There’s no magic switch to turn the economy back on and recovery will be a very long process, Ash Bennington and Roger Hirst said during today’s Real Vision Daily Briefing.

They said the expectation of a V-shaped rally is a misplaced hope and that overly optimistic headlines are feeding into the misconception. Hirst cautioned investors that in reality, the selloff was so massive that a bounce was inevitable.

“Is it going to bounce 62% or just the 38-50% we’ve currently got? No one really knows,” he said. “Should we be selling when we get a 62% retracement? If you didn’t get out the first time you probably should. I personally wouldn’t want to buy until we’ve made new all-time highs.”

Hirst and Bennington also discussed the challenge of quickly getting liquidity to the people who need it most. As states grapple with unemployment claims and lenders are overwhelmed with new requests, the different between policy response in the ideal world and policy response in the real world has become evident, they said.

Ultimately, this crisis didn’t happen in a vacuum, and Hirst argued that the fallout is exposing just how dysfunctional the economic status quo had become before the coronavirus emerged.

“Before all of this the overall economy was completely broken,” he said. “What the economy really loved wasn’t growth, but very low growth and government liquidity. If you look at all the best periods for the equity market over the last 10 years, it was when we nearly got to zero and the central banks panicked and produced more liquidity. The mechanism was broken but it was brilliant for equities because it was bullish.” 

“I don’t see how we can go back to that system,” Hirst said. “You can’t just throw a bunch of liquidity at it.”