Coronavirus Is Not an Emergency. It’s a War.

by John Mauldin of Mauldin Economics, 3/19/20

This is a short midweek note, something I haven’t done for years. But as we all know, these are very special and difficult times.

Below, I’ll give you two links. They describe the nature of the new coronavirus pandemic and its potential consequences. I have run this past the best medical professionals I know, and they agree.

I was critical of the Federal Reserve for its emergency moves last Sunday. I now assume they had the same information that I’m giving you today. They weren’t panicking, they were trying to get ahead of the situation, going where we know we need to go and doing it now. Good on them. I apologize for my criticism.

Without radical action (some of which is already happening, some places, but not enough), this pandemic could cost many lives and potentially launch an economic depression. I am not exaggerating when I say this. I really mean it.

That doesn’t have to happen. We can solve this. That is what we as Americans or British or Italian or Chinese do. That is what we as humans do. We come together in a crisis.

But it will mean that we have to treat this situation not as an emergency, but as a battle that could turn into a war. World War C. It will be costly and require extraordinary measures, even if we act quickly. This weekend, I will explain why we should forget about balancing the budget, not unlike we did in World War II. I will say things I never thought John Mauldin would ever think or say, let alone write.

In the meantime, I urge you to read the following links and understand the urgent need for extraordinary actions in terms of social distancing. It will come at a terrible cost for much of the country, but if we do it now, we can get through this crisis quickly.

Consider how South Korea, Singapore, and Hong Kong have fared. Swift, comprehensive actions work. And as in a war, we must bear this financial and lifestyle burden together, understanding it will have consequences. The longer we delay, the higher the costs will be.

It is not that I think my ideas are any better than others being proposed, but I will offer some philosophical underpinnings and ideas that can guide us. And I will argue that proposals I have read so far, which may change by this weekend, are inadequate to deal with the nature of the crisis. They merely seem radical in terms of what we have done in the past of those alive. It is not radical if we are to avoid a World War II type of situation.