The govt has the next 4 weeks to make sure all this money makes its way into the economy before the April and May rents default. If it fails to do that,commercial RE will collapse and start a domino effect that will take down other RE sectors and everything else after that. I believe there's a good probability that we are heading into a global depression.
I can say that it will take along time for people to get UI payments. All states are sitting on piles of applications that they can't process in time. This is madness.
No. Not 4 weeks. It's too late for April. The $2T only covers about two weeks. The gov't has the next 4 weeks to doll out the money before May, but that is only robbing Peter to pay Paul. April and May are 8 weeks. That'll require a stimulus every two weeks or $8 trillion. That is impossible as it would push our debt-to-GDP above Italy's 130+% debt-to-GDP. With that level of debt, our credit standing would require that we offer the same kind of rates as Italy and Greece: double digits. On $8 trillion we are talking $800B - $1T per annum til maturity on top of the debt payments we already have on the $23T of outstanding debt.
Wonder what happens if the virus does not abate for weeks and weeks, like sometime in June? Does the govt have any contingency for that besides printing $2T each two weeks? Methinks we are approaching the debt endgame.
Well, C+I+G+(X-M), so the only way is the Catch-22 whereby we ramp up the C (consumer spending) or X (exports). How will we increase consumer spending when they barely have money to pay for their cars, mortgages, etc. Restaurants won't be open to hire or generate tax revenue. The vicious circle has been stopped in its tracks. We won't be increasing exports unless we somehow seriously increase our means of production, but Trump won't touch the War Powers Act, which would allow him to federalize production and force companies to make essential goods. Why would anybody "I" invest with us if we are taking on debt like a rapper? Trump will have to give up on the idea of saving the indices and spending that $2T on medicine. We are bragging about removing an ice cube from the debt iceberg that sank the Titanic.
You're completely right that the vicious circle has to be stopped. I'm not sure that the Defense Production Act (The War Powers Act is a completely different law ironically limiting the President's power) or any increase in production for that matter, is necessarily the answer. The Defense Production Act was designed to force companies to switch production to war effort goods that would be purchased by the federal government and ensure commodities went to that effort. There's no shortage of private industry trying to build things that are in high demand, heck even Virgin Galactic has a prototype rapid deployment ventilator they've already built, and no shortage of any needed commodities to fight the pandemic. "Ordering" GM (because of course, cars and ventilators are built on the same production lines!) to build ventilators at this point is an exercise in idiocy. There's no indication that any "ordering" is going to speed up anything, some coordination at the federal level sure would be nice though. And there's already an organization of "deep state", oh I'm sorry, dedicated civil servants, set up, trained, and ready to do that at FEMA. Dipshit just couldn't be bothered to learn about it and after 3 years of denigrating and firing anyone competent in his orbit is left with the shitshow of the federal govt response we've seen so far. And the federal government just purchasing "stuff" writ large under the Defense Production Act for the purposes of giving said "stuff" a buyer doesn't seem like the most effective way to avoid the vicious circle especially given your valid concern about the debt. In fact overproduction of any kind isn't generally helpful to moribund economies, increasing inventories are actually seen as a sign of deeper recession. Unfortunately the manufacturing and trade inventories report isn't super timely for something like this, the last one came out a couple weeks ago but covered Jan (www.census.gov/mtis/index.html). However if we keep our eye on this we'll probably see inventories start to back up in the next several months, which won't be a positive. Is exports the answer? Maybe, if there are parts of the world that aren't impacted which isn't looking likely. And unfortunately our current leadership has made a game of alienating everyone else in the world especially in the area of trade because.... "America First". So turning to them to ask them to buy our shit to help us out will probably yield a giant fuck you until they have their own inventories drawn down and population back to work. There's no silver bullet here. Just a lot of pain, and hopefully we can mitigate the pain for the very weakest among us so we can all survive.