Larry Summers: Virus May Be Most Serious Crisis of Century

The coronavirus threatens both public health and the global economy and may prove to be the most serious crisis of the century so far, former U.S. Treasury Secretary Larry Summers said, adding that policy makers haven’t yet been able to grasp its gravity.

“This is one of the four major events of the 21st century so far,” Summers said in a Bloomberg Television interview, also listing the Sept. 11 attacks, Hurricane Katrina and the 2008 financial crisis.

“It wouldn’t amaze me if this didn’t prove to be the most serious of any of those events,” he said. “I don’t think the full extent of this problem has yet been fully appreciated.”

Public health officials all over the world are taking emergency measures to contain the spread of the virus and treat those affected, while economic policy makers from finance ministries to central banks are starting to roll out stimulus aimed at containing the damage. Summers said they’ll likely have to go further, and fast.

“We’re in a moment like where we were after Bear Stearns,” he said, referring to the collapse of the U.S.-based investment bank in the first quarter of 2008, several months before the world plunged into full-blown crisis with the failure of Lehman Brothers. “In retrospect, the time was largely wasted, and it would have been better if we had acted much more promptly.”

Summers, a paid contributor to Bloomberg Television who served under the Democratic administrations of Bill Clinton and Barack Obama, applauded steps taken by central bankers. But he said that the U.S. government’s response so far is “looking distressingly like the administration response to Katrina,” under George W. Bush. And he said that fiscal authorities should abandon long-held concerns about over-spending.

“As long as we’re worrying about budgetary targets and worrying about budget deficits and the like, I don’t think we’re going to get where we need to be,” he said.