Chief economist update: Lock us down Scotty!

Think your 30-50% year-to-date loss in your equity portfolio is bad? Just wait until all buyers disappear, consumed by a tiny speck of micro-organism.

Remember Murphy's Law? "Anything that can go wrong will go wrong".

Monetary and Keynesian stimulus measures, and governments nationalising banks and other financial institutions got the world pass the global financial crisis a decade ago. The underlying problem then was the drying of liquidity that, if left to fester, would turn into a solvency problem.

The problem now is that you can't bribe a virus with money!

Look around you, Virginia, and you'll see governments and central banks handing out cash like never before.

The latest news from Factset is: "Fed announced flurry of measures to improve market liquidity. QE now open-ended after Fed has previously committed to purchasing $700 billion in Treasuries and MBS. Asset purchases will be expanded to include commercial mortgage-backed securities, or CMBS (statement)."

"Also announced three new lending facilities designed to support $300 billion in new funding, with Treasury to cover $30 billion in losses (statement). Reintroduced the Term Asset-Backed Securities Lending Facility (TALF) to support consumer and business credit markets, plans for two lending facilities to support corporate markets."

These after a 150 basis point cut in interest rates before its scheduled 17-18 FOMC meeting (which was cancelled).

In Australia, the RBA's rate cuts on March 3 and March 19 - the official cash rate is now at 0.25% -- as well as bond yield targeting and QE, are matched by the Morrison government's increased spending.

According to news.com.au: "Parliament passed two packages worth $17.6 billion and $66 billion in response to the outbreak of the virus. In separate legislation, the government set aside a further $40 billion for urgent and unforeseen spending associated with the pandemic, likely to cause a recession".

But so far not so good. To repeat, government and central banks cannot bribe the virus to go away.

China's total lockdown of Wuhan is a positive test case. Italy's one presents a truism for Murphy's Law that all other nations can learn from.

The latest update shows that there are now 1887 cases of coronavirus infection in Australia -- relatively small for Australia's government to implement a total ban on socialising. But this has grown from 133 cases initially (if memory serves me right).

Certainly, the underlying psychology of this all is that a total lockdown would imbibe a sense of panic in communities and the entire country in general.

But isn't it better to lockdown all social interaction and commercial activity for two weeks or two months - to lower and stop the rate of infections -- rather than spending an ever growing amount of money tyring to mitigate the growing number of infections.

Latest reports tell of Italian healthcare workers now contracting the virus, add to that the dwindling number of medical supplies and equipment - due to the disruption in the supply chain and increased demand - and Houston, we definitely have a growing problem.

China's total lockdown worked. UK Prime Minister Boris Johnson has now implemented his own version.

Australia needs to nip the virus in the bud and lock us down before infections get out of hand and it'll be throwing more good money after this bad virus.

Read our full COVID-19 news coverage and analysis here.

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