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tv   Boom Bust  RT  April 29, 2020 8:30pm-9:01pm EDT

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we go to work. straight home. this is a boom bust the one business show you can't afford to miss more in washington coming up economic growth numbers are out for the 1st quarter of 2020 is taken a hit due to the ongoing pandemic with expert analysis on hand to break down the
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state of the economy plus the airline industry could be facing a grim future as the pen demick has created turbulence for sales we take a look at the performance of the sector with a packed show today so let's dive right in. and the united states economy declined by 4.8 percent in the 1st quarter of 2020 according to data released by the u.s. commerce department wednesday while contraction was expected a survey of economists by dow jones had estimated g.d.p. would only fall by 3.5 percent for the quarter consumer spending dropped by 7.6 percent for the 1st quarter as not essential businesses across the nation have been closed due to the coronavirus pandemic now exports fell by 8.7 percent and imports to the u.s. withered up by 15.3 percent now this was the 1st time u.s. g.d.p. went negative since the 1st quarter of 2014 and the biggest drop since the last recession in the united states this economic contraction as the longest period of
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economic expansion in us has. and like concerning news when it comes to economic growth in the united states markets surged on wednesday meanwhile the u.s. federal reserve federal open market committee wrapped up crucial meetings where they decided to keep interest rates near 0 fed chairman drone paul held a virtual press conference following the meetings and had this to say. last month we quickly lowered our policy interest rate to near 0 we stated then and again today that we expect to maintain interest rates at this level until we're confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals so let's get some expert analysis on the state of markets and the economy with former fed insider and c.e.o. of quill intelligence. co-host christine thank you both for joining us today now i want to start with you on this fed decision the fed is actually now plays additional actions and lending programs as the economic conditions have worsened
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what are the tools do we really have to work with here after that you know near 0 interest rate. well you know in the press conference chair powell said that if the size of the facilities that have been authorized thus far are not adequate if they're not big enough that the fed actually has 0 impediments to grow them as much as they want he drew a parallel to the p.p.p. program the 1st of which was capped at $349000000000.00 for example and said that unlike the cap that congress puts on certain facilities that are working through congress through the small business administration that the federal reserve is not impeded by any such limitations and that they can grow these facilities as much as they possibly need to until the economy is on a self-sustaining path. i mean that brings me to this point what it what is the danger of the fed actually blooming the balance sheet i mean its pursuit to stabilize the markets it is now ballooned to a record at 6.6 trillion dollars which is nearly a quarter of u.s. g.d.p.
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i mean or whatever what are we looking at here. you know the estimates vary but i think that it's safe to say that will be at least 10 trillion dollars by the end of this year and you know if not going higher and higher it really according to the chairman and self it really depends on the trajectory of the economic recovery and they're willing to continue growing their balance sheet as long as need be and these are kind of frightening thoughts because at some point you know you'll have you'll have the fed balance sheets that you know as the u.s. economy continues to shrink as we saw that that process has begun you could have a federal your balance sheet that eclipses the size of g.d.p. you know kristie to bring you in here in a 2nd so i apologize but i have another question is this is right for our viewers who maybe don't have as much information about how the fed actually operates can you give us a quick explanation of why they're able to do this with 0 impediments and they're
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just able to continue to pump this money in with really no oversight basically besides themselves. well 1st starters the fed is being allowed to use 10 times leverage so they were they were given the kick in the initial cares act they were given $454000000000.00 to work with with these facilities but they can lever that up to $4.00 trillion dollars these are unfathomable mts and as as powell said if they need to fire up the printing press in order to make more money in order to lever it up even more then that's up to their discretion and to your point i do get concerned because these facilities in large part have to be housed on the balance sheet of the treasury because it's against the law for the fed to take credit risk on such that any losses incurred via fed actions have to be shouldered by the taxpayer kind of makes your head spin christine i want to bring you in on this conversation here what do you make of what danielle saying or what this fed action
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is what's going on with this but action. why i think it's very concerning because right now as danielle just mentioned it will depend on the economic recovery and to see how how far we can build in the balance sheet and i think that 10 trillion dollars is actually a very conservative estimate like a lot of the people i was talking to there are projecting about 12 trillion which is about half of the u.s. economy's g.d.p. so at that rate it's going to be completely unsustainable and the fed is essentially going to be borrowing from our future the u.s. its future because at that some point that all that money is going to come due whether it's going to be in the form of massive fiscal school controls measures or other deflationary policies and now chris i want to go back to our 1st story here today 1st quarter g.d.p. numbers came out wednesday as a measure down 4.8 percent which is the worst of it which was worse than expected expectations now economists are saying their forecast for the 2nd quarter g.d.p. preparing for it to possibly be even worse than that what's happening there with the u.s. g.d.p.
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. well most of that was contributed by the surprise 7.6 percent plunge in consumer spending now consumer spending that makes up about 60 percent of g.d.p. so this contraction in the 1st quarter is the sharpest pace since the great recession as the lockdowns curve consumer spending and business activity now people are saying that the stay at home orders then began in mid march and consumer spending declined this much already then 2nd quarter contraction could come in even worse with full on lock downs in place so basically even if these restrictions were eventually lifted on later in the 2nd quarter travel restrictions will still hamper compte simmers spending as there won't be like to be an airline hotels restaurants bars and theaters and it will take a lot of time for demand to come back even more so in the face of the rising unemployment as we've spoken about which is projected to grow even more this week the latest jobless claims thursday is currently expected to report in at 30000000 workers that will have filed for unemployment benefits so now looking for the 2nd quarter is expected to contract another 40 to 45 percent according to barclay's as
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a rising unemployment takes its toll on the economy now do you know what do you make of this big g.d.p. drop i mean obviously a lot of this is expected whenever we see these awful numbers we knew that the economy was basically shut down and we know that the world economies are basically shut down but you know if feels like everybody goes it's no big deal don't worry about it we knew that it was going to happen we'll be able to recover but we don't know how long this is going to last and whether we reopen economies or not it may be 18 months before we were turn to what we like to call normal what do you make of all this then you know. well i think returning to normal is one thing i think i think that the markets are celebrating expectations that we're going to return to 50 year lows in the unemployment rate which could take 18 men to it could take 2 years it could take 4 years for the economy to recover from this magnitude of a demand shock and you have to bear in mind that this morning's number was as bad as it was it was flattered by a 21 percent spike in residential investment home building activity we know that
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that is since collapsed and that that won't be coming back any anytime soon either and goldman sachs put an action out also that said that once we get all of the revisions because we get to more revisions to this 1st quarter number that it could be it could come down to as low as 8 percent so look this is not i think i think the markets are getting way ahead of themselves the stock market the bond market they're getting way ahead of themselves and presuming that this is going to be a v. shaped recovery when nothing in the economic begins to sit to suggest that that's even a remote possibility kristie what do you make of that because with all this bad news today how does the market rally make any sense. ok exactly it doesn't really make any sense the market simply up on optimism that we're that much closer to finding a cure like that has been the running headline all morning just release a result of it strikes a program does appear to which then dr anthony fauci the director of national institute of allergy and infectious diseases he said that that showed a clear cut of effect when treating the virus so basically in this progress
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continues and we have an effective treatment an economic recovery will be quicker than expected now the f.d.a. also said earlier today that they have been in sustain an ongoing discussion with in order to make them disappear available to come in 1000 patients as quickly as possible the new york times is now reporting that the f.d.a. plans to announce this as early as wednesday and emergency use authorize ation for the anti-viral that is quite optimistic and that could result in businesses opening up as soon as later this month which is way earlier than expectations so basically this is as we get that it is pretty optimistic and where are getting ahead of ourselves because there is no be shaped recovery even if everything just started to open up as if we were back to normal right and chrystia feels like last week we ended the week with the positivity on this drug and then also they said well no never mind it doesn't really work the way that we thought it does now we have positive test results we don't really know where this is going to go the bus goes kristie i and dale the american are both thank you both for your time. thank you.
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and let's take another global look at the trends and spread of the quote of ours with our 2 correspondents so where are we today so grand today marks the $100.00 days since the 1st case of the corn of eyes heard the u.s. but since 10 more than 1000000 people have tested positive here in the u.s. and now most states along with half of all humans on earth have been ordered to shelter in their homes in the hopes of slowing the spread of the virus and try to keep hospital systems from being overwhelmed now as a result here in the u.s. jess in the last 5 weeks more than 26500000 people have filed for unemployment and you know since a great recession which occurred between 2008 and 9 there was over 22000000 jobs
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that were created so almost all of those jobs have disappeared now in comparison only 8700000 jobs were lost during the great recession so that just shows you just tells you how much has a virus has affected americans in their current financial situation but i want to go back to the numbers you know roughly one in 4 of the 220000 deaths around the world have been here in the u.s. and just when you thing that we're getting a little closer and somewhat controlling the virus we see surges again now take a look at mexico that's surging an increase of over 1200 new cases taking it to more than 16000 confirmed cases and over 1500 and according to mexico's government the actual number affection is significantly higher than the
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actual confirmed cases now. as a result the mexican government has closed hundreds of factories and is refusing to open them during dependent make which has made it extremely difficult for american companies who make crucial goods like mentally eaters and facemasks to actually get the parts and materials as they were traditionally only dependent on mexico for those parts and moving on once again we're seeing a large increase in numbers in russia who has reported in additional $5800.00 cases just in the last 24 hours with the new number of reported this is relatively low a 900 and a 72 and this week russian president vladimir putin extended the lockdown until may 11th and has also warned that russia has not yet seen the peak of the virus now moving over to spain their daily toll has once again raised with 325
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deaths up from 301 reported on tuesday and now over 24000 people have died in spain last week when i want to go over germany which just reported 202 more deaths making a total death to over 6000 and that's prompted the government to urge people once again to stay at homes as a march as possible after the country announced an easing of lockdown measures last week and i want to talk about close to cases what are we seeing there worldwide well globally from the 1200000 active cases only 3 percent have actually been in serious and critical condition while 97 percent have actually been in mild condition now talking and from the 1100000 close cases now 82 have actually fully
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recovered and in terms of the. there's been 18 percent so looking at the numbers in terms of percentages it's still low but still of course we're seeing just how significant it is r t correspondent thank you for keeping us up to date and ever larger you can always find the latest news and information regarding the crowbars on portable t.v.'s coronavirus tracker time now for a quick break but hang tight because when we return the turbulence continues for the airline industry of the pandemic hits continue to tank business straight ahead we'll break it down and as we go to break here the numbers at the close.
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early often speak of the black hole of debt that is where all of the universe ends up after it leaves a central bank balance sheet and its cosmic force pulling the g.d.p. of the world down now or at the white hole of debt as i am a fellow straining with this white piece of cardboard the white hole of dead is on the other side of deep black hole and in the era of negative interest rates and negative oil prices we have to cool rising our concept to death toll from black to white makes sense to. use. who we can prove. shit out.
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walking into a word don't you know we no longer know what we're walking into i don't see march. was that what she needs to break it down. to. but also. this is like a horse race what it's like to maurice strong there are $200.00. countries or 200 participants in this. and the question is which take me place to save most lives and companies because you see matter of saving both.
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welcome back while the travel industry has taken a huge hit from the crowed a virus there are still no regulations in place for those 'd who are continuing to fly and now flight attendants are actually discouraging people for a leisure travel arche correspondent attach a sweet takes a look at the situation and what may lie in store for the sector. as precautions like social distancing in and wearing masks become the new normal for some these things are not actually required for the airline industry well there are fewer people flying right now for those who are wearing masks or sitting 6 feet away from one another on a plane is not officially required and now some flight attendants say airlines should stop flying amid the pandemic the union president of the association of flight attendants wrote a letter to the department of transportation to end all leisure travel until the virus is contained in the letter union president sarah. alson says for air
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travelers we recommend that the federal government provide all airports sufficient numbers of disposable cloth or paper masks that are more effective than homemade masks at limiting viral spread the letter also points to canada which requires all air travelers wear masks that cover their mouth and nose at screening checkpoints when they can't physically distance themselves from others a letter also questions if flight attendants themselves are helping to spread the virus letter states at least 250 flight attendants covered by the union tested positive for covert 19 well some of the busiest airports like chicago o'hare appear more like a ghost town travelers say getting a flight now is also more of a challenge and there's not going to be a lot of people in the flight that's why my flight got to a 5 time because i was one of the only few person in the plane and despite federal bailouts experts say it will take time for the travel industry to fully recover in terms of demand in terms of the business in terms of profitability and in terms of
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employment in the airline industry in fact the entire travel industry has. a state . but with talks of masks and the need for social distancing wolf line ever be the same. and for more on the struggling airline industry and what the future may hold in store we're joined by professor richard wolfe host of economic update and author of understanding socialism 1st of all thank you for being here as always now we've discussed this recently that the airline industry was one of the 1st with their hands out when this pandemic hit and to be honest maybe rightfully so they were very hard in immediately but what do you make of the current state of things as travel has nearly grounded to a halt. well i think you face a number of fundamental problems here 1st you have an industry that you know absolutely nothing to prepare for this you know we have had viruses. books or
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and we know about how they spread had they been a responsible industry they would have taken some of the enormous profits they made in recent years partly because of the tax cut of 2017 i did because of the bailouts 10 years ago and they would have been able to stop the kinds of the equipment that could make the plane safe they didn't do that and now they want even the passenger or the workers to come back into an unsafe environment that they could or that didn't make safe and they're just covering like they are in the meat packing industry as well that the workers are not willing to do it and the passengers are striking to death of coming back in a sense they've made their bed and now they don't want to lie in it and they want the government to keep funding them while they live through their own failure to have prepared for this and now it's interesting that you have brought the
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especially passengers the c.e.o. of air bus he actually said that he expects it to be 3 to 5 years before passengers fly as they did before this crisis and now as we talk about limiting gatherings until there is a vaccine and a couple that with the economic downturn which was going to totally zap expendable income i mean the real what is the reality here because it doesn't seem to me that if you're a leisure traveler and especially somebody doesn't do it that often they are going to be so willing to hop on a board a plane right now when the safety may be an issue and even after a vaccine is created when you go i don't know if where i go if a virus breaks out and i get to be able to come home i mean they're going to be in trouble for quite a while aren't they. absolutely and here's another dimension to this we are all learning you and i and everybody watching how to do things electronically and distance and that includes and i'm involved in this all the time meetings conferences that we used to do in procession we now realize it's not as good
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a we can get by without doing it in person who in the world is going to risk illness or disease or death in order to believe a profit driven enterprise beckoning you inside it's airplanes no lie or at least no numbers sufficient to bring that industry back is going to be doing that for years to come and if there is a 2nd wave of virus as dr filed she and others warn us well then all of what i just said double carrots what it's interesting that you say that professor off because i often look at it this way and i say if we reopen this economy too soon this a little broader outside of the airline industry but if we were open this economy too soon and we have another breakout even before that 2nd wave that may happen in the fall or winter look things are going to get a lot worse and they're going to get worse very quickly when it comes to economic impact because then people are going to say oh there's no hope and i think that you're to look at that same thing when it comes to the airline industry
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specifically because again like you said why do you want to get on an airplane when you have a health risk is a fundamental reality that also expands the point we have now tested less than or at most if the numbers are jumping one percent of the people in this country we have 325000000 people we tested maybe one maybe 2 if you're if you're going to be exaggerated therefore we don't really know who's sick we don't know who's getting sick who's likely to get sick let alone the problem of tests to come back negative when you're actually positive and vice versa. and we don't know when the thing comes back i mean when you look at the lack of understanding because the government and the private sector haven't let us know avin done that gestate even them on the scale of much poorer countries like south korea have you realize we're at the beginning of
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a process and grandiose notions of when we can open back is reshuffles thinking by people at the top who want the rest of us to be the guinea pigs of their experiment it is not going to work in a professor if i want to take a little bit of a global perspective actually maybe a little different perspective that is on the global stage here since china began to actually reopen they're seeing their domestic like passing come back a bit not not to the same levels pre-crisis but according to data from syria domestic capacity was only down 33 percent year over year as of april 22nd now compare that data to february which showed a 71 percent drop year over year is there something china is doing better here or is it just kind of the nature of the country. no i think it's a china did something better look i mean i know this is painful for people to face but the chinese dealt with their crisis in a concentrated way because of the way their economy is organized they were able to
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mobilize both the private sector and the public sector shut down the province where we're on the beginning of the endemic was located really contain it there impose lock downs everywhere else they did early what we should have done and they're able to open up and they have been terrorized their people the same way we have here in the sense that they were frightened of the virus but they saw a government acting quickly acting in a coordinated way we haven't seen any of that and therefore i think you're going to show to the economy a way we handle this was very self-defeating for the united states professor richard wolffe host of economic uptick thank you so much for your time today. thank you brian. and that's it for this time you can catch boom bust on the brand new portable t.v. app available on smartphones through google play and the apple app store by searching portable t.v. or you can check it out at portable dot t.v.
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and as always check us out on you tube dot com slash boom bust r.t. see you next time. the u.s. economy was booming growing numbers of people made homeless. you can work 40 hours 'd in a week and still not have enough to get housing everybody believes america still is the land of opportunity the reality of those who were not financially quality and i'm not comfortable housing or living minimum wage give many people no choice you know just been a problem with the city and always turn their backs on a cold to stay way oh miss colton consider that there is no answer because yes that requires resources the most vulnerable are abandoned on the streets to become the
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invisible cops. this is like a horse race where it's like a marathon there are 200. countries more than 200 participants in this marathon and the question is which take any place out to save most lives and companies because it should matter of saving. your city somebody. let's see if. i was on the floor something is in my basket or you know trying praying. i want to. say as time progressed to the words i was having chill and fever i didn't have any sense of snakes the smell of. most young women.
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would you. recently she goes on the oldest you tube. that was simon is on the mound for the purpose insert. i have heard and. push myself to the full meaning the 58th i'm going to. go. yes. we need. to say. thank you sleep. to.
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the to the to the am i going to be what. are they folks next on dennis miller plus one well you can see how sunny we all are around here we're going to be joined by a good friend of the show jack osborne hosts a good show over on the travel channel cope ordinals that hell and then he's got a a and e. documentary coming out later this summer about his is that aussie good kid we'll talk to jack osborne right after this dennis miller plus one. they folks welcome.

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