrow more, they'll ultimately go bankrupt.

This plan is much better than loans and loan guarantees, as proposed by the German government. Businesses will only borrow to ensure their survival through crisis, not necessarily to pay off their workers. Moreover, loans will be paid, creating a load when the pandemic is finished. However, in this proposed programme, the payment could be conditioned with the maintenance of workers. The programme will also be completed naturally, with pandemic itself. Governments may then impose additional taxes to compensate for their expenses.

Ensuring revenues and managing long-term business spending are essential. Furthermore, within the eurozone it will be essential to help governments whose ability to borrow is limited.

And verily, this disaster is ever coming. But it won't happen tomorrow. Pandemia risks developing a depression. Salalu rei publice primacy lex (the security of the republic is supreme law). In war, governments spend freely. Now, they must mobilise their resources to prevent a disaster. Think deeply. Act quickly. Absolutely. /Buriment: Financial Times/Transform: Mapo.