We shouldn't give up on success

The worst recession in a century? Or a period of turbulence that is in some sense artificial, since it was deliberately caused? The truth is that the words we use influence our expectations and play a part in shaping the future. With this in mind, what are we truly facing? To stick to the facts:

• A voluntary suspension of economic activity due to the health crisis.
• A “carrying” operation to bring companies from pre- to post-crisis.
• And, to this end, an unprecedented mobilisation of resources: unlimited liquidity from the ECB; a nearly inexhaustible number of state-guaranteed loans; and, finally, the coverage of salaries during the lockdown period.
• All of these things are taking place simultaneously and throughout much of the world, reducing the risk of shifting market shares and, above all, allowing states to refinance their excess debt through unconventional interventions by their central bank.

Uncertainties about how to handle such a scenario must not detract from our ability to understand it and, therefore, from its overall manageability. This crisis is both one of the most brutal we have ever known in terms of scale, and one of the least complex since we know the path forward and have the necessary tools.

What conclusions can we draw, then? Will this violent impact on GDP caused by the lockdown reveal itself to be only a technical shock, unprecedented in its scale, but in the end only temporary? Or will it be the starting point of a process of economic recession, exacerbated by multiple factors, long-term and costly to correct?

The truth is that there is no possible answer to this question: not because it is too complex, but because everything depends on what we think, on what we decide, and on what we do.

It is not the time for econometric projections, but for action. And in order to come out victorious, we have to play the game. Collectively, and to the end.

But first, the stakes must be the same for everyone:

• For opinion leaders who weigh their words in light of their self-fulfilling consequences: a 10% drop in GDP is an assessment, an economic recession is a process.
• For households that continue to consume: difficult if they are constantly being warned that unemployment is about to rise sharply.
• For business leaders who do not feel forced to reduce the scope of employment to meet the challenges of this recession.
• For supervisors who do not use absurd accounting rules to ask banks to immediately provide risk provisions covering the next ten years. The devil is not always only in the details; it is also in our state of mind.
• For banks, relieved of the procyclical portion of their prudential burden, that must now more than ever take the necessary risks to support as many people as possible.

The purpose of all of this is not to give a swaggering performance in the face of adversity, but simply to counteract this adversity.

Playing the game to the end also means going further to support the sectors most impacted on a structural level. It also means putting mechanisms in place to strengthen the capital of companies that will come out weakened by this crisis, as it is indispensable to restore their more long-term investment capacities. Banks will renew their commitments in this area: alongside the State if it decides to act on the national scale, but also via their own mechanisms to adapt to the granularity of the economy, in the regions and locally.

In combat sports, there is always a moment when we think we have already given our all, when fatigue can make us see relief in the possibility of surrendering. To push past this phase, we must make an extra effort and, above all, ensure the coherence of our reasoning with each of our actions. This is a crisis unlike any other. It is not a matter of choosing the right attitude to adopt - pessimism or optimism - since both the best and the worst outcomes are still possible.

Simply put, at this decisive crossroads of collective confidence, we must choose the path of success. The time is now.