Covid-19 Economic Impact

[gopokes88]

this is way more possible than most on this thread realize ...

one good thing is the faith in the dollar will remain higher than the alternatives .. which buys the USA a little more time ...

but this is not good ..

Until people figure out Bitcoin. It can't be printed. Supply can't be unilaterally increased in a panic. It runs on the most secure computer network in the world because it's decentralized.

There's a greater than 0 chance it gains serious steam as a global safe haven and currency.

[mugofbeer]

Thanks bud.

I took a 50% pay cut yesterday.
I laid off 12 people who helped me build a company.
The company probably has revenue till April, at which point we go into hibernation mode.
I'll be out of my house by the end of summer to preserve cash. (assuming I can sell it)

My job opportunities coming out of college were toast because of the 2008 meltdown because boomers bought things they couldn't afford with easy credit.

But yeah I'm speaking because I'm mad at my dad or something.

I understand your pain and don't minimize it a bit, but lashing out at people - 99.99% of whom have nothing to do with what you refer to is only perpetuating a stereotype of what I think is your general age group.

Do you think Baby Boomers have had it easy?

We had to grow up in a time when nuclear war was a realistic and daily threat.

We had to watch as the Russians took us to the brink with the Cuban Missle Crisis

We had to go to Vietnam (not me, personally, but 2 of my older brothers), a horrid war that few of my generation wanted to be in and was far more deadly than any wars you have experienced.

I had to go to public school at a time of forced integration. I've seen racial fights and stabbings at my OKC high school as a result.

I graduated college at a time there were few jobs because of an oil bust so I opened accounts at a local Savings and Loan (an old fashioned credit union if you don't know what it is). I saw the Penn Square Bank closure, the total collapse of the Oklahoma oil industry because of governmental overreaction and lack of FDIC action (after all, we are just Oklahoma).

I was forced to leave Oklahoma City, my friends and my family because of a lack of jobs.

I have paid a mortgage rate of 13% because that's what interest rates were in the late 1980s and I never let it go into foreclosure.

I have seen significant economic slowdowns in the 1970s brought on by quadrupling oil prices and skyrocketing interest rates and resulting in 10 years of stagnation and high inflation.

I've seen the recession of 1980 brought on intentionally by shocking the economy with even higher interest rates, causing a deep economic recession which caused the inflationary stagnation stop and resulting in the longest economic recovery in US history.

I've seen the Silicon Age start, productivity skyrocket - followed by a deep recession and dot.com bust.

I've seen multiple oil booms, and multiple oil busts - and learned the rest of the country doesn't give a **** about Oklahoma because when OK does well, gasoline prices are high everywhere else. If they go down, like they are now, that is more money in virtually everyone else's pockets.

I've seen the Savings and Loan Recession caused by Congressional Tax Law changes resulting in massive commercial and private foreclosures.

I've seen a stock market crash 2 weeks after obtaining my brokers license.

I've seen a mortgage bust caused mostly by Democrats who felt it was a "right" for everyone to own a home AND by Republican's who wanted financial deregulation.

I've seen my 401K drop 50%, twice.

I've been laid off 3 times in my life and outright fired once.

in 2008, I took a 40% pay cut and was able to keep my job. (That 2008 mortgage bust? Uhh, mostly Milennials and X'rs buying homes they couldn't afford. BBr's already had our houses.

I've had to let dozens of people go for various reasons and in various cyclical and unique economic downturns. That's one of the hardest things in the world to do when you know someone has a house and children to feed.

I've seen the end of the polio epidemic and had family members afflicted with it. This is now pretty much eradicated.

I've had the chicken pox, the measles and the mumps - no one should get those anymore.

Baby Boomer have lived through multiple measles outbreaks though there are vaccines for it. It's not Baby Boomers that refuse to get vaccinated.

Baby Boomers have lived and are still living through the HIV/AIDs epidemic - it can now, usually, be controlled.

Baby Boomers have also seen, as have Millenials, annual bird flu's, swine flu's, human flu's

We have seen MERS - I have a brother and sister in law who barely lived through this.

We have seen SARS

We have seen and are still fighting Ebola.

---------------------------------

I feel badly for you and your company but things will recover and you will survive, maybe not exactly the way you planned but you will survive.

I doubt banks will foreclose on your house because FNMA and Freddie Mac have said they won't for the foreseeable future and they own most mortgage loans. Those owned by large banks likely will have a decent grace period, too, because of experience from the 2008-10 mortgage bust and governmental and consumer pressure.

This Coronavirus is not your fault nor the fault of anyone, young or old, in this country. I could, as a Baby Boomer, a person at-risk if I were to get it because of immunity issues related to a previous illness, look at multiple issues above and blame it on Gen-X's, minorities, women, white men, gay men, people from overseas, people who eat wild animals and cause virus's to mutate, and many, many others but I don't.

I could even look at Coronavirus and blame it on Milennials because governments at all levels are taking note they seem to have refused to stop congregating at their favorite bars and restaurants. But I don't.

Lashing out at Baby Boomers is not only factually wrong but short-sighted and ignorant. In the words of Baby Boomer John Mellencamp:

Days turn to minutes and minutes to memories
Life sweeps away the dreams that we have planned
You are young and you are the future
So suck it up and tough it out and be the best you can

To finalize, even though times are tough now, don't take for granted what every generation has given you.

My only child is away at college (for now) but is constantly in my thoughts. My parent's both died in the last couple of years and I would give everything I have to spend a few more years with them.

[mugofbeer]

Until people figure out Bitcoin. It can't be printed. Supply can't be unilaterally increased in a panic. It runs on the most secure computer network in the world because it's decentralized.

There's a greater than 0 chance it gains serious steam as a global safe haven and currency.

Cryptocurrency is also the leading way to use, hide and transfer money illicitly. The decentralized computer network makes it also the hardest-to-trace and a highly used currency for illegal purposes.

[gopokes88]

Cryptocurrency is also the leading way to use, hide and transfer money illicitly. The decentralized computer network makes it also the hardest-to-trace and a highly used currency for illegal purposes.

Correct.

No one has every used a dollar bill for something illegal.

[mugofbeer]

Correct.

No one has every used a dollar bill for something illegal.

Country-backed currency transactions can generally be traced. Crypto-currency, by it's design, cannot.

[Eric]

I understand your pain and don't minimize it a bit, but lashing out at people - 99.99% of whom have nothing to do with what you refer to is only perpetuating a stereotype of what I think is your general age group.

Do you think Baby Boomers have had it easy?

We had to grow up in a time when nuclear war was a realistic and daily threat.

We had to watch as the Russians took us to the brink with the Cuban Missle Crisis

We had to go to Vietnam (not me, personally, but 2 of my older brothers), a horrid war that few of my generation wanted to be in and was far more deadly than any wars you have experienced.

I had to go to public school at a time of forced integration. I've seen racial fights and stabbings at my OKC high school as a result.

I graduated college at a time there were few jobs because of an oil bust so I opened accounts at a local Savings and Loan (an old fashioned credit union if you don't know what it is). I saw the Penn Square Bank closure, the total collapse of the Oklahoma oil industry because of governmental overreaction and lack of FDIC action (after all, we are just Oklahoma).

I was forced to leave Oklahoma City, my friends and my family because of a lack of jobs.

I have paid a mortgage rate of 13% because that's what interest rates were in the late 1980s and I never let it go into foreclosure.

I have seen significant economic slowdowns in the 1970s brought on by quadrupling oil prices and skyrocketing interest rates and resulting in 10 years of stagnation and high inflation.

I've seen the recession of 1980 brought on intentionally by shocking the economy with even higher interest rates, causing a deep economic recession which caused the inflationary stagnation stop and resulting in the longest economic recovery in US history.

I've seen the Silicon Age start, productivity skyrocket - followed by a deep recession and dot.com bust.

I've seen multiple oil booms, and multiple oil busts - and learned the rest of the country doesn't give a **** about Oklahoma because when OK does well, gasoline prices are high everywhere else. If they go down, like they are now, that is more money in virtually everyone else's pockets.

I've seen the Savings and Loan Recession caused by Congressional Tax Law changes resulting in massive commercial and private foreclosures.

I've seen a stock market crash 2 weeks after obtaining my brokers license.

I've seen a mortgage bust caused mostly by Democrats who felt it was a "right" for everyone to own a home AND by Republican's who wanted financial deregulation.

I've seen my 401K drop 50%, twice.

I've been laid off 3 times in my life and outright fired once.

in 2008, I took a 40% pay cut and was able to keep my job. (That 2008 mortgage bust? Uhh, mostly Milennials and X'rs buying homes they couldn't afford. BBr's already had our houses.

I've had to let dozens of people go for various reasons and in various cyclical and unique economic downturns. That's one of the hardest things in the world to do when you know someone has a house and children to feed.

I've seen the end of the polio epidemic and had family members afflicted with it. This is now pretty much eradicated.

I've had the chicken pox, the measles and the mumps - no one should get those anymore.

Baby Boomer have lived through multiple measles outbreaks though there are vaccines for it. It's not Baby Boomers that refuse to get vaccinated.

Baby Boomers have lived and are still living through the HIV/AIDs epidemic - it can now, usually, be controlled.

Baby Boomers have also seen, as have Millenials, annual bird flu's, swine flu's, human flu's

We have seen MERS - I have a brother and sister in law who barely lived through this.

We have seen SARS

We have seen and are still fighting Ebola.

---------------------------------

I feel badly for you and your company but things will recover and you will survive, maybe not exactly the way you planned but you will survive.

I doubt banks will foreclose on your house because FNMA and Freddie Mac have said they won't for the foreseeable future and they own most mortgage loans. Those owned by large banks likely will have a decent grace period, too, because of experience from the 2008-10 mortgage bust and governmental and consumer pressure.

This Coronavirus is not your fault nor the fault of anyone, young or old, in this country. I could, as a Baby Boomer, a person at-risk if I were to get it because of immunity issues related to a previous illness, look at multiple issues above and blame it on Gen-X's, minorities, women, white men, gay men, people from overseas, people who eat wild animals and cause virus's to mutate, and many, many others but I don't.

I could even look at Coronavirus and blame it on Milennials because governments at all levels are taking note they seem to have refused to stop congregating at their favorite bars and restaurants. But I don't.

Lashing out at Baby Boomers is not only factually wrong but short-sighted and ignorant. In the words of Baby Boomer John Mellencamp:

Days turn to minutes and minutes to memories
Life sweeps away the dreams that we have planned
You are young and you are the future
So suck it up and tough it out and be the best you can

To finalize, even though times are tough now, don't take for granted what every generation has given you.

My only child is away at college (for now) but is constantly in my thoughts. My parent's both died in the last couple of years and I would give everything I have to spend a few more years with them.

If you dangle cheap money in front of people they will take it. I don't blame the younger generation for doing what humans do. I place more blame on the lender.

Lending is a dirty business anyway.

[Plutonic Panda]

Crypto currency is a joke and the day it is banned the world becomes a better place.

[mugofbeer]

If you dangle cheap money in front of people they will take it. I don't blame the younger generation for doing what humans do. I place more blame on the lender.

Lending is a dirty business anyway.

Trust me, I've lived it my entire adult life. Anything to do with the business of money is easily corruptible and easily a dirty business.

Blame is an individual matter or governmental. Not generational.

If you blame Baby Boomers for all the woes of today, you do nothing but perpetuate an undeserved stereotype - like saying all Milennials are doped-up snowflakes who think the world should be sugar-coated, comfortable and safe. Or all Milennial men wear hipster beards and man-buns who are lazy, self-absorbed narcissists.

In this case, someone is lashing out at a generation who doesn't know a thing about what that generation went through.

And, might I say, Baby Boomers really don't have a clue about what the Greatest Generation went through in their lives. My Dad didn't have indoor plumbing when he was a child - yet people today area panicking over toilet paper.

[Mr. Blue Sky]

I understand your pain and don't minimize it a bit, but lashing out at people - 99.99% of whom have nothing to do with what you refer to is only perpetuating a stereotype of what I think is your general age group.

Do you think Baby Boomers have had it easy?

We had to grow up in a time when nuclear war was a realistic and daily threat.

We had to watch as the Russians took us to the brink with the Cuban Missle Crisis

We had to go to Vietnam (not me, personally, but 2 of my older brothers), a horrid war that few of my generation wanted to be in and was far more deadly than any wars you have experienced.

I had to go to public school at a time of forced integration. I've seen racial fights and stabbings at my OKC high school as a result.

I graduated college at a time there were few jobs because of an oil bust so I opened accounts at a local Savings and Loan (an old fashioned credit union if you don't know what it is). I saw the Penn Square Bank closure, the total collapse of the Oklahoma oil industry because of governmental overreaction and lack of FDIC action (after all, we are just Oklahoma).

I was forced to leave Oklahoma City, my friends and my family because of a lack of jobs.

I have paid a mortgage rate of 13% because that's what interest rates were in the late 1980s and I never let it go into foreclosure.

I have seen significant economic slowdowns in the 1970s brought on by quadrupling oil prices and skyrocketing interest rates and resulting in 10 years of stagnation and high inflation.

I've seen the recession of 1980 brought on intentionally by shocking the economy with even higher interest rates, causing a deep economic recession which caused the inflationary stagnation stop and resulting in the longest economic recovery in US history.

I've seen the Silicon Age start, productivity skyrocket - followed by a deep recession and dot.com bust.

I've seen multiple oil booms, and multiple oil busts - and learned the rest of the country doesn't give a **** about Oklahoma because when OK does well, gasoline prices are high everywhere else. If they go down, like they are now, that is more money in virtually everyone else's pockets.

I've seen the Savings and Loan Recession caused by Congressional Tax Law changes resulting in massive commercial and private foreclosures.

I've seen a stock market crash 2 weeks after obtaining my brokers license.

I've seen a mortgage bust caused mostly by Democrats who felt it was a "right" for everyone to own a home AND by Republican's who wanted financial deregulation.

I've seen my 401K drop 50%, twice.

I've been laid off 3 times in my life and outright fired once.

in 2008, I took a 40% pay cut and was able to keep my job. (That 2008 mortgage bust? Uhh, mostly Milennials and X'rs buying homes they couldn't afford. BBr's already had our houses.

I've had to let dozens of people go for various reasons and in various cyclical and unique economic downturns. That's one of the hardest things in the world to do when you know someone has a house and children to feed.

I've seen the end of the polio epidemic and had family members afflicted with it. This is now pretty much eradicated.

I've had the chicken pox, the measles and the mumps - no one should get those anymore.

Baby Boomer have lived through multiple measles outbreaks though there are vaccines for it. It's not Baby Boomers that refuse to get vaccinated.

Baby Boomers have lived and are still living through the HIV/AIDs epidemic - it can now, usually, be controlled.

Baby Boomers have also seen, as have Millenials, annual bird flu's, swine flu's, human flu's

We have seen MERS - I have a brother and sister in law who barely lived through this.

We have seen SARS

We have seen and are still fighting Ebola.

---------------------------------

I feel badly for you and your company but things will recover and you will survive, maybe not exactly the way you planned but you will survive.

I doubt banks will foreclose on your house because FNMA and Freddie Mac have said they won't for the foreseeable future and they own most mortgage loans. Those owned by large banks likely will have a decent grace period, too, because of experience from the 2008-10 mortgage bust and governmental and consumer pressure.

This Coronavirus is not your fault nor the fault of anyone, young or old, in this country. I could, as a Baby Boomer, a person at-risk if I were to get it because of immunity issues related to a previous illness, look at multiple issues above and blame it on Gen-X's, minorities, women, white men, gay men, people from overseas, people who eat wild animals and cause virus's to mutate, and many, many others but I don't.

I could even look at Coronavirus and blame it on Milennials because governments at all levels are taking note they seem to have refused to stop congregating at their favorite bars and restaurants. But I don't.

Lashing out at Baby Boomers is not only factually wrong but short-sighted and ignorant. In the words of Baby Boomer John Mellencamp:

Days turn to minutes and minutes to memories
Life sweeps away the dreams that we have planned
You are young and you are the future
So suck it up and tough it out and be the best you can

To finalize, even though times are tough now, don't take for granted what every generation has given you.

My only child is away at college (for now) but is constantly in my thoughts. My parent's both died in the last couple of years and I would give everything I have to spend a few more years with them.

Wow. Is there a Pulitzer for forum posts? Excellent!
Pete - this is an opinion piece for the Gazette. Seriously.

[Plutonic Panda]

Mugofbeer, amazing post! Took words from my mouth. As a millennial, blaming boomers is asinine.

[Rover]

If you dangle cheap money in front of people they will take it. I don't blame the younger generation for doing what humans do. I place more blame on the lender.

Lending is a dirty business anyway.

Greed is greed...either by the lender or the borrower. Yes, some bankers are unethical... so are some car dealers, some programmers, some clothiers, some clergymen, some...... And there are plenty of borrowers out there who weren't hoodwinked and took money they knew would be hard to pay back and bought things that were silly and costly, and they looked for any reason to walk away.

News flash: Human behavior, good or bad, isn't governed by generations.

[Rover]

I am reminded of the old adage:

"Adversity doesn't make character, it reveals it. "

We will still have plenty who bind together, help each other through this, and display great character. Others will resort to blaming, name calling, selfishness, etc. Everyone's character will be revealed. Many have been already.

[mugofbeer]

I do feel badly for everyone caught up in this. It shows you how global issues can quickly affect us individually.

I urge you, as possible, support your LOCAL businesses and franchises. They can still do takeout food. Try to differentiate between the national corps and the little guy and, if you can afford to pay a touch more, get it from the little guy. Buy Oklahoma (or whatever state you are in) first!

[TheTravellers]

https://slate.com/business/2020/03/b...-everyone.html

[mugofbeer]

https://slate.com/business/2020/03/b...-everyone.html

If you've seen the pressers the last couple of days, they are trying to figure this out, within reason. They did make clear that businesses are second priority because ensuring people can eat is first. After a slow start, the "team" has a handle on what is necessary. It's just a matter of how to do it.

This situation prolonged has the potential for the makings of DE-pression. Businesses have to potential to hibernate a while. People have to eat every day.

[TheTravellers]

if you've seen the pressers the last couple of days, they are trying to figure this out, within reason. They did make clear that businesses are second priority because ensuring people can eat is first. After a slow start, the "team" has a handle on what is necessary. It's just a matter of how to do it.

This situation prolonged has the potential for the makings of de-pression. Businesses with a ton of capital in reserve or investors willing to pump money into them have the potential to hibernate a while. People have to eat every day.

fify

[Jersey Boss]

I understand your pain and don't minimize it a bit, but lashing out at people - 99.99% of whom have nothing to do with what you refer to is only perpetuating a stereotype of what I think is your general age group.

Do you think Baby Boomers have had it easy?

We had to grow up in a time when nuclear war was a realistic and daily threat.

We had to watch as the Russians took us to the brink with the Cuban Missle Crisis

We had to go to Vietnam (not me, personally, but 2 of my older brothers), a horrid war that few of my generation wanted to be in and was far more deadly than any wars you have experienced.

I had to go to public school at a time of forced integration. I've seen racial fights and stabbings at my OKC high school as a result.

I graduated college at a time there were few jobs because of an oil bust so I opened accounts at a local Savings and Loan (an old fashioned credit union if you don't know what it is). I saw the Penn Square Bank closure, the total collapse of the Oklahoma oil industry because of governmental overreaction and lack of FDIC action (after all, we are just Oklahoma).

I was forced to leave Oklahoma City, my friends and my family because of a lack of jobs.

I have paid a mortgage rate of 13% because that's what interest rates were in the late 1980s and I never let it go into foreclosure.

I have seen significant economic slowdowns in the 1970s brought on by quadrupling oil prices and skyrocketing interest rates and resulting in 10 years of stagnation and high inflation.

I've seen the recession of 1980 brought on intentionally by shocking the economy with even higher interest rates, causing a deep economic recession which caused the inflationary stagnation stop and resulting in the longest economic recovery in US history.

I've seen the Silicon Age start, productivity skyrocket - followed by a deep recession and dot.com bust.

I've seen multiple oil booms, and multiple oil busts - and learned the rest of the country doesn't give a **** about Oklahoma because when OK does well, gasoline prices are high everywhere else. If they go down, like they are now, that is more money in virtually everyone else's pockets.

I've seen the Savings and Loan Recession caused by Congressional Tax Law changes resulting in massive commercial and private foreclosures.

I've seen a stock market crash 2 weeks after obtaining my brokers license.

I've seen a mortgage bust caused mostly by Democrats who felt it was a "right" for everyone to own a home AND by Republican's who wanted financial deregulation.

I've seen my 401K drop 50%, twice.

I've been laid off 3 times in my life and outright fired once.

in 2008, I took a 40% pay cut and was able to keep my job. (That 2008 mortgage bust? Uhh, mostly Milennials and X'rs buying homes they couldn't afford. BBr's already had our houses.

I've had to let dozens of people go for various reasons and in various cyclical and unique economic downturns. That's one of the hardest things in the world to do when you know someone has a house and children to feed.

I've seen the end of the polio epidemic and had family members afflicted with it. This is now pretty much eradicated.

I've had the chicken pox, the measles and the mumps - no one should get those anymore.

Baby Boomer have lived through multiple measles outbreaks though there are vaccines for it. It's not Baby Boomers that refuse to get vaccinated.

Baby Boomers have lived and are still living through the HIV/AIDs epidemic - it can now, usually, be controlled.

Baby Boomers have also seen, as have Millenials, annual bird flu's, swine flu's, human flu's

We have seen MERS - I have a brother and sister in law who barely lived through this.

We have seen SARS

We have seen and are still fighting Ebola.

---------------------------------

I feel badly for you and your company but things will recover and you will survive, maybe not exactly the way you planned but you will survive.

I doubt banks will foreclose on your house because FNMA and Freddie Mac have said they won't for the foreseeable future and they own most mortgage loans. Those owned by large banks likely will have a decent grace period, too, because of experience from the 2008-10 mortgage bust and governmental and consumer pressure.

This Coronavirus is not your fault nor the fault of anyone, young or old, in this country. I could, as a Baby Boomer, a person at-risk if I were to get it because of immunity issues related to a previous illness, look at multiple issues above and blame it on Gen-X's, minorities, women, white men, gay men, people from overseas, people who eat wild animals and cause virus's to mutate, and many, many others but I don't.

I could even look at Coronavirus and blame it on Milennials because governments at all levels are taking note they seem to have refused to stop congregating at their favorite bars and restaurants. But I don't.

Lashing out at Baby Boomers is not only factually wrong but short-sighted and ignorant. In the words of Baby Boomer John Mellencamp:

Days turn to minutes and minutes to memories
Life sweeps away the dreams that we have planned
You are young and you are the future
So suck it up and tough it out and be the best you can

To finalize, even though times are tough now, don't take for granted what every generation has given you.

My only child is away at college (for now) but is constantly in my thoughts. My parent's both died in the last couple of years and I would give everything I have to spend a few more years with them.

And like the "dayum" you gave me recently, I give you my appreciation for this post. Thanks for keeping it a 100!

[Edmond Hausfrau]

Shift healthcare workers from areas where there is less need.

Hire unskilled labor to help out.

Healthcare workers are not equivocal. It's not like being short on pilots, where you just shift over a few flight attendants and then ask for some unskilled workers to run the flight radar thingy.
I appreciate the intent, but best to leave this to the public health sector and their experts.

[Pete]

Healthcare workers are not equivocal. It's not like being short on pilots, where you just shift over a few flight attendants and then ask for some unskilled workers to run the flight radar thingy.
I appreciate the intent, but best to leave this to the public health sector and their experts.

You asked, I was merely offering a suggestion. Of course the health sector experts will make these decisions.

And it's not uncommon to bring people into disaster areas to help out.

[Edmond Hausfrau]

I understand. Everybody is taking it on the chin right now, especially healthcare. It's scary. The best way we come out the other side is trusting that each sector of the economy has people leading who can see a way forward that minimizes panic and maximizes resources.

[gopokes88]

https://www.wsj.com/articles/the-eco...573285?mod=mhp

The Economic Rout Accelerates
The Fed and Treasury need to liquify business now or liquidate later.
By The Editorial Board
March 18, 2020 7:14 pm ET
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TEXT
221

A woman reads a closed sign at Starbucks during the global outbreak of coronavirus in Santa Monica, March 16.
PHOTO: LUCY NICHOLSON/REUTERS
You know you have a big economic problem when you roll out your grand solution and markets tank another 6%. That was the sorry story Wednesday, as the Trump Treasury disclosed its $1 trillion proposal to rescue the pandemic economy, and the panic accelerated.

The rout in stocks was the least of it. Oil fell 17% to about $20 a barrel, which is lower than it’s been since after 9/11. Financial markets also showed more stress, as asset holders liquidated holdings even in supposedly safe havens like Treasurys and gold. Money managers are shedding those traditional hedges against risk because they fear even those are too risky to hold. They’re literally selling those for cash to stick in the vault, if not a mattress.

***
Somehow we doubt this is what President Trump had in mind Tuesday when he said his rescue plan was to “go big,” by which he means spend $1 trillion. We also doubt it’s what Federal Reserve Chairman Jerome Powell intended when he told House Speaker Nancy Pelosi, according to media leaks, that she also shouldn’t worry about spending $1 trillion.


Washington Panics Over the Virus Economy

00:00 / 29:22
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But “big” is irrelevant or worse if it’s aimed at the wrong solution because you’ve misdiagnosed the problem. The market has figured out that American commerce is shutting down right before our eyes with no end in sight. Hotels are at 10% occupancy, airline flights are two-thirds-empty except for college kids on spring break who think they’ll live forever. U.S. car makers suspended production Wednesday to reduce danger to their workforce and because people don’t buy cars when they’re at home.

This national economic shutdown is accelerating by the day, and second quarter GDP could fall by 10% or more. For comparison, the worst single quarter during the financial panic was minus-8.4% at the end of 2008. Mass layoffs could begin soon in the hardest hit parts of the economy, spreading and growing if there’s no sign of recovery.

The market has also figured out that Washington is even more panicked than the markets and is throwing money at the wrong problem in the wrong way. The Fed is deploying its 2008 tools to ease constraints in money markets, and that’s useful for the economy’s financial plumbing and banks. The commercial paper facility is good for the biggest companies. But this doesn’t address the dramatic and immediate need for liquidity—financing, i.e., loans—across the breadth of American business to survive this unprecedented economic shutdown.


President Trump’s Treasury seems to think this can be solved by handing out $500 billion in cash to individual Americans in two installments in April and May. Chuck Schumer and Nancy Pelosi will see and raise. This won’t stimulate much of anything, but it might even be tolerable as a political price if it helped to sell the proper medicine for the larger economy.

Instead, Secretary Steven Mnuchin’s proposal that he sent to Senate Republicans includes $50 billion for the airlines, plus another $150 billion in loans to other affected businesses. This is too little, too cumbersome, and too political. Wait until Congress attaches strings to that cash, and wait until the bureaucrats get around to doling it out. The airlines may get rescued, perhaps with price and route controls attached, but they won’t have many passengers if a million Americans a month lose their jobs.

The same goes for another $300 billion for a new small-business loan program to be administered through private lenders, though it isn’t clear what rules would apply or how long this would take to set up. If it’s anything like the Small Business Administration, prepare for a long wait.

Former Fed Chairman Ben Bernanke has weighed in with a suggestion that the Fed buy not merely Treasury and mortgage securities but also corporate bonds. This also doesn’t directly address the business liquidity problem, and Europe has been doing this for years without much notable economic improvement.


***
You don’t calm a panic by floating ill-considered trial balloons or chanting “go big” as an illusion of proper and thoughtful action. Markets are panicked in part because they sense that our political leaders are more panicked than the public is.

You calm a panic first by looking like you know what you’re doing. You explain that this is a liquidity problem caused by an extraordinary precaution against a virus that is closing down businesses. The government needs to act to prevent the liquidity panic from becoming a solvency rout that becomes a banking crisis. And it needs to act fast.

Mr. Mnuchin should adapt his pet plans and work with Mr. Powell to set up a new facility under Section 13(3) of the Federal Reserve Act to provide financing to otherwise healthy businesses jeopardized by the pandemic shutdown against good collateral. Kevin Warsh explained this on these pages on Monday, and we elaborated Tuesday. Mr. Mnuchin and President Trump should also ask Congress to backstop this facility, in case there are losses, with that $150 billion Treasury has proposed for industry-specific rescues. The Fed should be able to set it up in a week.

This pandemic may be the biggest demand shock to the U.S. economy since World War II. The only alternative we see to this liquidity solution is if the pandemic eases faster than we think, or policy makers make a different calculation about viral versus economic risks. If we don’t do the latter, we need to do the former or suffer the economic damage.

[gopokes88]

^ they are making all the wrong decisions and setting us up for a depression.

Here’s your $2000 for 1-2 month’s mortgage.

You still have no job
No place to spend it
Your retirement is gone
And we’re going to keep you quarantined

[jonny d]

^ they are making all the wrong decisions and setting us up for a depression.

Here’s your $2000 for 1-2 month’s mortgage.

You still have no job
No place to spend it
Your retirement is gone
And we’re going to keep you quarantined

What should they do?

[gopokes88]

What should they do?

Over 60 stay in your house.

Under 60 go to work. You’ll probably get it, then you quarantine. You will get over it, and then you’ll be fine.

It’s too late now, we’ve chosen this path.

Weekly unemployment numbers shot through the roof, it reflects basically one day of restrictions. Next weeks number will fully reflect this weeks activity. Tracking suggest 2 million people were laid off this week alone. That’s the height of ‘08 recession type numbers.

The state government of Oklahoma is going to have a tough time paying all the unemployment benefits. Holt laid off a ton of people, and the oil fields are damn near a standstill.

[Ginkasa]

Over 60 stay in your house.

Under 60 go to work. You’ll probably get it, then you quarantine. You will get over it, and then you’ll be fine.

It’s too late now, we’ve chosen this path.

Weekly unemployment numbers shot through the roof, it reflects basically one day of restrictions. Next weeks number will fully reflect this weeks activity. Tracking suggest 2 million people were laid off this week alone. That’s the height of ‘08 recession type numbers.

The state government of Oklahoma is going to have a tough time paying all the unemployment benefits. Holt laid off a ton of people, and the oil fields are damn near a standstill.

First death in OK was a man in his 50s:

https://kfor.com/health/coronavirus/...officials-say/