tv Inside Story 2020 Ep 121 Al Jazeera April 30, 2020 8:32pm-9:01pm +03
it would be n.h.s. that we avoided an uncontrollable catastrophic epidemic where the reasonable worst case scenario was 500000 deaths and so i can confirm today for the 1st time we are past the peak of this disease we're past the peak and we're on the downward slope lebanon's government has approved a rescue plan for its crisis it economy it's been under pressure to act after demonstrations were held in several cities for a 3rd straight night from an assassin their absence that lebanon will seek help from the international monetary fund and of the country is aiming to work at $10000000000.00 worth of aid and those are the headlines we'll have more news fear an artist hereafter inside story next.
as corona virus spreads in the u.s. its economy is likely to face its worst crisis since the great depression and the spillover is expected to inflict long term damage there and around the world so what can be done to reverse the crash and can the global economy fully recover this is inside story. hello and welcome to the program i'm homage i'm joined it's the world's largest economy and has enjoyed record growth but it's collapsing the u.s.
economy could be facing its worst recession in decades triggered by coded 1000 measures it shrank by almost 5 percent in the 1st quarter of this year that's the biggest slide since the 2008 financial crisis millions of americans have lost their jobs consumer spending has seen its biggest decline in 40 years and many businesses are going bankrupt the u.s. has pumped more than 2 trillion dollars into the economy in the past 6 weeks but many economists say this is not enough and the worst is yet to come president donald trump says things will bounce back once the virus is contained and he wants lockdowns lifted fast i think is a tremendous feeling of optimism in this country and i think the 3rd warders transitional that it would we're transitioning into but it's a very transitional period i think it's going to do good but i think the 4th quarter is going to be fantastic. the federal reserve chair jerome powell has warned there is significant risk of long term damage ongoing public health crisis
will weigh heavily on economic activity employment relationship in the near term and poses consider all risks of the economic outlook over the medium term at the fed we're doing all we can to help american families and businesses weather this difficult period. when the spread of the virus is under control businesses will reopen and people will come back to work we will continue to use our tools to assure that the recovery when it comes will be as robust as possible the slump in the u.s. is part of a global slowdown caused by the pandemic the european economy has also suffered a record fall the euro zone's g.d.p. shrank by 3.8 percent in the 1st 3 months of this year that's its sharpest quarterly decline since records began in 1995 germany said its economy could shrink by more than 6 percent this year and the president of the european central bank warned the eurozone economy could fall 'd by 15 percent china's has declined by a record 6.8 percent and japan's is also projected to contract further it already
face its fastest contraction rate in 5 years at the end of 2019. all right let's introduce our panel in london greg swenson partner at investment banking firm brig mcadam in maryland robert scott senior economist at the economic policy institute and in washington d.c. jeff hauser executive director at the revolving door project at the center for economic and policy research welcome to you all jeff let me start with you many of the restrictions have been put in place in the u.s. . now you have this 4.8 percent contraction that's happened and the restrictions were put in place before this is only really hinting at how bad things will get. absolutely the 2nd quarter the economy the worst in american history the intentional debt reduction in economic activity is unprecedented
it's necessary if anything it's actually insufficient in terms of how much america is complying with you not stay at orders but if that 2nd quarter the economic statistics are going to be a bloodbath and the reality is can be even worse robert when will the bulk of the pandemics economic impact be felt most i think we're going to see it in the 2nd quarter certainly but and we we could see unemployment surge to levels again perhaps at honest and press and we were the numbers out this morning suggests that we had an additional 3800000 workers filed for unemployment official numbers are over 30000000 in the united states. we could it could be as high as 839243 1000000 or about 25 percent of the labor force is out of a job and that's going to be thought most strongly 2nd quarter but those hangover
effects will continue into this or greg how difficult is it not just in the u.s. but the rest of the world to gauge the depths of this decline. yeah i think as as the other guests were saying and you know we haven't seen the worst of it because the when you think about in the u.s. and even in the u.k. the lockdown in the major changes in behavior in the economy didn't actually occur well into march you know mid march basically so you know it's really going to be april and may that are the real devastating losses but we're seeing it i mean you could see it already especially with lower income workers they're the 1st ones to get hit here because of the focus on on retail and and consumer facing businesses travel and leisure so you know we can see it and i know that a lot of people that that are able to work from home don't necessarily experience it but this is real it's it's it's the sooner we can get back to work the better this is devastating on both the european and the u.s.
economies and around the world so hopefully you know we have some recovery around the corner but in terms of g.d.p. numbers which are backward looking the worst is yet to come jeff in just over a month the pandemic has wiped out all of the job gains in the u.s. since the 2009 recession i want to take a step back for a moment could you explain to our viewers just how staggering that is. yeah i mean $280009.00 was the deepest economic calamity in the united states essentially since the great depression and we've got to that level and likely below it in a month and what's odd is that while significant stakes have been made by the federal government there isn't the same sort of obvious that if the ends in the way that the banks in the financial sector were the one s. and the lead up to 2000 a and the great recession it's the combination of the pandemic and the failed public health response that is leaving people i really and mr aided and as other
guests have said the consequences are going to be brutal not just now but for several months the con robert many economists believe that job losses may actually be far worse than figures are now indicating what do you think. well as a alluded to earlier we had done a survey. americanization that was released earlier this week that showed. the essential counts of joblessness probably understates the total number of people who've been pushed out of work a month unable to apply for benefits by anywhere from 30 to 60 percent of the reasons known or perhaps. 14000000 workers. who lost a job for one reason or another couldn't apply for unemployment benefits so we just have ringback unprecedented levels of unemployment for comparison. if the real
level of an unemployment is say $40000000.00 workers sense about said 25 to 30 percent of the total labor force and the peak level of unemployment in the great depression was only about 24 percent of the labor force and that was in $1033.00 or of years after the great depression started we've done this to the economy in the space of about 6 weeks so. the collapses is perhaps deeper and much much sharper greg the the european economy shrank by a record 3.8 percent in the 1st quarter what does this mean for europe and what measures can the european central bank take now. yeah they don't quite have the firepower that that the fed has so i think that's one major difference is the fed has a lot more you know than if they buy by some measures have injected 12 trillion
dollars of the quiddity i mean that's 20 percent of the of the barclays aggregate index of you know bond index in the u.s. so it's massive injection of liquidity and policy support but you also have the prior condition of the economies the u.s. was in great condition after 2 or 3 years of tax reform and deregulation you had record unemployment and especially record wage growth significantly for the lower income or the lower the lower court tile of workers especially so you know that the condition of the economy was what much better granted the unemployment numbers are in the u.s. are staggering but because it's it's so short and it was imposed by the government it wasn't a structural problem with the economy i expect the recovery in the u.s. to be a lot better on the other issue is that you know the the european economies probably started a little earlier i mean obviously you had the problems in spain and italy with corona before it reached the u.k. and the u.s.
so you know you might see some numbers that are worse in the u.s. in the e.u. or any in the european zone because you know and that 4.8 i mean that 3 to the numbers don't really explain it i mean it was actually higher because on an annualized basis it was 14 percent so the condition of the of the european economy arguably is much worse than the u.s. economy and i think the u.s. economy will rule recover quickly from when we get back to work robert it looked to me like you may have been nodding to some of what greg was saying to you want to jump in. well i actually think that the numbers in the 2nd quarter ending and june are going to be quite her horrific what the predictions are that the real. bottom of the g.d.p. will decline at a rate of anywhere between 35 and 40 percent again this is uncharted territory i
would also add that i'm concerned that the united states because of the holes in our unemployment system compares compared to europe it's going to be much more difficult to recover we're going to lose potentially millions of small and medium sized businesses they're just going to disappear and so i don't think it's going to be so easy to just pop back from this intentionally induced downturn jeff it also looked to me like you may want to jump in did you want to add to what was just being said. yeah i think that european response generally obviously varies across countries has been much more rational in prioritizing keeping workers connected to businesses especially small and medium sized businesses the u.s. small business. effort there but just lot of effort to keep our small businesses going is way too complicated it's interacts and it's underfunded so while the federal reserve is definitely making the significant efforts that greg
mentioned and it's trying to do the best the federal reserve is not a structure well suited to supporting small businesses that's not it's focal point what we really need are direct payments to workers through small businesses that keep workers tied to small businesses and while small business is to be well situated to return when the public health conditions warrant and the other thing is america's public health response is completely all over the map you have states like florida and georgia which are not taking the issue seriously you have meat packed packing plants across the country which have become just horrific depositories virus and death we have such a scattered public health response that i think it's going to take a lot longer for the united states to begin to get past real not moments of peril with this virus i think america is going to be much slower to get physically
healthier than compared to europe and therefore europe is going to be ahead of the game in getting back to something approximating normalcy economically you can't fix the economy unless you master public health and america's public health response has been frankly an embarrassment greg i want to talk for a minute about global value chain hub regions i want to talk about places like china and europe just how much has covered 1000 structures at the core of those global value chain hub regions. yeah i think there's going to be a reset you have a couple of moving parts here one is that some of the dependencies on the supply chain have been exposed especially with dependencies on anything coming out of china and anything related to the c.c.p. so i think you're going to have a natural pushback it started because you know basically because beginning with the cover up and the deception coming out of the out of china out of the c.c.p. specifically but also some of the follow on where there's been distribution around
the world of masks and other products that have that of it quite often are defective and i think any sort of dependency that's been exposed by this crisis not just a criticism of the c.c.p. but just the dependency overall on a global supply chain will just you know maybe create some sort of a reset where again we're not advocating you know stopping global trade of course but i think just really reevaluating the dependency on certain supply chains that can be exposed during a crisis like this and i'd also argue to jeff's point about the health response in the us you know look it's a federalist system we're better designed to operate at state local levels and i think that some people argue that's a patchwork response actually i think decentralizing and deregulating has been fantastic he's taken the president in the federal government have taken the shackles off of the the drug companies in the life science companies to proceed quickly with remedies without the regulatory burden that's normally associated with
those type of responses and then you've got a great experiment going on as we reopen especially we have an ability to look at 5 different q.b. enters and even and even within the states you know the the the response in new york and even andrew cuomo governor cuomo even said this you know he was he in many ways regrets the complete lockdown of the entire state because the policy response in new york in the city should be quite different than it is. as in buffalo or in the more rural areas and we see that in texas florida for sure and quite obviously in illinois where most of the state in illinois is untouched by the by corona and the faith tally rates where chicago is suffering granted so you know i think you have to look at the the patchwork argument is really a great experiment of federalism and that's the way the constitution designed it jeff i saw you shaking your head there so i want to give you the opportunity to rebut. it's kind of amazing to hear libertarian values amidst
a pandemic can demick for acquire a strong government response a social democracy people coming together the only way you are prepared for a public health catastrophe is by having the government fund in advance efforts which are not going to pay off in the market you don't know what you're a pandemic is going if you don't that's why our medical system was not trying to produce coronavirus responses even to the family of viruses that coronaviruses represent the well known threat to human life but because mirrors and sars were dealt with quickly enough in the past there was no economic incentive to invest in a response that's why there is no free market response to either the economic karo of the moment or to prepare in advance for a public health and faster day and if you look at if they i'm happy to be from new york new york state from a suburb of new york city which is both rocking time which is being hit in creamy hard right now but the reality is that the places which or hit 1st of the places that have most international trade but the places in more rural parts of the state
there's something about rural life that really keeps you safe from the current of irish you still go to religious ceremonies you still go to school just the supermarkets and the like you know public high school sports you still are in contact with other human beings you're not living in her medically sealed life the only reason why some of those places do not have terrible pandemic is because of the staff home orders and the problem is that if only one state new night state fails to stay at home adequately that state can become the hub of the next wave of the coronavirus you need off 50 states to act in concert in order to keep the total volume of virus down enough in the country that things can return to normal safe it just takes iowa or new brassica being crazy to imperil the entire rest of the country and frankly as somebody who's been locked down since march can i really like to. there is quickly as possible and i am really feeling personally threatened
for my family by what red state governors in this country are doing robert one of the supposedly lessons learned out of 2008 was that is especially if there were to be another financial crisis that small businesses in the u.s. should be helped just as much as big businesses but the rollout of these programs to help small businesses across the united states it has been clunky it has been confusing why is that and has it been effective. well it's a completely broken down system i only know just in terms of the unemployment benefits by the beginning of this shutdown only about 20 percent of workers were eligible for unemployment insurance and the traditional system congress stepped in and at the last minute they they they on the fly completely revamped the unemployment insurance system they offered greatly expanded benefits but only for 3 months and this downturn is clearly going to last longer than 3 months i think the
contrast again with europe is striking on the unemployment side europe has a fully fleshed out job retention program where the unemployment. compensation is used to pay firms to keep workers on the payroll so workers from a attach to firms here in the u.s. we have this is a patchwork system where loans are made to small businesses if they can get through to that to a bank and if they can provide all the documentation in europe it happens more or less automatically and so many firms the u.s. are falling by the wayside and that's why millions of firms are going to go out of business before we come out of this recession in the united states and our unemployment is going to be much higher than what they see in europe and countries around the world greg whether we're talking about the u.s. or europe i mean even if some parts of the economy reopen consumer spending won't
snap back immediately well. no and we've seen that in china already a lot of the workers are back at it and you can see it in the traffic patterns in beijing and shanghai and so during the week they're almost back to know what i would call normal levels but on weekends they're not so they're obviously not tapping into the into the restaurants and any kind of leisure activities people are staying home so i would agree with with jeff and robert that this isn't going to be easy i mean this is not flipping the switch back on but the p.p.p. was actually the 1st 250 s. 1st 350000000000 was executed quickly 1600000 loans were made yet there's more government in in europe there's more government action or activity in this in the economy the u.s. is not designed that way it's more reliance on the private sector but i will say these loans are put to work quickly and in the in the u.k. you know it's a matter of you know keeping people on the payroll i know i've been in the u.k. we've been involved with small businesses it's been really difficult getting those
getting those programs executed so i wouldn't say that it's been you know perfect yet maybe there's a better unemployment system in western europe because they they actually encourage unemployment but look i think that the way that they jacked up on unemployment benefits in the u.s. was a quick relief to workers it's important that we did that it was very helpful it was the right thing to do to help workers but paying workers $400.00 a month in additional benefits or $600.00 is going to make it really hard to get them back to work and we're seeing that in oregon already where restaurants want to reopen but the employees are incentive to stay on because the benefits are too high this happened in 2009 when unemployment benefits were extended and they should have been extended and that's just contributed to more anemic growth and really constricted the the economy so i hope the government makes the stimulus it's important as a relief measure i hope it's temporary and i hope it's targeted so we can get the
broad privates. you're back working jeff the federal loan program it's supposed to help companies of void layoffs but some of the large recipients of loans have already dramatically reduced their workforces and it's not always because of the coronavirus pandemic how come there aren't regulations in place to stop this from happening. one of the things that my project is focused on is trying to look into the history and practices of the small business administration america hasn't had even before coronavirus a growing monopoly problem and that's only going to be exacerbated by the coronavirus and the way that the biggest companies are getting bailed out most effectively by the federal reserve the smaller companies are not so what we have had is we have a government that is not designed to help small business the small business administration is long been a backwater the government only went to wrestling impresario was in charge of the
small business administration was the person when the mic man under john trump was there a person who anyone had ever heard of who ran the s.b.a. it's been a backwater because american politics has been built to favor large companies getting larger and that's why we don't have the regulations and in place to protect small business that's why so many small businesses are releasing the lemmas that's why the loan system the p.p.p. what it functionally did by privatizing the government service and having banks serve as intermediaries between the government and small business meant that small businesses which had substantial wending histories with given banks got priority over small banks that operated over smaller firms that operated principally on cash so we stopped cash very prudent small businesses that did not rely on loans couldn't get access to the p.p.p. and those companies those small businesses many of them are probably gone forever
even as they may be. the fabric of a community is very existence so it's i think the implications for social life in america and that communities are going to each one apart is going to end up tremendous because of the way the american government is focused it's built right now to focus on larger business is not something america is going to have to address not only in the short run but in the medium and long run all right well we have run out of time so we're going to have to leave it there thanks so much to all our guests gregg swenson robert scott and jeff hauser and thank you too for watching you can see the program again any time by visiting our website al-jazeera dot com and for further discussion go to our facebook page that's facebook dot com forward slash a.j. inside story you can also join the conversation on twitter our handle is at a.j. inside story for me and the whole team here bye for now.
what impact will called it 19 on the drop in oil prices have on the race to the white house can gold trump survive these historic setbacks and does joe biden have what it takes to beat. special coverage i'll just say. in countries like mine people have been killed too because we in the united states have privatized the ultimate public function more this was a deal with saudi arabia things were done differently saudis other arabs when they
came to britain for being all to help the past bombs deal's off you will rumsfeld this meeting saddam isn't that interesting their shadow on al-jazeera and the stories of abuse in aged care homes in the west to shock the world that there's no alternative one to one of these makes those sending elderly loved ones to thailand to live out their dogs on al-jazeera. throughout history human kind has come together to prevail in our darkest moments this is a moment for pretty much the opposite side laying low saving humankind by really really not getting near every generation has its moment where individual sacrifice makes way for the good of those who come after this war is ours.
part of the fans of moscow is on the love god we are grappling the extra mile they are the media don't go we go there and we give them a chance to tell their story. this is al-jazeera. hello i'm adrian for the get this is that he is live from doha coming up in the next 60 minutes more than 30000000 americans unemployed in just 6 weeks the financial impact of the pandemic shows no sign of slowing in the u.s. . it's not much better in europe new figures showing the eurozone economy is suffering record losses as well. we are throwing everything at