Economics in the Times of the Coronavirus

by Rudolf Hickel, Ingar Solty and Daniel Stelter, March 30, 2020

Most people’s thinking is determined by the development of the Covid-19 crisis, the return of “the hour of executive power” (Gerhard A. Ritter), i.e. state of exception legislation, and the fears which it evokes as well as the economic measures which appear to be in response to the health crisis.

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3 Responses to Economics in the Times of the Coronavirus

  1. Marc says:

    Nobel Prize-winning economist Paul Krugman says we are ignoring a `huge fiscal time bomb'”

    The crisis is not a replay of the Great Recession, Krugman says, adding that there will be a second wave if we don’t act forcefully enough now.

    Krugman says we have a “huge fiscal time bomb” that is not getting enough media coverage. He predicts that just as the economy is ready to recover there will be mass layoffs of government employees and a cutoff of unemployment benefits unless there’s another major round of legislation.
    He is not impressed with America’s response to the crisis. From an economic standpoint, he describes Denmark as a standout with corporations keeping workers on the payroll and the government picking up 75% of the tab. He believes the US, in some ways, has had the weakest economic response of any G7 country.

  2. Marc says:

    The great swine flu scare
    by Denis Duclos, Dec 2009

    The lethal potential to humans of fast-moving and faster-mutating viral and bacteriological infections is real. And they’re hard to contain in a globalized world where people won’t accept restrictions.

  3. Marc says:

    November 2019 — U.S. Corporate Debt Reached $10 Trillion = 47 PERCENT OF OVERALL ECONOMY. April 6, 2020

    The official narrative is going to be that everything was just fine on Wall Street and in the economy until the coronavirus hit. At the Tuesday, March 24 press briefing, Kudlow also said that “We started the year very strong and then we got hit by the coronavirus.” But that’s simply not true. As we reported yesterday:

    “According to the New England Journal of Medicine, the first confirmed case of coronavirus was reported in the United States on January 20, 2020. But according to the Fed’s own minutes, between September 17, 2019 and December 10-11, 2019, the date of its December federal open market committee meeting, the Fed had been pumping ‘roughly $215 billion per day’ in emergency loans to Wall Street’s trading houses or more than $6.23 trillion in cumulative loans – before there was any coronavirus crisis in the United States.”

    On November 29 of last year, the Washington Post quoted two experts on the state of toxic debt on Wall Street. Emre Tiftik, a debt specialist at the Institute of International Finance, said this: “We are sitting on the top of an unexploded bomb, and we really don’t know what will trigger the explosion.” Krista Schwartz, a finance professor at the University of Pennsylvania’s Wharton School said this: “It’s going to make everything happen faster, larger, worse. The recession would just be that much deeper.”

    The article noted that corporate debt had reached a record $10 trillion or an unprecedented 47 percent of the overall economy. Even worse, the corporate borrowing binge had not gone to boost innovation or the productive capacity of the corporations but had been used instead to “repurchase their own shares, pay higher dividends to investors and fund acquisitions.” Quoting S&P, the article noted that “more than $3 trillion over the past five years” had been spent by the corporations to buy back their own stock.

    Those stock buybacks artificially inflated profits at these firms and resulted in huge compensation for “performance” for the corporate CEOs, including those at the biggest banks on Wall Street. Now the day of reckoning is here and the evil genius plan is to throw a few crumbs at desperate people on Main Street while forcing the taxpayer to absorb the astronomical losses of another decade of hubris by the Fed and Wall Street.

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