The Viral Economy

[LawBeefaroni]

That's 9.9M in two weeks.

Am I reading that right? More in the last two weeks than the entire 2008/2009 crisis?

Yes. Happy Thursday!

[RunningMn9]

To quote a sometimes wiser man than me: Holy underpants.

[Octavious]

Well now we do need to MAGA. I didn't see what needed to be fixed so badly before, but we're certainly screwed now. If only we could have seen anything in his past that would lead us to see that he has no idea what he is doing? If only....

[malchior]

Mnuchin's 20% unemployed w/o stimulus might be closer 25-30% w/ stimulus short-term and 10-15% long-term (1-2 months) as it kicks in over time. But that is just plain thumb in the air type guesses that I'm getting from economists talking about this on my feed.

[El Guapo]

Seems very likely that Trump's going to panic and start pushing to reopen the economy ASAP again.

[malchior]

Seems very likely that Trump's going to panic and start pushing to reopen the economy ASAP again.

Agreed. I have a worry there especially with the neo-sociopath economic crowds screaming from the Foxnews/WSJ editorial page universe.

[LawBeefaroni]

Markets are up primarily on Trump's oil/MBS tweet.

[Octavious]

Why the hell does anybody in the market listen to his nonsense? It's infuriating.

[malchior]

Markets are up primarily on Trump's oil/MBS tweet.

It was bullshit. This is the type of nonsense you see from pink sheet pump 'n dump con men. Luckily it's the President...

Wait...Donald Trump lying about Putin?

What??

I am *shocked* by this development.

[gameoverman]

Seems very likely that Trump's going to panic and start pushing to reopen the economy ASAP again.

I don't think it'll be that easy. In theory all the people out of work will rush back to their jobs to get their paychecks flowing again. But what happens when you start seeing your co-workers get sick and disappear? How much can you take before whatever they're paying you isn't enough? I suspect the 'save the economy' people are assuming everyone will just work like dogs and ignore the human cost. If you're living paycheck to paycheck, or making minimum wage, you might not feel it's worth it. It could trigger a large percentage of the former workforce to refuse to work, and also refuse to pay bills/rent/etc. Now what?

It sounds good, let's get the schools open. And it'll probably feel great right up until kids and teachers start dying, and parents. Who is still going to want to work when that happens? Who will want to send their kid to school when that happens?

[malchior]

Seems very likely that Trump's going to panic and start pushing to reopen the economy ASAP again.

I don't think it'll be that easy. In theory all the people out of work will rush back to their jobs to get their paychecks flowing again. But what happens when you start seeing your co-workers get sick and disappear?

Trump isn't known for having things like good ideas or plans. If he hears that the economy tanking, that people think it is his fault, that it'll hurt his re-election plans, or hurt his pocket then he'll be the strong man who "fixes" the problem. He doesn't think even beyond that to what you just said. What usually happens then is that the classic angel/devil pair appear over each shoulder. One who tries to convince him that its a bad idea and the other some know-nothing sycophant D-lister egging him on for their own personal glory. Rinse. Repeat until he does it because he can't control the urge or the angel and/or devil gets fired or exiled to the press pool (Spicer!). That is his Presidency in a nutshell. When we fret he is going to do something dumb that'll kill people this is why. We have plenty of evidence that proves that this is his decision process.

[El Guapo]

Seems very likely that Trump's going to panic and start pushing to reopen the economy ASAP again.

I don't think it'll be that easy. In theory all the people out of work will rush back to their jobs to get their paychecks flowing again. But what happens when you start seeing your co-workers get sick and disappear?

Trump isn't known for having things like good ideas or plans. If he hears that the economy tanking, that people think it is his fault, that it'll hurt his re-election plans, or hurt his pocket then he'll be the strong man who "fixes" the problem. He doesn't think even beyond that to what you just said. What usually happens then is that the classic angel/devil pair appear over each shoulder. One who tries to convince him that its a bad idea and the other some know-nothing sycophant D-lister egging him on for their own personal glory. Rinse. Repeat until he does it because he can't control the urge or the angel and/or devil gets fired or exiled to the press pool (Spicer!). That is his Presidency in a nutshell. When we fret he is going to do something dumb that'll kill people this is why. We have plenty of evidence that proves that this is his decision process.

Yeah I don't think it will work well, or that he'll even be successful in doing so. But if the current economic trends continue, he's screwed in November, and he's at least capable of grasping that.

So he'll try, but that'll mostly mean flailing about to inconsistent effect (other than getting at least a few more people killed).

But we'll see.

[YellowKing]

It's interesting in that people tend to blame the President for the economy, regardless of whether or not they actually had any real impact. In this case, we actually have direct evidence that this administration's failure to manage COVID-19 is what torpedoed the economy. It's a double whammy - not only will Trump be blamed, we have the receipts.

[Unagi]

It's interesting in that people tend to blame the President for the economy, regardless of whether or not they actually had any real impact. In this case, we actually have direct evidence that this administration's failure to manage COVID-19 is what torpedoed the economy. It's a double whammy - not only will Trump be blamed, we have the receipts.

Those that don’t blame him, will not accept our receipts as evidence.

[YellowKing]

True, but we don't need to change their minds. Just leaners and fence-sitters.

[Unagi]

True, but we don't need to change their minds. Just leaners and fence-sitters.

I wonder how these people can exist. I feel like they could also be labeled: the can't make sense of anything, the seriously don't care, and the I'm afraid to say I can't socially defend my reasons for voting for trump so I won't tell you that

[gameoverman]

It's interesting in that people tend to blame the President for the economy, regardless of whether or not they actually had any real impact. In this case, we actually have direct evidence that this administration's failure to manage COVID-19 is what torpedoed the economy. It's a double whammy - not only will Trump be blamed, we have the receipts.

Those that don’t blame him, will not accept our receipts as evidence.

I wonder if that is a permanent loyalty or if there is a breaking point. If someone is still working, still getting paid, and doesn't personally know anyone who has been infected by this virus much less died from it, it's easy for them to stay loyal. It might not make sense from a facts and logic standpoint, but their lives are not screwed so they can view it his way. If the economy continues to nose dive, if for instance the lack of taxes being collected starts to strangle state economies so that even state employees start getting laid off en masse, that might be a slap in the face to people. It might be the slap that wakes them up.

There could come a point where his base is suffering but still are keeping the faith. At this point they will expect him to step up for them and do something to fix things for them. When he fails to save his base from their fate, is that faith shaken? It might be. Someone who feels you betrayed their faith can turn on you pretty hard.

[Unagi]

This is why the cult-like devotion to Trump is sincerely frightening.

People (humans) apparently will go to enormous lengths to show their devotion, if their psychology is committed enough, committed through a ramp-up of previous denials and their blind faith even in the teeth of evidence against their dear leader.



Some, certainly will leave the cult. Many wont.

[YellowKing]

There could come a point where his base is suffering but still are keeping the faith. At this point they will expect him to step up for them and do something to fix things for them. When he fails to save his base from their fate, is that faith shaken? It might be. Someone who feels you betrayed their faith can turn on you pretty hard.

And I think it's also important to remember that a lot of Trump voters weren't his base. They were disenchanted blue collar workers who were usually reliable Democrats, people who just hated Hillary, people who were disgusted with both parties and wanted an outsider, etc. And indirectly, the people who stayed home or voted third party helped him squeak by with the win.

There's little to no guarantee that those same voters will be willing to vote for this trainwreck again.

[gameoverman]

There could come a point where his base is suffering but still are keeping the faith. At this point they will expect him to step up for them and do something to fix things for them. When he fails to save his base from their fate, is that faith shaken? It might be. Someone who feels you betrayed their faith can turn on you pretty hard.

And I think it's also important to remember that a lot of Trump voters weren't his base. They were disenchanted blue collar workers who were usually reliable Democrats, people who just hated Hillary, people who were disgusted with both parties and wanted an outsider, etc. And indirectly, the people who stayed home or voted third party helped him squeak by with the win.

There's little to no guarantee that those same voters will be willing to vote for this trainwreck again.

I'm glad you mentioned that because I had forgotten that aspect. There certainly was a great deal of voting against Hilary. It's going to be hard, if not impossible, for Trump's people to tap into an equivalent deep seated hate for his upcoming opponent. For one thing, I don't think Biden or even Sanders generate that level of personal animosity.

[Kurth]

Serious question: What measures could this administration have taken that would have prevented the pandemic from significantly tanking the economy?

From where I sit, there’s plenty to blame Trump for interns of his botched and negligent response to COVID-19, but does anyone really think the current state of the economy is Trump’s fault?

My understanding is that so much of what he did wrong was moving too slowly to shut things down. But shutting things down is what’s caused the current economic situation.

I just don’t see how there was any approach to this that wouldn’t have tanked the economy and caused skyrocketing unemployment and economic disruption.

[RunningMn9]

Serious question: What measures could this administration have taken that would have prevented the pandemic from significantly tanking the economy?

I feel like Smoove_B has been answering this question over and over again for a while, no? This didn't have to be an unrestrained epidemic in the US. If it wasn't an unrestrained epidemic, it likely wouldn't have tanked the economy.

To paraphrase what I think Smoove will say....TESTING, TESTING, TESTING. Once we were too late testing, we were then too late to enforce social distancing. All of our decisions have been weeks too late.

[Smoove_B]

IF we had testing and had been actively conducting sentinel surveillance in major cities starting in January, it's possible that targeted/precision shelter-in-place orders could have been issued to try and minimize spread. There absolutely would have been economic fallout, but ideally it would have been much more controlled. Instead, we now have to give broader orders and hope people listen and/or can comply. Instead the virus was allowed to spread mostly unnoticed for 6+ weeks, and in some states its still spreading without anyone watching. That's ultimately the message here - this was going to be bad no matter what. However, it's orders of magnitude worse because of inaction at a federal level. Lives lost. The economy. The overall cost - everything goes back to what was known in January (or arguably what was done in 2018) and no one in the Trump administration thought it was worth preparing for.

EDIT: Apparently I have a tell.

[Kurth]

Yeah, the testing misses are clear. I guess I just assumed that the result of that testing would have been an earlier understanding of just how widespread the virus was in the U.S. and that that info would have led to implementing shutdowns and stay at home orders earlier.

I get that the timing here is big and is a significant factor in making things worse. But I still have a hard time seeing any outcome here that wouldn’t have done major economic damage. To quote Smoove, this was going to be bad no matter what.

[Unagi]

From where I sit, there’s plenty to blame Trump for interns of his botched and negligent response to COVID-19, but does anyone really think the current state of the economy is Trump’s fault?

Do you think the stock market, in times of crisis like this, reflect the outlook and trust in our leadership?

To me, your question is like asking "Does anyone think this parachute would be more effective in a thicker atmosphere?" It's without a doubt that our current stock-market (which is not == the economy) woes are made worse by the man at the helm.

[Kurth]

From where I sit, there’s plenty to blame Trump for interns of his botched and negligent response to COVID-19, but does anyone really think the current state of the economy is Trump’s fault?

Do you think the stock market, in times of crisis like this, reflect the outlook and trust in our leadership?

To me, your question is like asking "Does anyone think this parachute would be more effective in a thicker atmosphere?" It's without a doubt that our current stock-market (which is not == the economy) woes are made worse by the man at the helm.

100% agree that the stock market swings are made worse by uncertainty tied to a chaotic an unpredictable administration. If we had a stable hand on the tiller, the stock market (and everything else) would be less inclined to massive swings.

But I also 100% agree that the stock market is not the economy. I'm talking more about actual fundamentals like GDP, unemployment, etc., which I think were going to take a massive hit because of COVID-19 under even the best leadership.

Edit to make clear: Probably obvious, but I've got no claim to any expertise in economics - got my worst college grade in International Econ, in fact (a D+, which, after retaking the class, only improved to a B-). So feel free to tell me I'm full of shit here, and I'll take it with an open mind.

[Unagi]

I am in no position.

And I'm certainly not trying to say that the actual fundamentals wouldn't have taken a hit, no mater who was in place, but I do think they (the administration) are in a position to mitigate economic disaster through insight, a little foresight, and deference to experts, all things that this administration seeming scoffs at.

[malchior]

I think it is pretty complicated but you have several components. You have the crisis management angle which he definitely flubbed badly. As a thought experiment for this. Suppose we had a competent, mentally agile President. It is almost certain that President wouldn't have sat on their hands worrying about reelection in 9 months. Or micromanaged whether a cruise ship should be allowed to dock. They would have seen all the red alarms blaring and at least taken it seriously. Much of his administration's response ties back to how he downplayed this. He sets the priorities for his people. They all followed his lead here.

What he should have done was attempt to scope out the problem early and make intelligent, informed decisions. Instead Trump was directing resources and attention *away* from where they needed to be. In a crisis, early decisive action even if it is wrong is almost always better than doing nothing. Why? You still learn from the wrong thing. If you do nothing, you often learn absolutely nothing at all and lose opportunities to manage the crisis. And then he blew past managing it to reacting extremely late to the crisis. Essentially the worst possible case. This will eventually be a text book example of what *not to do in a crisis*.

As a practical example, consider the failed testing regime. In other more nimble nations, they reached out to experts in private industry to solution testing. Japan and South Korea both did an excellent job of this. They aren't out of the woods yet but they haven't had to resort to draconian shutdowns of their economies and they had more exposure to China. Outside the testing regime, you have the medical equipment response. China realized the risk early and started sourcing ventilators very early in their response cycle. We did none of this and instead diverted attention away and exposed rampant mismanagement in the Trump administration. They let maintenance contracts expire on medical equipment, they don't have good inventories, etc.

Then you have the economic side. Let's say this alternate administration wasn't full of the hacks, clowns, and charlatans. Instead, they have leading experts on economics, legislation, law and order issues, and could have proactively managed the economic response instead of all the emergency last ditch efforts that had snow ball effects that reverberated well outside of Wall Street. The administration and the Fed could have war gamed out what happens if we have to shut down parts of the economy. Maybe we could have done it in a more targeted fashion. Who knows? The de facto response was that Trump left it up to the Governor's who didn't have good data. That data and coordination was expected to come from the Federal government. That forced them into worst case scenarios because they were blind. We'll never know what could have been done but perhaps we didn't need to do much of this had we had that two months to prepare.

Surely it is true that even if we had prepared for those two months, the bad scenario could have happened anyway. However, you could imagine the President going to Congress with a plan of attack. This White House did do this to some effect but a competent President should have been using the bully pulpit to cut through all the horse shit and saved us time and focused our efforts. Instead, Congress played an abbreviated version of all its usual games (e.g. secret 1% tax cuts/grandstanding/delay tactics) and still likely got it wrong. An actual strong President could have helped with this.

Anyway, I think this gets the idea across. There were a lot of better paths that weren't even considered because of Trump. He thought his simplistic solutions such as the partial China travel ban solved the problem when they didn't even make much of a dent. This crisis was so far beyond him. Honestly it may have been too much for other President's as well but it is hard to think that anyone could have managed it worse than this man. And throughout it he showed all his true colors out in the open.

[Zarathud]

Trump STILL has no plan to stop or slow the disease, or get people back to work. That makes everything worse.

The bully pulpit of the Presidency should be to provide leadership, not focus on ratings.

A leader would say “We’ve identified some of the problem. X, Y and Z are in shutdown for 4 weeks so we can get ventilators built. That means many people aren’t working and business isn’t earning. So we’re going to have a program that pays the W-2 wages of affected businesses for 3 weeks. That should mean most of the businesses stay open so the economy will survive.”

Or even “A bunch of Americans have already been sick and can go back to work. So let’s test them so they can keep the lights on.”

Even Stalin had a plan: “There be fewer but healthier Americans.”

[gameoverman]

Serious question: What measures could this administration have taken that would have prevented the pandemic from significantly tanking the economy

I read on Buzzfeed a comment about how not having shelter in place in all states at the same time is like having a peeing section in your swimming pool. The first measure would have been to get everyone on the same page at the start and act decisively. This 'it's not a big deal' 'it's kinda a big deal' 'let's open everything up by Easter' approach is not decisive. Plus this administration seems content to let states do their own thing, so you have people peeing in one section of the pool as if that has no effect on the other people in the pool, the non pee-ers.

[YellowKing]

The sad fact is that the only reason we’re in the 6th circle of Hell and not the 7th right now is because of the decisive action taken by many state and local officials in spite of Trump, not because of him.

I still have yet to see anything helpful come out of this administration other than guidelines our state had already adopted days if not weeks earlier.

[Kraken]

For starters, maybe don't fire everybody who's smarter than you are. Go back to playing golf and watching the gorilla channel. Do your little standups for the cameras and let the adults handle the details.

[malchior]

As it stands there is a good time the USPS collapses by summer. Positive side note for the GOP you can't have voter fraud on mail in ballots without mail!

[El Guapo]

As it stands there is a good time the USPS collapses by summer. Positive side note for the GOP you can't have voter fraud on mail in ballots without mail!

I get this, but if the USPS collapses in the summer, or before, that seems bad for Trump and the GOP. If the mail stops showing up, people are going to take that as a sign that things are massively wrong, and they're disproportionately going to blame those in power. And it's hard to see how they could get by without fixing the mail problem for that long.

Seems like what they would want is for the mail to collapse in late October. They could absolutely get by without fixing the mail for a couple weeks.

[Kraken]

Seems like what they would want is for the mail to collapse in late October. They could absolutely get by without fixing the mail for a couple weeks.

Shhhhh. Don't give them ideas like just enough emergency funding to make to October.

[Smoove_B]

If only the airline industry could do rural-route mail delivery.

Not good Gregg, but it is what it is. Have to save the airlines!

Every day he definitively demonstrates why he is the worst President in the history of our country.

[malchior]

As it stands there is a good time the USPS collapses by summer. Positive side note for the GOP you can't have voter fraud on mail in ballots without mail!

I get this, but if the USPS collapses in the summer, or before, that seems bad for Trump and the GOP. If the mail stops showing up, people are going to take that as a sign that things are massively wrong, and they're disproportionately going to blame those in power.

Unless he convinces the mob that it is the libs fault. He doesn't absorb blame for anything where it matters.

And it's hard to see how they could get by without fixing the mail problem for that long.

I get what you're saying but we've seen how bad things decline and nothing happens. I don't know what the 'last straw' is. Is this it? Maybe but bake in that the cult will just accept whatever excuse they come up with on the back of an envelope. And consider they are the only ones that matter.

Seems like what they would want is for the mail to collapse in late October. They could absolutely get by without fixing the mail for a couple weeks.

That would be optimal but maybe this is a don't waste a crisis moment.

[LawBeefaroni]

Everyone, don't panic. Private equity will be OK!

Airlines, hotels, and restaurants—all of whose revenues have cratered in the wake of sweeping stay-home orders—have engaged in Hunger Games–like lobbying to cash in on the CARES Act, making their case for a share of the disaster relief. But among those angling for a federal handout is one of the wealthiest sectors of the American economy: private equity. These firms not only have a record $1.5 trillion in cash on the sidelines, waiting to be invested, but their CEOs are among America’s richest executives. So why should they be permitted to raid the federal Treasury in a time of crisis?

The reason is as simple as it is galling: while great private fortunes, such as that of Blackstone’s Stephen Schwarzman (net worth: $17.5 billion and Apollo’s Leon Black ($7.5 billion), have been made from private equity’s march through the world, its losses, to a remarkable degree, will belong to all of us. That’s because some of the major investors in private-equity funds are public pension plans; at Blackstone, roughly one-third of the firm’s money comes from retirement plans set up to provide for over 30 million working-class Americans, according to someone with knowledge of its portfolio. So if Blackstone’s investments crater, the teachers, firefighters, and health care workers who are counting on those investments to generate the returns necessary to pay their pensions will suffer. Think of private-equity firms as the banks of the corona crisis: They are, for better or worse, too big to fail.

These guys take huge risks with pension fund money, at no actual risk to themselves. Easy money to get when you take the pension managers on junkets, get them laid, whatever. If it works out they look like geniuses and get more business. If it doesn't, they get bailed out because pensions are sacred. Either way they get paid out the ass with fees so they win no matter what.

[LawBeefaroni]

Nation’s Largest Pension Fund Stopped Paying for Crash Insurance — in January

The California Public Employees’ Retirement System ended its program to protect against stock-market crashes shortly before it likely would have paid off, the fund confirmed Thursday.

...

Unwinding the explicit hedging program cost CalPERS an estimated $1 billion payday, Bloomberg reported.

[Isgrimnur]