Announced that the spread of the virus might be reaching an apex, and were getting close to that flattening of the curve. Positive messages about the outbreak were welcome news on wall street, helping to send stocks soaring on monday, and by wednesday the s p 500ed had joined the dow in exiting the bear market it fell into on march 12th. Its now up 25 from its low point just a little more than two weeks ago. More gains came as the fed stepped up its efforts. Meanwhile, the irs was moving to send direct payments to individuals, and billions of federal dollars to help Small Businesses stay afloat were being sent to banks for loans that could eventually be forgiven although problems caused a bottleneck in getting the cash out. Still, the grim news about the economy continues unabated as another 6. 6 million filed firsttime jobless claims this week. Meanwhile, theres a growing push by the president and others to start allowing businesses that have been shut down because of the coronavirus to get up and running again. The white house insists while that decision will be based on the medical evidence, the need the begin opening up the economy soon is crucial. The president s team is developing a plan to do that with top Economic Advisor larry kudlow telling fox business they hope to do it over the next 48 weeks on a rolling basis. So what are the best ways to get the economy going again . How can we return to work, and what will the eventual economic comeback look like . With me now to give his thoughts is noted economist Mohamed Elerian, and he joins me by skype from newport beach, california. Mohamed, welcome to the show. Thank you. Gerry let me start by you wont be able to see it, but youll be familiar with the numbers. Estimate by jpmorgan this week that shows for gdp and unemployment this year First Quarter gdp growth 10 , Second Quarter, 40 , and the Unemployment Rate they say going to 20 in the Second Quarter and then falling back down to 8. 8 percent. Again, nobody has a clear idea yet because the impact is so vast and so unpredictable. But whats your overall assessment of just how much damage this is going to the economy right now. So like thaw say, gerry, precise estimates are really hard, but this is by far the biggest hit to u. S. Economy and the Global Economy that weve seen since the great depression. It will make the Great Recession look like a soft blow, and we all know what we felt then. And i think the one number you cited thats really important is in just three weeks 17 Million People joined the up employed unemployed which is 10 of the labor force. 10 of the labor force, and thats equal to the high level of unemployment we reached during the great, Great Recession. So this is a massive hit to the economy, unfortunately. Gerry have we done enough so far . Weve seen a massive fiscal response, the cares act, you know, increasing unemployment benefits, payments to households, sport for certain support for certain industries, support in terms of loans for Small Businesses, the Federal Reserve coming in again this week providing that additional money thats needed for a lot of those programs, doing other things too. Obviously, we cannot possibly remove, we cannot possibly completely compensate, but have we done enough so far, do you think, mohamed, to cushion the economy as much as we can . What congress, what the white house and the Federal Reserve have done is astounding, absolutely astounding. It was unthinkable that they would move as fast and with the magnitude they have moved. So we have done a lot. There are three issues that we are dealing with. One is that were still building the pipes as were trying to get the money out there. This is an unprecedented shock, and we didnt have the pipes in place. So so its one thing designing and approving a massive intervention, its another thing for it to be felt on main street. Unfortunately, that takes time. Secondly, as you say, ger are ry, we cant restart the economy. Thats the health issue. So the best you can do right now is try to contain the damage to as many people and as much businesses. The worst thing for a liquidity problem which is reversible and temporary, is to become a solvency problem which is permanent unemployment and bankruptcy. And then the final point that i dont think weve talked enough about is were reacting as if this is a oneround hit. Somehow we get through it, its going to be a neat v coming out. I think as we start looking at how to we start the economy and what the landscape looks like after this crisis, were going to realize that the policy challenges are just starting. Gerry lets pick up that point in particular because, as you say, one of the phenomena weve seen in any previous economic downturn is the longer it goes on, the harder it is to recover and the longer it takes to recover. So far this has been going on a month. But if it goes on much longer, give us a sense of how much lasting damage there will be and how much more of a challenge that will be for us to recover from. So i worry that its going to last a while. Remember, this is not just a hit to the u. S. Economy, unprecedented hit to the u. S. Economy. Its a hit to the Global Economy. So there are massive synchronization issues both within the u. S. And within the Global Economy. And policy has to make sure not to repeat the mistake of 20089. And the biggest mistake of 20089 is that we won the battle against the great depression, we won the war, but we lost the peace. We werent able to secure the peace which is lasting, inclusive growth because we didnt realize that things would look different. And i think that this is really important to start thinking about this now. When we emerge from this and i have no doubt were going to emerge, i just dont know when and with how much damage. But when we emerge from this, its going to be a completely different hand scape and that things that landscape. And things that we need to do now to make sure we secure the peace, because if we dont this time around, were going to find ourselves vulnerable to any shock in future. Gerry what about the financial system, mohamed . Again, the fed has been on alert there for right from the start of this providing liquidity as needed, cutting interest rates, doing other things that seems to be necessary. But one of these things, as we know, is when you have a down turn like this, all kind of financial stressors appear. Are you concerned at all, do you think weve addressed those . Arent isnt there still the risk that we could see some particular financial critical problems . Yes. I mean, theres two risks; one that the fed has managed well and a second one that, unfortunately, hasnt played out yet. Weve got to be careful. The first risk is the liquidity risk, that this shock thats stunning the economy hits the markets, and the markets are caught completely offside. And the attempt to get back on side causes disruption, risks market failure that can reverse contaminate the economy. The fed has moved fast and aggressively to reduce that risk. And that is a good thing. Theres a second risk, which is credit risk, default risk, bankruptcy risk. That is a much harders are risk to deal with harder risk to deal with. And i fear that if the severity and the length of the crisis ends up being really bad, were going to have a second round of Financial Market disruptions. And that is a round of corporate defaults in the Global Economy, a round of sovereign defaults. That with, again, we risk contaminating. Now, the answer to this is not bail out everybody. Thats not the answer. The answer is move as fast as possible on the Health Issues, containment, treatment of illness and immunity, in order to reduce the risk of economic bankruptcy. Gerry weve got to take a quick break, but up next i want to get your thoughts on how we can start the economy, what measures we need to take and how quickly well be able to do it. Stay with us. Y pills . Flonase relieves your worst symptoms which most pills dont. Get allinone allergy relief for 24 hours, with flonase. Which most pills dont. I have always wanted to be a teacher. Ive been teaching for over 20 years. With everything going on, weve had to alter our classroom settings. We have to transition into virtual learning. On the network, we can have teachers facetoface with a student in livetime. 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Other countries are already starting to talk about and have put in place plans for reopening their economy. Austria, a couple countries in europe have talked about it. The president this week tasked some of his team with coming up with an economy reopening plan whenever that happens. Give us a sense, if you would, from your perspective of how we may be able to go about it, what that might look like. So first, we need to safely and i stress safely restart the economy as soon as possible because we have a risk of the cure being worse than the disease, as the president said. Remember, the current phase of Health Policy for good reasons are social distancing, separation, isolation. Our economys wired for exactly the opposite. And Health Issues should dominate, but weve got to get restarted. I think theres two things that are very important, gerry. First, to disabuse people and markets of the notion that youre simply going to flip a switch, that were going to restart the economy instantaneously, that were going to go back to something that looked like the level of productivity before it was shut down. Thats not going to happen. Its going to be a very sequential startup. Youve got to start with the priority sectors. That is critical to making sure that we dont end up in a a w. And importantly, weve got to figure out how to bring it back in a synchronized fashion. To this is a real so this is a real planning, engineering challenge that were up to, but weve got to think that way. Second, weve got to start it in a way that addresses the longer term issues. And if you had to step back and say, well, how are we going to emerge from this, three things hit you in the face immediately. One, with a lot more debt. Two, weve got to start rewiring the way we do business. Which means were going to get a hit on product utah. Were going to sacrifice efficiency for resilience. And, three, were going to have a massive entanglement of the government in the private sector. Weve got to figure out ways to restart the economy to make sure that these longer term issues, the ones that enable us to have a good peace or a bad peace, that we deal with them as well. So it is an engineering challenge. I think were up to it, but weve got to start on this really quickly. Gerry i want to come on to those longerterm issues, as you say, product utah. But just in the immediate future, key how quickly we can get people back to work, businesses open again is testing, right . We need to know who has had the virus, who is um moon from the virus, and weve got to move quickly on that. And if we can, presumably, then people who are immune or have had the virus or are at very low risk can go back to work. Yes, absolutely. You really need to have three things, but you can restart with two. The first one is an ability to identify and contain the spread of the virus. And testing is absolutely key. Its a necessary condition. Ill come back to it. The second is the ability to treat the ill better, because you need to give people confidence that if, god forbid, they fall ill, that theyre able to be treated. Otherwise they wont come out, as we see in china gerry therapies being developed are important for that. Critical. And the issue is on the first one, testing is critical, but we also need it to find a way to signal that you are okay. And this is hard because the easiest way to do that is for all of us to carry a passport that says weve been tested, were okay, and we are open to have random testing. Right . But that goes against a lot of what we stand for gerry a lot of privacy concerns, right . They have privacy concerns gerry you could track everybody in the cup, but people feel uncomfortable about about that. Correct. Weve got to figure out either a private sector solution or in partnership with the government. But testing is a necessary condition. Also how to you signal that you have been how do signal that you have been tested and are reengage in the economy. Gerry one more quick break, and after that well consider some of these longerterm issues talking about how this will change our economy and how we can make our economy work better again. Stay with us. Im your mother in law. And i like to question your every move. Like this left turn. Its the next one. You always drive this slow . How did you make someone i love . That must be why youre always so late. I do not speed. And thats saving me cash with drivewise. My son, he did say that you were the safe option. And thats the nicest thing you ever said to me. So get allstate. Stop bossing. Where good drivers save 40 for avoiding mayhem, like me. This is my sons favorite color, you should try it. [mayhem] you always drive like an old lady . 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And were going to have challenges and opportunities. On the challenges side, if you are a company today and you had a globalized supply chain because you really wanted cost effectiveness, just in time inventory, management, you suddenly realize that that comes with a lot of risk. Is so what were going to see are companies rewiring their supply chains. Were also going to see people, i believe, come out more riskaverse. Willing both these things mean the supply side and the demand side will initially not be as responsive as before. Were also going to have a greater entanglement of governments in the private sector. We may end up inadvertently supporting zombie industries. Weve got to be careful about that. That eats away at productivity. And finally, a much higher level of debt. Weve got to think about how were going to deal with that high level of debt. Against that, i want to stress opportunities. We are seeing amazing Public Private partnerships emerge. We should continue with that. We are seeing elements of the private sector come together; tech, pharma, banks, and we act and act in a collectively responsible manner. We have to make sure that continues. So there are both challenges and opportunities, but we have to start thinking about minimizing the challenges now and exe exploiting the opportunities. Gerry how do you think the u. S. Is placed to deal with those longterm challenges . Much, much better. We are, first, relatively closed, so we dont need everybody else to come back on stream. Very different from europe, very different from china. Second, much more entrepreneurial and flexible. But i want to stress one thing, the one part of the world i worry about and we havent talked enough about it pluckily is the american publicly is the american world. They dont have the ability to contain the virus. The Health Care System is very poor, and they dont have the resilience that we have. So they cant do what we do to contain damage. If we get a major outbreak there, theres going to be huge human toll. Gerry also an economic toll for them most importantly, but for the rest of the earlier. You mentioned the risk of sovereign debt crisis. Is that something we should be concerned about . We should. What you hear now from people in africa is that theres a race. Its not a race like us between health and policy, getting ahead of the virus. Their race is much more depressing. It is between dyin