WE have a raging virus ripping through the country and world and our economy is a yo yo…..one day up two days down then one up, etc.
This thing could be a society killer…..
As of March 2020, the entire world is affected by an evil with which it is incapable of dealing effectively and regarding whose duration no one can make any serious predictions. The economic repercussions of the novel coronavirus pandemic must not be understood as an ordinary problem that macroeconomics can solve or alleviate. Rather, the world could be witnessing a fundamental shift in the very nature of the global economy.
The immediate crisis is one of both supply and demand. Supply is falling because companies are closing down or reducing their workloads to protect workers from contracting COVID-19, the disease caused by the new coronavirus. Lower interest rates can’t make up the shortfall from workers who are not going to work—just as, if a factory were bombed in a war, a lower interest rate would not conjure up lost supply the following day, week, or month.
The Fed is trying desperately to curb a recession/depression and the government is also trying to prop up businesses in this time of need……but will it be enough?
As the Covid-19 pandemic worsens, it’s hard to decide which are scarier: the conversations I’m having with epidemiologists or the conversations I’m having with economists.
“This is an economic tsunami,” Mark Zandi, chief economist at Moody’s Analytics, told me. Social distancing is economic distancing. We are telling people to cease going to stores, to restaurants, to workplaces. We are insisting they stop supplying their labor, making their goods. To slow a pandemic, we are forcing a recession, perhaps a depression.
It was common, in 2008, to hear economists say that nothing had changed in the real economy. The US still had just as many workers, factories, and machines. We hadn’t lost any land or knowledge. There was no physical reason the economy was in crisis. The collapse in credit markets had changed economic behavior — businesses were afraid to invest and hire, and families were afraid or unable to spend.
Will collapse be in the cards as a result of this virus and the lack of adequate response by the government?
Trump and the Congress are trying hard to avoid the collapse….but will it be worth it?
I Read, I Write, You Know
“lego ergo scribo”