I have no idea how far the latest coronavirus will spread and how badly it will affect our economy and, therefore, profits and dividends.

But right now hundreds of billions of dollars remain “wiped on” the local market.

As sure as bears defecate in the woods and constantly forecast doom,  the market falling a few per cent means lots of “$X billion wiped off market” headlines.

The fall of a bit more than six per cent over the past five days certainly makes for big numbers and an ugly graph.

Australia’s All Ordinaries index over the past five days. Photo: ASX

If anyone went from no shares to 100 per cent equities at the start of last week, these would be very painful days.

Such a person might exist, but for 99 per cent of us, it’s a longer timeframe that counts.

Change the above graph from five days to five years and, hey presto, all the recent drama disappears.

Australia’s All Ordinaries index over the past five years. Photo: ASX

This is not meant to diminish the danger of the coronavirus running riot, but to keep some perspective as the scary headlines mount.

A common observation is that equity markets were due for a decent correction anyway as they have been pushed hard and fast by cheap money.

It was a sign that things had become more than a little silly that our market seemed to ignore the virus for as long as it did.

But the danger of a coronavirus pandemic is one hell of a trigger for a correction, particularly when we have a government that continues to show no sign of assisting the economy when it needs it.

We can all speculate endlessly about how serious an impact the threatened pandemic would have, but on what is presently known about mortality rates, the world as we know it would not come to an end.

At the corporate level, the usual rules for any financial crisis would apply: Solid companies with conservative borrowings would dip but then recover as the virus passed, while the highly-geared would fail.

Companies with little or no free cashflow hit the wall when revenue shrinks as a result of people not spending.

Fortunately, corporate Australia as a whole is not heavily geared.

The Reserve Bank has been begging Australian business to borrow and invest, but with little success.

It’s government policy that the major debt load in Australia is carried by households.

The biggest economic threat then is a rise in unemployment, which is why good government must be prepared to do whatever it takes to stop unemployment heading towards double digits again.

Like our corporates, the Australian government is not carrying much debt. If the need arises, it can easily afford to spend big to keep unemployment manageable.

The problem for Australia is that there is no sign this weirdly doctrinaire and discordant federal government has the ability to or interest in moving fast or far enough to prevent a crisis becoming a disaster.

After all, this is a government that can’t even produce a national energy plan, that is incapable of admitting zero net CO2 emissions by 2050 is a minimum, and seems to spend most of its planning and administrative efforts on rorting multiple grants programs for political benefit.

Scott Morrison and Josh Frydenberg are still more interested in clinging to the hope of a near-surplus than preparing to head off a possible recession.

While I was contemplating this sad reality, Crikey’s Bernard Keane and Glenn Dyer had already published the key stupidity: “Scott Morrison and Josh Frydenberg want you to know that if the economy tips into recession and the budget surplus they not merely promised but claimed had already been delivered fails to materialise, it’s the fault of coronavirus.

“It’s not their fault – despite the fact that they refuse to show economic leadership of any kind.

“Yesterday, as share markets around the world slumped, the PM and the Treasurer called a media conference to say exactly that: it won’t be their fault, even though they don’t propose to do anything and certainly won’t undertake any fiscal response to help the economy.

“They did not, of course, admit the surplus has vanished. They’re still hoping something will turn up on that front.”

Tweet from @BernardKeane

It’s that leadership and trust thing again – it’s just not there.

The loonier end of the Coalition still works hard on propagating the myth that Australia didn’t need the fiscal stimulus package Labor delivered when the GFC hit.

Like anti-vaxxers and climate denialists, they can’t be convinced otherwise.

It’s a very simple matter to point to how low our GDP growth fell during the GFC and then subtract how much of that low growth came from public spending to see a seriously negative figure – and one that would snowball from the effects of high unemployment – but such people prefer their mythology to mathematics.

The government’s leadership was on display with the bushfire response – it was late, way too late.

Just as the government would not act on the warnings about the approaching summer being horrendous, it continued to repudiate warnings that our economy needed fiscal help before the coronavirus emerged.

And it still is.

There are immediate and overdue policy initiatives that should already be in place to support consumption and investment when the Reserve Bank is down to its final couple of shots from a peashooter of dubious value.

Everyone but Scott Morrison and Murdoch’s tabloids knows increasing Newstart would be both humane and good policy.

Similarly, a real injection of federal money into social and affordable housing (instead of a little window dressing) in the last budget would have headed off the worst of the housing construction downturn.

Failing to adequately manage an economy in relatively good times, it’s dispiriting to think what the Morrison/Frydenberg government will or won’t be capable of doing in an economic crisis.