Coronavirus Dilemma

Last night I posted a commentary on the President’s unhelpful and mendacious handling of the Coronavirus crisis. I appended a list of precautions to take to protect against being infected.

If everyone were to follow my advice, the epidemic would be stopped cold. The problem is that the effect on the US economy would be equally devastating. There is a very thin line between keeping the population healthy and causing an economic disaster.

The busiest intersection in Milan at rush hour during the Coronavirus crisis.

The recommendations that regard personal hygiene should definitely be followed, but the others involve making difficult decisions. Avoiding crowds is recommended for personal safety, but if no one shops or goes to restaurants or theaters or hairdressers, those will quickly face bankruptcy, go out of business and drag their landlords and suppliers along with them. 

Contagion travels like quicksilver and the stock market reacts accordingly. Italy is a case in point. As of today, February 28, almost 900 people in Italy have tested positive since the first case was announced on Feb. 21. Almost all the cases are clustered about Milan, a major city in Lombardy, a region in the North. 

At the end of January, a Chinese tourist couple fell ill, tested positive, and was put in isolation. None of the people they had been in contact with tested positive. All flights to and from China were banned.

Then on Feb. 18, “Patient One,” a 38-year-old man, took himself to a hospital, but wasn’t tested because he hadn’t been to China. He was surrounded by other sick patients. He returned home, then back to the ER the following day because he felt worse. He was diagnosed with the Coronavirus on Feb. 20, but by then he had infected at least eight people. On Feb. 23, the Italian government cordoned off the “Red Zone,” forbidding travel in or out of the towns where the outbreak is located. Many residents were commuting to the city for work.

Though there are no known cases in Milan, the financial capital of Italy is a ghost town. The streets are deserted as anxious people stay home and workers telecommute. Schools, universities, museums, bars, restaurants, hairdressers— all closed. Most Italians are rabid soccer fans, but in the North, games are being played in empty stadia. Worried by the effect these closures are having, the authorities have declared that schools, museums and other public places will reopen on Monday, a week short of the recommended 14-day quarantine.

It’s almost impossible to navigate the strait between the Scylla of economic wreckage and the Charybdis of a decimated populace. It took less than a week for the paralysis in the industrial North of Italy to bring the third-largest economy of the Eurozone to the brink of recession. Worldwide, panic and the pandemic have caused the disruption of supply chains, postponement of travel plans and cancellation of major events, bringing the global wipeout to $6 trillion.

And yet, most people have no reason to panic if they wash their hands frequently and keep their distance from people with respiratory disease. Even if they do contract COVID-19, healthy people seem to recover without ill effects.

Ryan, Obama and the debt ceiling

With all the buzz around the election, few were talking about the looming sequestration tsunami, which, if not averted, will surely sink the economy in 2013. The Budget Control Act of 2011 is an emergency measure that was devised to force an agreement in the debt-ceiling debate of last summer. A supercommittee was charged with finding a way to achieve a $1.2 trillion reduction in the deficit. Republicans insisted on extending the Bush tax cuts— no new taxes!— while Democrats contended the revenue generated by their expiration would diminish the severity of the cuts in domestic spending demanded by the Republicans. Incorporated into the bill were measures abhorrent to both parties. The thinking was that Republicans wouldn’t permit steep cuts to the defense budget and Democrats wouldn’t allow domestic spending on social services to be slashed. But there is no agreement to date, and the cuts will kick in automatically on Jan. 1, 2013.

The White House proposed the deal, and Republicans signed on. House Speaker John Boehner and House GOP Leader Eric Cantor are now claiming that the Democrats are to blame for the lack of a plan to prevent the trigger of the draconian cuts, somehow forgetting that Republicans unanimously rejected the plan proposed by Obama.

GOP VP nominee Paul Ryan is saying (video above) that the supercommittee (of which he was a member) offered an alternative to the sequester. In fact, it did not, because Republicans on the committee, led by Ryan, denounced the cuts to entitlement programs as inadequate, and the Democrats refused to cut programs without increased revenue.

Democrats are the real Job-Creators

In the 64 years from the end of WWII to 2009, jobs under Democratic presidents have invariably increased at double the rate of growth under Republicans. Prof. Robert McElvaine compiled the data from the Bureau of Labor Statistics:

Reading McElvaine’s graph of job gain/loss by administration, it’s clear that the inauguration of a Republican president signals a drop in new jobs that will last until a Democrat takes the helm. This holds true even under the much-maligned Jimmy Carter and the sanctified Ronald Reagan. Only in the special case of 2009 did the number of new jobs plunge under a Democratic president. That was the year following the crash at the end of the Republican administration of Pres. G. W. Bush and before Democratic Pres. Obama’s stimulus could take effect. Remarkably, though, as weak as the recovery is, we have seen a net growth of more than 1 million jobs under Obama, more than twice the number under Bush. McElvaine crunches the numbers:

Worldwide financial collapse?

A trader’s take on the coming crash:

I’m not an economist—far from it—but I keep reading and hearing that another financial crisis is inevitable.

In Europe, the finance ministers keep talking but do nothing while the situation deteriorates. The European Union’s central bank doesn’t have enough money to bail out the failing economies of its members. Italy, for example, with the third largest economy in the EU, is too big to fail and too big to bail. Yet Italian debt is so large — 120 percent debt-to-GDP ratio or a fifth more than its economic output — that some economists believe it can’t avoid default. The EU has the world’s largest economy, and if the eurozone fractures and the euro collapses, the impact on the global economy will be devastating.

China, with the world’s third largest economy, is also showing signs of strain. It still has large trade surpluses, but demand from troubled economies is decreasing, causing its manufacturing sector to slow down. The US, its largest customer, is placing fewer orders, reflecting the American worker’s reduced spending power. Inflation and a deflating real-estate market add to China’s problems.

In the U.S., the politicians don’t agree on the measures that could be taken to revive the economy. As a result, we draw ever closer to a deepening, double-dip recession. (When will we start hearing “depression”?)

 

Saved by Ruritania!

Paul Krugman explains:

Suppose that Obama announces that we face a clear and present danger from Ruritania, and that to meet that threat we need immediate investment in roads and rail (to move troops, of course). The economy surges on the emergency spending — and newly employed men and women at last get to move out of their relatives’ basements. Home construction surges.

Then Obama apologizes, says that his advisers have learned that there is no such country as Ruritania, and cancels the program. But we still have the new roads and rail links; plus, the surge in housing demand is now self-sustaining, and the economy remains strong.

Of course, we could do all this without the Ruritanian threat; but we won’t.

It sounds so easy. Would that Congress and the President could act together to solve our problems!

That *!&$*! tax cut deal

It’s very upsetting that Obama had to accede to the Republican demand that tax cuts for the wealthiest Americans not expire, that with control of both the House and the Senate the Democrats have a hard time getting anything done. Sure, they’re angry. I’m angry too. Especially since it looks as though Obama caved without so much as a quibble, let alone a real fight. But what choice did he have in the face of a certain filibuster?

Louisiana’s loss. . . and the Hamptons’ too

Something special happened to me today. The computer was on, and I was nearby ironing some ribbon. (I’m trying to copy a crocheted garment—I don’t know what you call it—of my daughter’s, and I’ve started and ripped out so many times the ribbon was very twisted.) I heard a beep from the computer, so I looked and found the editor of Women’s Voices for Change had just asked me if I wanted to interview a woman from the Louisiana coast about the oil spill.

I’ve been following the spill pretty closely, so I jumped at the chance. I talked with the woman for 57 minutes about so many things— the fishing industry, the importance of oil to the LA economy, the destruction of the coastline, the sickening of the men cleaning up the spill, the global implications for the food chain and perhaps toxic rain, the loss of a heritage, traditions and way of life— and more. In the end the woman’s voice was cracking, and I knew she was crying in spite of herself. “My soul is being ripped apart,” she gasped.