A Week of Coronavirus Pain and Progress Infections are rising, but markets are calmer and medical aid is surging.
https://www.wsj.com/articles/a-week-of-coronavirus-pain-and-progress-51585245116?mod=opinion_lead_pos1
As the number of Americans infected with the coronavirus surges, and hospitals are besieged, it can appear that America is losing the pandemic war. But in important ways the U.S. is better off at the end of March than it was a week ago, and it’s worth tracking the progress as well as the pain.
The most important good news this week is the ebbing panic in financial markets. The Federal Reserve unveiled new facilities to provide liquidity to corners of the market where anxiety had shut down trades or threatened a run. Think money-market and municipal-bond funds. The Senate bill that the House passed Friday adds $454 billion for Treasury that can backstop further Fed actions if they’re needed.
Our market sources say trading has calmed down and most sellers can find buyers for assets to raise cash when they need it. If you think this doesn’t matter to the real economy, imagine a cascade of defaults that become bankruptcies that become a banking panic. At least for now the panic toward a deflationary spiral has stopped. The Fed and the Senate legislation sparked this week’s modest rally in equities.
Trouble spots remain in the markets, notably commercial real estate, oil and gas companies, and high-yield corporate debt in general. But the Treasury and Fed should be wary of intervening too far up the risk curve of private assets. Some companies were over-leveraged even before the shock of $20 oil and the national economic shutdown.
The Fed’s goal should be to offer liquidity against good collateral to companies that were healthy before the virus shock. Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin can make this distinction clear when they announce their special-purpose vehicles, perhaps as early as next week. They’ll get more bang for their dollar in easing credit conditions for more of the economy.
None of this will prevent the recession that the government-ordered lockdown has made inevitable. This week’s record job losses will grow by the millions as long as American commerce is closed by fiat. The good news on that front is that a debate has now begun about the importance of a healthy economy in the fight against the virus.
President Trump’s choice of Easter as a possible date for America to return to work triggered the inevitable sneers by his political opponents, but New York Gov. Andrew Cuomo has made a similar point without the specific date. Health expert Scott Gottlieb and White House task force coordinator Deborah Birx have also talked about balancing public health with economic health. The White House letter to governors suggesting a national map of counties by virus risk seems a decent place to start.
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There has also been progress against the direct assault of the virus, though that is harder to discern amid the rising infection totals. Those numbers will continue to increase as testing becomes more widely available and we get a better grasp on how far the virus has spread. Tests are becoming easier to obtain, though we are still paying for the earlier failure by the Centers for Disease Control and Prevention.
The most urgent need continues to be masks, gowns, respirators and ventilators for hospitals in the hardest-hit cities. Mass production of masks seems well underway but the political blame-game over ventilators is dispiriting. Mr. Cuomo blames Mr. Trump, who blamed GM and Ford Friday for moving too slowly and triggered the Defense Production Act.
Mr. Trump does himself no favors by questioning Mr. Cuomo’s estimate that New York will need 30,000 ventilators. If it doesn’t turn out that way, great, but the best response is to say the government is doing its best to get as many as possible to these cities. Neither man will escape blame if there are Italy-like scenes of medical triage.
More broadly, the scope of what we still need to learn to develop a sustainable anti-virus strategy is coming into focus. This includes the number of people who have been exposed to the virus and now have antibodies that suggest immunity, even if they never showed symptoms. This will give us better insight into the death rate and who can safely return to work and where. As Dr. Birx noted this week (see nearby), the lower estimate of deaths from the Imperial College London expert means the apocalyptic fears may not be warranted.
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The good news here is that the public seems to be ignoring the trivial politics and focusing on what matters. The Beltway press corp’s habit of playing gotcha with Mr. Trump seems especially small these days. Most Americans are looking past it for real news about help on the economy, the availability of medical equipment, and the potential of anti-viral therapies. Damage from the virus will continue for months, but America is now mobilizing against it. Don’t bet against success.
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