Going through the current Corona-crisis we often hear references back to earlier disasters that came our way, and how they resulted in deep financial turmoil. I lived through two. The Asian currency crisis in 1997-98 put a first and serious dent in the boom times of the 1990s and in the process solved a few major problems like for instance traffic jams in Bangkok. As it happens I was there trying to restructure a billion dollars of debt for a large Thai conglomerate which had revenues in Thai Baht and debt in US dollars, lots of it. Management’s thinking had been that a timely phone call from the Finance Ministry would prevent a meltdown of the company. That call never came, markets unfortunately don’t work that way, and we were sweeping the floors while the taps were open, so to speak. I will never forget standing in front of a Bloomberg terminal seeing the crisis unfold in real-time as the Thai Baht plunged to unprecedented levels. At the same time my employer UBS had embarked on a merger with its nearest competitor, Swiss Bank Corporation, and for most of us on the UBS side the writing was on the wall. So, this crisis had all the right and painful ingredients: maximum financial chaos, job uncertainty and of course serious stock portfolio turbulence.
The financial crisis of 2008 began one morning during a meeting discussing a biotech deal when someone pointed out that while we were talking Lehman was collapsing. This ironically was the bank with whom we had partnered advising on the restructuring deals some 10 years earlier in South-East Asia, now they were gone. At this point in time I was a self-employed advisor and investor and probably in an even more vulnerable position than in 1998. The stock portfolio, now largely containing US and Canadian stocks came under some real pressure. At the same time, I was putting a financing together for a company that would successfully exit in 2011, something we did of course not know during that dark late summer of 2008.
The 2020 Covid-19 wipe-out is comparable on many levels. Crises emerge because vital information is often suppressed on purpose and once the information seeps out a cascade of events ensures collapsing stock markets, failing businesses, job losses, government intervention and a realization that things are going to be very different going forward. I recall exactly the same things in 1998 and 2008 and it comes with the clear realization that none of this is your fault, it is a larger power that has shaped the turn of events and there really is nothing you can do to change the dynamics in your favour in the short-term. There is however one redeeming feature: you do not have to blame yourself. You can always hit yourself up if you are not doing all that well during the good times: what did I miss? Was I not aggressive enough? Everyone else seems to be doing quite well, so the one person to address deficiencies with is often yourself. But not during a crisis: you are enveloped by a flood and it is totally outside your control. And however disastrous, such an event can be quite healing. Why?
The first thing is that you can now throw all assumptions and ideas of life and career before overboard, they have been reset for you by something else. And while trying to manage through the mess with the resources you have, you can start drawing the map of the next steps on a completely blank slate that someone else has wiped clean for you. Our idea to move to Canada was shaped in 1998, right in the middle of the currency crisis and merger activities. We could do anything we liked - in fact we had to in a way - as the foundations of certainty and clarity were collapsing around us. And while it may sound unpleasant it tends to unleash creative and out of the box thinking, simply because you have to. True, we were young and had no kids at that time, but the logic applies to any crisis and for anyone, the difficult decision to leave the past behind has been made for you and now you can chart new ways that will take you forward.
As it is unfolding Covid-19 is manifesting itself as a deeper crisis, as of today we don’t know nearly enough about the virus and how it propagates and there is no shortcut to a vaccine soon. It has not only created a financial crisis deeper than ever, the deadly attribute to redefine how we go about life in a physical way will make some things even more complicated. And therein lies the key to getting out of this, the deeper the crisis, the higher the potential to reinvent ourselves. It has already been called a ‘re-set’ but you can also argue it is a ‘re-balance’ which is where I am leaning. We will continue on our paths, no moving continents again yet, but we are going to tweak the way we work, invest and engage with others. It is a great time to do just that.