Popular Economics Weekly
Economists are beginning to predict the worst due to the COVID-19 outbreak that has become a worldwide pandemic. Former Fed Vice-Chairman Alan Blinder said recently on CNBC that a recession may have already begun this March; and Jason Furman, the chief economist of Obama’s Council of Economic Advisors, told Lawrence McDonnell on MSNBC that the recent record-breaking sttock and bond market volatility feels more like 1929, and the onset of the Great Depression.
The U.S. Treasury Bond market even seemed to seize up over the past several days; so the New York Fed just announced that it may buy up to $1 trillion in U.S. Treasury bonds to inject liquidity into the bond markets, which enabled the bond market to continue to function as well as injecting more money into the general economy.
Another sign just out of a looming recession is sharply falling commodity prices. The PPI Index of Final Demand for Commodity prices has risen just 1.28 percent YOY in February, per the St. Louis Fed graph, signaling a huge drop in the demand for such products amid declining world trade; while the coronavirus has as yet no timeline for recovery.
History books say the starting point of the Great Depression is usually listed as October 29, 1929, commonly called Black Tuesday. This was the date when the stock market fell dramatically 12.8 percent. It was after two previous stock market crashes on Black Tuesday (October 24), and Black Monday (October 28).
Sound familiar? The current market gyrations saw the stock indexes plunge 10 percent just yesterday, after several severe plunges last week.
If such predictions prove true, then policymakers should really be looking at the need to implement that which brought us out of said Great Depression.
It was called the New Deal that gave us good government policies and kept Americans out of serious downturns since then—until the Great Recession. The obstacle to implementing similar New Deal policies that provided federal jobs to the jobless in infrastructure building, education, and research; while protecting more than one million homeowners in danger of losing their homes; has been conservative Republican administrations since the 1980s that have worked to dilute those safeguards limiting the power of Big Business, and protecting the rights of workers.
There was also another important ingredient that created the New Deal. It was the leadership of Franklin Delano Roosevelt, one of our greatest presidents, because he inspired Americans to work together with his words.
He said, “The only thing we have to fear, is fear itself…This is preeminently the time to speak the truth, the whole truth, frankly and bold. Nor need we shrink from honestly facing conditions in our country today,” in his first Inaugural Address.
Right now, the coronavirus is an unknown fear that is devastating whole economies as businesses and individuals go into quarantine.
Yet there is no coherent national leadership today to address its spread, “to speak the truth,” just attempts to deceive and deflect from the reality of COVID-19’s contagious affects.
We will need a new leader and leaders that have this capability to speak the truth to its sufferers as the coronavirus spreads to all states, and possibly one million victims.
Let us hope that the upcoming Presidential election brings us such a leader.
Harlan Green © 2020
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen