People don't trust their governments to handle the coronavirus crisis

The current collapse in global equities markets is mirroring a broader collapse in global public confidence.The big picture: Both financial markets and public sentiment are reacting to uncertainty at three levels: the future trajectory of the coronavirus outbreak; the adequacy of the policy response; as well as the impact on the economy and financial institutions.At the heart of all three is a growing gap in public trust in our various national governments.

• In part that's because folks have been told for so long that government is the problem, not the solution.
• In part it’s because critical public institutions mandated with the responsibility for defending public health have been defunded over time.
• It’s also because people understand that this crisis is bigger than any single national government can handle — yet the relevant institutions of international governance (i.e. the WHO) have been defunded as well.

Flashback: There are echoes of the Global Financial Crisis. After the Lehman Brothers collapse in September 2008, markets were in free-fall as business and consumer confidence collapsed and lines of credit dried up.

• What broke the fall was the G20 Summit in London the following March, when the world’s largest economies decided to act together.
• They agreed on a coordinated global fiscal and monetary stimulus, a ban on protectionist measures to keep trade flowing, and a regulatory response including the future stress-testing of globally significant financial institutions to handle future crises.

The U.S. could have taken the lead by reaching out to Beijing at the height of the crisis — and Washington could still do so — to establish a Joint Coronavirus Taskforce.

• This could provide the political capital to break through any geopolitical nonsense currently impeding serious work on effective prevention strategies and vaccine development.
• Second, G20 health and finance ministers, including the WHO leadership, could meet weekly by video-link around a fixed agenda of work.
• Third, a virtual G20 summit could be held to agree on global economic measures to reduce the risk of global recession and any associated threats to financial institutions.

The bottom line: Unless and until both public opinion and financial markets see major global governments working together with a credible, substantive policy response, then what we’ve seen so far will only be the beginning. Article originally published by Axios on 9 March 2020Original Article Available here