[Viewpoint] The four stages of the financial fluIt might not seem so at first glance, but dinosaurs and the black plague have something in common. First, they were both ferocious; second, they both suddenly disappeared one day; and third, nobody knows exactly why they disappeared.
The theory of a disease or asteroid collision are the strongest behind extinction of the dinosaurs, but many oppose even these ideas. The disappearance of the black plague, which cut the population of Europe in half over a period of 300 years, was similar. The likeliest explanation is that those with plague-tolerant genes survived and reproduced, while those who were susceptible to the disease died, leaving no one else to infect. The plague disappeared on its own one day - the human race did not exterminate the disease (Susan Scott, “Return of the Black Death”). Over 300 years, people could not stop blaming each other for its existence, let alone develop a treatment.
What about the new flu and the financial crisis? The two do not look like they have any correlation at first glance, either. However, look one step deeper and you will see the two are alike.
First, the beginning: There is no such thing as a lone wolf. Money and people constantly get mixed together all around the globe, so it is difficult to keep out viruses or the risks that caused the financial crisis. Therefore, the entire world has to look for the solution together. This is why quarantine networks were started internationally and the United States secretary of the treasury said at the recent G-20 meeting that governments ought to discuss a global exit strategy.
Second, in the development stage, conspiracy theories arise. This is what happened when the financial crisis started one year ago. The Jewish fund conspiracy theory, which was the biggest one, suggested Jews intentionally created the crisis to increase their own benefits.
There are just as many conspiracy theories surrounding the new flu. The story that the danger level of the virus has been exaggerated to sell more drugs is cute compared to the claim that someone intentionally created and spread the virus. In April, Indonesian Health Minister Siti Fadilah Sufari made the claim that there is was a chance the new flu was intentionally created for the profit of leading pharmaceutical companies.
Third comes the reverse situation stage. People forget the problem, and then get excited again. When Korea had its first flu patient in the beginning of May, the country was in a state of panic. The name swine flu even led to a rapid decrease of pork sales. However, the virus lay low for a while after that, and people lost interest. It was considered nothing more serious than a cold until August, when a new flu patient died for the first time. One could not have imagined the excitement that would stir up. It is the same with the financial crisis, which is like a repeat of the Great Depression in 1929. People were floating high on the bubbles before the crash and could not see the sheer drop that was coming at them.
Fourth, in the final stage, problems are solved with money. The later it is, the more money it will take. Korea has spent 300 billion won ($246 million) on hurriedly purchasing enough vaccines to treat 13 million people since August. It would have been much cheaper if they had bought it last year. The social cost is huge, too. The excessive fear and confusion is leading to suppressed consumption. We cannot predict what effect this will have on the economy as of yet. The Korea Centers for Disease Control and Prevention presented a service report three years ago that said that if we have problems counteracting such viruses, in the worst-case scenario, we could suffer 27 trillion won in financial damage.
Management of the financial crisis has been similar. We poured 50 trillion won into it, which was quite effective because we did so at an early stage. Meanwhile, the United States and Europe put in much more money than was expected, yet still have not recovered as much as Korea.
It would be great if we could type a period after that and simply put an end to the matter, but there is more - a sequel. The title of the sequel is “People are Talking.” Already there are more “complainers” who stress a national fiscal crisis instead of praising the government for solving the problem. The chatter of choice these days is that the current administration ate up the healthy finances the former administration worked so hard to achieve.
If we make it through this winter without any problems and have some vaccines and drugs left over, the new flu will go on the chopping block, too. People will ask who used all that money to buy so much useless “cold medicine.” They will say we should look into connections with foreign pharmaceutical companies.
I would like to ask those complainers some questions of my own, like which would you choose: a flu without a vaccine or a vaccine without a flu? A crisis without an economy or an economy without a crisis?
*The writer is the business news editor of the JoongAng Sunday.
by Lee Jung-jae