di Ali Alsous
If you’ve been paying attention you’ve likely noticed the markets tumbling down for the past few days now as apprehension solidifies regarding the coronavirus’ (Covid-19) potential mutation into a global pandemic. This week the S&P 500 experienced its worst 2-day plunge since 2018. Several Asian economies are currently on the brink of recession as economic activity grinds to a halt in China and elsewhere in the region. Gold prices have now reached a 7-year high in response. President Trump is presently panicking since any prolonged recession occurring between now and November would spell death for his reelection bid, and as a result was furious when 14 U.S citizens who tested positive for the virus were allowed re-entry into the country. In fact, it has been reported the president told advisers that he does not want the administration to do or say anything that would further “spook the markets”, in essence rendering the U.S response to Covid-19 one of no response since apparently that is the market-friendly response. The Center for Disease Control and Prevention, a branch of the federal government that Trump has defunded coincidentally, has stated that it is not a matter of if Covid-19 spreads to and within the U.S but a matter of when. Given the dismal state of sick leave in the U.S, workers will continue to report to work even if they feel sick making the spread of the virus within the U.S a virtually guaranteed eventuality. Cementing this was a new case discovery, the first in the U.S without any ties to a known outbreak, occurring just minutes after Trump's coronavirus press conference tonight, in which he heavily downplayed the potential pandemic, as well as strangely appointed Mike "Evolution is a Myth" Pence as the frontman for handling the crisis. Also today, the World Health Organization announced more new cases of the virus occurring outside of China than inside, marking the transition of the virus from a regional epidemic to global pandemic in all but name. Adding fuel to the fire are current estimates which place the viability of any widely deployable vaccine to over a year from now at the earliest.
Due to decades of globalization and offshoring, the U.S is heavily reliant on overseas production for basically everything, including key ingredients in over 150 prescription drugs. With China, Italy, and South Korea shutting down major production centers, the global supply chain will likely dry up in a matter of weeks with the emptying of manufacturer inventories following shortly thereafter. A devastating Q2 will likely be unavoidable as America deals with a crisis of production for the first time in 80 years. Mark Stoller has an excellent piece articulating how Covid-19 will mark the end of ‘affluence politics’ as it exists in America today, remarking the following:
Regardless, the end of affluence politics means focusing on whether medicine is on shelves, not bitter disputes over bloated and wasteful hospital and insurance billing departments. It means caring about bureaucratic competence in government, and accuracy in media, not because these are nice things to have but because they are necessary to avoid immense widespread suffering. It means understanding that pharmaceutical mergers that benefit shareholders while laying off scientists are destructive, not just because they are unfair, but because they make us less resilient to disease. (Shareholders, as it turns out, also have lungs.) Finally, it means recognizing that wealth, real wealth, is not defined by accounting games on Wall Street, but the ability to meet the needs of our own people.
Stoller also mentions the historic importance of this kind of event converging upon the runup to a presidential election and the significance that it will bear on it. Likewise, this bout of uncertainty brought by the spread of Covid-19 provides a valuable exposé on the fragility of the contemporary economic system, a fragility of which long predates the emergence of Covid-19.
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