In the United States, 3 million people work in restaurants, bars and hospitality. Another 750,000 people work in the airline industry and related fields. Retail stores are closing down. The small business worker is the backbone of the American economy, and trillions of dollars are not enough to bail them out, given a shutdown of all society.
Don’t call it a quarantine, call it a shelter-in-place social distancing phenomenon where all air travel and movement will be curtailed. It is a pandemic, after all.
New York officials say the state’s coronavirus total has jumped to 1,700, with at least 19% hospitalized. Late April is the anticipated peak of coronavirus cases. But a U-shaped recovery could take months and there will be economic casualties too.
Boeing is seeking “tens of billions of dollars” in U.S. government loan guarantees and the Fed is handing out money like debt was the new utopia. The travel industry alone wants $150 Billion. Industry lobbyists estimate decreased travel due to the coronavirus could wipe out $355 billion in total travel spending.
Don’t call it a pandemic, call it an economic meltdown of consumer inactivity. Stay at home, we’ll take care of you.
The White House wants a $1 Trillion stimulus package, and the markets sink to the growing reality of what’s coming in the next few weeks to North America. We’ll get what Europe has and what East Asia had.
But what happens when you decimate the restaurant industry, the travel industry, the hotel industry, the airline industry, the cruise line industry, the retail industry and the small business sector all at once? What happens to the economy and the workers themselves?
Bailouts and Shut-Ins are the New World Order
New York’s shutdown is a microcosm of a new financial system or a kind of basic income state. You don’t need to remember some yang gang slogan to get it, the Treasury Secretary Steven Mnuchin wants to send cash to Americans, echoing sentiment expressed by Senator Mitt Romney.
Stimulus, liquidity, and loans, baby. Sacrifice too has a cost. What’s the slogan going to be this time?
San Francisco Bay area officials ordered some 7 million residents to “shelter in place” on Monday. Residents there are prohibited from leaving their homes, except under “limited circumstances,” according to the order. NY City and other cities are likely to follow in step — because it’s fashionable in the U.S. to follow California still.
Let’s shelter, sacrifice and implode together. Let’s blame a nameless pandemic that’s new to the planet. Let’s mumble, “Gosh that social distancing was rough“. Recession not probable, the only certainty being the certainty of a U-shaped recession that could change the fabric of capitalism.
Economic fallout. Sacrifice. Bailout. Shelter In Place. Forced Quarantine in a health crisis. These are sentiments that could dictate the fate of millions of businesses globally.
How many trillions of dollars will be the price tag? $1.3 Trillion is the new deal package. Watching Boeing implode this week is what could happen to New York City as a whole, so the bailout is at all costs. What’s more costly than hosting an Olympics? A Pandemic. Cancel all of your plans, it’s time to stay inside. This has New York State up to 2,500 cases alone tonight, the 17th of March, 2020.
Coronavirus’ drag on the economy will last 6 months at least, or basically all of 2020. Not just a sentiment driven event but, most likely, a financial crisis that’s as deep as it is prolonged. It’s also an immediate health crisis.
New York has 53,000 hospital beds and 3,000 ICU beds, far short of what state health officials are predicting will be needed, Gov. Andrew Cuomo said. Unfortunately nearly 19% of cases require hospitalization so far. April could be what we remember of Covid-19 in New York.
- Travel lock-down
- Retail shutdown
- Economic implosion due to the above
People who venture out are expected to remain six feet apart, wash their hands, cover their coughs or sneezes and abide by a number of other restrictions. What will be the economic pain we will have to endure? The careers derailed, the jobs lost, the businesses folded… Time will tell, but we have got to be realistic.
The economic pain to the travel industry alone is expected to be six times worse than that of 9/11. How do you quantify that on a global scale? We have to assume the hit to the U.S. economy will be harder than it was in China. How many jobs will be lost all at once? Too many to count.
Donald Trump called this a “Chinese Virus” but it will soon be a New York virus. How do you accept, grieve and prepare for the economic storm like this pandemic? We’ll need more than a freedom dividend to get through this.
The financial crisis of the pandemic is a generational event. Too young to remember 2008? Here’s your chance to study history in the making. We are heading fast for 200,000 coronavirus cases and 8,000 deaths, that’s a 4 percent case mortality rate.
New York Govenor Cuomo warned on Monday that the outbreak would stretch U.S. hospitals to their maximum capacity, saying the nation doesn’t have enough hospital beds to handle a pandemic. But do American banks and the Fed have coffers deep enough to bail out all of society that will be impacted? The
- Small business
- and Services sectors simultaneously?
New York is at the epicenter of a storm and as we cringe and shelter in place, we’ll be tabulating the cost of doing so, perhaps for decades to come.
It takes some guts to admit the sacrifice. A financial crisis due to the pandemic will cost more than the passing of some of our parents and grandparents, it will cost us our dignity. It will cost us our dreams. It will cost some of us our retirement savings. For others, our retirement itself.
What is the most essential thing in a liquidity crisis? A basic income. The pandemic could lead to a new financial system and way of thinking about economic decentralization. So what is the sacrifice?
We won’t have enough hospital beds. We won’t have enough to bail out everyone. Thousands of small businesses and companies won’t survive the crisis. New York could even fail to limit (flatten) the curve of the spreading virus, which has gone weeks unchecked (and untested) in community transmission.
You can shelter in place and still fail. Trump has made clear his intent to protect certain industries. That won’t necessarily include the industry you work or in, or the job you’ve been doing recently.
This is not a war that can be won alone, which is why New York is partnering with overnight Repo ops by the Fed, among many other bizarre things. But we will need new solutions to unprecedented challenges. We will need to think in new macro-economic terms to even bailout effectively many of these industries and protect American workers from the financial crisis.
To shelter in place means to wait and watch. What sets off a financial crisis is when firms are unable to get cash. But we might not be able to get medical care too. We might not get adequate help before it’s too late financially as well. The impact of the virus on social cohesion could also create new problems, new domino effects like the oil price war (between Saudi Arabia and Russia) already.
Helicopter money and direct cash handouts won’t save us. Social distancing won’t save us without adequate and fast testing. Let’s face it, we aren’t South Korea, Taiwan or even Beijing. We have procrastinated and there will be consequences for that. It’s not clear how long we’ll be sheltering in place, or how long retail stores will be closed or how long airlines won’t do commercial flights.
Many of us cannot work from home. What kind of firms will we bail out, and why not others? Which States will be up to the challenge and which won’t? And where is it already too late to lower the curve? If it’s a U-shaped recovery and not a V-shaped one, how long will it take before life is back to normal?