Economics and the Worst Case Scenario

"It’s always murkiest before someone flips on the light switch."  The Joker said that in a comic book many years ago, a variation of “it’s always darkest before the dawn”. While the Joker is a maniacal, psychopathic murder clown, he is right.

Another way to express this is it’s going to get worse before it gets better.  Now that’s a pessimistic view, cynical even. But it is a necessary conceit. To expect that whatever point of an ordeal one finds oneself in is the worst its going to get is wishful thinking at best and poor leadership at worst.

Which brings ups to our muckity muck in chief, Donald Trump.

Trump thinks that after two weeks of hunkering down, staying away from each other, working from home and not dining out, we’re gonna be fine.

Those of us who aren’t dead can go back to work.

Now here’s the thing: there may be a chance Li’l Donnie’s right. I mean, maybe after two weeks of being in lockdown mode, this storm could blow over.

It could happen. It's not bloody damn likely. And that’s the point.

A good leader needs to expect the best case scenario will not be the likely one. A good leader has to prepare that things will get worse before they get better.  

Donald Trump has trouble with that.

He is notorious for being impatient.

And getting through this crisis is going to require patience.

And it will require the resolve to accept that it’s going to get worse before it gets better because it’s always murkiest before someone flips on the light switch.

Months ago when the coronavirus first reared it’s ugly head, Trump hedged his bets that it was only a China thing and wouldn’t be coming here.  He was so proud of himself for blocking travel from China. Well, that solves that.

Two months later and with COVID19 running rampant across our great country, Li’l Donnie keeps coming back to that. “I blocked travel from China.” “Great! But the disease is here now and we need drugs, masks, ventilators.” “But what about blocking travel from China? How come I’m not getting credit for that?”

Because blocking travel from China was step one, you god damn fucking moron!

What steps did you take if the virus broke free from China?

Even if it didn’t come to our shores, what steps did you take if the virus hit Americans overseas in military bases and embassies?

What if the virus hit our allies? Did you give a single damn thought to our allies? No, Trump's all "Fuck our allies! What did they ever do for us?"  

OK, what steps did you take two months ago to plan for what if that silly little “Chinese virus” (as you like to call it, you fat racist fuck!) made it’s way past our borders?

“Stop being nasty to me!” Trump would retort. “I blocked travel from China! Give me credit for doing that!”

Well, fuck.

Trump did not plan for the worst. He did not expect the worst. 

This is nothing new. 

Take for example last year, Trump was making a stink that the Federal Reserve should lower interest rates.

Now here’s the thing. Pre-coronavirus meltdown, the economy was humming along pretty well. Unemployment was down, wages were starting to creep up a bit and Li’l Donnie’s precious Stock Market  was doing great. Despite Trump’s efforts to destroy the economy by running up Federal deficits and going crazy with the tariffs and shit, the economy was going pretty darn good.

So why was Trump pushing the Federal Reserve to lower interest rates?

Because he thought the economy would get even better!

The thing is the economy is cyclical. The best of times are not going to last forever. When the economy starts to head south (as it inevitably will), the government has certain tools to soften the blow. For example, the Federal Reserve can lower interest rates.

Generally speaking, Federal Reserve raises interest rates when times are good. Higher interest rates are beneficial to savings, retirement plans and investments. When times are good and people actually have money, higher interest rates encourage people to put money aside into savings, retirement plans and investments. 

Higher interest rates are bad if you want to borrow money; money become more expensive to borrow. If times are good, however, the higher cost of money is not a great impediment. 

When economic fortunes take a downturn, the higher cost of money can be quite the impediment. So the Federal Reserve can lower interest rates. Which encourages companies to borrow and people to spend which softens the blow of the economic downturn and eventually guide the economy on a upward trajectory.

Kind of hard to lower interest rates when bad times hit if the interest rates are already low.  

Last year, while things were good, Trump wanted the Fed to lower interest rates.

Trump wanted to keep the good times going when inevitably, they will not keep going. 

He had no concept that the good times would end. 

So no surprise that Trump wasn't prepared for the coronavirus to hit the United States.  In Li'l Donnie's tiny, feeble mind, the coronavirus was a Chinese thing and he blocked travel from China so problem solved. 

Which was the best case scenario.  

Trump had no concept of the worst case scenario.   


And I had no concept when I began typing this post that some much of it would be a treatise of economics.


Sorry about that.


Remember to be good to one another.


Hope for the best. Be prepared for the worst.