22 THENEWYORKER,APRIL20, 2020
a President, doesn’t care how it’s per-
ceived. It gets penetration, whether you
believe in it or not. By the time, later in
March, that he acknowledged the scale
of the pandemic (and sought to convince
those who hadn’t been paying attention
that he’d been paying attention all along,
except to the extent that he’d been dis-
tracted), it had long been abundantly
clear that he cared more about the eco-
nomic damage—even if it was only in
relation to his reëlection prospects, or to
the fate of his hotel and golf-resort busi-
nesses—than about any particular thresh-
old regarding loss of life or the greater
good. Others, perhaps on his behalf, have
tried to expand his position. For a few
days, the message, reinforced by the likes
of Glenn Beck (“I’d rather die than kill
the country”) and Dan Patrick, the soon-
to-be-seventy lieutenant governor of
Texas (“If that’s the exchange, I’m all
in”), was that we might have to sacrifice
our elders for the sake of the economy.
The politics of it were perverse. Many
of the same people who had cited “death
panels” in the fight against Obamacare
were now essentially arguing the oppo-
site. One man’s cost controls are another
man’s eugenics.
For Trump, the economy is basically
the stock market. He’s obsessed with it,
much the way he fixates on television
ratings. The stock market is, among other
things, a great mood indicator. But it isn’t
the economy—not even close. As we’re
now discovering, to more horror than
surprise, the cessation of commercial ac-
tivity—travel, tourism, entertainment,
restaurants, sports, construction, confer-
ences, or really any transactions, in signifi-
cant volume, be they in lawyering, ac-
counting, book sales, or sparkplugs—means
no revenue, no ability to make payroll or
rent, mass layoffs, steep declines in both
supply and demand, and reverberations,
up and down the food chain, of defaults
on debt. That’s the economy.
This brutal shock is attacking a body
that was already vulnerable. In the event
of a global depression, a postmortem
might identify covid-19 as the cause of
death, but, as with so many of the virus’s
victims, the economy had a preëxisting
condition—debt, instead of pulmonary
disease. Corporate debt, high-yield debt,
distressed debt, student debt, consumer
debt, mortgage debt, sovereign debt. “It’s
as if the virus is almost beside the point,”
a trader I know told me. “This was all
set up to happen.”
The trader was one of those guys who
had been muttering about a financial
collapse for a decade. The 2008 bailout,
with the politically motivated and, at
best, capricious sorting of winners and
losers, rankled, as did the ongoing col-
lusion among the big banks, the Federal
Reserve, and politicians of both parties.
He’d heard that the “smart money,” like
the giant asset-management firms Black-
stone and the Carlyle Group, was now
telling companies to draw down their
bank lines, and borrow as much as they
could, in case the lenders went out of
business or found ways to say no. Sure
enough, by March’s end, corporations
had reportedly tapped a record two hun-
dred and eight billion dollars from their
revolving-credit lines—a “revolver frenzy,”
as the financial blog Zero Hedge put it,
in publishing a list of the companies “that
managed to get their money in time.”
Corporate America had hit up the pawn-
shop, en masse. In a world where we talk,
suddenly, of trillions, two hundred bil-
lion may not seem like a lot, but it is: in
2007, the subprime-mortgage lender
Countrywide Financial, in drawing down
“just” $11.5 billion, helped bring the sys-
tem to its knees.
It is hard to navigate out of the debt
trap. Creditors can forgive debtors, but
that process, especially at this level, would
be almost impossibly laborious and
fraught. Meanwhile, defaults flood themarket with collateral, be it buildings,
stocks, or aircraft. The price of that col-
lateral collapses—haircuts for bald-
heads—leading to more defaults. The
market in distressed debt has already
ballooned to about a trillion dollars.
As April arrived, businesses, large and
small, decided not to pay rent, either be-
cause they didn’t have the cash on hand
or because, with a recession looming, they
wanted to preserve what cash they had.
Furloughed or fired employees, mean-while, faced similar decisions, as land-
lords sent threatening reminders. Would
property owners, without their monthly
nut, be able to finance their own debts?
And what of the banks, with all the bad
paper? In the last week of March, an ad-
ditional 6.6 million Americans filed job-
less claims, doubling the previous week’s
record. In New York State, where nearly
half a million new claims had been filed
in two weeks, the unemployment-insur-
ance trust began to teeter toward insol-
vency. Come summer, there would be no
money left to pay unemployment benefits.A
s the stock markets tanked, and
the bond markets freaked out, the
klaxons of doom broke the spell of what
had been a kind of perpetually rattled
complacency. For three years, Trump’s
fits and provocations—and even his pro-
tectionist policies toward traditional
trading partners—had failed to knock
the markets off course for any prolonged
stretch. The markets, the reasoning went,
liked Trump—or at least his tide of de-
regulation, business-friendly tax poli-
cies, and the regimen (which, of course,
predated his Presidency) of low inter-
est rates and easy money.
On March 20th, Goldman Sachs
spooked the world, by predicting a
twenty-four-per-cent decline in G.D.P.
in the second quarter, a falloff in activ-
ity that seemed at once both unthink-
able and inevitable. Subsequent predic-
tions grew even more dismal. The service
sector—the economy’s real mainstay—
would be hit the hardest, and the impli-
cations for people’s jobs, and their abil-
ity to pay for things, were dire. In an
e-mail exchange among some of my old
schoolmates—an orthopedic surgeon
forced to all but shut down his practice
because of the interruption of elective
surgeries, a commercial-real-estate guy
firing hundreds of employees—a futures
trader wrote, “Sell everything that isn’t
nailed down.” Earlier in the week, notes
from a Goldman call, with talk of terri-
ble numbers, had leaked out onto the
Street. A couple of the Fokkers, on the
basis of no evidence except decades of
experience, suspected Goldman of sow-
ing fear in order to profit. They certainly
thought that was what Bill Ackman, the
hedge-fund billionaire, had done: he went
on CNBC and said, “Hell is coming.”
He predicted that the nation would enter