How Covid -19 slows the economy
Coronavirus is not only a public health crisis, it is also a shock to the global economy. Working people must demand that government act, or we and our families will pay the price for others’ lack of action, as we so often have in the past.
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The stock market fell 7% at the open Monday morning. That may not sound like a lot, but it’s a catastrophic collapse—a financial crisis type number. Typically, the market might gain or lose in a whole year the value that was lost by the time the sound of the opening bell faded.
The collapse appears to be the result of a combination of the spread of coronavirus and falling oil prices—two events that are themselves connected. But it needs to be interpreted as an alarm bell, because we are dealing with the threat of two deadly kinds of contagions—one biological and the other economic and financial—both of which pose serious but manageable threats to the well-being of working people.
We have heard a lot about biological contagion and how to stop the spread of coronavirus in our workplaces and our communities. You can get up-to-date information on workplace safety and coronavirus at www.aflcio.org/covid-19 and at the websites of our affiliated unions. But what about financial and economic contagion? This is something elected leaders, economic policymakers and financial regulators must take action to stop.
How does it work? Coronavirus is a shock to the global economy. It stops economic activity of all kinds—shutting down factories, canceling meetings, sending cruise ships into quarantine. The only way to prevent that is to stop the spread of the virus (see above). The consequence of economic activity slowing down or stopping is that businesses lose revenue, and generally with loss of revenue comes loss of profits.
People who trade on the stock market usually price stocks by making projections about the future profits of the companies whose stocks trade on the public markets. The stock market reacts instantaneously to changing expectations about what may happen in the economy and to specific businesses. The stock market itself doesn’t create or destroy jobs, but it does contribute to the overall financial health of companies and of people. When stock prices fall rapidly, they can create their own kind of contagion—exposing fragile financing structures for both companies and people. That can in turn lead to retreat—companies pulling back on investments or, in the worst case, going bankrupt.
So the stock market can create contagion all by itself. But the much more serious kind of contagion has to do with corporate debt. We have had low interest rates for years, and businesses around the world have gone on a borrowing spree. This spree has been one of the causes of relatively healthy economic growth in the last few years, but it has also led to businesses carrying a lot of debt relative to their earnings and growth.
Here is where the danger gets very real, because, as we all know, if you borrow money, you have to make payments on that debt. What if businesses that have borrowed a lot of money suddenly don’t have anywhere near the revenue they expected to have? This is what empty planes and blocked supply chains mean.
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Saturday, March 14, 2020
Government Must Act to Stop Spread of Economic and Financial Consequences of Coronavirus
Trump's Bogus Google Claim on Convid 19
SACRAMENTO PROGRESSIVE ALLIANCE: Trump's Bogus Google Claim on Convid 19: According to the Washington Post, Trump has lied 1,400 times since becoming President. So, what should we expect ? On Friday. Presiden...
Hint, Don't wait for the Trump Administration.
Hint, Don't wait for the Trump Administration.
Thursday, March 12, 2020
Wednesday, March 11, 2020
Tuesday, March 10, 2020
The Virus and Trump Incompetence
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South Korea currently tests about 10,000 people per day, and the virus is slowing,
The US tests less than 200 per day, because we don’t have test kits distributed. We can not get more test kits because the administration cut the health budget each of the last two years,. And, the virus is spreading, Even in the nursing home in Seattle where many have died, they can not get test kits to test those remaining Tuesday alive.
This is incompetence- and it kills,
We now have had more than a month to prepare to defend our people against the spreading virus. The U.S. still is not responding at the necessary level because the Trump government is spending its energy and time managing perceptions to influence the stock market. See the statement by the nurse’s union.
They have not used emergency authority available to them to mass produce masks and test kits. They also need to be preparing auxiliary hospitals for the coming surge !
This is incompetence. People will die because of the incompetence. I hope that it is not you or a member of your family.
See more:
How delays in testing set back the U.S. response
https://www.nytimes.com/2020/03/10/us/coronavirus-testing-delays.html
White House over rules CDC on elderly
Get serious about fighting the Virus,
https://prospect.org/economy/get-serious-about-fighting-corona-depression/
Editor.
On Sunday, the State Department warned Americans against travel on cruise ships; older adults or those with compromised immune systems should consider postponing nonessential travel altogether, said Dr. Fauci. Many businesses, including Facebook and Amazon, have postponed most employee travel altogether.
Our seminar is suspended by the Corona virus Covid 19.
This week we had planned to take up the Climate Crisis and the Green New Deal.
Here are readings and videos on this topic,
Please take care and stay well,
Duane Campbell
This week we had planned to take up the Climate Crisis and the Green New Deal.
Here are readings and videos on this topic,
“ Paris to Pittsburgh”
Excellent video; here is the promo. To watch the entire piece, you will need to use Prime, or Netflicks,
Full video on National Geographic, for a fee. It looks as if there is a full copy on Youtube for a fee. I have been unable to find it on the National Geographic site,
On Fire: The Burning Case for a Green New Deal
(Democracy Now) 26 minutes.
reading: https://theintercept.com/2019/02/13/green-new-deal-proposal/
Green New Deal , Naomi Klein.
Reading: Care and Repair. Left Politics in the Age of Climate Change.
Naomi Klein.
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