How To Rebuild The Coronavirus Economy

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A person files an application for unemployment benefits on April 16, 2020, in Arlington, Virginia. (Olivier Douliery/AFP/Getty Images)
A person files an application for unemployment benefits on April 16, 2020, in Arlington, Virginia. (Olivier Douliery/AFP/Getty Images)

Oil shock. Great Depression levels of unemployment. It’s not just about restarting the economy. It’s about rebuilding it. We talk about how.


Rana Foroohar, CNN global economic analyst. Financial Times global business columnist and associate editor. (@RanaForoohar)
Michelle Singletary, Washington Post personal finance columnist. Her column, "The Color of Money" is syndicated in newspapers across the country. (@SingletaryM)
Jack Beatty, On Point news analyst. (@JackBeattyNPR)

Interview Highlights

On other moments in history that shed light on the current coronavirus economy 

Rana Foroohar: “I look at this period that we're in, very similar to the period between the run-up to the 1929 market crash and then the Great Depression. And if you look, that run-up started actually in 1918 or so, which was when the Spanish flu hit, a big pandemic. There was a crisis. There was a slowing of growth globally. And then central bankers cut interest rates in 1921. And then that was easy monetary policy, as we've had the last 10 years.

"It allowed for a real run-up in asset prices which led to the 1929 crash. The '20s were actually very similar, interestingly, to the last 10 years. Lot of encouragement of people taking on credit, you know, two-thirds of purchases for white goods and things around the home were being made on credit. You had stock prices soaring, but then you had the 1929 crash and it took two or three years for the markets to finally bottom out. Growth slowed.

“And during that period between the '30s and World War II, you had a real increase in private sector savings. And I do think that we're going to start seeing an impulse towards that. And actually, if you look at savings by income, you can already see that anybody who can save — meaning people that have a bit of cash on hand, wealthy people, middle class people — they are saving more. And I think that as soon as working people are able to save more, I think the impulse will be to do that.

"And you look at behavioral economic research, it shows that whatever the kind of key seismic economic event is of your youth, that's what shapes your behavior going forward. So my grandmother, you know, uses a teabag 10 times because she's a depression-era person. My parents, who were boomers, took on a big ... mortgage on a big house after they retired. So it's behavior.”

"You look at behavioral economic research, it shows that whatever the kind of key seismic economic event is of your youth, that's what shapes your behavior going forward."

Rana Foroohar

On what individuals can do during the coronavirus pandemic

Michelle Singletary: “It's not entirely the individual's fault because the whole system is designed to get you to think that debt is OK and almost OK at any level. I mean, look at the corporations. Why are these multi-million dollar companies, why didn't they have a cushion? Why aren't these large landlords, why didn't they have a cushion that they can carry somebody for a couple of months? I heard from a landlord — who didn't even have a mortgage — who was fretting about how they're going to pay their utility bills in July if their tenants, who are unemployed because of the virus, can't pay their rent.

“And I'm thinking, 'Well, dude, like, what were you doing with the money that you were collecting from them, that you can't carry them for a couple of months?' I mean, everybody has to take a hit in this. You know, we are all in this together. And if you as a landlord haven't done your job to make sure you have a cushion, you can't just blame your tenants when they can't pay their rent. I actually had a rental property at one point and I had a single mom who lost her job through no fault of her own. I was actually able to carry her for six months. And not only that, I did not charge her that back rent because I understood her situation.

"But that's because I'm a great saver and I didn't buy into this idea that I'm gonna have an investment property and I'm gonna spend every dime that I get in there and I'm not going to have a cushion. So I'm a little angry at some of these businesses and landlords who didn't have a cushion, and can't carry people at a time that is extraordinary. That people are not working because they're like, 'Hey, you know, I don't want to go out there and wear a mask.' These people can't work because they don't want to die. And so I know I'm sort of passionate about this.

" ... And then there are individuals who were over. Now, I'm not talking about people just living on the edge who don't make enough. There is a swath of our population that, you know, vacations and cars and more houses than they can afford. And now you're realizing that you shouldn't listen to those folks who gave you all those credit cards and said, 'Yeah, go ahead and buy this $40,000 car when you only make $50,000 a year.' And so you got to take ownership of the bad decisions that you make once we get past this crisis."

"If you as a landlord haven't done your job to make sure you have a cushion, you can't just blame your tenants when they can't pay their rent."

Michelle Singletary

If there were one policy or even behavior that you would want people to use right now — as individuals, or as a nation, or institution  — what would it be?

Michelle Singletary: “We have got to stop telling people that they need to borrow whatever it takes to send their kid to college. ... We have car mortgages now. Too much house or credit card debt, if you don't own a house. I mean, I think our nation, our federal government's love affair with using debt when we get in trouble and being okay with being in debt, which then trickles down to individuals who then get criticized when they have debt. ... So for me, it's debt. It's debt, debt, debt. Debt is evil. It is crushing. And I would just like to see us not get to the point where — obviously there's some debt you have to use — but just get rid of this love affair with debt and using it to fix our economic problems.

Rana Foroohar: "I would say we need to start thinking more as a country about resiliency instead of efficiency. And that's at both the macro and the micro level. I mean, companies, you know, the entire process of globalization since the 80s onward has been about, 'Let's strip costs out the system, let's send our corporate savings to tax havens. Let's send our jobs to where labor is the cheapest.' Goods and capital can kind of move 35,000 feet above individuals, but individuals and workers still have to stay on the ground and deal with problems within the countries that they live in.'

"We need to start thinking about, 'You know what, we're in it together. Let's build a system that has more resiliency.' And that means changing a lot of things. It's not going to be an easy process. But there are other countries, there are rich countries that have made different choices. You look at Germany right now, you look at some of the Scandinavian countries, they've made different choices to have a more balanced economy. And I'd like to see that conversation happening."

"Debt is evil. It is crushing."

Michelle Singletary

From The Reading List

Financial Times: "Coronavirus bursts the US college education bubble" — "Bubbles are bursting everywhere and America’s most prestigious export — higher education — won’t be immune. Universities are like landlocked cruise ships: places with all-you-can-eat buffets and plenty of beer, but almost no way of social distancing."

Washington Post: "Your money and the pandemic" — "The coronavirus pandemic has turned people’s financial lives upside down. Millions are unemployed or have seen their income significantly reduced. Account balances in IRAs and 401(k)s and similar workplace retirement accounts have fallen."

Financial Times: "The ‘Doomsday Dollar’ scenario, part II" — "Some Swampians may remember that I put forward an idea last year called the 'Doomsday Dollar' scenario, which laid out how both the greenback and stock prices could potentially fall at once. I also made the case for holding some gold, as a hedge against a dollar dip related to the US entitlements crisis and the possibility that we could be heading, at some point, into a longer-term dollar dip, if a major debt crisis created unlimited central bank monetisation of state budgets."

Washington Post: "Why paying off your mortgage early may make sense — if you can afford it" — "As the stock market skyrocketed and mortgage interest rates fell, financial experts encouraged people to put any extra money they had into their retirement accounts rather than pay off their mortgages early."

MarketWatch: "Opinion: Why lockdown easing can’t bring a quick economic boost" -- "Whether they have already eased their lockdown restrictions (as in Germany,) are planning to (in France, Italy and Spain), or are delaying for the moment (in the U.K.), European governments are all saying the same thing: from an economic viewpoint, easing can only make sense once they are sure that the outbreak’s peak has been reached and the situation is under control. And, in any case, the return to (eventual) normal will be gradual and slow."

Financial Times: "We are entering the new age of American austerity" — "Americans are traditionally the world’s consumers of last resort. But that’s about to change. Even when what the IMF is calling the Great Lockdown ends and we emerge from the immediate coronavirus crisis, the economic ramifications of this moment will produce a new age of US austerity."

Washington Post: "Rent, mortgage, car loans, utilities and child support. The other bills can wait." — "More than 6.6 million people. That’s how many Americans applied for unemployment in the week ending March 28 — an all-time high. This is the latest aftershock of the coronavirus pandemic."

This program aired on April 28, 2020.


Wes Martin Freelance Producer
Wes Martin is a freelance producer for On Point.


Meghna Chakrabarti Host, On Point
Meghna Chakrabarti is the host of On Point.



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