Conversation

1) People are describing this stimulus (or QE or whatever you want to call it) as 'aggressive' and 'massive'. BUT--the world has lost 10s of trillions in the last month in equity value; compared to that, $700B is.... well, it's big, but just not nearly *as* big.

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2) Which isn't to say it's bad! If there's a time for stabilizing measures now might be it. But "helpful" isn't the same thing as "enough to prevent a recession".

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3) I think people have been massively underestimating the economic impact of COVID-19 and the world's (bungled) response. Even just in terms of direct health impact, lost jobs --> poverty --> death is likely to kill a LOT.

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4) 2008 REALLY sucked. It wrecked lots of families/businesses/economies/jobs, and that reverberated for a decade. We're in danger of going back there.

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5) This is in part caused by the disease itself, but a lot of this is coming from the world's reaction. Many countries are following the "ignore it, it's just the flu, wait for it to spread uncontainably, then freak the fuck out and shut everything down" approach.

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6) That's just about the *worst* approach. If you want to contain COVID-19, you have to act quickly and intelligently--quarantine the high risk, massively increase hygiene, temperature checks everywhere, etc.--and then you have a chance to avoid it spreading.

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7) If you want to avoid a recession, you have to avoid shutting the country down for months. But to do that you either have to contain it early or give up on containing it. The "ignore it then freak out" approach is the worst of both worlds: it spreads *and* you shut down.

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8) HK and Singapore did a great job here: 1 week of partial shut-down, lots of effectively common sense measures, contained it, and they're still functioning.

1:32 AM · Mar 16, 2020Twitter Web App

Replying to

9) China didn't act early enough to have a low-cost intervention, but they did just in time so that a HUGE cost intervention--shutting down for a month--stopped the spreading.

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10) The UK suggested the alternate approach--acknowledge it will spread and just try to contain the impact. But not clear they'll follow through on it given the political blowback, which would leave them in the "chill out, wait no actually freak out" bucket.

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11) There are advantages to "flattening the curve" but I think they're overstated. People are talking about it like it's the solution to COVID-19, but it combines (a) letting it spread with (b) shutting everything down. The impact is blunted a bit, but at a huge cost.

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12) There are also lots of things we probably *should* be doing but aren't. The cost of a recession is HUGE--maybe $100T!!! So spending $100B each on rapidly building hand sanitizer/etc factories, rapidly increasing ventilator capacity, etc. is a small price to pay.

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13) Trump has really bungled this, but he was in a tough place: freak you and you crash the economy, brush it off and you are callous and look obviously wrong in retrospect. He's swinging wildly around looking for an angle that works.

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14) The problem is that the right angle here, and the right speech to give, isn't really in Trump's wheelhouse: it's nuanced and acknowledges tradeoffs and is empathetic.

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15) Bullet points from what I'd have said: a) this will suck b) we have to try to prevent deaths c) we have to try to prevent recession d) we will get through this together

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16) e) announce big stimulus f) announce massive program to provide sanitizer, masks, etc. to everyone g) cover the wages of high-risk or sick people and have them stay home h) temperature checks everywhere

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17) i) massive increase in testing, including heurstic testing (temperature checks, people coming from high risk areas, etc.) j) funds to increase ventilator/hospital capacity k) funds to find a vaccine l) 14d quarantine for people from high-risk area, otherwise open borders

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18) Repeat the beginning: This will suck, but we'll do what we can and we'll get through this together.

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19) But in the end lots of things are better than the status quo: a large % of people get COVID-19, *and* lots of people lose their jobs.

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