How I experience the global crisis in Amsterdam

I was thinking a lot about the economy today. Meaning, I was thinking about people. Goldman Sachs just released their latest forecast and it is a note right out of human hell: “The bank is forecasting a 24% decline in economic activity next quarter, compared to their previous forecast for a 5% decline.”

How bad is that? The biggest recorded quarterly decline in modern U.S. history was 10% in the first three months of 1958 during a short, but steep recession. Some 2 million people lost their jobs in less than a year. Even during the worst of the 2007–2009 Great Recession, the biggest contraction in GDP was 8.4% during the 2008 fourth quarter.

As a reminder, The Great Depression began in the United States as an ordinary recession in the summer of 1929. The downturn became markedly worse, however, in late 1929 and continued until early 1933. Real output and prices fell precipitously. Between the peak and the trough of the downturn, industrial production in the United States declined 47 percent and real gross domestic product (GDP) fell 30 percent.

This is a forecasted decline of 24% in one quarter. One quarter.

Not 4 years.

Economy equals people. Humans with dreams, ideas, fear, and hopes. It is unimaginable what a decline of 24% in GDP will do to people. I can’t even put it in words. Dystopian movies might look like fairy tales. Good night stories of a future that might be better than our reality.

The German government promised to take care of everyone, ensure that everyone keeps their job and business. It’s a pandemic, nobody’s fault, we pause for a few months, ride it out and then restart the economy. Whatever it takes. Whatever the price. That’s what government is for. It will restore faith in institutions, ensure stability and beat down any populist forces. I don’t think it’s the right approach. I know it’s the only approach. Giving a few dollars to citizens and bailing out corporations will do nothing. It will lead to more anger, more division.

The roaring US economy of the past hasn’t worked for many. Homelessness is a daily disgrace, the climate numbers are horrendous and inequality is at a peak. But it’s better keeping that economy alive, fixing the problems and pay off the debts over time than the current proposal. The government should pay all mortgages, all rents, all wages, everything until the storm is over. And then we figure out how to deal with the new reality. At least, it’s a reality, not a dystopian nightmare.