Opinion | How Many Will Die for the Dow? – By Paul Krugman – The New York Times

By 

Opinion Columnist

Credit…Johannes Eisele/Agence France-Presse — Getty Images

“In mid-March, after weeks in denial, Donald Trump finally admitted that Covid-19 was a serious threat and called on Americans to practice social distancing.

The delayed acknowledgment of reality — reportedly driven by concerns that admitting that the coronavirus posed a threat would hurt the stock market — had deadly consequences. Epidemiological modelers believe that tens of thousands of deaths might have been avoided if America had started lockdowns even a week earlier.

Still, better late than never. And for a little while it seemed as if we were finally settling on a strategy for containing the virus while also limiting the economic hardship caused by the lockdown.

But Trump and the Republican Party as a whole have now given up on that strategy. They won’t say this explicitly, and they’re throwing up various disingenuous explanations for what they’re doing, but their basic position is that thousands of Americans must die for the Dow.”

Opinion | How to Create a Coronavirus Economic Depression – by Paul Krugman – The New York Times

“Last week the Bureau of Labor Statistics officially validated what we already knew: Just a few months into the Covid-19 crisis, America already has a Great Depression level of unemployment. But that’s not the same thing as saying that we’re in a depression. We won’t know whether that’s true until we see whether extremely high unemployment lasts for a long time, say a year or more.

Unfortunately, the Trump administration and its allies are doing all they can to make a full-scale depression more likely.

Before I get there, a word about that unemployment report. Notice that I didn’t say “the worst unemployment since the Great Depression”; I said “a Great Depression level,” a much stronger statement.

To understand why I said that, you need to read the report, not just look at the headline numbers. An unemployment rate of 14.7 percent is pretty horrific, but the bureau included a note indicating that technical difficulties probably caused this number to understate true unemployment by almost five percentage points.

If this is true, we currently have an unemployment rate around 20 percent, which would be worse than all but the worst two years of the Great Depression. The question now is how quickly we can recover.

If we could get the coronavirus under control, recovery could indeed be very rapid. True, recovery from the 2008 financial crisis took a long time, but this had a lot to do with problems that had accumulated during the housing bubble, notably an unprecedented level of household debt. There don’t seem to be comparable problems now.

But getting the virus under control doesn’t mean “flattening the curve,” which, by the way, we did — we managed to slow the spread of Covid-19 enough that our hospitals weren’t overwhelmed. It means crushing the curve: getting the number of infected Americans way down, then maintaining a high level of testing to quickly spot new cases, combined with contact tracing so that we can quarantine those who may have been exposed.

To get to that point, however, we would need, first, to maintain a rigorous regime of social distancing for however long it takes to reduce new infections to a low level. And then we would have to protect all Americans with the kind of testing and tracing that is already available to people who work directly for Donald Trump, but almost nobody else.”

This weekend in the New York Times, reported by David Lindsay

Photo: Jacinda Ardern, the 39-year-old prime minister of New Zealand.

There has been plenty of good analysis this weekend in the New York Times.

Paul Krugman wrote on Friday, May 2nd, “But I’d argue that there are deeper reasons for the current stock market-real economy disconnect: Investors are buying stocks in part because they have nowhere else to go. In fact, there’s a sense in which stocks are strong precisely because the economy as a whole is so weak.

What, after all, is the main alternative to investing in stocks? Buying bonds. Yet these days bonds offer incredibly low returns. The interest rate on 10-year U.S. government bonds is only 0.6 percent, down from more than 3 percent in late 2018. If you want bonds that are protected against future inflation, their yield is minus half a percent.

So buying stock in companies that are still profitable despite the Covid-19 recession looks pretty attractive.

And why are interest rates so low? Because the bond market expects the economy to be depressed for years to come, and believes that the Federal Reserve will continue pursuing easy-money policies for the foreseeable future. As I said, there’s a sense in which stocks are strong precisely because the real economy is weak.” https://nyti.ms/3d4hMMx

 

David Brooks, not to be outdone, weighs in with good news. In a piece titled, Why Trump’s Ploy Stopped Working, he starts, Even in a pandemic there are weavers and rippers. The weavers try to spiritually hold each other so we can get through this together. The rippers, from Donald Trump on down, see everything through the prism of politics and still emphasize division. For the rippers on left and right, politics is a war that gives life meaning.

Fortunately, the rippers are not winning. America is pretty united right now. In an ABC News/Ipsos poll last week, 98 percent of Democrats and 82 percent of Republicans supported social-distancing rules. According to a Yahoo News/YouGov survey, nearly 90 percent of Americans think a second wave of the virus would be at least somewhat likely if we ended the lockdowns today.

Pew survey found 89 percent of Republicans and 89 percent of Democrats support the bipartisan federal aid packages. Seventy-seven percent of American adults think more aid will be necessary.

According to a USA Today/Ipsos poll, most of the policies on offer enjoyed tremendous bipartisan support: increasing testing (nearly 90 percent), temporarily halting immigration (79 percent) and continuing the lockdown until the end of April (69 percent). A KFF poll shows that people who have lost their jobs are just as supportive of the lockdowns as people who haven’t.

The polarization industry is loath to admit this, but, once you set aside the Trump circus, we are now more united than at any time since 9/11. The pandemic has reminded us of our interdependence and the need for a strong and effective government.” https://nyti.ms/2SoVXPL

 

The Editorial Board struck a blow to our President, with their editorial, In a Crisis, True Leaders Stand Out, which began, Leadership may be hard to define, but in times of crisis it is easy to identify. As the pandemic has spread fear, disease and death, national leaders across the globe have been severely tested. Some have fallen short, sometimes dismally, but there are also those leaders who have risen to the moment, demonstrating resolve, courage, empathy, respect for science and elemental decency, and thereby dulling the impact of the disease on their people.

The master class on how to respond belongs to Jacinda Ardern, the 39-year-old prime minister of New Zealand. On March 21, when New Zealand still had only 52 confirmed cases, she told her fellow citizens what guidelines the government would follow in ramping up its response. Her message was clear: “These decisions will place the most significant restrictions on New Zealanders’ movements in modern history. But it is our best chance to slow the virus and to save lives.” And it was compassionate: “Please be strong, be kind and united against Covid-19.”

Ms. Ardern, a liberal, then joined with the conservative prime minister of Australia, Scott Morrison, in shaping a joint effort that has all but eliminated the virus from their island nations.”

 

Opinion | What Will the Coronavirus Do to Our Deficit? – By Paul Krugman – The New York Times

By 

Opinion Columnist

Credit…Bishara Mustafa/EyeEm, via Getty Images

“Almost a decade has passed since I published a column, “Myths of Austerity,” warning that deficit alarmism would delay recovery from the Great Recession — which it did. Unfortunately, that kind of alarmism seems to be making a comeback.

You can see that comeback in the gradually increasing number of news analyses emphasizing how much debt we’ll run up dealing with the Covid-19 crisis. You can also see it in the rhetoric of politicians like Mitch McConnell, the Senate majority leader, who is blocking aid to beleaguered state and local governments because, he says, it would cost too much.

So this seems like a good time to emphasize two key facts. One is economic: While we will run very big budget deficits over the next couple of years, they will do little if any harm. The other is that whatever they may say, very few prominent figures in politics or the media are genuine deficit hawks, who are actually worried about the consequences of rising government debt. What we mainly have, instead, are deficit peacocks and deficit vultures.

The term “deficit peacocks” was coined by the Center for American Progress for people who preen and posture about fighting deficits without offering realistic policy proposals. I’d broaden the term to include what I used to call Very Serious People — those who inveigh against the evils of debt not because they’ve done a careful analysis but because they imagine that it makes them sound earnest and tough-minded.

Opinion | McConnell to Every State: Drop Dead – by Paul Krugman – The New York Times

“. . .  On Wednesday, McConnell, the Senate majority leader, declared that he is opposed to any further federal aid to beleaguered state and local governments, and suggested that states declare bankruptcy instead. Lest anyone accuse McConnell of being even slightly nonpartisan, his office distributed two memos referring to proposals for state aid as “blue state bailouts.”

A number of governors have already denounced McConnell’s position as stupid, which it is. But it’s also vile and hypocritical.

When I say that we have the resources to avoid severe financial hardship, I’m referring to the federal government, which can borrow vast sums very cheaply. In fact, the interest rate on inflation-protected bonds, which measure real borrowing costs, is minus 0.43 percent: Investors are basically paying the feds to hold their money.

So Washington can and should run big budget deficits in this time of need. State and local governments, however, can’t, because almost all of them are required by law to run balanced budgets. Yet these governments, which are on the front line of dealing with the pandemic, are facing a combination of collapsing revenue and soaring expenses.

The obvious answer is federal aid. But McConnell wants states and cities to declare bankruptcy instead.

This is, as I said, stupid on multiple levels. For one thing, states don’t even have the legal right to declare bankruptcy; even if they somehow managed all the same to default on their relatively small debts, it would do little to alleviate their financial distress — although it could cause a national financial crisis.”

Opinion | The Wisconsin Primary Shows That Democracy Is in Trouble – by Paul Krugman – The New York Times

“. . . Yet the scariest news of the past week didn’t involve either epidemiology or economics; it was the travesty of an election in Wisconsin, where the Supreme Court required that in-person voting proceed despite the health risks and the fact that many who requested absentee ballots never got them.

Why was this so scary? Because it shows that America as we know it may not survive much longer. The pandemic will eventually end; the economy will eventually recover. But democracy, once lost, may never come back. And we’re much closer to losing our democracy than many people realize.

To see how a modern democracy can die, look at events in Europe, especially Hungary, over the past decade.

What happened in Hungary, beginning in 2011, was that Fidesz, the nation’s white nationalist ruling party, took advantage of its position to rig the electoral system, effectively making its rule permanent. Then it further consolidated its control, using political power to reward friendly businesses while punishing critics, and moved to suppress independent news media.

Until recently, it seemed as if Viktor Orban, Hungary’s de facto dictator, might stop with soft authoritarianism, presiding over a regime that preserved some of the outward forms of democracy, neutralizing and punishing opposition without actually making criticism illegal. But now his government has used the coronavirus as an excuse to abandon even the pretense of constitutional government, giving Orban the power to rule by decree.

If you say that something similar can’t happen here, you’re hopelessly naïve. In fact, it’s already happening here, especially at the state level. Wisconsin, in particular, is well on its way toward becoming Hungary on Lake Michigan, as Republicans seek a permanent lock on power.”

Opinion | Will We Flunk Pandemic Economics? – By Paul Krug – The New York Times

By 

Opinion Columnist

Credit…Susan Walsh/Associated Press

“Just a month ago Donald Trump was still insisting that Covid-19 was a trivial issue, comparing it to the “common flu.” And he dismissed economic concerns; after all, during flu season, “nothing is shut down, life & the economy go on.”

But pandemics come at you fast. Since Trump’s blithe dismissal, something like 15 million Americans have lost their jobs — the economic implosion is happening so quickly that official statistics can’t keep up.

In our last economic crisis the economy shrank around 6 percent relative to its long-run trend, and the unemployment rate rose around five percentage points. At a guess, we’re now looking at a slump three to five times that deep.

And this plunge isn’t just quantitatively off the charts; it’s qualitatively different from anything we’ve seen before. Normal recessions happen when people choose to cut spending, with the unintended consequence of destroying jobs. So far this slump mainly reflects the deliberate, necessary shutdown of activities that increase the rate of infection.

As I’ve been saying, it’s the economic equivalent of a medically induced coma, in which some brain functions are temporarily shut down to give the patient a chance to heal.

While a deep slump is unavoidable, however, good policies could do a lot to minimize the amount of hardship Americans experience. The problem is that the U.S. political landscape has long been dominated by an anti-government ideology that left us unprepared, intellectually and institutionally, for this crisis.

What should we be doing? Serious economists have already reached a rough consensus over the appropriate policy response to a pandemic. The bottom line is that this isn’t a conventional recession, which calls for broad-based economic stimulus. The immediate mission, beyond an all-out effort to contain the pandemic itself, should instead be disaster relief: generous aid to those suffering a sudden loss of income as a result of the economy’s lockdown.

It’s true that we could suffer a second round of job losses if the victims of the lockdown slash spending on other goods and services. But adequate disaster relief would address this problem, too, helping to sustain demand.”

Opinion | This Land of Denial and Death – By Paul Krugman – The New York Times

By 

Opinion Columnist

Credit…Chip Somodevilla/Getty Images

“Death comes at you fast. Just three weeks ago the official line at the White House and Fox News was that the coronavirus was no big deal, that claims to the contrary were a politically motivated hoax perpetrated by people out to get Donald Trump. Now we have a full-blown health crisis in New York, and all indications are that many other cities will soon find themselves in the same situation.

And it will almost certainly get much worse. The United States is on the worst trajectory of any advanced country — yes, worse than Italy at the same stage of the pandemic — with confirmed cases doubling every three days.

I’m not sure that people understand, even now, what that kind of exponential growth implies. But if cases kept growing at their current rate for a month, they would increase by a factor of a thousand, and almost half of Americans would be infected.

We hope that won’t happen. Many although not all states have gone into lockdown, and both epidemiological models and some early evidence suggest that this will “flatten the curve,” that is, substantially slow the virus’s spread. But as we wait to see just how bad our national nightmare will get, it’s worth stepping back for a few minutes to ask why America has handled this crisis so badly.

Incredibly bad leadership at the top is clearly an important factor. Thousands of Americans are dying, and the president is boasting about his TV ratings.

But this isn’t just about one man. Neither the scientific denial that crippled the initial response to this pandemic, nor the tens of thousands of unnecessary deaths that now seem likely, are unique to Covid-19. Among advanced countries, the United States has long stood out as the land of denial and death. It’s just that we’re now seeing these national character flaws play out at a vastly accelerated rate.

About denial: Epidemiologists trying to get a handle on the coronavirus threat appear to have been caught off guard by the immediate politicization of their work, the claims that they were perpetrating a hoax designed to hurt Trump, or promote socialism, or something. But they should have expected that reaction, since climate scientists have faced the same accusations for years.”

Opinion | On Coronavirus, We’re #1 – By Paul Krugman – The New York Times

By 

Opinion Columnist

Credit…Eve Edelheit for The New York Times

“It’s hard to believe, but just a month ago Donald Trump and his henchmen were dismissing the coronavirus as a nonevent. On Feb. 26 Trump declared that “You have 15 people, and the 15 within a couple of days is going to be close to zero.” His remark came a day after Larry Kudlow, his administration’s chief economist, declared that the virus was almost completely contained, and that the economy was “holding up nicely.”

There are now more than 82,000 cases in the U.S. — we don’t know how many more, because we’re still lagging far behind on testing. But that makes us the world’s coronavirus epicenter, and the U.S. trajectory is worse than that of any other country.

As for the economy: Last week more than three million workers filed for unemployment insurance, a number that is completely off the scale even as many others who are suddenly out of work aren’t eligible for unemployment benefits. We’re clearly losing jobs even faster than at the worst moments of the 2008-9 financial crisis, when we were losing “only” 800,000 per month.

Trump’s dismissal and denial played a large role in getting us to this point. And he should be held accountable. But the crucial question now is whether we’re doing enough to cope with the catastrophe.”

Opinion | 3 Rules for the Trump Pandemic – By Paul Krugman – The New York Times

By 

Opinion Columnist

“So Donald Trump is now calling Covid-19 the “Chinese virus.” Of course he is: Racism and blaming other people for his own failures are the defining features of his presidency. But if we’re going to give it a nickname, much better to refer to it as the “Trump pandemic.”

True, the virus didn’t originate here. But the U.S. response to the threat has been catastrophically slow and inadequate, and the buck stops with Trump, who minimized the threat and discouraged action until just a few days ago.

Compare, for example, America’s handling of the coronavirus with that of South Korea. Both countries reported their first case on Jan. 20. But Korea moved quickly to implement widespread testing; it has used the data from that testing to guide social distancing and other containment measures; and the disease appears to be on the wane there.

In the U.S., by contrast, testing has barely begun — we’ve tested only 60,000 people compared with South Korea’s 290,000, even though we have six times its population, and the number of cases here appears to be skyrocketing.”