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| This Is the Only Way to End the Coronavirus Financial Panic | This Is the Only Way to End the Coronavirus Financial Panic |
| (1 day later) | |
| The Covid-19 crisis will take time to be solved by science. The economic crisis can be solved right now. | The Covid-19 crisis will take time to be solved by science. The economic crisis can be solved right now. |
| With President Trump proposing to send $1,000 checks to every American and industries, like the airlines, lining up for bailouts, there is a better way to arrest the panic. | With President Trump proposing to send $1,000 checks to every American and industries, like the airlines, lining up for bailouts, there is a better way to arrest the panic. |
| I chronicled the 2008 financial crisis and spent the past week on back-to-back telephone calls with many of the experts who crafted that bailout, as well as the programs put in place after 9/11, Katrina, the BP oil spill and other crises. Now here is a thought experiment that could prevent what is quickly looking like the next Great Recession or even, dare it be mentioned, depression. | I chronicled the 2008 financial crisis and spent the past week on back-to-back telephone calls with many of the experts who crafted that bailout, as well as the programs put in place after 9/11, Katrina, the BP oil spill and other crises. Now here is a thought experiment that could prevent what is quickly looking like the next Great Recession or even, dare it be mentioned, depression. |
| The fix: The government could offer every American business, large and small, and every self-employed — and gig — worker a no-interest “bridge loan” guaranteed for the duration of the crisis to be paid back over a five-year period. The only condition of the loan to businesses would be that companies continue to employ at least 90 percent of their work force at the same wage that they did before the crisis. And it would be retroactive, so any workers who have been laid off in the past two weeks because of the crisis would be reinstated. | The fix: The government could offer every American business, large and small, and every self-employed — and gig — worker a no-interest “bridge loan” guaranteed for the duration of the crisis to be paid back over a five-year period. The only condition of the loan to businesses would be that companies continue to employ at least 90 percent of their work force at the same wage that they did before the crisis. And it would be retroactive, so any workers who have been laid off in the past two weeks because of the crisis would be reinstated. |
| The program would keep virtually everyone employed — and keep companies, from airlines to restaurants, in business without picking winners and losers. | The program would keep virtually everyone employed — and keep companies, from airlines to restaurants, in business without picking winners and losers. |
| It would immediately create a sense of confidence and relief during these tumultuous times that once the scourge of the coronavirus was contained, life would return to some semblance of normal. It would also help encourage people to stay home and practice social distancing without feeling that they would risk losing their job — the only way to slow this disease. | It would immediately create a sense of confidence and relief during these tumultuous times that once the scourge of the coronavirus was contained, life would return to some semblance of normal. It would also help encourage people to stay home and practice social distancing without feeling that they would risk losing their job — the only way to slow this disease. |
| The price tag? A lot. Some back-of-the-envelope math suggests that many trillions — that’s with a “t” — of dollars would go out in loans if this crisis lasted three months, possibly as much as $10 trillion. That’s half the size of America’s gross domestic product. And assuming 20 percent of it is never repaid, it could cost taxpayers hundreds of billions if not several trillions. I get that. But with interest rates near zero, there is no better time to borrow against the fundamental strength of the U.S. economy, spend the money and prevent years of economic damage that would ultimately be far, far costlier. | The price tag? A lot. Some back-of-the-envelope math suggests that many trillions — that’s with a “t” — of dollars would go out in loans if this crisis lasted three months, possibly as much as $10 trillion. That’s half the size of America’s gross domestic product. And assuming 20 percent of it is never repaid, it could cost taxpayers hundreds of billions if not several trillions. I get that. But with interest rates near zero, there is no better time to borrow against the fundamental strength of the U.S. economy, spend the money and prevent years of economic damage that would ultimately be far, far costlier. |
| The alternatives being proposed may be worse — because the size of the bailouts may be too small and come too late, and because the politics of targeted bailouts at specific industries and businesses would create a morass of anger and distrust. | The alternatives being proposed may be worse — because the size of the bailouts may be too small and come too late, and because the politics of targeted bailouts at specific industries and businesses would create a morass of anger and distrust. |
| Ultimately, the plan being suggested here is the equivalent of a full-employment act for the country during the crisis. | Ultimately, the plan being suggested here is the equivalent of a full-employment act for the country during the crisis. |
| Some politicians have argued that bailouts should be directed only toward individuals and families, rather than companies. After all, we don’t want a repeat of 2008, when so much of the country felt the bailouts benefited Wall Street banks but not Main Street businesses. | Some politicians have argued that bailouts should be directed only toward individuals and families, rather than companies. After all, we don’t want a repeat of 2008, when so much of the country felt the bailouts benefited Wall Street banks but not Main Street businesses. |
| But the truth is that sending checks directly doesn’t solve the problem: People want a paycheck and a sense of confidence that when the crisis subsides they will still be employed. And one-time check writing — or even a series of checks — won’t restart the economy when the crisis is contained because so many companies would be forced to file bankruptcy without immediate loans. | But the truth is that sending checks directly doesn’t solve the problem: People want a paycheck and a sense of confidence that when the crisis subsides they will still be employed. And one-time check writing — or even a series of checks — won’t restart the economy when the crisis is contained because so many companies would be forced to file bankruptcy without immediate loans. |
| The proposal here, a shock and awe plan, avoids that. | The proposal here, a shock and awe plan, avoids that. |
| The most challenging part would be executing it. | The most challenging part would be executing it. |
| Who would make the loans? The government doesn’t have the expertise or people to make it happen. | Who would make the loans? The government doesn’t have the expertise or people to make it happen. |
| The easiest way to do it would be to have the banks, which already have a relationship with companies and individuals, administer the program, guaranteed by the government. Banking may not be the most popular industry, but it could get the job done in short order. In truth, the banks should volunteer to administer the plan for free as a gift to the country for the bailouts of 2008. Besides, if the economy goes down, so do they. | The easiest way to do it would be to have the banks, which already have a relationship with companies and individuals, administer the program, guaranteed by the government. Banking may not be the most popular industry, but it could get the job done in short order. In truth, the banks should volunteer to administer the plan for free as a gift to the country for the bailouts of 2008. Besides, if the economy goes down, so do they. |
| Self-employed individuals, including contractors, gig workers and others, would be provided no-interest loans based on their provable income in the previous 12 months. And companies would have to be restricted from using the loans to “refinance” past loans or use the money for stock buybacks. But other than that, there should be few restrictions, lest individuals and companies refuse to take the money. | Self-employed individuals, including contractors, gig workers and others, would be provided no-interest loans based on their provable income in the previous 12 months. And companies would have to be restricted from using the loans to “refinance” past loans or use the money for stock buybacks. But other than that, there should be few restrictions, lest individuals and companies refuse to take the money. |
| Updated June 16, 2020 | |
| The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. | |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. | Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. | Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. |
| The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. | The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| In a crisis, getting buy-in matters. And time is the enemy. At the rate of the economic slowdown in just the travel industry alone, unemployment would jump to 6 percent right now, and Treasury Secretary Steven Mnuchin is warning that unemployment could rise to 20 percent, Depression-era levels. | In a crisis, getting buy-in matters. And time is the enemy. At the rate of the economic slowdown in just the travel industry alone, unemployment would jump to 6 percent right now, and Treasury Secretary Steven Mnuchin is warning that unemployment could rise to 20 percent, Depression-era levels. |
| Would there be fraud and abuse along the way? Yep. Is that acceptable? Of course the answer is no, but given the scale of this crisis, it may just be part of the price paid. | Would there be fraud and abuse along the way? Yep. Is that acceptable? Of course the answer is no, but given the scale of this crisis, it may just be part of the price paid. |
| Admittedly, if you hated the economic system before the Covid-19 crisis — inequality, executive compensation and the like — this proposal wouldn’t change it. If you believe the airline industry is terrible and deserves to file for bankruptcy, this plan wouldn’t make that happen, either. If you feel that we are once again privatizing profits and socializing losses, that wouldn’t be wrong. | Admittedly, if you hated the economic system before the Covid-19 crisis — inequality, executive compensation and the like — this proposal wouldn’t change it. If you believe the airline industry is terrible and deserves to file for bankruptcy, this plan wouldn’t make that happen, either. If you feel that we are once again privatizing profits and socializing losses, that wouldn’t be wrong. |
| In truth, the plan’s entire aim is to return the economy to the state it was in before the crisis with as little change and interruption as possible. | In truth, the plan’s entire aim is to return the economy to the state it was in before the crisis with as little change and interruption as possible. |
| But once we do that, and the economy gets back on its feet, we need to have a very serious, almost grave, conversation in the country with our political and business leaders about financial responsibility and our policies. Over the past 20 years, we have lurched from bailouts to wars to rescue packages to bailouts again, and we never fill up our coffers during the best of times to pay for any of them. | But once we do that, and the economy gets back on its feet, we need to have a very serious, almost grave, conversation in the country with our political and business leaders about financial responsibility and our policies. Over the past 20 years, we have lurched from bailouts to wars to rescue packages to bailouts again, and we never fill up our coffers during the best of times to pay for any of them. |
| At some point, our debt will become the crisis that we can’t end with more money. | At some point, our debt will become the crisis that we can’t end with more money. |