- The contrast seems grotesque. A deadly pandemic has shut down the global economy and left millions of workers furloughed, fired, or stranded without gigs. The future for most businesses looks uncertain to dismal. Yet U.S. stock indices are near all-time highs, at giddy valuations comparable to the 2000 dot-com bubble and 1929.
Foreign Policy researched but could not find a moment in financial history that remotely resembles today—so we asked a panel of leading experts to help us make sense of the markets, and what their state tells us about the economy and society going forward.
TL;DR:
Never before this spring have so many people lost their jobs so quickly, and never before have central banks stepped in to provide so much liquidity to financial markets with no obvious limit. A world with guaranteed income for capital and unprecedented unemployment for labor tells us about the relative power of each: It has become very expensive to buy social peace from capital, while labor can be offered next to nothing.
Someone on Twitter quoted an economist from the '70s saying that interest rates are the natural cost of monopoly. When money costs nothing to borrow, it's easy to swamp the field and crush everyone little. When money is expensive to borrow, market forces are allowed to operate naturally. Let's say you own and operate a small business. There's just you. You tell the government that Coronavirus has impacted your business; if you play your cards right you will get two and a half months' salary. Now let's suppose you have 300 employees. You tell the government that Coronavirus has impacted your business; if you play your cards right you will get two and a half months' salary for every person you employ. Under a non-shitty system, your employees would get money from the government. But no - the government is going to give your money to your boss. So that he can pay you. Our employees got $1200 from the government to help them through. My wife? My wife got $70k. And fuckin' hell: we're spending it on salary so that we can keep our powder dry because I'm not expecting to see a whole lot more for "small business" and I think this whole kerfuffle is a long goddamn way from over. But I mean we bought laptops for two employees and they're tickled pink and it's kinda like "you know we got like nine grand in your name, right? And that thing in your hand is a write-off that we also get to accelerate the depreciation on? And that we basically get to double-discount your salary because god is dead?" Things are workin' out great for me and I'm the littlest capitalist I know. If I were fuckin' Shake Shack...