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Corona Crisis Exposes US System Failure & Changes Country

Only a folded cardboard card in the low conference room indicates who the place is for. “The President” is written on it. Behind it sits Donald Trump, leaning back, arms folded, his favorite pose. Here, in the headquarters of the US civil protection agency FEMA, Trump can be seen in his new role for the first time in mid-March: as crisis president. The governors of the 50 US states are switched on one after the other via loudspeakers.

Bravely they present their wishes to the President. Brian Kemp from Georgia hopes that the power of command over the National Guard will remain with the states even during the corona crisis, “because we know best what is going on in our country.” Trump replies: “I like your idea, Brian, consider that a decision.” And then: “The next governor, please!” Trump has found a new role. That of the leader in the “war against the virus”.

What else is there for him? Trump’s initial downplay of Covid-19 lung disease no longer fits the harsh reality. In Corona Hell New York, forklifts are now hauling the dead in refrigerated trucks. There are hospital tents in Central Park to accommodate the sick – the last time it happened in the civil war was over 160 years ago.

How bad the supply of protective masks and respirators is, can be seen on the night of Wednesday, when Trump accepted relief supplies and experts from Russia. “That cannot be true,” said Russian expert Andrew Weiss from the Carnegie Endowment for International Peace in the United States.

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While the corona pandemic has abated in China and has presumably reached its peak in Europe, it is overwhelming the United States. No other country in the world has so many infections. In no other country in the world do so many people die. The Corona Task Force of the White House expects up to 240,000 deaths. The climax is expected with up to 3500 deaths per day around Easter – more than two people in the United States will lose their lives every minute.

With the term “China virus”, Trump not only started to upset China, but also suggested that this is a problem for others. The United States gave away valuable weeks in which they could have learned from the experiences in Asia and Europe. In which the rather ailing US health care system could have prepared for the onslaught of the corona patients and in which the economic consequences of the pandemic could have been mitigated.

“In the United States, we have had the worst of both worlds so far: an economic crash and a rapid spread of the virus,” says Maurice Obstfeld, former IMF chief economist.

The economic crisis comes to the health catastrophe. Compared to Europe, the less regulated US labor market responds more quickly to the situation. The unemployment curve is similar to an ECG of a heart attack, 3.3 million people registered without a job last week, twice as many this week.

Empty Broadway in New York

The city is the center of the US corona crisis.

(Photo: imago images / Bildbyran)

According to the investment bank Goldman Sachs The unemployment rate in the USA will skyrocket to 15 percent by the middle of the year, and the effects of the three Corona aid packages to date have already been included.

With unemployment, consumption collapses, with almost 70 percent a pillar of the gross domestic product (GDP). “The United States will plunge into a deep recession that is so unusual that statisticians may never agree on exactly what percentage production slumped,” warned Harvard professor Kenneth Rogoff. “Our system for calculating GDP is simply not designed for this kind of sudden stop.” He assumes that the slump in the second quarter will be up to 25 percent.

The US economy is particularly hard hit by the low oil price. It would have been a welcome help in the past, given that Americans spend less on gasoline and heating oil. But the country blossomed into international oil power with fracking. Now the new industry is facing ruin – and pulling the economy down.

There is a lot of talk in the United States about the situation with which the situation is most comparable. With the financial crisis of 2008? With the Spanish flu of 1918? Or even with the Great Depression in the early 1930s? Nobel laureate in economics Robert Shiller sees this as a “worst case scenario” for the possible consequences of the corona pandemic in the USA.

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In fact, there is another parallel: Pearl Harbor. The surprise attack by the Japanese on the headquarters of the U.S. Pacific Fleet in 1941 hit a nation that could have known better. But the war raging across the oceans in Europe and the Far East seemed far away. An illusion that only died with Pearl Harbor.

Even in the corona pandemic, the United States has long deluded itself: that the pandemic would miraculously remain confined to Europe and Asia. That she could be kept away from the United States with entry bans. On March 9, Trump still saw that Corona was no more serious than a flu wave.

Six days later, the White House recommended a nationwide shutdown. The pandemic strikes a superpower that is just as unprepared as the 1941 attack by the Japanese. With deadly brutality, the virus exposes the weaknesses of the economic and social system:

  • In the crisis, the US social system is more like a fire accelerator than a safety net. Anyone who falls ill or is released in the USA is quickly at risk of ruin. It is not only hard for those affected. It also intensifies the crash of the overall economy and there is a lack of so-called automatic stabilizers. With hasty economic stimulus packages, politicians are trying to compensate for this shortage and to provide social benefits that are a matter of course in other industrialized countries, such as continued wages in the event of illness.
  • The American groups are world leaders in their stock market valuation. But in the crisis it becomes clear that this is often based on the art of illusion. Many companies have used the low interest rates of the past decade to get into debt. However, this money was mostly not used for future-oriented investments, but to distribute high dividends and buy own shares from the market and thus drive the stock market price. Now that sales break down in the shutdown, companies lack financial reserves. The state has to bail out the corporations with aid loans.
  • The struggle against the disaster is aggravated by a political system in which distrust dominates: Democrats against Republicans, governors against Washington. And above all a president who for a long time was not guided by facts, but by emotions, survey values ​​and ratings.

1. The social system: Even in the crisis there is an up and a down

Corpse transportation in Brooklyn

The health system is overworked.

(Photo: Shutterstock)

“Hang Tough, South Slope!” The residents of the Brooklyn house posted in their windows. “Hold on!” That is the motto with which the hard-boiled New Yorkers are trying these days to brave themselves against the rapid spread of the corona virus.

New York has long since become the largest source of fire in the world. The number of people who test positive in the city increases by thousands every day. More than 45,000 people have contracted Covid-19 and nearly 1,400 have died. The silence in the streets is increasingly interrupted by the sirens of the ambulances.

In Central Park, a field hospital made of white tents welcomes the Covid 19 patients, the Mount Sinai Hospital on the Upper East Side is no longer up to the rush. “I have already set up field hospitals like this in war zones and after earthquakes. But I never expected to ever have to build one in Central Park, ”said Elliott Tenpenny, doctor and team leader of the Christian charity Samaritan’s Purse.

New York doctors and nurses report that they have to wear their masks and suits for five layers, occasionally disinfected with spray. A doctor outraged spread the image of a rain poncho with “New York Yankees” on Twitter. The cloak, originally intended for spectators at baseball games, was given to her at the beginning of her shift in the hospital as protective clothing.

New York took the right measures, but too late. Rice Powell (CEO Fresenius Medical Care)

Rice Powell is optimistic that New York can cope with the situation thanks to the new makeshift hospitals. He has to be the boss of Fresenius Medical Care (FMC) know. The German company operates a total of 80 dialysis centers in the state of New York, many in New York City. Ten percent of these are isolation centers for corona-infected patients.

“We saw what happened in China, Italy and then Spain,” said FMC CEO Rice Powell. “That’s why we applied our pandemic protocol early and ordered protective clothing.”

The FMC boss is convinced that the US could have reacted earlier. “As a country and as a city of New York, we weren’t sufficiently prepared with the hospitals,” Powell says. “New York took the right measures, but too late.”

The catastrophe is now here, and anyone who can afford it leaves the city. Short-term rental prices for beach houses in the Hamptons have quintupled in recent weeks, brokers report.

Robin Mayer is a New York billionaire who prefers not to read his real name in the newspaper. He and his wife have retired to his luxury property in the US state of Wyoming. “So we can hold out for a while,” he says. The fridges are full, he got masks weeks ago.

“Now we just have to wait,” he says. “Sure, a few things will change permanently, but there will still be capital markets after Corona and it will continue. In two to three years, this will only be a small dent in a graphic. ”

Medical ship in New York

Aid is needed, as was the case in the 2001 terrorist attack.

(Photo: Brendan McDermid)

New York film producer David Geffen was less discreet than Mayer. Last week he caused a wave of outrage when he published photos of his super yacht “Rising Sun”. The billionaire in the Caribbean wants to sit out on the pandemic. “I hope you all stay safe,” his greeting ended on Instagram, which earned the billionaire so many angry reactions that he deleted his account.

Not all super-rich are as instinctual as Geffen. With his foundation, Bill Gates is providing $ 100 million to fight the virus. Michael Bloomberg donates $ 40 million to fight Corona in Africa.

But such benefits tend to go under. “More than half of the US stock is in the hands of the richest one percent,” criticizes Robert Reich, who was Secretary of Labor under President Bill Clinton and now teaches at the University of California at Berkeley.

The super-rich would therefore not see the corona virus as a health and social crisis. “After all, you are not exposed to the risk of infection like nurses, doctors and delivery men every day.” In Reich’s eyes, the problem for super-rich people is reduced to the question: “How can we get share prices up again as quickly as possible?”

I have already set up such field hospitals in war zones. But I never expected to ever have to build one in Central Park. Elliott Tenpenny (doctor and team leader Samaritan’s Purse)

The further down one looks in the income and wealth scale, the more the pandemic raises another question: How can I survive Corona without ruining myself financially? “We cannot say that we have a functioning health system,” Reich said on Tuesday with an online reading. “We are the richest country on this planet. It’s a shame.”

Since the health care reform under President Barack Obama (“Obamacare”) ten years ago, all US citizens have the right to health insurance without a prior health check – a huge step forward for US standards. But not everyone has such insurance, and even if: What benefits are covered by the individual policies and what additional payments are incurred can hardly be overlooked by the insured.

This leads to extreme burdens even in normal times – around 60 percent of private bankruptcies in the USA are due to invaluable hospital bills. Some, but by no means all insurance companies have announced that they will waive the excess that would otherwise be due for corona treatments.

With their aid packages hurriedly put together, politicians are now rushing to introduce social benefits that are a matter of course in other industrialized countries. For the duration of the corona crisis, most US employees are now guaranteed 14 days’ wages in the event of illness or if quarantine threatens.

In addition to the unemployment benefits that individual states pay in the United States, unemployed people are to receive $ 600 a week from the federal government’s fund. But even that only for the next four months, the measure against the corona crisis should under no circumstances become a permanent social benefit.

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The United States now even has a kind of improvised short-time worker regulation. Smaller companies can apply for aid loans that they do not have to pay back if they keep their workforce on board during the crisis.

This does not help corporate employees. The Macy’s department store chain wants to put the majority of its 125,000 employees in front of the door, as does the Gap clothing chain with 129,000 employees. There is no statutory protection against dismissal that could delay such mass layoffs or make them more socially acceptable.

America remains a class society even in the Corona emergency. This is also shown by the fact that the health crisis in the world financial capital of New York is taking place under the eyes of the digital and media public, who mourn every missing protective cape and cheer every new field hospital – while 770 kilometers further west, people die much more quietly.

Detroit, the run-down auto metropolis, is on its way to becoming the new corona hotspot in the United States. The number of infected and dead people increases particularly rapidly here and in the neighboring communities. One third of Detroit’s 673,000 residents live in poverty. Many have pre-existing conditions that make the virus particularly dangerous for them.

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