Investors expecting a rapid recovery are trying to time markets and catch falling knives. But dealing with these deep-seated systemic flaws will require time.

Given the state of public finances, it is unlikely that governments, especially heavily indebted ones, will be able to sustain the level of support required to keep economies in total lockdown for months. Deleveraging and cleaning out financial excesses will be slow and may not be feasible even if the will to tackle the task is found.

The long-term damage will be great. Hysteresis refers to effects that persist after the initial causes are removed. The current crisis will compound persistent financial and economic weakness; structural damage to industry, employment and public finances; and savings and consumption behaviors which are difficult to foresee. While the Covid-19 crisis will probably pass, our fragile economic and financial system will take longer to recover.