-US jobless claims came in a 3.2 million. Let that sink in.
-The global economy is on war-time footing
The economic crisis triggered by the coronavirus is an existential one. The chairman of the US Fed said Thursday the world’s largest economy may be in recession already, though it may be a voluntary recession to some degree as nations and the public self-isolate. The demand disintegration for some segments of the economy may be so extreme that they collapse. Overnight, US lawmakers passed a stimulus package that’s unrivaled in American history, boasting that government is the only entity that can stem the bleeding. Worried about their own demise, big business is saying it’s time to get back to work. But bringing people back to work may be a suicide mission.
Brent crude oil managed to post gains in the Wednesday session as US lawmakers locked step to coordinate on a $2 trillion stimulus package. The global benchmark was down some 1.3% as of 8 a.m. ET to $27.05 on declining storage capacity and expectations of massive unemployment in the United States.
In a black-swan moment, the US Senate put partisan rancor aside and voted unanimously for a war-time economic rescue package that includes direct payments to American taxpayers. Senate Democratic leader Chuck Schumer, N.Y., said the economic crisis is too severe for the private sector to handle.
“Individuals even with bravery and valor are not powerful enough to beat it back,” he was quoted by Reuters as saying. “Government is the only force large enough to staunch the bleeding and begin the healing.”
That is a very Hobbesian solution to the economic crisis and ignores the prospects of ingenuity that even Marx saw as part of capitalism’s cleverness. It was Henry Ford that created the means of mass production that helped accelerate growth in manufacturing, a key component of national power. And so it is then that the super-rich are eager to get the economy moving sooner than later. Dick Kovacevich, the former head of Wells Fargo & Co., was quoted as saying the recovery rests, coincidentally in a way that Marx predicted, on sacrificial lambs.
“We’ll gradually bring those people back and see what happens,” he told Bloomberg News. “Some of them will get sick, some may even die, I don’t know.”
On the notion of work, Dutch firm Saxo Bank said the US unemployment figures will be the most important data point of the week. Christopher Dembik, the head of macro analysis, said the real figures might not even be accurate as many state support systems are overwhelmed by new filings.
“In less than two weeks, we have moved from full employment to a number of job destruction we have never experienced in a period of peace,” he wrote.
The forecast was for 1.5 million claims. The actual figure was more than double that.