Low and welcome across all Things Considered im Peter Lavelle the outbreak and spread of the corona virus has become a black swan event for the Global Economy is no longer whether the u. S. And other economies will slip into recession the question now is how deep and how long the recession will last its going to get worse before it gets better. In the corona recession im joined by my guess and in houston he is president of Lipo Oil Associates in new york we have helen i need ski she is an american journalist with r. T. And in Great Barrington we crossed pete earley he. As an economist with the American Institute for Economic Research all right crosstalk rules in effect that means you can jump in anytime you want and i always appreciate andrew in houston let me go to you 1st here. I guess this is the 2nd shock in as many weeks for you because youve covered the oil markets and now we have the process being rolled out to deal with the corona virus when weve seen markets crash and we see a lot of disorder and a lot of questioning of what direction we need to go into but there seems to be quite clear that a recession is going to be upon us and very very soon if not were in it already go ahead and what are your thoughts. Well i think thats right because if you look around the world we have School Closures we have industries telling people to telecommute we also have really the shutdown of the economy say like in italy where everyone is staying at home or in spain and were seeing that spread to parts of the u. S. Most notably San Francisco and of course the World Economy is so dependent on Consumer Spending travel tourism and youre seeing those industries really collapse and clothes and of course that is going to lead us into a recession i think not only here in the u. S. But worldwide ok helen if this seems to have this kind of Ripple Effect from 2008 and i keep hearing the words bailout in stimulus and things like that. Bailing out who it is had a good reason and what about the little guy what about they gave workers thats what i really worry about i look at these plans and i dont really see you know where the majority of people going to be devastated by this our early workers waitress waiters waitresses. Amazon i guess if you get to be an amazon delivery person jeff bezos is going to help you out but i mean it seems to me the talk of how to react to this is an echo of 2008 it worried about the rich or not so worried about the poor go ahead helen. Yeah event like this really exposes the flaws in the american system as far as well the government is talking about bailing out various industries and whether the financial stimulus will be enough to get these businesses back on their feet but yeah all of these have it trickles down to certainly the good workers who have absolutely no rights as far as any sort of collective bargaining or demanding or anything theyre just sent home and told ok well go get a job at another point well very recently people tried to access the unemployment website in new york city and they were web site crashed because so many people tried to get on it once to 10000 something employees were laid off at one go and so were going to see a lot more of this and these people have nothing to turn to they have no unemployment is going to run out very quickly these benefits have been slashed again and again a lot of these people at this low level never really recovered from 2008 so for them its really just one blow on top of another the industry recovered and industry will always be fine because there will always be people willing to buy these things once the economy gets back on its feet but the little guy i mean hes its a big question well in later in the program on to talk about the political implications of that to lets go to peter and Great Barrington i mean one of the interesting things i actually picked up a couple days ago a book about the bankers in the Great Depression that started in 2929 and it revealed a lot of the flaws of the economy what flaws are being revealed because when you have these kind of crisis these you actually see the flaws of the system that is being that is falling apart what is some of the flaws that you see as we speak as we watch the Global Economy slowdown go ahead peter. Well one of these i see is that we have the ability for political officials just to jump into any time i mean. This clamping down on the entire economy. Shows one of the flaws because now we have all this fear and the way that the u. S. And china and italy have attacked this coronavirus issue is vastly different than what south korea did and south korea basically harnessed private Property Rights they respect individual freedoms and to some extent of course i mean there are quarantines but theyve basically they basically have an invention right which is lowering and theyve done so by you know utilizing technology and not all these measures of government figure out which are causing fear and were benchley and were essentially freezing up the economy right now at a time when it really should be more fluid and there should be and goods and services flowing and all that you know andrea you started out with talking about how dependent the economies are on consumption but if i mean if everythings closed i mean even if youre given you know this 1000 bucks that everybodys talking about and you wont be able to spend it or it will not you know you wont be able to make it go out easily and spend it i suppose everybody can you know buy food and have it sent to you but you know its still the you know its still contract in the economy here i mean it has to deal with the consumption part of it and theyre not doing that go ahead and. Well i think helen made a good point earlier you know when sang the government really needs to give say 1000. 00 for every individual so they actually can continue and buy food and medicine and fuel over the next couple of weeks because we see so much on the consumption side basically shutting down really its a Health Care Issue that governments around the world are trying to deal with i think that its really theyre between a rock. In a hard place trying to keep things open at the same time to prevent the spread of disease its clear that you know the young people millennial people in their thirtys and fortys you know theyre in good health theyre not going to be affected by this disease but the concern is that it could be transmitted to older people like your mother and father or older uncles and aunts and thats what theyre trying to prevent is a Major Health Care crisis yeah but hell in a lot of people would say at least in america that there is a min an ongoing Health Care Crisis and this is just insult to injury here i mean watching the the biden bernie debate i mean i was kind of aghast and how they dont see how that is such an important issue for so many people and that we have this coronavirus and you know even if you get a 1000. 00 thats not going to be enough to be able to cover any kind of cost i mean thats the thats nothing compared to the least perceived crisis that were dealing with right now for the average person go ahead helen. Yeah its and any kind of remedy that they try to push through legally is just going to be too little too late at this point maybe i mean the fact that we dont even have a National Paid sick leave of the house is just trying to work on that now its really insane and yet that debate was kind of a travesty because these people especially by the in the campaign is so heavily funded by these Health Care Insurers that anything that comes out of his mouth might as well just have been the price tag bristling off it because its these people they arent working for the for the for the people who would be responsible for letting their working for the Health Care Insurance theyre working for the 5 percent of all companies and unfortunately when you have a Health Care System built to serve the Health Care Insurers in the pharmaceutical companies then the actual patient ends up getting shot and when you have a disease like this where rich people can get it too i mean if this is not something thats just going to affect the poor so really there its end up coming back to bite that because you know anything that the workers who are delivering the products that the rich people are ordering because theyre in there getting to stay inside and having other people serve them well they can still get the disease so it alternately a Health Care System has to serve everybody or else even the ones of the pop and of getting suffer if i mean i i everyone knows who watches this program im a conservative ok im not a big fan of Big Government obviously but im more than concerned when the president the hunted states the stocking to private enterprise you know to the to the medical community which created the medical system we have in the United States i mean it just seems to me that you know youre going to people that you know youre going to make them allow him to profit from this crisis here at the expense of everyone else and im not attacking private enterprise but i mean the medical system should be to the service of all so you dont have to rely upon it i mean if we had a better system well be able to cope with this crisis much easier south korea has already been mentioned go ahead pete so i agree with you but. What i would say is that the problems our government we dont need more government i gree need more or less license your requirements we need less cut and protections on drugs so the generics come out sooner we need a lot and i mean a lot of. Reining in of lawsuits and tort that creates a lot of cost in the medical and in the medical jerry system that it is in medicine today so i would argue that the problem is too much government and not not enough ok but still giving it all to private enterprise where they can regulate themselves i mean i see where youre going ok but its not solving its not going to solve the problem immediately and do what kind of recession we facing well i think that were going to see a recession in the 2nd and 3rd quarter is how deep it is is still up for much debate i mean people think that the economy is already contract ing by 5 percent in the 2nd quarter and you can clearly see that on things like fuel demand with the the Airlines Cutting their International Flights by 75 percent the domestic carriers are cutting their flights by 20 to 40 percent on the road i mean traffic is clearly much lighter not only here in the u. S. And in europe and of road traffic is any indication of. An impending recession you can say that were going to contract by over 5 percent in the 2nd quarter the question is are we going to be on the road to recovery in the 3rd quarter or is that contraction going to continue you know helen you know again i appreciate what andrew had to say here but for 2 quarters thats a half a year that is a very long time if youre in the gig a con a very long time i mean for most people 2 weeks is a long time when you have these kind of situation go ahead helen. Yeah and you have some cities and new york and seattle i know or 2 of them an exam francisco as well promise sort of an amnesty an even chance but i mean little lawyers are not going to just be nice and decide to let people indefinitely not pay rent and you know i have a massive crisis on your hands unless theres some sort of sweeping just stay on rent payments because people cannot know what he in this country to think there is of americans do not have any sort of savings 2 thirds of americans cant afford 600. 00 for an emergency so i mean never mind for 6 months of emergency rent payments plus healthcare plus whatever other needs that people have theres going to have to be a very serious reorganization of how people are dealing with this because rent especially if we go lets go in and hold that thought were going to go to a short break and after that short break well continue our discussion on the corona recession state of oregon. City on. How. Some considered i dont know yet but heard of might have to guess i mean during. The. Moment between going drinks time with romney. Sherry dont. Try me. Its. Very uncertain. Why. Last days. And the baby had a fever of 38. 30 were hoping thats. Ok. And were going to fulfill the repeated promises apologise to the people and come on you know weve all bots. Pretty. Tough now you want to 1st. Know. Full. Well yeah. Yeah. Welcome back to crossfire where all things are considered im Peter Lavelle to remind you were discussing the corona recession. Ok lets go back to pete i want to talk about 2 things in this part of the in this part of the program want to talk about globalization and in the political fallout here i mean i suppose i saw my. A broken record on my own program because ive been talking about globalization for a long time and now weve got the perfect storm to talk about it here and supply chains and whatnot i think its really time to seriously reconsider globalization because its failing a lot of people around the world and the country that i know best obviously is the United States the supply chains have to be reassessed you have to start thinking strategically again you have to start thinking about sovereignty have to start thinking about borders again ok and i think that this situation demands all of that go ahead. So i just want to add one quick thing and that is that they are we tracked a number of Economic Indicators and at the end of february both are coincidence or both are lagging and and leading indicators were very neutral 50 so i think its very likely that we wind up with this sort of a slowdown the economy seeing a recession the question is whether its going to you shape or v shape and. Whether specter globalization you know whenever i hear that i hear echoes of economic nationalism and sort of the kind of new america to listen thats come popular with the Top Administration right now and im not sure that the issue is supply chains and all that as it is again the numerous sort of treaties and tariffs and laws about importing and exporting that cause problems it would be great if there were some redundancy if there were some resiliency bill into the system but again i tend to see the problem as being one of the numerous hoops and legal sort across requirements that goods and services have to pass through rather than letting individual firms in india and individuals negotiate their own sort of private trade treats ok well i mean ok perfect but let me get paid a simple thing i mean dont you think that a country the size of the United States should at least have its own antibiotics store i mean i mean something as simple as that went over 90 percent of it is is in another country that could potentially turn into a political football i mean im not an economic nationalism a practical person ok and i dont think its a good idea to have Something Like that completely outsourcing see what i mean right so so so 2 quick things 1st of all comparative advantage right we have a reason why things are made in other countries and we cant make everything here we should make everything here the other question is how do you decide which needs to be put in silos what goods need to be stored which dont and we i would also want to know because im not an expert in this area but i am an economist and i would want to. So why is it that 90 percent of our antibiotics come from other countries and may very well be because those are where those are the places that make them best and theyre the lowest cost and that they buy other things from us that we make that are low cost again it is this is the does this sort of urge to sort of overturn 200 years of economic thought in the last say 10 years and 20 years really since the early ninetys thats responsible for many of these problems ok i understand the economic theory very well ok comparative advantage obviously i understand that but andrew i mean you get down to basics like this when you have a situation where theres huge shortages ok and test kits and things like that i mean its incumbent upon the government to be thinking about things like that thats why people pay taxes and they still vote ok so understandings pete i i get that ok but theres a practical side here of globalization go ahead andrew. Well i am in favor of globalization and what its showing you is that normal supply chains cannot cope d with a black swan event like a pandemic because we simply dont have enough supplies sitting around and warehouses well you know just waiting for a pandemic to happen if you decided that you didnt like globalization one could think of well where should china sell all their manufactured goods to should each country become Energy Independent who would russia sell all their crude oil exports to if youre looking at africa which is a very come on to be dependent continent you know who would they sell their their metals to if everyone decided well we want to be on our own and go to the silo approach so i do think that measure of globalization has really helped the World Economy maybe some to more of a greater extent than others but overall when you end up in a silo economy i think the consumer is going to be. Hurt and i get that bill and lets go to hell and i completely get im not saying we should get rid of globalization completely what im just saying is that you have to think in terms of National SecurityHealth Security things like that there has to be a balance there and i think this crisis is showing that you need to have some kind of balance and i think there should be more manufacturing in the United States personally ok those jobs need to come back or have to be regenerated and well paying jobs go ahead. Yeah exactly and because now we have an almost completely Service Based economy and thats exactly what is hit hardest artist by this sort of pandemic because nobodys using these services so. If we had manufacturing it would serve 2 purposes you would have people going back to work much quicker and you would have people being able to make a living and we would have the products that we need so yeah i think what is necessary is a hybrid where we make some of our most important products our most crucial Products Pharmaceuticals obviously medical supplies is whats being shown up to be a big obvious oversight here and the other things are stories from abroad especially Raw Materials and some manufactured goods but some of the necessities at least need to be made partially at home or else otherwise you have i mean its not like you can just say oh we had one pandemic its not like its never going to happen again we can just you know do go back to doing things before i dont think they didnt and on top of that i mean on top of the reaction time being able to get you know kids and tests and stuff like that when you really really need it ok pete let me go to you lets talk about the the elephant in the in the room here politics here i mean how is this being played out here because governments are under stress you know people are just making demands that they act and be held accountable and i think about the upcoming president ial election in the United States is this now a referendum on the trumpet ministration you think go ahead peter. I dont think that this coronavirus should be a referendum on trump. Yesterdays collapse of the market is absolutely should actually be laid at trumps feet given the fact that he made a press conference where he said all sorts of negative things at 315 in the afternoon you know i was wondering whatever happened to doing 8 b. N. Press conferences and talks in the oval office but in general you know weve had a very rapidly growing economy that growth is start to slow i think the reason for a lot of that slowing in the last 3 quarters of 2019 had more to do with the tariffs than anything else but the chrono economies grow they change they get long in the tooth we will as i mentioned before business best was slowing lagging and leading indicators rosso slowing. So some decide this is going to come along anyway but the growth of virus is definitely going to be best swift kick that the economy didnt need this to to kill a time yeah and i mean again i really like what pete said there because i remember watching and trying speech and they actually showed he had like an i pad in front of a minute said 321 you know afternoon youre absolutely right i was really surprised by that. And to what do you think this is going to be a referendum on trump governance well i think what will be a referendum is the trump response to the coronavirus and what happens from now over the next 6 months have people feel that the government took hold of the crisis and things are Getting Better whether its the distribution of testing kits or a peaking and the number of new cases that we say and that their sense is that the government actually did something for something that was not their fault if you will the chronic virus has no ones fault then i think you know they the public will will tend to vote for trump but if 6 months down the road it still looks like theres a lot of confusion out there then certainly it will be a referendum on his handling of this crisis. Helen the same question to you what do you think this is going to be a referendum here because i i see how the left is using it you know and the cable stations i mean this is cannon fodder for them and you know hes the president of United States the buck stops there hes the one in charge and he has to be held accountable go ahead alan. Yes certainly Mainstream Media will be circling around in their usual like fashion looking for ways to attack him on weakness but also come home celcom high his value as a president to the stock market when the stock market crashes and you build your entire reputation as a president based on how the stock market was going up and up and up well sure thats great mohamed is going up but when it crashes you crash with it so he really has only himself to blame if he comes out of this and unable to be reelected. If hed let me go back to you and Great Barrington here i mean it is what can you see would you talk to about what kind of recession this will be a you were a v. What do you think its going to be any any gas. Gosh i would have to see how it unfolds but. I think a lot of that depends upon i think a lot of what happens in economy is going to depend upon how quickly in a way the epidemic of the pandemic really of the corona virus. Is taken under control if you know we have a vaccine and it gets spread around and theres a tremendous effort to get into people and people you know self quarantine and they take on the steps that they should i think we could have a v. Shape recession but if theres more thrown into the mix and you know we wind up with things like. Other nations either either more slowly recovering or you know another maybe maybe another strain of corona virus or Something Else you know a black swan within a black swan sort of speak that i mean i think we certainly could have a long slow recovery its all going to hinge upon what happens with the corona virus and in turn what governments do to it to address it or it as a would prefer suited that they take a lot as light a touch as possible you know and you do think that you know i suppose you know were going to have to expect that there pandemics in the future can we learn something new can the global system learn something from this experience here id like some kind of a better coordinated reaction is that something we should take from this when this is all said and done. Well i think thats right i think you know after this has all said and done were going to look around at what good and bad things governments around the world did in order to handle this certainly theyll be the stocking of more supplies or test kits or ventilators or what people feel is needed around the world in order to cope with the next pandemic whenever that should happen so i do think that after this is over there is going to be a serious amount of study for what went right and what went wrong and whether the korea model was a good model or the italian model or what should we take away from each of those for the world going forward. I certainly hope so because theres going to be a lot of people left behind that when this is all said and done as i mentioned a lot of people low income people are going to have very tough time even if its a recession thats all the time we have here many thanks and i guess im used to new york and ingrates learning and thanks to our viewers for watching us here dorothy see you next time and remember. I dont trust medical authority at all ever and there isnt so that is i had this horrible autoimmune disorder growing up and then it turns out it was completely alleviated with very drastic dietary measures and i went to a number of doctors to discuss what happened to me and i was basically laughed at like diet has nothing to do with our meanest orders so my suggestion to people who have Health Issues they cant figure out if theyre going to see a medical professional and theyve been going for 10 years and theyre still in the same place they should probably take it upon themselves to Start Testing things out testing out diet testing out exercise and try and figure out. Things on their own. Backs geysers financial survival guide. Housing bubble. Oh you mean theres a downside to artificially low Mortgage Rates dont get carried away thats cause report. Join me every thursday on the alex simon shore and ill be speaking to guests of the world of politics or business im showbusiness ill see if. This is a ridiculous situation right the whole world im crazy thats what it seems like and im supposed to be at work right now that was actually looking forward to traveling the world again making films because ive been stuck on Maternity Leave for the past so 8 or 9 months now and i was looking forward to the i have been so cold. All day long but i got my mother in law to move to moscow to replace me while i work there she is