A Bigger Hammer

Summary

Slate Money — "A Bigger Hammer" (March 21, 2020)

Episode Overview

This urgent episode of Slate Money, hosted by Felix Salmon (Axios), with co-hosts Emily Peck (HuffPost) and Anna Szymanski (BreakingViews), dives deep into the economic fallout from COVID-19 as of mid-March 2020. The main focus is the rapid movement toward massive U.S. government stimulus packages, debate over bailouts and checks for individuals, the public health crisis's impact on markets, and questions about the adequacy and fairness of policy responses. The team also discusses global reactions, U.S. political blame, stories of inequality, and how this crisis may change the world's economic order.

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Main Discussion Points & Insights

1. The State of the U.S. Coronavirus Bailout

Details of Proposed Direct Payments

• Congress is debating stimulus checks to Americans.
• Early proposals: Up to $1,500 per adult (Felix); latest: $1,200 per adult, phasing out above $75,000/year income, and no checks above $99,000/year (Emily) [02:11-03:18].
• Notably, "poor people under this proposal from McConnell would actually get less money than middle class people because they don't get tax refunds." (Emily) [02:38].

Critique of "Helicopter Drops" vs. Targeted Help

• Current ideas resemble broad, one-off payments, not targeted relief for those most in need (laid-off workers, hardest-hit industries) [04:06].
  • "We're not seeing a massive increase in unemployment insurance... All of these kind of very targeted interventions seem not to be happening." (Felix) [04:09].
• Contrasted with Europe: Denmark covers 75% of affected employees' salaries; France waives rent during lockdowns.

The Need for Speed and Scope

• Consensus: Do more, and do it fast.
  • "The lesson of the coronavirus is that you can never be too early or too aggressive." (Felix) [06:10].
  • "Just do more, do it now and keep doing it. Like there's no shortage of things. Like you can't think too big on this." (Emily) [06:20].
• Unemployment spike underway: Forecast of 2.2 million new claims next week — "a number which is unimaginable... never in American history has it been even half that" (Felix) [07:26].

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2. Stimulus vs. Economic Lifeline

• "This isn't really stimulus. We're not trying to stimulate the economy. We're just trying to bridge it." (Emily) [08:08].
  • The immediate goal is economic preservation—not growth—by enabling survival until reactivation is possible.

Keeping Markets "Clearing"

• Focus shifts from market levels to functionality: "Are [markets] doing their job of being able to move capital around to where people need capital?" (Felix) [10:57].
  • Markets are under stress but functioning; credit facilities (Fed, ECB) are critical.
  • The internet’s resilience is a bright spot for homebound workers [10:57-11:59].

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3. Societal Inequality & Inadequate Safety Nets

• Hourly and gig economy workers are especially vulnerable; state systems are overwhelmed.
  • "Even if they got the $1,200 one time check, that's not enough money..." (Emily) [11:59].
  • Criticism of recent paid sick leave law: covers only workers at companies with fewer than 500 employees, leaving out millions [12:58].
  • "What they've done with paid sick leave is a national embarrassment." (Emily) [12:58].

Optimism About Congressional Action?

• Felix: "Congress has unlimited bites at this apple... They will continue to pass new bills for as long as this crisis continues." [13:34]
• Possible expansions: rent, utilities, healthcare costs waivers, universal paid treatment.

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4. Political Scandal: Congressional Insider Trading

• Senators Richard Burr and Kelly Loeffler dumped millions in stocks after coronavirus briefings while publicly denying the threat [15:30-19:47].
  • "Burr understood what was about to happen...was telling people privately...He was making trades based on that information. Then he was going out to the public and giving a whole other story. To me, that's even more shocking than trading on the information." (Emily) [19:01].
• Legal loopholes let Congress evade prosecution; only public exposure might force resignations (Felix) [17:14-18:22].
• The incident exposes deep flaws in both ethics and transparency in U.S. governance.

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5. Signals from China: Cautious Optimism

• China reports zero new domestic coronavirus cases and over 90% of large businesses back online [20:43].
  • Felix references "The Hammer and the Dance" Medium post to explain the need for strong early action ("the hammer") and the careful easing ("the dance") [20:43-22:42].
• Doubts raised about the sustainability and completeness of China's recovery.
  • "Any type of V-shaped recovery is incredibly unlikely...could be slow going for a while." (Anna) [22:42].
  • "You have to wait around 14 days to see that...One day isn't enough to make a trend." (Emily) [23:23].

U.S. Testing Troubles

• America lacks comprehensive data on case counts due to testing shortages [23:42-24:34].
• Bringing cases down, ramping up medical capacity, and learning from Asian monitoring practices are seen as urgent priorities [24:56-26:49].

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6. Healthcare, Capacity, and Inequality

• The hospital ship for New York demonstrates slow federal logistics but a needed increase in capacity [27:40-28:11].
• The crisis could depress non-COVID deaths (fewer car accidents, flu) — a "silver lining" in public health [28:39-29:45].
• Environmental benefits (air quality) noted due to economic slowdown—but not viewed as a template for climate action (Anna) [29:51-30:16].

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7. Corporate Bailouts, Stock Buybacks, and Capitalism's Role

• Should bailouts include restrictions? Debate over banning stock buybacks, imposing climate conditions [31:21-32:08].
  • Anna: Temporary restrictions make sense when companies have outstanding government loans; beyond that, may be punitive.
• Felix on the true purpose of capital and risk:
  • "That's capitalism kind of working the way it should...if and when a pandemic arrives, [investors] lose money, and that's how things should work." [32:50, 35:15].
• Anna pushes back: "This is something that is truly unique...that's very different from what's happening here." [33:58].
  • Felix: "The businesses continue because they've already received the money from the investors...the risk materialized and they lost a bunch of money, and that's how things should work." [35:15].

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8. The Numbers Round

1. Xenophobia and Deglobalization

• Felix: "12" — the number of U.S. journalists expelled from China, indicative of growing nationalism [37:44].
  • Prediction: the pandemic accelerates deglobalization and nationalism [39:18].
• Emily: Silver lining may be voters' rejection of populist, anti-globalist leaders [39:18-40:11].
• Anna: Worries deglobalization is here to stay [40:11].

2. Gold-Silver Price Ratio

• Anna: "123.78" — the highest gold-to-silver price ratio in 5,000 years, reflecting market chaos [40:50-41:34].

3. Health Insurance Inequality

• Emily: "$6,500" — the deductible faced by an Amazon driver she interviewed [41:49]. Contrasts the desperation of essential workers with the privileged (e.g., rich New Yorkers paying $5,000 per year for concierge medicine and rapid COVID-19 testing) [43:25].
  • "Just shows you the extreme inequality." (Emily) [43:27].
• Felix: An effective safety net is crucial—countries that have succeeded against COVID-19 have universal healthcare; the U.K. remains better positioned than the U.S. due to its NHS [43:34-45:11].

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Notable Quotes & Memorable Moments

• "This isn't really stimulus. We're just trying to bridge it until we can get it back going." — Emily [08:08]
• "You can never be too early or too aggressive." — Felix [06:10]
• "Congress has unlimited bites at this apple...They will continue to pass new bills for as long as this crisis continues." — Felix [13:34]
• "What they've done with paid sick leave is a national embarrassment." — Emily [12:58]
• "To me, that's even more shocking than trading on the information...not doing his duty as a public servant." — Emily on Senator Burr [19:01]
• "The lesson of the coronavirus is that you can never be too early or too aggressive." — Felix [06:10]
• "That's capitalism kind of working the way it should." — Felix [32:50]
• "If you want to prevent losses in the event of a pandemic, don't have wealth; just go out and spend your money instead." — Felix [35:15]

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Timeline — Key Segments with Timestamps

• [00:12] — Episode theme: Congress stimulus talks and economic impact of COVID-19
• [02:11-04:06] — Breakdown of proposed checks and missed targeting
• [06:10] — "Never be too early or too aggressive"
• [07:26] — Unemployment spike; systemic risk
• [08:08-08:54] — "Not stimulus, a bridge"
• [10:57] — Importance of functional markets and clearing
• [11:59-13:34] — Safety net failures, Congressional inaction
• [15:30-19:47] — Senatorial insider trading scandal and structural corruption
• [20:43-22:42] — China's "Hammer and the Dance" response
• [23:42-24:34] — U.S. lack of testing data, need for suppression to re-open economy
• [27:40-28:11] — Hospital ships, medical capacity ramp-up
• [31:21-32:08] — Corporate bailouts and buyback restrictions debate
• [32:50-36:56] — Felix and Anna debate the point of capital, risk, and crisis losses
• [37:44-40:11] — Numbers round: expelled journalists, deglobalization fears
• [40:50-41:34] — Gold-silver ratio historical record
• [41:49-43:34] — Health insurance inequality, essential worker struggles

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Tone & Style

The conversation is brisk, informed, and balanced between urgent realism and the hosts’ characteristic dry humor. While critical of policy failures and attuned to the mounting human costs, the hosts seek out positive lessons and global perspectives. They do not mince words about corruption, inequality, or the scale of the crisis, and aim their critiques both at structural forces and specific leaders.

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Conclusion

“A Bigger Hammer” thoughtfully captures the uncertainty and urgency of March 2020. The hosts analyze the initial U.S. federal crisis response, compare global policy measures, underscore both technical and moral imperatives, and highlight how the pandemic exposes deep fault lines in American society and economics. They warn that the crisis may fundamentally reshape markets, inequality, and globalization—evidence, perhaps, of the world hammering out a new order in real time.

Transcript

[A]

Foreign.

[B]

Welcome to the Bigger Hammer episode of Slate Money, your guide to the business and finance news of the week. We had a mini episode on Wednesday to try and keep you caught up. We have a full episode today, but it is impossible to keep up with what's going on right now. We're going to do our best to cover what's going on in Congress, what's going on in the world, how the coronavirus will affect the global economy. All of these questions in this episode. I'm Felix Salmon of Axios. I wrote a newsletter this week, Axios Edge, with a whole segment about the sort of what this means for investors in the stock market. We don't cover that this week, but we are definitely looking at that. And if you have any questions about your own investments or anything else, do please send them in on slatemoneylate.com and we will do our best to answer them. With me, I have Emily Peck of HuffPost, hello. Who's going to try and explain how this crisis is hitting like hourly wage earners and that kind of thing. With me, I have Anna Shymansky of Breaking Views.

[A]

Hello.

[B]

Anna has a whole Sleep plus segment about Brazil, but she is also going to have a little fight with me about what is the job of capital during a pandemic. All of that coming up on Sleep money. So let's start with America and the bailout. We're all getting a check, or we will all be getting a check in what, two or three weeks perhaps from Steve Mnuchin for like a certain amount of money. It'll be up to $1,500. And then if you earn more than like $150,000 a year, it'll start going down after that.

[C]

Well, it's not even so the Congress has sort of gotten behind slowly this idea of sending out checks to Americans. Mitt Romney proposed $1,000 checks, I think earlier this week. And then On Thursday, Mitch McConnell put out his proposal for coronavirus emergency stimulus. And in that proposal he did propose direct cash payments to Americans. But probably a lot of people, they're not that great. So it's $1,200 per adult. But the checks start diminishing after for people who make over $75,000 a year. And they phase out for those making $99,000 a year and above. So that's one thing. And they're also smaller, the checks. They're only around $600 for poor people. So to be clear, poor people under this proposal from McConnell would actually get less money than middle class people because they don't get tax refunds.

[A]

What is classified as poor. So, like, what exactly is the level where that cuts off?

[C]

Right. So it has to do with if you filed a for if you owed taxes or not. So people who didn't have any tax liability in their claims, I believe are getting going to get less back because they're framing it as kind of like a rebate. So one person, a former Obama administration official, did one analysis and said people making less than $40,000 a year might get almost nothing under this proposal. And this is just a proposal, and I think it's going to go through a lot of machinations before anything actually comes of it. But I wouldn't wait breathlessly by the mailbox for the next two weeks waiting for your check. Like, it seems like this is going to be a bit of a struggle to figure out for Congress.

[B]

There's going to definitely be a bunch of political horse trading on Capitol Hill. There will be some kind of a stimulus. But it seems that at least in the first instance, there's not going to be a bunch of what we were talking about last week, which is targeted stimulus aimed at the people who are worst affected by the coronavirus recession, that is the people who've been laid off. People in the entertainment industry, the travel industry, the restaurant industry, that kind of stuff. We're not seeing a massive increase in unemployment insurance. We're not seeing a bunch of bills saying the government is going to pay businesses to keep people on payroll. Like that's what Denmark is doing, that Denmark is paying up to 75% of the salaries of affected businesses to allow them to keep people on payroll. France is coming out and saying that businesses don't need to pay rent if they need to close for this period. All of these kind of very targeted interventions seem not to be happening. And instead we're doing a vague kind of helicopter drop. Everyone gets something. Maybe the richest people, depending on how much they earned in 2018, might get less money. Maybe the poor people might get less money because this is America, goddammit.

[A]

And.

[B]

And it doesn't seem like anyone is really thinking about this in terms of what's going to be the most effective. Instead, they're thinking about this in terms of some other kind of weird political calculations and also what's practically the easiest to implement on a practical basis.

[A]

Yeah, I would say that yes, on the one hand, in theory, we would want to do this in the most effective way possible, but this is such a potential disaster that I feel like they should just do More rather than less. And do whatever you can quickly. Because the longer it takes to do this, the more damage there's going to be and the more expensive it's going to be.

[B]

This is a piece that I wrote for Axios on Friday which is basically saying the lesson of the coronavirus is that you can never be too early or too aggressive.

[C]

Yeah, I think I said that last week. Just do more, do it now and keep doing it. Like there's no shortage of things. Like you can't think too big on this. Everyone is going to be affected. Unemployment claims are skyrocketing. State unemployment offices are already overwhelmed. People can't get through to even file for unemployment insurance. The emergency package that passed Wednesday did have a little more money going from the federal government to the states because one massive problem is going to be states, they have to balance their budgets and all of a sudden they have less tax revenue coming in and then they can't pay for all the benefits that people are gonna need right away, like unemployment and stuff like that.

[A]

The one slightly positive is that states went into this incredibly flush. If you look at actually states have these massive rainy day funds. I think California's rainy day fund was like $18 billion. So that is the only positive thing I will say now that's not this true for all case Illinois, their rainy day fund is like $4 million. But for the majority of states, that is actually one thing that they could tap that.

[B]

And we have to understand, because this happens at the state level, all of this unemployment money which is coming out is over and above any federal stimulus. At some point, as Emily says, the federal government is going to wind up having to send money to the states in order to pay an unprecedented spike in unemployment claims. Goldman Sachs is forecasting that the, the next week, when the big first week of unemployment claims numbers comes out, we're going to see 2.2 million new claims for unemployment, which is just a number which is unimaginable. Yeah, it's like never in American history has it been even half that.

[C]

One thing I was thinking about, we're calling this a stimulus package, but this isn't really stimulus. We're not trying to stimulate the economy. We're just trying to bridge it until we can get it back going. Because the, the point right now is to stop the economy and to keep everyone from like crashing out. It's not to stimulate anything. Like, that's not actually what the problem is at all.

[A]

That's a good point. And that's actually similar to, you know, what The Fed's doing like the Fed isn't buying long term bonds because they're like, oh well, we're going to lower long term rates and that's going to stimulate the economy. It's like, no, we just want to keep this market going. And that's exactly the same thing here. I mean, you're just trying to stop it from imploding because if you don't, I mean, this would be the kind of economic crisis that we've literally never seen.

[B]

So my former employer, Nouriel Roubini is doing his doctor Doom thing on Twitter and he's talking about this, he's saying, well, there are people talking about a V shaped recovery and then there's this U shaped recovery and then there's just an L shape. And then he's like, I think it's going to be an I shaped, which is just a depression where it just keeps on going down. And that's a real possibility. I don't necessarily think it's the base case scenario right now, but it is important to just try and get as much activity moving and as much things clearing like the credit markets right now. Nouriel and I vividly remember the credit crunch of 2007, which then became the financial crisis of 2008. And the credit markets right now are looking, I would say, worse than they were in 2007. And it's not, you know, we don't.

[A]

Have.

[B]

The same kind of systemic built in problems that you had in 2008 with mortgages, so that's less of a problem. But what we do have is just especially the Fed coming in and the ECB as well coming in with just basically unlimited amounts of liquidity to try and keep markets clearing. When you have the government needing to borrow a trillion dollars in a very short amount of time to send checks out the door as part of the stimulus package, you need to have the markets able to operate enough to be able to lend the government that trillion dollars. These things need to be able to function. And a lot of what we're seeing is just keeping the economy fun functioning.

[A]

Exactly. I mean, when people are talking about, you know, like, you know, the commercial paper market, like the Fed stepping in, making sure which is connected with money markets as well. This is how a lot of businesses access short term capital for them to pay for payroll and rent. So it's vital that these, especially these short term markets function properly. So it's not about the government like bailing, it's not bailing out, it's just.

[B]

Sustaining right And I think this is the main thing that we should keep top of mind when we're thinking about markets is that historically when we look at markets, what we tend to do is we look at the levels of the market. Like, is the market up? Is the market down? And if it's up, people are happy, and if it's down, people are sad. But I think that's the wrong way to look at markets right now. And the right way to look at markets is just, are they clearing? Are they doing their job of being able to move capital around to where people need capital? And right now there are strains in the markets, but they are clearing and they are working. And that's one of the main things that we really need to continue to work right now. And obviously one of the other ones is just the Internet. All of us are working from home. We're all recording from our sheltering in place. It would be so much worse if we didn't have this Internet system, which seems to have held up incredibly well. And that's also a little piece of good news.

[C]

Right now I'm feeling okay and sort of confident that the Fed is going to do what it can do to make sure things are moving and people are able to get the money they need, companies are getting the money they need, et cetera. My concern really is for all those people filing the unemployment claims and all those small businesses who might go under right now and might not be able to come back later. I mean, you're really looking at a massive catastrophe for like what, 20% of the American workforce? I mean, these people are really working paycheck to paycheck. And even if they got the $1,200 one time check, that's not enough money to do much of anything. Like you have to pay rent, keep the lights on. If you get sick, you need to be able to get health insurance. Like we're talking about like a massive human catastrophe if Congress doesn't get its act together and figure out how to do a real package. And I'm actually really worried about it because they've already had two bites at the apple and both bites have been kind of like nibbly and not good yet. I mean, what they've done with paid sick leave is a national embarrassment. The version they passed on Wednesday gave paid sick leave only to people who work at companies with less than 500 employees. So leaving out millions and millions and millions of workers at these large companies, many of whom are still actually working and aren't unemployed and are at the in the Most at risk of getting sick.

[B]

So that's a really, really good point. And I'm going to be a little bit optimistic here, which is, first of all, Congress has unlimited bites at this apple. Like, no matter how weak the bill it passes right now is, if things continue to go catastrophically bad, Congress will still exist and they will still be able to pass new bills. And they will be able to continue to pass new bills. They will come up with some kind of remote voting protocol if they need to, and they will continue to pass new bills for as long as this crisis continues. And to your point, yes, people right now have this feeling that they need to pay rent, they need to pay utilities, and they need to pay healthcare bills. Congress right now, it doesn't look like they're going to do this, but at some point in the future, absolutely has the ability to pass a law saying, you know what, right now you don't need to pay rent. It has the ability to pass a law saying you don't need to pay your utilities. We're going to deal with utilities and we're just going to have them, you know, not bill you for these months. It has the ability to say all treatment is going to be free for the next however many months. Like, all of these things are within Congress's power to implement. And although it is not doing it yet, I hold out hope that if and when those things become necessary, like, at least we will have the ability to do them.

[A]

Yeah. And if you compare to 2008, how long it took for anything really to start, like, the only thing, one of the few pluses I'll say is at least people are now they're getting their act together somewhat quickly. And even though, yes, it would be nice if Congress was doing it faster, I do think that if what we've seen thus far continues, it shouldn't be too long before something significant is in place. And they can always add to that after.

[B]

So the other thing that Congress is doing is insider trading. Emily, we have to cover this because it's quite astonishing. Let's talk a little bit about Richard Burr and his friends on the Intelligence Committee.

[C]

Richard Burr is the Republican senator from North Carolina and he chairs the Intel Committee, as Felix just said. And he knew for a long time what was going on with coronavirus. At the same time, he was reassuring the public that everything was fine. He was telling he was at a private function warning people that things were going to be really bad and the economy is going to get really hit hard. Oh, and on February 13, while he was still saying things were going to be fine in public. He sold about $1.7 million worth of stock before everything kind of crashed. Do I have that right?

[B]

And he. And he also specifically sold stock in, like, hotel companies and while buying stock, I believe. No. Yeah, he sold stock in hotel companies. And then it was Loeffler who started buying stock in, like, Citrix. Remote working companies.

[C]

Yeah. So separately, another senator, Kelly Loeffler, who is married to the president of the New York Stock Exchange, also a Republican out there in public saying, everything's gonna be fine. And Trump's got this, don't even worry, it's not a big deal. Democrats are kind of making it seem worse than it is. She also, along with her husband, sold a bunch of stock in companies most likely to be affected by the coronavirus and then bought stock, as you said, in Citrix, which is. Specializes in part in working from home software to help you work from home. So people.

[B]

She claims, like, just to be clear, she claims that she didn't make that decision and it was all done by some third party financial advisor. So if that is true, then that's just an amazing trade by her third party financial advisor and, like, what an amazing coincidence. But, you know, she just got very lucky. Burr is just saying, well, I sold before the stock market went down, so that means I'm fine. But it's like, no, that's the very strange logic. This is the real scandal here is that this is legal. Like, everyone is like, they should be prosecuted for insider trading. There was a big attempt to try and make members of Congress liable for insider trading laws. It failed. And the compromise was that they would have to at least report their trades, which is how we know that they did this. And there is no law against them doing it. They just, we just need to be able to see that they did it. And now that we have seen that they did it, basically the only thing that can happen is that public opinion forces them to resign. As far as I can make out.

[A]

Yeah, it's just, it's amazing to me, like, when comparing to the restrictions you have if you work for like a private equity firm, like the regulations that you have as an employee about when the approval you need to get for trades and the fact that if you work for the government, apparently you can just do anything you want is.

[B]

Never mind. Being a financial journalist, I don't own any individual stocks at all.

[A]

No, none that I manage myself. That's the real scandal here. Yes, these people are just awful. But that's part of a larger system that's enabling people to do this. And until that system is changed, people are going to continue to do this.

[C]

I feel like I was just most scandalized by the fact that these people knew what reality was like. Richard Burr understood what was about to happen in this country, was telling people privately he was being straight with people and saying what the coming situation was going to be like with this pandemic. He was saying it privately. He was making trades based on that information. Then he was going out to the public and giving a whole other story. And to me, that's even more shocking than trading on the information. It's keeping that information close and not doing his duty as a public servant and informing the public of the actual risks that were coming. That is a scandal, to me.

[B]

That is a scandal. And I actually blame Trump for that.

[A]

Yeah, I agree.

[B]

Because there was a point many, many, you know, millions of years ago when the US Senate was this grand deliberative body full of wise old gray beards who would, you know, try and do what was best for the country. But obviously, over the years, it has become increasingly politicized. And under Trump, basically, anyone who does anything that Trump considers to be disloyal can forget about being reelected. And so they are. They feel incredibly constrained in what they say, and they feel that the only thing they're allowed to say is whatever Trump is saying, and that's deeply unhealthy to any kind of civil society.

[A]

Yeah.

[C]

And we're seeing how that shakes out right now. It's terrifying.

[B]

Let's move on to a little bit of good news for those of us who are on the FedEx earnings call and anyone else who's been looking at China. China recorded zero new domestic cases of coronavirus on Thursday. And they, according to FedEx, like, more than 90% of the big businesses are back running again. More than two thirds of the small businesses are back running, running again. And I am just going to jump in here and say that everyone who listens to Slate Money should get onto Medium and read the Medium article about the Hammer and the Dance, because this explains the way that the world can and should respond to coronavirus better than any other piece of writing or audio or anything else that I've, I've come across during this crisis. And basically what we had in China was we had the hammer. They brought the number of new cases down to zero. And now they're beginning the dance. Now they're saying, okay, we can allow the economy to start moving again. We can allow people to start going back to work again. And you know, probably there will be some new, new cases if we do that. But we have it under control and we have like the right knobs and levers and dials. And if we need to crack down again, we can. But so long as we keep this number called R0, which is basically the number of people that any infected person infects, as long as we keep that below one, we're fine. And probably in China right now, like under the hammer, when they really cracked down, it was down to about 0.3. So they can bring the amount of activity in the economy back up substantially from where it was and still function as an actually important global economy. And that for me is a really optimistic little data point.

[A]

So I agree, I mean, I will say just a little bit of caution that there are also a lot of activity indicators coming out of China that are still really not good. They're better, but especially things that are related to consumption are still. And even though now you have a lot of migrants who have moved back from their homes to the cities, they're not necessarily finding any work there. So I agree that I think clearly once China kind of got its head around this, they reacted well in certain ways and so they should see a recovery. But I think any type of V shaped recovery is incredibly unlikely. And I think it could be slow going for a while.

[C]

And I was under the impression that even though there was one day where there were no domestic cases, you have to wait around 14 days to see that. That has to happen every day for around 14 days before we can say that, you know, they kicked it right? I mean, one day isn't enough to make a trend.

[B]

That's absolutely correct. But we know what the trend is in China. The interesting question is, do we know what the trend is in the US and we do not know what the trend is in the US we have no idea how many people have the coronavirus in the US because we don't have any testing. As the testing rolls out, the number of positive tests is obviously going to go up. It's just going to be a function of how many tests you do, basically. And it's going to be a very, very long time. Well, not very long time. It's going to be a few weeks before we can get a handle on is the number of people with the virus in the US at least flat or going down rather than going up. And before you can start beginning to open up the economy again, you really want this not only to be going down, but you want it to have gone down substantially to somewhere near zero.

[A]

Yeah. And I do think it's important to focus, to bring up some of these more positive statistics, because I think in a moment like this, it can seem like everything is just going to fall apart and that there's nothing anyone can do. But I think when you see this, you can see like, well, no, if people actually stay inside, if people. People follow the rules, this disaster will be substantially less.

[B]

It will be substantially less. Yeah. No, it's going to be bad, and we're going to need to wait. I mean, let's assume. Which is absolutely not the case, but let's assume that everyone in the United States is basically sheltering in place at this point and is not really having a lot of human contact with other people. That's good. The number of cases will still continue to go up for the next week or so. Number of actual real cases in the world, not the number of measured cases. They will continue to go up, but then it will stop going up and, you know, the hospitals will be overloaded and there will be this medical emergency. But then it will, with any luck, start going down and start going down quite quickly as people don't have contact with each other. And then that gives us time to start building out more medical capacity to, you know, because, like, come the fall, there will be another uptick in Covid cases. But, like, we have time between now and the fall, and maybe in the fall, we have enough time to get a lot of masks, get a lot of tests, get a lot of respirators and ventilators and put ourselves on a footing which makes us much more capable of reacting to this epidemic. And then you can allow people, you know, in a few weeks to start, you know, going back to work and that kind of thing with much more confidence that there's a plan. Right now, there is not a plan, and the only thing you can do is buy yourself time to create a plan.

[A]

Yeah. And one sorry, one last thing I'll say is that one of the things you've also seen in a number of other Asian countries that have done a really good job with this is that they, when they started kind of allowing people to go out, they were heavily monitored. So, like you're going into a restaurant, your temperature is taken. And while that may seem intrusive, I think a lot of people would, at a certain point, rather have that than having to just stay inside.

[C]

Absolutely. And one other thing in that medium post Felix shared with us, I already kind of knew and had read about, but really was hammered home was how important it's going to be to have the hospitals have the capacity to treat people. And what a rolling disaster it would be if the US Was all of a sudden flooded with COVID patients. Because that kind of creates this snowball effect where other people who are sick can't get care. And then you're seeing a huge fatality rate for the COVID cases, but then more fatalities for, you know, people who are coming in with heart attacks or strokes or the potential for catastrophe is so high that if we can buy the time right now and to ramp up that hospital bed capacity, which I guess New York state is kind of leading this a little bit, they're having a hospital ship, right? A navy hospital ship is going to.

[B]

So the navy hospital ship is coming in two weeks, because apparently it takes two weeks. They literally. They could have started, like getting out this ship two weeks ago, but it was just sitting in Virginia gathering dust. Now they need to start making it work. And then in two weeks time, it will arrive in New York. And yeah, that this hospital ship, when it arrives in New York, will not have any COVID patients. It will have all of the other patients that would otherwise normally be in hospital to free up space in the hospitals for COVID patients.

[C]

Right. And so that, to me, the post that you shared really hammered home the importance of ramping up our medical capacity and our hospital capacity and just what a difference that can make in the fatality rate. And there just seems like there's a lot that needs to be done. So it seems state governments kind of have it under control. But again, I say the federal government does not seem to. There seems to be more to be done there while we wait the hammer to get bigger, you know, the hammer.

[B]

We definitely need the hammer to be as big as possible, that's for sure. And the hammer has come down in California. The whole state of California is under shelter in place right now, but it's not coming down in much of the rest of the country. We need to have this in basically everywhere. And then once it does, yeah, we can build out this capacity. What fascinates me is that in terms of total deaths, like, if you manage to bring the hammer down and get the COVID deaths down, all of this is incredibly good for saving lives in other ways. Like, the number of flu deaths comes way, way down for exactly the same reason as the number of COVID deaths does. Because you have social distancing and people don't catch the flu. You get like People are driving less. So you have fewer car crashes, you have fewer homicides. There's this fascinating study of what happened to illness and death during the Great Depression. And it actually went down rather than up. Counterintuitively that recessions seem to have surprisingly good health outcomes. If you want a little silver lining.

[C]

Here, a fast moving economy is bad for the environment and bad for the health of the population. Maybe we.

[B]

Well, actually, I mean, the environment, that's actually a non trivial thing. I've seen some mathematics on this just in terms of China, that the number of lives saved by the decline in air pollution in China is greater than the number of lives lost to Covid.

[C]

Yeah, I mean this is a really good experiment, you know, in collective action to solve the climate crisis. Right. Maybe we just need to. Social distancing.

[A]

I don't think this is the. Yeah, I think that would create a number of problems that probably wouldn't be the ideal solution.

[C]

Are you sure? Okay.

[B]

When it comes to bailouts, one of the things that the American government is trying to work out what to do is try and work out what to do with the airlines. Obviously the airlines are barely flying right now. They're losing a lot of money. And the question is, do you try and keep the airlines operating as best possible so that when we're on the other side of this, they can go back to the status quo ante or not? And I have this weird feeling that this is our opportunity. If you let the airlines go bust, it takes a long time to rebuild those networks and it results in flights being rarer and much more expensive. And I'm like, is that a bad thing? You know, like from a climate perspective you want flights to be rarer and.

[A]

More expensive for individuals, but I mean, you're talking about an entire logistics system. I mean like, it's bigger than that. I mean, you kind of can't let the airline industry not function, but you.

[C]

Have restrictions on the bailout money so that they function in a more climate sensitive way. I mean there's so much, there is a lot of talk right now about how to structure these corporate bailouts so companies can't just. For example, I think Elizabeth Warren doesn't want them to do stock buybacks ever again. I wanted to bring.

[A]

Which is. Okay, can I just say one thing? Like, okay, like I understand saying that, like if you're going to give a company a loan until they have paid back that loan, I can see having some restrictions on how that money can be used that I get. But anything beyond that, it Just, it makes me actually kind of angry because I'm like, the companies didn't cause this complete government incompetence cost us. So I don't think we should be like, harming companies. I also don't understand why Elizabeth Warren is so obsessed with stock drawbacks.

[B]

But I will say that the way that the treasury proposal structured the corporate bailouts seemed quite good to me in terms of not bailing out the shareholders or the bondholders. It was secured debt, which basically means that, you know, if the company goes down in value, the government ends up owning a large chunk of the company. Both the president and Larry Kudlow have said quite publicly that they're perfectly comfortable with the government owning stakes in companies. I think that's correct. And the, the corporate bailouts are not really going. And they're loans, they're not grants.

[A]

Yeah, they're not really good.

[B]

You know, that, that bit of it seems to me to be structured the right way. My. The way that I'm looking at this generally in the big picture way is that people with wealth in the world are a minority of the people in the world. And what they do with their wealth a large part of the time is they wind up taking risks, investing it and taking risks, and they put it in the stock market and they put it in the bond market. And all of those investments carry risks. And one of the big sort of tail risks that comes with those investments is that a global pandemic can strike and the value of their investments goes down. And that's kind of the job of people with wealth is to provide this loss, absorbing capital, something which can go down in value when a crisis hits. And that's exactly what we're seeing right now. The value of bonds is going down, the value of stocks is going down, the value of gold is going down. Basically, the value of things that people with wealth have is going down. And that's capitalism kind of working the way it should. And I'm in a weird way heartened by that.

[A]

I'll agree with that to a certain point. I think you can't have an economy functioning where any investment or business decision, you're thinking, well, what if we had a global pandemic next year that stops all production? Because if you did that, you would have an economy that wouldn't function. And so I agree with you to a certain extent that part of the reason you get a return is because you're taking on risk, so there can be some loss there. But I do think that this is something that is truly unique this is not a normal, oh, we had a recession. People made some bad investments, they had too much leverage. That's a, that's very different from what's happening here.

[C]

So Felix is saying it's okay if investors lose money. And Anna, you're saying, not this time.

[A]

Well, and I'm not saying that investors can't lose the money. I'm not saying the goal should be to make sure that every investor is flush. That's not what I'm saying. What I'm saying is if you're thinking of people are investing capital and that's how companies are able to function, if everyone is investing and then the companies themselves are using that capital in such a way always within the back of their minds. Well, I need to make sure I have enough of a buffer so that if there is a global pandemic, I will be fine. That's not how it happens.

[B]

That's not what I'm saying at all. I'm saying the exact opposite. I'm saying that companies should not be worried about that and the companies will continue to operate. And the investors in the companies, the risk takers, not the companies themselves, but the risk takers, the people with the stock and the bonds, they are taking the risk that there's going to be a pandemic. And that's a very low risk. It's a tail risk, but it always exists. And if and when a pandemic arrives, they lose money. The businesses continue because they've already received the money from the investors when they issued the stock and the bonds. And that's like, that's the right way for capitalism to work. And the investors took a risk. That's what it means to be wealthy on some level, is to delay consumption to the future and take the risk that you won't be able to spend that money in the future. And they took that risk and the risk materialized and they lost a bunch of money, and that's how things should work. I'm not for a minute saying that people should operate in the expectation that there's going to be a pandemic or that they should try and prevent losses in the event of a pandemic. I'm saying that if you want to prevent losses, but in the event of a pandemic, don't have wealth, just go out and spend your money instead.

[A]

Going to think, that's not, that could be ideal way how we want to run our economy. But look, I agree with you.

[B]

That's like, that's, that's, that's capitalism. I mean, Literally saying, that is how we have been running our economy. That is exactly how the economy has been growing up until now and that's how the economy will continue to grow on the other side of this pandemic, when we come out the other side.

[A]

Fair, we don't need to go in this argument. I think that's with everything that's going on, I feel like this is not. But only last thing I'll say is that what happens to investors affects the ability of companies as they move forward. You can't divorce the real economy and the financial economy entirely, especially with something like this, because the ability of investors to access more capital, the ability of investors to grow, the ability of the economy to function is based on having capital markets that work. And if investors are so gun shy because they were all just wiped out, that could cause some problems. Now, do I think they should all be completely bailed out? All the investors? No, I'm just saying this is a unique circumstance.

[B]

Let's have a numbers round. I'm going to start, I think with 12, which is the number of journalists that China expelled in its latest tit for tat war with America over journalists. And they basically kicked out all of the journalists working for the Washington Post, the New York Times, the Wall Street Journal, the Voice of America. And they said you have to leave the country and you can't even go to Hong Kong. You just need to leave everywhere. And this came after America effectively kicked out about 60 odd Chinese journalists. And it comes against the background of China basically, which is the main manufacturing hub in the world for face masks, basically refusing to export any face masks until all of the Chinese demand for face masks was filled. There is this extreme nationalism that is happening against the backdrop of the pandemic. And when you see countries putting up national borders, not allowing people in or out, that happens on a national level. We're seeing a lot of this nationalism. And I worry about this because I feel that there was already a trend towards less global cooperation and more nationalism and that this pandemic is only going to exacerbate that. And that could well continue long after the coronavirus crisis has passed.

[C]

I've thought about that because some of the countries affected the most right now have elected these populist leaders, like us, like Italy, like the uk. And my positive thinking on this is that these leaders are doing such a bad job and the nationalism has failed. And coronavirus really does need to be fought with a global outlook, even though so much of it is about shutting down, you know, borders and Keeping everyone at home. There has to be some kind of global coordination. And these populist leaders have done such a bad job at that. It runs against everything they seem to believe in that I'm slightly optimistic that they'll all get voted out and we can maybe get back to some kind of global cooperation or more globalist thinking in the future, maybe.

[A]

Sadly, I kind of feel like, especially the last year, everyone is talking about this deglobalization, this kind of end of this era. And to me, this is like the ultimate coda on the end of the era of globalization when literally you have people locking themselves down. I kind of feel like we are not going to go back to globalization as we were before. I think it's much more likely that countries are going to become much more isolated, that trade is going to decline, that supply chains are going to become much closer, which will probably also end up potentially increasing prices. So I'm not overly positive about this.

[B]

Anna, what's your number?

[A]

So My number is 123.78. That is the ratio of gold and silver prices from a few days ago. That is the highest that number has been in 5,000 years.

[B]

So that's the gold price divided by the silver price?

[A]

Yes. Now, obviously, the data we had from, like, Pharaoh's time is probably somewhat suspect, but we do, in fact have data. And as of, like, looking at the data we have, it is, in fact the highest it's been in 5,000 years. Now, don't try to get me to explain why exactly that is because like anything right now, it's incredibly. There are about 8 million reasons why. But I thought that was interesting. So.

[B]

But this is interesting, that gold, the price of gold has been going down with everything else. But basically what you're saying is that even if the price of gold has been going down, the price of silver has been going down even more. Exactly, Emily.

[C]

Interesting. My number is $6,500. That is the healthcare deductible of one Amazon driver I spoke to yesterday that I can't stop thinking about. She pays $98 a month for health insurance, but then has a $6,500 deductible, which essentially means she's paying about $600 a month for health insurance. She only makes about $18 an hour right now driving, and has very limited protection against, you know, getting coronavirus, not able to work from home. She's out in the truck all day. And because everyone is home right now, Amazon is seeing an amazing surge in business. So she's being pressured to drive for, I think, eight or ten hours a day as fast as she can. So she said that means she doesn't really take bathroom breaks or breaks to eat or anything like that. And just talking to her really reinforced how precarious people's economic and health situations really are right now and just how bad the safety net is in the United States. I feel like we can't talk about enough because maybe the situation will finally make people realize, like you have to do something. People can't have $6,500 deductibles. Oh, and then the thing I wanted to compare it to is this great story in Reuters about a medical concierge service in New York City that rich people pay $5,000 a year to belong to. So contrast that with the $6,500 deductible and those people of the concierge service were able to get Covid tests to their homes right now.

[B]

So at a price.

[C]

At a price, in addition to the $5,000 a year. But I mean, it just shows you the extreme inequality.

[B]

This is why the NBA players all got tested. This is why, like, you know, Idris Elbow or whoever got tested is because if you are rich, you can get these tests. And it is a ridiculous two tier system. I mean, part of the problem, the main problem, of course, is just that there aren't enough tests. And the, one of the main reasons we need to buy time is to buy time to get a lot of tests, like tens of millions of tests, possibly hundreds of millions of tests into America so that people can be. Everyone can be tested, everyone can be tested multiple times. Everyone can know exactly who has it and who doesn't. That really helps enormously. And it's almost more important than a vaccine. So that's huge. But I can also recommend Max Fisher piece in the New York Times basically saying that if you look at the countries that have been successful in fighting the coronavirus versus the ones that have not, been, having an effective medical safety net is just crucial. And I'm looking at the UK right now, which just seems to have the most shambolic response imaginable to coronavirus. And Boris Johnson is the worst conceivable leader you could have in the face of this crisis. But the thing it has is the National Health Service. And like just that alone puts it on a stronger footing than the United States. You need people to get treated and get tested and not worry about health care costs. Because if people are worried about health care costs, that increases the amount of other people that they infect.

[C]

That is correct. And most people are worried about health care costs.

[B]

On which depressing note, we are going to wrap up this episode of Slate Money. Thank you for listening. Thank you to just me and Molly for managing to stitch together three different audio tracks into a single podcast from three different parts of New York State. Do keep the emails coming. It's slatemoneylate.com and we will talk to you next week on Slate Money.

[A]

Sam.