The restrictions applied to populations to stop the spread of the virus—including quarantines, stay-at-home orders, business closures, and travel prohibitions—have produced massive fallout for the world economy. The data to measure these effects are still arriving; available indicators reveal conditions have dramatically darkened since February. An early arresting statistic was that 3.3 million Americans applied for unemployment benefits in the week ending on March 21. The following week, 6.6 million applied. Until these two shocking totals were triggered by this crisis, the highest number of unemployment applications ever received in one week was 695,000 (in 1982). Around the world, stock markets lost approximately one-third of their values between February 20 and the end of March (Exhibits 1 and 2). …
East and West—yesterday and today
The reality today is that the Chinese economy has begun to reopen as the West shuts down. The most recent edition of McKinsey’s Global Economics Intelligence (GEI), released to subscribers on March 31, reveals the damage the Chinese economy experienced in January and February, when it was at the center of the outbreak.1 Forward-looking indicators for manufacturing and services fell to unprecedented lows; exports contracted 17 percent compared with those in 2019. For Europe and the United States, the data were still largely positive in advance of the coming storm. In Europe, a moderate pickup in growth experienced early in 2020 has since been stopped in its tracks, as large employers curtail operations and lay off workers. Indicators for India presented in the GEI report were largely positive as well, but they are set to fall steeply, as the entire nation has been under a stay-at-home order since March 25. … [To read the full article, click the following LINK – Ed.]
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How Israeli Exit Strategy Aims to Save Economy While Keeping Virus Under Control
Shoshana Solomon
Times of Israel, Apr. 13, 2020
A plan to get Israel’s economy back on track envisages the gradual easing of some coronavirus social distancing restrictions in specific, predetermined steps, contingent upon continued medical monitoring, immediately after Passover.
The rationale behind the plan led by the Finance Ministry is to get certain businesses deemed important contributors to productivity and employment back to work as soon as possible — the financial sector, tech and service sectors, including accountants and lawyers — while holding back on those that entail the highest health risks, such as closed shopping malls and markets and the hotel industry, and those that have a low impact on economic growth, such as hairdressers and sports and entertainment venues.
Schools — starting with special needs children and pre-kindergarten and kindergarten children — will also be reopened in phases and under strict health guidelines, along with public transportation, which has ground to a near-total halt. Both of these are seen as essential to the resumption of economic activity in Israel, enabling workers to travel to their jobs by bus or train, and to do so without leaving young children alone at home. Israel has more than 384,000 households with children ages 0-9.
If the current virus statistics remain relatively encouraging, some stores in open air shopping centers will also be allowed to resume operations — under strict Health Ministry instructions — from April 19, just after the end of the Passover festival, to help jumpstart consumption and get people spending once again.
The exit policy aims to find a balance between the needs associated with two catastrophes that are savaging Israel and the rest of the world — the coronavirus pandemic, which has killed, as of April 13, more than 100,000 people worldwide, with over 1.8 million confirmed cases in 210 countries. And the economic disaster: the global economy could grow at just 2.4 percent this year, its slowest rate since 2009, due to the outbreak, according to the Organization for Economic Cooperation and Development (OECD).
In Israel, the virus has caused over 11,000 cases of infection and killed 113 people as of Monday afternoon. The social distancing steps that have been in place to contain the virus have inflicted a “very heavy economic price,” the authors of an inter-ministerial report setting out the exit strategy said. Keeping these measures in place would lead to an “unprecedented hit” to the Israeli economy, they warned. … [To read the full article, click the following LINK – Ed.]
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Coronavirus Plunges Canada’s Economy into the Abyss
Jason Kirby
MacLean’s, Apr. 6, 2020
In every economic crisis over the last century, people have ultimately turned to the world of medicine to help make sense of the fear and uncertainty around them. In the 1930s, political cartoons showed U.S. president Franklin D. Roosevelt as a doctor tending to an ailing Uncle Sam, whose bandages carried words like “banking” and “depression.” When the 1990s currency crisis in southeast Asia threatened to infect the rest of the world and trigger a global meltdown, economists and investors took to calling it the “Asian flu.” And in 2008, as America’s economy was felled by the financial crisis, then president Barack Obama urged lawmakers to “provide a blood infusion” to “make sure that the patient is stabilized.”
Never has the metaphor of an economy on life support been more appropriate than for the twin health and economic crises the entire world now faces. Canada, like nearly every other nation on the planet, has put its economy into an induced coma as it attempts to fight off the invading COVID-19 virus. Offices, factories, stores and restaurants are closed and workers have been ordered to stay home, many without paycheques, some unsure whether their jobs will still exist when the crisis abates.
With each day bringing new tales of horror from overrun medical workers and stricter measures by governments to contain the virus, economists have scrambled to ratchet down their growth forecasts. At the Big Five banks, the average forecast among economists as of the end of March was for Canada’s economy to shrink by nearly 23 per cent in the second quarter on an annualized basis. (Less than two weeks earlier, they had predicted the decline would be half that bad.) Others forecast an even deeper drop—Capital Economics expects a contraction of 35 per cent.
An unprecedented one million Canadians applied for unemployment insurance in just one week in March. Officials are bracing for four million applicants when Ottawa’s newly created Canada Emergency Response Benefit launches on April 6.
… [To read the full article, click the following LINK – Ed.]
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Trump Rewrites the Book on Emergencies
Christopher DeMuth
Wall St. Journal, Apr. 17, 2020
Washington’s response to the Covid-19 pandemic is upending one of the most durable patterns of American politics. Throughout history, national emergencies have led to a more powerful and centralized federal government and to the transfer of federal power from Congress to the executive branch. This time, the federal response rests largely on state and local government and private enterprise, with a wave of deregulation clearing the way. The Trump administration has seized no new powers, and Congress has stayed energetically in the game.
The historical pattern is powerful and might have seemed inevitable. In times of war, natural disaster and economic upheaval, action is king. The president and his officials and agencies can act with much greater dispatch than Congress can. They may be forgiven for crossing statutory or even constitutional boundaries—in a crisis, the test of legitimacy is perceived effectiveness. But emergency actions often set precedents for normal times.
Moreover, crises generate proposals for preventing their recurrence. These typically take the form of an agency that, with the benefit of hindsight, could have nipped the crisis in the bud. Positing an omnicompetent government authority is political misdirection: It elides the profound problems of uncertainty and conflicting information and interpretation that precede every catastrophe. That is a sure recipe for highly concentrated, discretionary power.
These tendencies were dramatically on display in the first two national emergencies of the 21st century, 9/11 and the 2008 financial collapse. In response to the 9/11 attacks, the Bush administration and Congress created two gigantic agencies with extraordinary powers and insulation from congressional control, the Department of Homeland Security and the Office of the Director of National Intelligence. Intelligence was centralized and bureaucratized; federal police powers were extended down to driver’s licenses and much else; the administration established wide-ranging surveillance programs.
In response to the 2008 crisis, the administration arranged corporate mergers and bailouts with only fig leaves of statutory authority. It spent hundreds of billions of dollars without congressional appropriation. These crisis expedients provided the template for the Obama administration’s unilateral responses to mere political frustrations—congressional inaction on its climate change, immigration and other legislative proposals. At the same time, the Dodd-Frank Act of 2010 commissioned an army of new regulatory authorities with unprecedented discretion and autonomy. … [To read the full article, click the following LINK – Ed.]
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For Further Reference:
Coronavirus: A Visual Guide to the Economic Impact: Lora Jones, David Brown & Daniele Palumbo, BBC News, Apr. 3, 2020 — Here is a selection of maps and charts to help you understand the economic impact of the virus so far.
COVID-19: Briefing Note, April 13, 2020: Matt Craven, Mihir Mysore, Shubham Singhal, and Matt Wilson, McKinsey & Co, April 2020 — The coronavirus outbreak is first and foremost a human tragedy, affecting hundreds of thousands of people. It is also having a growing impact on the global economy.
U.S. Business Formation Tanks as Coronavirus Shuts Economy: Lucia Mutikani, Reuters, Apr. 16, 2020 — Applications to start new U.S. businesses tumbled last week, the latest indication that stringent measures to control the spread of the novel coronavirus had brought the economy to its knees.
Private-Equity Firms Scramble to Shore Up Coronavirus-Hit Holdings: Miriam Gottfried, WSJ, Apr. 13, 2020 — Private-equity executives have spent the past five years bemoaning the difficulty of investing profitably with stocks at elevated levels. Now, they’re getting a taste of what they wished for—and a whole new set of headaches.
Trump’s Plan to Ease the Lockdowns: WSJ, Podcast, Apr. 17, 2020
YLC Presents: 100 Years of Jewish Business in Montreal: YidLife Crisis, YouTube, Dec. 6, 2017 — In honour of the Centennial year of Montreal’s Federation CJA, YidLife Crisis presents a retrospective of 100 Years of Jewish Business in Montreal. Created by Jamie Elman & Eli Batalion.
