In times of crisis, and we are in a doozy of a crisis, you can't do enough to help make things better. Those who think small must get really lucky to beat back the crisis and so far we are about as unlucky a people as I can ever remember.
Everything is going wrong at once. So in the interest of being constructive, which there is certainly not much of lately, let me tell you what I would do, what big thinking means, and what needs to happen to stop the tsunami of selling.
First, the government has basically mandated that bars and restaurants close to stop congregation. That's $309 billion in wages, at least in 2018, according to the Bureau of Economic Analysis, as reported by the New York Times. Payrolls in hotels and lodging? $87 billion. Entertainment? $63 billion. Airlines? $59 billion. Amusements, gambling and recreation?
What does think big mean for these payrolls?
It means the government has to write checks not to the employers, that's a mistake, but right to the employees. You cannot afford to rip the fabric of society for no reason other than a virus. They have done nothing to deserve this.
How about small and medium sized businesses? Treasury Secretary Mnuchin has talked about business interruption insurance. Make the payments, make them weekly as surely as it is a fire that has swept through their buildings.
It is vital that this money not be in the form of loans. Who wants to take a loan to stay open when your business doesn't make all that much money? I own a closed restaurant and a closed bar. The last thing I want is to layer debt on it to pay my employees to do nothing.
Next big think: aerospace. Boeing (BA) is this nation's most important manufacturer. It's sits on top of our greatest export. Two million people work for Boeing as either employees or suppliers. Cost of saving them? $60 billion. Pay it.
If Boeing wants more help it needs to apply to another big think idea, the New Normal Deal, a $2 trillion government bank, funded by a $500 billion 30 year Treasury issuance, which would be lapped up like mad, and the Social Security fund which sits in cash. Every other country invests this money. It is time to use those reserves for this. Why not? Here's the really big idea: We will beat this virus? Everyone knows that. Almost no one, though, has the money to invest in these companies except the federal government.
But is there any doubt that when the virus is beaten these stocks will bounce back with a vengeance? These could be the single greatest investments ever but nobody has the kind of capital the government has and the moment the companies get the money they are solvent. They have to give up their buybacks. They can't pay dividends as long as they have government money. They have to accept a government board member to be sure the money is used right. Put that person on the audit committee. But the money is theirs. They don't have to go under and it would be financially criminal to have them go under and then, the next day, the virus is beaten. Only small thinkers would let that happen.
Huge think: Give the Federal Reserve unlimited authority to buy every corporate bond that it thinks is worth it. I know, that's subjective. But if the Fed buys the company is saved. If it doesn't? ZERO. Only small thinkers would worry about the consequences right now.
And give the banks the credit lines they need so they don't have to tell you they are solvent because no one who tells you they are solvent is solvent.
More big think: One of the huge pressure points right now is the collapse in oil. That's a man-made collapse. There may be lower demand but the demand isn't so low that oil deserves to be at $20. That's just the Saudis and the Russians choosing to wipe out our energy independence. It's in our national interest to get the price of oil above $30 which saves the thrifty oil companies but still hurts the profligate while giving us great prices at the pump. In the interest of national security the president has to make a tough call for him because he is a free market oil man. He has to call Saudi Arabia and explain that the regime will not be protected until it let's oil go to $30. It's a nice compromise and would take about a minute to make a call and about $300 billion saved by making the call, which is the debt that I think is at stake with oil down here.
Next big think? Let's get all the quarantine space we need. Commandeer as many hotels as possible. Buy as many motor coaches as possible. Start the building of the containment hospitals on army bases. Advertise that we need hundreds of thousands of people to help build these. I do not like to see the Chinese build these hospitals and we talk about them. Let's show the world what we can do. We know that there is a tremendous backlog of cases that are going to be announced in the next few weeks. With every new horrible data point this stock market is going to go lower. But if we build these facilities with American made equipment, perhaps bought, perhaps borrowed, we will make sure that if you get sick you will get the best treatment in the world. Hate him or like him, President Trump is a builder. He knows how to do these things. We are going to have a gigantic amount of unemployment. But with this building program we can feel confident that we can beat the epidemic or at least hold it off well while we wait for Dr. Fauci and friends to get the vaccines and the anti-virals. Stop at nothing to help them. They need a trial? Make sure that they get the number of people they need and get them fast. It's hard to do a trial. It's expensive. Make them funded by the government. If there are drugs that are working in trials start making them en masse and store them wherever possible.
One more big think: If I have to hear one more person talk about how hard it is to get a test I will scream. Do whatever it takes to make it clear that you can get a test and results in four hours. That way you can go back to work and stay back at work until the next test if necessary.
Until we get these changes I can tell you that we are going to keep having days like today where the only bull market you can find is in a haystack, a Hormel or French's mustard needle.
One more spur about why my wish list must be done? The Chinese will rule the earth if we don't do it. They will be the only major power. They have conquered what is felling us as we will hear from Starbucks (SBUX) later tonight or what we heard from Federal Express (FDX) last night.
These will happen.
We have no choice but to win. It's time to dust off your Churchill. Study your FDR. You will need every bit of their wisdom and no more bickering!