THE FINAL DAYS OF DONALD TRUMP - HIS MISHANDLING OF THE CORONAVIRUS AND THE COLLAPSE OF THE AMERICAN ECONOMY MAY PUT TRUMP ON THE LAM - "Trump himself dodged to the three-year-long high-crime (and misdemeanor) spree."

Is There Any End in Sight to Coronavirus’s Economic Carnage? I’m your host, Benjamin Hart, and today I’m chatting with business columnist Josh Barro about pandemic panic on Wall Street and beyond.

Ben: As you wrote this morning, pretty much all economic indicators are flashing red, as coronavirus anxiety hits every corner of society. The stock market plummeted so much this morning that trading had to be halted; a coronavirus-related oil-price war between Saudi Arabia and Russia has sent oil prices plummeting; the yield on a ten-year U.S. treasury bond went below 0.4 percent for the first time in history. Do you see any scenario where the financial situation calms in the near future? Or is recession — at the least, a small one — the inevitable outcome here? Josh: A severe economic disruption is inevitable. As for a recession — that’s defined as two consecutive quarters of negative economic growth. As recently as Saturday, I was talking with Tim Duy, a macroeconomist at the University of Oregon, and he was saying we might still avoid recession. Disasters like this hit the economy hard but often the recovery out of them is fast — people just start doing what they had stopped doing and the economy goes back to normal quite quickly. My gut feeling is this crisis is going to be too widespread and prolonged for that “natural disaster” model to apply — an earthquake or hurricane does not hit the entire world for months — but I’ve been surprised that some smart people have not been telling me “100 percent odds of recession.” I think, as always, people focus a little too much on the “recession/not recession” question. The difference between 0.1 percent growth and -0.1 percent growth can determine whether we call it a recession, but those are quite similar economic situations. And what’s happening here is definitely slowing down economic growth significantly, especially with the impacts on the travel, transportation, and energy sectors. Ben: But as you said, the underlying (American) economy was doing pretty well before this exogenous event, which separates it from something like the 2008 financial crisis and previous downturns. Does that also mean that the traditional economic measures we use to fight this kind of thing are unlikely to work in the same way they did then? Josh: I’ve been saying the best thing the government can do to protect the economy is to effectively fight the spread of the virus. The markets are falling because of a very real problem in the real world. Mitigate the problem and stocks will go back up. I do think this situation is not very amenable to the traditional macroeconomic tools you use to boost the economy. Cutting interest rates won’t reopen supply chains, and it won’t do much to encourage consumers to go to concerts or take cruises. The same goes for fiscal stimulus measures, like rebate checks. I do think there is a case that fiscal and monetary stimulus will play a useful role in helping the economy recover once the epidemic abates, especially if it has gone on for a long time. If people have missed work, or if they have incurred expenses related to the virus, they may come out of the crisis in a weak cash position. Fiscal stimulus (like rebate checks or a payroll tax cut) or monetary stimulus (low interest rates) may encourage consumers to spend more and businesses to invest more after this is over. And I don’t think it’s important to get the timing right — send out the checks now and people will be in a better cash position after this is over and more inclined to spend. But we shouldn’t expect the effects to show up until later, and it’s secondary to measures to limit the number of people who get sick, ensure people who need care have access to get it, keep hospitals from getting overwhelmed, etc. One more note on the response: I see a lot of people talking about the importance of targeting a fiscal stimulus — noting that gig workers are especially hurt, specific industries, etc. And I think it is possible to get too clever here. Those broad inferences make sense, but it is really hard to figure out in advance where to target your fiscal stimulus. And if you focus too much on targeting, you’re likely to end up with something that’s too small. Better to send checks to too many people than too few. I’d go for big, simple measures over fine-tuning. Ben: The Trump administration response has been about as incompetent and baffling as you might expect. Though it’s hard to say how much the president and his anti-science policies hampered the CDC’s testing rollout, there’s no question that Trump himself has been the opposite of helpful, with his denial about the severity of the outbreak, as well as his usual conspiracy-mongering and lying. It’s hard to imagine even a well-oiled-machine type of administration getting things exactly right, but how much do you think the simple fact of him being in office during a crisis he’s clearly unequipped to handle is playing into the economic fears around this thing? Josh: I don’t know. Equity markets are falling similarly sharply all over the world. That doesn’t mean it’s not Trump’s fault — if Trump screws up, that can hurt German and Japanese stocks, and in an ideal situation, positive American leadership would be helping calm the whole world. But some of the key screwups — like the CDC sending out test kits that didn’t work — strike me as matters that didn’t likely have anything to do with Trump. I tend to agree with our colleague Max Read, who tweeted this morning that our tendency to ascribe government errors to Trump personally may be causing us to miss ways our government was broadly unprepared for an epidemic of this nature. I tend to assume the epidemiological outlook that this crisis would be at least somewhat better with a more normal president, and therefore stocks wouldn’t have fallen as sharply and the economic outlook wouldn’t have been hurt as much. But I’m very unsure how large the effect is. Ben: If international markets continue to tank in tandem as they have the last week, is there any hope of some kind of worldwide economic coordination to stem panic? Or are we more likely to see the opposite scenario play out as things become more tense, as we are with today’s oil-price war? Josh: So first of all, I think people are overrating the importance of the oil-price war. Obviously it’s bad for oil companies. The effect on the broad U.S. economy should be close to a wash, since we produce about as much oil as we consume. Consumers and firms that use petroleum products will benefit from falling prices. And the price war is itself a symptom of the coronavirus crisis. Russia and Saudi Arabia have their reasons for not being able to cooperate here, but I don’t think it tells us much about the ability of the U.S. to cooperate with China or with European governments, etc. Worldwide, it would be ideal to see cooperation on fiscal and monetary stimulus measures. Europe is likely to be recalcitrant here — it’s an extension of fiscal and monetary policies that have been dysfunctional in Europe since before the financial crisis. But again, this is not my key focus. I’m mostly concerned that governments around the world do well with containing the outbreak itself. Ben: And presumably, what you’ve seen thus far does not inspire confidence that things will be back to normal anytime soon. Josh: No. Personally I’m concerned with how little consensus I’m seeing about the likely death rate from COVID-19, and about the outlook for mitigation. I don’t think people have a clear idea how bad this is going to be. And I think that uncertainty is part of what’s weighing on financial markets — people have good reason to think this is going to be very bad, but there are wide error bars around “very bad” in both directions.

We Are Watching the Probable Demise of Trump’s Reelection in Real Time

By Jonathan Chait

Photo: Jim Watson/AFP via Getty Images

President Trump’s political career has consisted of a series of self-generated crises that he has improbably survived, from insinuating that John McCain was a coward for having been captured during the war that Trump himself dodged to the three-year-long high-crime (and misdemeanor) spree. Throughout these disasters, Trump has maintained a floor of support that is apparently immutable and just high enough to give him a plausible chance of reelection. Yet the pair of crises now enveloping the administration appear to be of a completely different political magnitude than anything that has faced Trump to date. It may now really, finally, truly be over for him.

The obvious factor distinguishing the coronavirus and the probable recession from the Access Hollywood tape, firing James Comey, and all the rest is that they have a tangible impact on the lives of Americans. (Or, to put it more precisely, Americans who have voting representation, unlike Puerto Ricans.) Trump’s continuous din of scandals and gaffes is unintelligible to many Americans who either do not follow the news closely, or follow Trump-controlled news organs, and who have instead judged his presidency by the direct experience of peace and prosperity. Trump has done one very big thing very well: He rebranded the economic expansion he inherited as his own creation, like the licensing deals he makes to splash the Trump name over hotels and resorts other people built. Trump’s handling of the coronavirus turns his greatest strength into perhaps his greatest liability.

A somewhat less obvious factor is that Trump’s own mismanagement has demonstrably contributed to these disasters. The entire crisis has grown out of Trump’s constitutional aversion to long-term planning. In his autobiography, Trump boasted that he does not even plan his days, but simply reacts to events as they happen. That process is now dominated by cable news, and especially the stock market, which is Trump’s narrow and highly distorted prism for understanding the entire economy. He dissolved the skilled team of pandemic experts he inherited from Obama on the overt calculation that it wasn’t a priority. “Who would have thought … we’d be having this subject?” he mused.

At some point Trump may retreat to the defense that the coronavirus is an external disaster for which he can’t be blamed. But a series of leaks have documented his direct responsibility.

In January, the Washington Post reports, Health and Human Services Secretary Alex Azar “was having trouble focusing Trump’s full attention on his coronavirus briefing … Why did you push me to insert myself into a controversial political issue? Trump demanded.” Another Post story notes that, while health officials warned not to say the virus had been “contained,” people like Lawrence Kudlow insisted on saying this anyway.

Politico’s reporting implicates Trump’s aides, who apparently shared the broad right-wing belief that the virus was overblown, in trying to keep the issue off the president’s agenda. “It always ladders to the top,” a person involved in the administration’s response says, “Trump’s created an atmosphere where the judgment of his staff is that he shouldn’t need to know these things.”

“Trump is simply not on the same wavelength as the rest of his team, but they said there isn’t much they can do to change his public tone,” reports NBC. “Trump has been advised by some close to him to let public health officials, rather than the politicians, take a more forward-facing role, according to a person familiar with the conversation. But a person close to the White House said Trump thinks it helps him politically to keep doing what he has been doing.”

White House health experts wanted to advise old and vulnerable people to avoid commercial flights, but were overruled by Trump, who feared the impact on the economy. Trump even resisted the mild and extremely obvious advice that old people should avoid booking cruises, for fear of the impact to the cruise industry, before eventually relenting. Even sycophantic sources like the Federalist are begging Trump to keep his mouth shut.

But Trump is incapable of such patience. He keeps repeating that the coronavirus will blow over without much hassle. He believes the conspiracy theories that it’s a hoax designed to bring him down, and he also believes any messaging problem he has can be solved by more messaging from Trump.

Trump seemed totally oblivious to the danger of hardening his public image as the national-level equivalent of the mayor in Jaws, blithely ignoring reports of a gigantic shark because he didn’t want to hurt the tourism season.

Enough of the debacle has played out in public to supply Democrats with a campaign’s worth of damning video clips. Trump appeared in public insisting that the virus was “contained,” and that the number of cases “within a couple of days, is going to be down to close to zero.” Trump and his surrogates kept advising people to buy stocks after every dip. The strategy made no sense except as a desperation gambit to prop up the stock market on an hour-to-hour basis with dumb money from Trump’s marks.

For all the apparent durability of Trump’s personality cult, it is worth recalling that George W. Bush was once a figure of nearly equal stature on the right. He was the swaggering, flight-suit-wearing alpha male who had conquered Afghanistan and Iraq. The conservative media slathered over him in almost erotic terms. When things went south for Bush, after his failed attempt to privatize Social Security was followed by Hurricane Katrina and the unraveling of the Iraq occupation, they went south very fast.

It is possible that the public-health and economic catastrophes that loom so large at the moment will be gone by autumn. It is even possible that they will remain and Trump will somehow survive anyway. (After all, the mayor in Jaws had somehow retained his position in Jaws 2. And he was still minimizing shark risks!)

But it seems more likely that Trump has finally made his unfitness for office so blatant that even his own supporters will notice. The American economy, its health infrastructure, and perhaps more are plunging into foreseeable crisis. And every step Trump has taken along the way seems almost calculated to expose him to maximal blame. Trump is now quite likely to lose his reelection, and we will look back at the last few weeks as the time when he sealed his own fate.

Coronavirus Is Imploding Global Financial Markets

By Josh Barro

Stocks plunged worldwide on Monday. Photo: Arne Dedert/picture alliance via Getty Images

Less than two weeks ago, the 10-year U.S. Treasury bond yield hit a record low of 1.31 percent. I wrote Sunday about why I was alarmed that the yield had fallen well below that, dropping below 0.7 percent and portending significant and protracted weakness in the U.S. economy. Well, it’s gotten worse: In trading early Monday morning, the 10-year yield fell below 0.4 percent.

Bond yields aren’t alone: All sorts of financial-market indicators are moving swiftly and soundly in a bad direction. Asia-Pacific markets fell sharply on Monday — the Japanese Nikkei exchange fell more than 5 percent, and Australian stocks were down more than 7 percent — and the Dow Jones Industrial Average opened down more than 1,800 points once Monday morning reached New York. Europe is a mess, too, with most major indexes around 6 percent, and more in Italy, which is hit hardest by the outbreak. The story across all these markets is the same: The novel coronavirus is a big deal, and it’s going to be very bad for the global economy.

A new wrinkle on Sunday was a stunning 26 percent drop in oil prices. Oil had already been under pressure as the coronavirus crisis suppressed demand, but this particular price drop was driven by a Saudi announcement that the country will slash the price of the oil it sells and ramp up production. Last week, the “OPEC+” group of oil-producing countries, which includes traditional OPEC members, like Saudi Arabia and Iran, plus Russia, had tried and failed to reach an agreement on a plan to cut oil production in response to the oil-demand slump. Russia resisted the production cut, and now the Saudis — who can produce oil more cheaply than any other country in the world — are trying to squeeze the Russians into agreeing to production cuts by driving down the price. Whether this will ultimately work to prop up oil prices is unclear, and in the meantime the result has been oil prices falling below $30 a barrel.

Several news organizations have been running a quote from Vital Knowledge founder Adam Crisafulli, who said Sunday that the oil-price crash “has become a bigger problem for markets than the coronavirus,” but this claim does not make a lot of sense to me. First of all, the oil-price crash is the coronavirus: It is a knock-on effect from the sharp drop in consumer demand for oil due to virus-related disruptions. Second, from a U.S. perspective, the effect of cratering oil prices is decidedly mixed: It’s bad for firms in the oil industry and for regions where oil extraction is a major industry (Exxon was down 14 percent just after the open Monday), but it’s good for businesses and consumers that rely on petroleum products, which will get cheaper.

“Oil-price declines have mixed effects, and more or less wash out in aggregate,” said Ernie Tedeschi, a macroeconomist at the investment-research firm Evercore ISI, in reference to the U.S. economy. “The oil-price volatility may be a net negative for financial markets right now as it’s feeding into risk-off/uncertainty. But even there, it’s catalyzing the virus effect that’s already present.”

Investors are pricing in more reaction from the Federal Reserve: Bond futures indicate that investors expect the central bank will cut short-term interest rates by at least 0.75 percentage points at a regularly scheduled meeting later this month, after the Fed already did an unscheduled cut of 0.5 percent last week. But, as I have written, interest rates can only do so much to foster economic activity in a crisis where disease risk is suppressing both supply and demand. The Fed’s last cut did not impress the stock market that much. The primary driver of coronavirus-related economic concerns remains the trajectory of the epidemic itself, and measures to mitigate the spread of the virus remain policy-makers’ best hope to contain the economic damage.