COVID-19 and the Economy — As Seen From a Technology Investment Conference Rich Karlgaard
https://www.forbes.com/sites/richkarlgaard/2020/03/08/covid-19-and-the-economy-as-seen-from-a-technology-investment-conference/#4c13a064fc7c
COVID-19 infected the American psyche and stocks rather suddenly during the final week of February. Last week I attended at large technology investment conference in California — The Montgomery Summit 2020 — and was eager to see whether investors and entrepreneurs were pulling in their horns. I also moderated two discussions on the pandemic’s likely damage to the economy, markets and supply chains around the world.
My first session was with Michael Milken, the noted financier and philanthropist. Milken was cautious for the short term, but generally optimistic. Computer power for gene sequencing and AI models to predict infection spread, he said, are vastly more capable than during the SARS scare of 2002-2003 and the H1N1 epidemic of 2009-2010, when 700 million to 1.4 billion people became infected worldwide and upwards of 500,000 died. Technology can identify and solve problems much faster today.
Milken cited the U.S. polio epidemic of 1952 and the HIV/AIDS panic of the late 1980s as times when fear gripped the population. “People were afraid to be in the same room with someone infected with HIV.”
Fear, of course, is hard to break. The polio fear persisted a few years after the Salk vaccine. Milken said it was popular figures like Elvis Presley, photographed during his Army vaccine, that broke the spell. What lifted the clouds for AIDS were new drug cocktails that eliminated the death sentence, along with thriving patients such as basketball star Magic Johnson.
Capitalism, reasonably regulated, Milken reminded us, has remarkable recuperative powers. The COVID-19 crisis has created the lowest mortgage rates in U.S. history. Oil and gas are priced almost at the lows of early 2009 [update: and now significantly lower.] “The cost of living is going down. Purchasing power is going up.” Milken said, which will lead to a faster recovery of any recession caused by COVID-19.
MY SECOND PANEL was called The Politics, Economics and Health Implications of Covid-19. It included a virologist at George Washington University (Dr. Christopher Mores), a former dean of the school of public health at UCLA (Dr. Jonathan Fielding), an infectious disease expert at the gene sequencing company, Illumina (Dr. Michael Oberholzer), and a global strategy consultant at Clocktower Group (Marko Papic).
Bottom line: Not great, but not disastrous. Expect a recession. If the recession runs more than a quarter, expect a massive stimulus package of quantitative easing and government spending that will reignite inflation in 2021 and beyond.
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