“But on the submarine, Boris wasn’t as cheerful as he could have been.” – The Bullwinkle Show
If it’s a missile sub, you could say, “Okay, Boomer.”
In most submarine movies, there is a scene where the submarine is hit. One of the forward compartments is being flooded, but the submarine can’t surface because the enemy destroyer is lurking on the surface like Nancy Pelosi lurking at the clinic where they reinject her with blood from the young. The captain must make the fateful decision: do I try to save the team in the forward cabin and perhaps lose the ship? Or do I close the bulkhead door and assure the safety of the ship and the remaining crew?
Time is always of the essence. When the movie is particularly well made, one of the people on the other side of the door is someone you know the captain cares about. It’s often a nephew, or a new, innocent crew member that is doomed to death. You can tell you’re supposed to like him, because he actually has a name; something like Ensign Timmy McFarmboy instead of Dead Crewman #3.
One memorable variant of this theme was in Star Trek II: The Wrath of Khan™. In that particular scene, Captain, Kirk doesn’t order Spock to go in the reactor room, Spock just does it to save the ship and crew from Ricardo Montalbán’s massive pectoral muscles. “Logic clearly dictates that the needs of the many outweigh the needs of the few,” are among his last words to Kirk. Thankfully, Spock has as many lives as a cat, and kept returning to Star Trek® movies because his agent couldn’t get him the lead role in Die Hard.
Spock said my mother was so fat, that she outweighed the needs of the many.
Presidents don’t generally have the luxury of behaving like captains of submarines or starships in the movies, especially in 2020. The world of politics won’t allow it. Political enemies keep attempting to frame both sides of the equation so that whatever happens, the president loses.
If he acts too soon in closing the bulkhead? He’s being irresponsible – overreacting. If he acts too late and loses the submarine? He was fiddling while America burned. Regardless of his decisions, each one will be held up to the scrutiny of the perfect knowledge that only the future will bring.
That’s the burden of the mantle of command: you own the decisions. I won’t second guess President Trump – I wasn’t in those rooms when the decisions were made. I don’t have the facts that he does. And I don’t have to take responsibility.
He does.
However, to continue to use the submarine analogy, the front compartment is flooding. In many ways, the political opposition on the Left is thrilled: they feel that they have a winning issue against Trump, even if it took a crisis that will either kill Americans or wreck the economy to do it. Either is fine with them, which is a function of how polarized the country is now.
The crisis, however, is huge. And it’s far more than Corona.
Easter sheep: ready to wool the world.
I would bet that the reason that Trump said that he wanted the country to reopen for business at Easter was that he was given information about how the COVID-19 measures are wrecking the economy. But I think the information he was given was overly optimistic. I don’t think anyone told him we’d see 3.3 million initial jobless claims – no one expected that we’d see the largest numbers in history. The expectation is that we’ll see another 6.0 million next week. In a labor market of 160-some million Americans, that’s a 6%* unemployment increase. (*edited for an incorrect figure and updated unemployment with 4/2/20 numbers)
In two weeks.
No, his advisers didn’t tell him that.
“We’re the first nation to go to the poorhouse in an automobile.” – Will Rogers
The personal pain and tragedy that level of unemployment represents is astonishing. In previous posts, I told you the economic fallout would be Great Depression bad, but this is worse. The Federal Reserve Bank is projecting 32% unemployment at the high end. 25% was the highest unemployment rate during the Great Depression.
At the height of the Great Recession in 2009, the unemployment rate hit 10%. Total. Not 10% additional two weeks. The Great Recession is the biggest economic emergency that many people remember, and this is projected to dwarf it.
The jobs we’re already losing aren’t all low-paying jobs, either. Oil has dropped in price to $20 and I don’t think it’s done dropping. Oil production companies, the folks that drill the wells for the sweet, sweet oil? They’ll be shedding jobs nearly immediately. The average oilfield job pays $100,000 per year, but $20 per barrel won’t pay for $100,000 per year jobs. Or pickup trucks. Or houses.
The economy is crashing faster than at any point in recorded history. Daily. Based on JP Morgan’s™ recent estimates, it will be $4 trillion smaller (a drop of nearly 20% overall) this year. That’s assuming that the economy returns to astonishing levels of growth in the last half of 2020.
I hope I’m wrong, but I consider an immediate rebound highly unlikely.
Why?
Dear Diary, Today the stock market didn’t crash.
This is far worse than 2008 – at this point, it’s projected to be eight times worse. At the maximum rate of growth the economy has seen in the last fifty years, it will take a decade to get back to where we are today. That’s a decade of lower employment. A decade of people having to do with less, not more.
I’ve heard it said that all of the economy is still there, waiting to be re-occupied. But it’s not. The stock market has dropped by a third. How much of that was in the average person’s 401k? Spending habits will change. And the people who have been fired – will they come back to work for a company that fired them nearly immediately? Will businesses start as usual the instant the stay-at-home orders are lifted? Will oil zoom back up in price to $60 a barrel?
No. Spending isn’t being deferred – in many cases spending is being cancelled right now. If this goes on until May, that will be at least six weeks without the usual wages for millions of people, perhaps as many as 20 million people. For the majority of households not capable of handling a $1000 emergency, what will happen to their spending profile?
And the people won’t be the same, either.
Most of my jokes about unemployment don’t work. Oh, except for the one about the unemployed classical musician. He’s baroque.
Think about that for a second. Are people going to emerge like cave dwellers from the basement, and start consuming like they used to? No. They won’t have the money, having spent it all on toilet paper. They’ve had bills. Food. Electricity. Rent. Sure, they’re not getting kicked out of their house or apartment during the crisis, but someone has to pay the rent at some point.
Corona has also hit economies all around the entire world. As we speak, the world stock markets have lost trillions of dollars as well. Sure, that impacted all of the Greek shipping tycoons who wanted to buy a yacht, but it also impact all of the people who were thinking of buying a new car this year. Not only will demand be down in the United States, demand will be down globally.
For a decade.
If we’re lucky.
We sit at the crossroads of a country experiencing increasing polarity, year after year, and have just had the greatest financial catastrophe anyone living has seen. The submarine is still taking on water, and the hatch isn’t yet closed.
Expect even more surprises.
Soon.
