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First Move with Julia Chatterley
President Trump Talks Withholding Funding From The U.N.'s Health Body; Tens Of Thousands Leave Wuhan City After Two Months Of Lockdown; The Latest On U.K. Prime Minister Boris Johnson. Aired 9-10a ET
Aired April 08, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:07]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here's your need to know.
Who pays? President Trump talks withholding funding from the U.N.'s health body.
Wuhan waiting. Tens of thousands leave the city after two months of lockdown.
And responding to treatment. The latest on U.K. Prime Minister Boris Johnson.
It's Wednesday. Let's make a move.
A warm welcome to all our FIRST MOVErs across the globe. As always, we hope you and your loved ones are healthy and staying safe during these
challenging times.
The latest from here in the United States as the COVID-19 cases are approaching 400,000. That follows the deadliest day here on record.
However, the overall trend of new cases may be flattening in many countries and Norway became the fourth nation following Austria, Denmark and the
Czech Republic to announce gradual levels of reopening.
The key here, as we keep discussing on the show, finding that balance between the science and the stimulus in getting global economies up and
running, lowering the level of lockdowns. For now, though, of course, plenty of uncertainties remain.
U.S. market action, I think reflects that, too. Futures are higher at this moment, but stocks gave up some four percent gains yesterday late on in the
session. Europe at this moment under some pressure. Asia stocks, as you can see there closing mixed as well.
In terms of stimulus, Eurozone Finance Ministers failed to agree on emergency aid packages, despite all night talks, they'll continue to work
on that. Meanwhile, there's rising hope here in the United States that Congress can agree a further $250 billion of loans for small and medium
sized businesses. In my view, this program should be limitless.
Congress needs to remove the fear that for many viable businesses, they could miss the cash. Owners then may make different decisions shorter term
if the money comes eventually and that could ultimately save jobs. There's likely to be a battle in Congress even just getting that agreed, I think.
JP Morgan believes a further seven million people signed on for jobless benefits in just the last week alone. Help can't come soon enough.
On to the drivers, President Trump is threatening to withhold funds from the World Health Organization in retaliation for, in his words, missing the
call on the coronavirus outbreak.
The President criticized the World Health Organization for not supporting his initial travel restrictions with China.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: We're going to put a hold on money spent to the W.H.O. We're going to put a very powerful hold
on it and we're going to see --
(END VIDEO CLIP)
CHATTERLEY: The President later seem to soften his comments on that front.
(BEGIN VIDEO CLIP)
QUESTION: Well, up on that. So is the time to freeze funding to the W.H.O. during a pandemic --
TRUMP: I mean, maybe not. I mean, I'm not saying I'm going to do it, but we're going to look at it.
QUESTION: You did say --
TRUMP: We give a tremendous -- no, I didn't. I said we're going to look at it. We're going to investigate it. We're going to look at it, but we will
look at ending funding.
(END VIDEO CLIP)
CHATTERLEY: Christine Romans joins me now. Christine, I think huge questions do have to be asked about the response in many cases, whether
it's individual nations or the World Health Organization, but cutting funding during a pandemic? Not the right solution, even when you're trying
to raise money domestically to support your people.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Yes, and I think that whole episode with the President, it showed sort of three Trump
patterns. One, the pattern of saying something and then saying no, I didn't say that. I said I was going to look at that. He says that he has done that
many, many times.
The other is his need for a scapegoat, right, to find somebody else to blame. What our polling this morning shows that a majority of Americans
don't think the United States is doing a good job -- the Federal government has been doing a good job to slow the spread, and also his distrust of
global institutions. Right? I think those three things are at play here.
CHATTERLEY: Yes. And we, on the show also have some skepticism at times of global institution responses, too, but he did talk about something
critical. I know it's very important to you and I, which was how, indeed, we try and get economies including the United States, in some form, back up
and running.
Listen to what the President had to say about that.
(BEGIN AUDIO CLIP)
TRUMP: Well, I'd love to open with a big bang one beautiful country and just open, but it's very possible, you know, there are some areas that are
not affected very much.
We're looking at two concepts. We're looking at the concept we open up sections and we're also looking at the concept where you open up
everything.
(END AUDIO CLIP)
CHATTERLEY: Logistics and science aside, which are big suppositions here, Christine -- and the strength of that bang or the Big Bang that he is
talking about is going to come down to providing money as soon as possible to individuals and to businesses in the United States.
[09:05:10]
CHATTERLEY: And that is slow in coming.
ROMANS: It really is. And you know, there's new numbers this morning that show that a third of renters in April didn't pay their rent. You know,
usually you get a little bit of leeway until maybe April 5th. It is now April 8th, and a third of renter's did not pay their rent. And the reason
is, they're waiting for the jobless benefits. They can't get through to the State Unemployment Office.
We saw these long lines in Florida of people actually told to wait in line for a paper jobless claims application because the systems were down and
you have small businesses who are clamoring for small business relief and they're having trouble getting their hands on the money, too, even as
Washington is promising, maybe new money after this.
It's just -- we're just in this sort of this log jam, right, Julia, where the money has been promised. It's there. It almost seems limitless when you
talk about the Fed backstopping everything, but it's just not in people's hands yet.
CHATTERLEY: Yes, just not yet. Can't come soon enough. Christine Romans. Thank you so much for that. Thank you.
Now to China. The lockdown in Wuhan, the original epicenter of the coronavirus outbreak has finally been lifted to celebration, but also tens
of thousands of people leaving the city after more than two months of complete lockdown. David Culver has the details.
(BEGIN VIDEOTAPE)
DAVID CULVER, CNN CORRESPONDENT (voice over): Counting down the moment like the start of a new year, Chinese media documenting a dramatic midnight
reopening of Wuhan.
Officials rushing to push aside highway barriers, traffic flowing once again. For 76 days, this city with a population larger than New York City
was walled off from the rest of Mainland China.
Today, the original epicenter of the novel coronavirus no longer on lockdown.
A water cannon salute for the first commercial aircrafts returning to Wuhan's Airport.
Inside the city train stations, an unusual sight, crowds of people, passengers going through security and screenings. Only those with a clean
bill of health allowed to leave.
Railway officials say about 55,000 tickets were sold for outbound travel on Wednesday alone. Row after row of trains were at the ready.
Just before the January 23rd lockdown took effect, CNN traveled to Wuhan. We took you to the suspected source of the outbreak, the seafood market. We
met locals who like us were unaware of the unprecedented lockdown that loomed.
(BEGIN VIDEO CLIP)
CULVER (on camera): Behind me, this is one of a few hospitals here --
(END VIDEO CLIP)
CULVER (voice over): A few hours after filing our report, we, like so many here got word of plans to shut down Wuhan. We, then boarded a train back to
Beijing to begin our quarantine, but relied on video chats to keep in touch with those inside the lockdown like Iris Yu, stuck in her apartment for
more than two months.
As of Wednesday morning, she was on board a train fully protected headed to Southern China.
(BEGIN VIDEO CLIP)
IRIS YU: After 80 days of quarantine, I finally came out today. Now, I'm on the train to Shenzhen now.
(END VIDEO CLIP)
CULVER (voice over): As for the Wuhan she is leaving behind.
(BEGIN VIDEO CLIP)
YU: Though it is not yet fully operational, it indeed is recovering.
(END VIDEO CLIP)
CULVER (voice over): Even officials caution, this is far from back to normal.
(BEGIN VIDEO CLIP)
CHRISTOPHER SUZANNE, WUHAN RESIDENT: We receive daily text messages from the government saying, hey, like don't be complacent, you know, be
cognizant that there may be a second wave.
(END VIDEO CLIP)
CULVER (voice over): A possible second wave. It's for that reason that Wuhan residents like American, Christopher Suzanne, are not allowed to roam
freely within the city.
Neighborhood committees are monitoring people as they enter and leave their homes and if necessary, enforcing quarantine.
(BEGIN VIDEO CLIP)
SUZANNE: So I have a special ticket, it's a red piece of paper. It allows me outside for two hours per day, but only one person per family per day.
Two hours.
So, no, my wife, she doesn't go outside. She is still, you know, scared.
(END VIDEO CLIP)
CULVER (voice over): While some stores are back open, other businesses will stay closed, unable to weather the economic pressures of the harsh
shutdown.
Following subdued Lunar New Year's celebrations in late January, state media marking this moment as the new beginning of sorts, but the unknowns
linger over a city still haunted by this devastating virus.
(END VIDEOTAPE)
CHATTERLEY: And David Culver joins us now. What a journey for these people? What a journey for you too, David, I believe that's 76 days ago, my
two takeaways. One, the testing of people leaving here, but also, this is nothing like normal. It's early days, but it's not normal.
CULVER: That's right, Julia, and I think I would characterize this more as a trial period because the Chinese government is clearly going to have to
be experimenting a little bit to see as you resume life and you ease these lockdown restrictions, people are starting to move obviously within Wuhan.
They're now allowed to leave.
[09:10:05]
CULVER: And to your point on testing, you're going to make sure that all those individuals have a green QR code, as we call it here. We've got these
little QR codes on our phone that allow us to get on and essentially say that we've got a clean slate of health and that we haven't been exposed to
the virus.
I mean, that's -- that's how they're doing this. You know, obviously, it brings up privacy concerns, too. But at the same time, there is an
uneasiness within many of the homes in Wuhan, folks that we've been in touch with for those 76 days, who say, you know, even if these restrictions
are being eased, and even as this is being portrayed as a celebratory moment, they were not too sure that it's right now, this moment to breathe
easy.
You know, they think perhaps, that things could resurface and this virus could come back and so that's why I think there's a hesitation but there's
also, to the government's point, an opportunity to seize on that hesitation and allow some to remain in their homes for a good while even if on their
own accord, before really resuming things as a whole.
So it's going to be this moment that we're seeing that really kind of navigating unchartered waters and trying to test to see if the control
really is in the hands of the government here.
CHATTERLEY: We're just at the beginning of a new journey. I just want to ask you quickly, David about the QR code. Do you have to have had a test
then in order to get the QR code on your mobile, and what happens if you don't have one of those? You can't travel.
CULVER: No, it's based on jurisdiction. So here in Shanghai, they have their own type of QR code. In Wuhan, they have a separate one. In other
places, it works that way. You don't have to be tested. I've not been tested. But even as foreigners, we have them here. And it's our access to
hotels, to certain restaurants, to shopping malls. It's your really golden key.
CHATTERLEY: Yes, it's the golden key. David, you have done such an incredible job of keeping us informed over the last few months. Thank you.
CULVER: Thank, Julia.
CHATTERLEY: Thank you. Yes. David Culver there. All right, now to a stark warning just released by the World Trade Organization, it says trade this
year could fall by nearly a third, which would be worse than during the global financial crisis.
Clare Sebastian has more. Clare, when I saw the headline on this, I have to say I thought is that all? But also what were they saying about the
potential timing for recovery here? Because that's the key unknown, I think for all of us.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia. The numbers and the words of the W.T.O. Director General, they are pretty ugly. I want to
give you a comparison, because the range here is between 30 -- 13, rather than 32 percent decline in 2020.
Bear in mind, the drop that we saw in 2009 after the global financial crisis was 12.2 percent, which at that point, was the biggest drop in 70
years, so this even at the most optimistic scenario is set to be bigger than that.
But they do say there will be a rebound in 2021. I think we can show you a chart that has the most optimistic and the most pessimistic scenario and in
both cases, they expect a rebound, but it just depends they say on the duration of the outbreak and the effectiveness of the policy response is,
how deep the fall will be and how steep the rebound and whether we get anywhere close to the previous trend line to reverse those losses.
So they say, Julia that North America and Asia will be the hardest hit sectors with complex things like electronics, will feel it the most in
services which are not included in this number will also take a big hit.
This is uncharted water as Dave Culver was just saying. Things like travel restrictions, restrictions on movements, social distancing, are all
presenting challenges that we did not see during the global financial crisis and all of that is set to affect trade.
CHATTERLEY: Yes, public confidence, first and foremost -- and that brings us right back to the science. Clare Sebastian, thank you so much for that
update there.
To the U.K. now and the British Prime Minister spent a second night in intensive care. Boris Johnson is in a stable condition, and his spokesman
says he is responding to treatment as he continues to battle coronavirus symptoms.
Max Foster joins us now from St. Thomas Hospital in London. Max, great to have you with us. Obviously, this ongoing balance between privacy for the
Prime Minister, but obviously the public's need to know. Responding to treatment though sounds good.
MAX FOSTER, CNN LONDON CORRESPONDENT: Yes, it's very positive, isn't it? He is getting better. That effectively means according to the medics that
we've been speaking to, but obviously, they're very cautious. The reason for that being is that he is still being kept in intensive care, but he is
stable and responding to treatment.
I don't think at this point, you can look for anything better. That's what I've been told at least. He continues to be cared for in intensive care,
according to Downing Street and he is good spirits, so that's good.
But then he always is, isn't he, Julia? That's his great quality. And we were told going into this that psychology is very important in terms of
that recovery process for these virus victims. This is about getting yourself breathing properly again, and you need to have a positive
mentality and he's got that and I think it's working in his favor.
CHATTERLEY: Irrepressible is the word I think that comes to mind here, Max.
One of the real challenges of this illness is the distance from loved ones because you have to protect those around people -- never mind the social
distancing. What do we hear about Carrie Symonds? One, how she is dealing with this and her health of course. This is the Prime Minister's partner?
[09:15:21]
FOSTER: Yes, absolutely. She is pregnant and you know, they only recently got engaged, so very difficult for both of them and they are both in
confinement effectively.
It was interesting to see the Queen sending a message to the Johnsons, as they will be, but sending a message to Carrie at Downing Street. So that
was -- she is very much part of this story.
And it's interesting to see the coverage Julia here, you wouldn't have seen the British newspapers, but a lot of them are very much getting behind
Boris Johnson on this.
He put his health on the line for his duty for the country, and people need to be doing the same. So stick to these isolation rules. Slightly
difficult, I to say because some of the scientists, government scientists are saying they're getting more positive about the numbers here. We could
be reaching the peak, but they need more data to confirm that.
As you can see, great weather in the U.K. They were very worried going into the weekend that people will use that as an excuse to go back out. But I
have to say, at the moment, the streets are pretty clear. Very eerie here, I have to say at the moment, but that's good news.
CHATTERLEY: Yes, absolutely. However nice the weather, stay at home. Fingers crossed, it is working. Max Foster, great to have you with us.
Thank you.
All right. We're going to take a break here, but still to come on FIRST MOVE. Nobel laureate Paul Krugman on what he calls the economic corona
coma. We discuss the patients, the cure and the potential long term damage.
And decontaminate and reuse. The Ohio based company with a fix for the critical shortage of medical masks. Stay with us. We're back after this.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. We're counting down to the market open. It looks like it's going to be positive this morning. There you can
see it just above 1.3 percent across the board there.
[09:20:06]
CHATTERLEY: The major markets gave back gains of four percent late in the session yesterday to end up closing pretty much flat. Remember the only
thing I promise you again, as I say cautiousness and volatility. Earning season, though, also begins next week and that will likely be another
reality check regarding the economic cost of the massive shutdown that we've seen, even as nations around the world begin to at least have the
conversation about some form of phased reopening.
Alicia Levine is the chief strategist at BNY Mellon Investment Management, and she joins us now. Alicia, great to see you and great to see you looking
so well.
One of the key questions I keep getting from people is have we seen the worst for the stock market? We don't yet have a handle on the science, but
oh, boy, have we had unprecedented levels of stimulus? Where are we?
ALICIA LEVINE, CHIEF STRATEGIST, BNY MELLON INVESTMENT MANAGEMENT: Look, that's a great question. I think the answer has to be divided into two
parts. And Julia, it is great to see you during these times.
Look, if the shutdown is essentially no more than six to eight weeks, then the amount of stimulus that has been pumped into the global economy and in
the U.S. should be sufficient to get us to the other side of this giant air pocket that we're experiencing right now.
So with the Fed stimulus, with the monetary stimulus, and the fiscal stimulus, that really got rid of the left tail risk of some of the
contagion issues that we were starting to see in credit markets, and that's really why you saw the market rally over the last couple of weeks.
The issue is the following: As you point out, the science is really unclear. And this started with science, and it's going to end with science.
And if science dictates that we cannot open the economies, you know, by the end of May, let's say, then you're really going to see another leg downward
because the market is essentially pricing in that we have a terrible deep hole here, unprecedented, but that we come out on the other side and start
to regrow again by the fourth quarter.
And if that's the case, and we have seen the bottom in the market.
CHATTERLEY: I mean, there's so much uncertainty to that point. You've said that the stimulus that we've seen, has effectively cushioned us for the
next six weeks. If we end up in a situation where even if we start to reopen at that point, it's staggered. It's a slow process simply because it
has to be because we have to be very cautious here.
Does the damage to the economy, to jobs, continue to worsen and perhaps speed up due to the time required?
LEVINE: Look, it is clear that there's not going to be an all clear signal. There will not be. And there will only be an all clear signal when
we have a vaccine, and as you know that's 12 to 18 months away and none of our economies can afford to wait that long, let's face it.
So it will be a staggered and phased reopening, and what I worry about is that the labor market here in the U.S., you know, you've had 10 million
people file for unemployment claims, and what that means is that they are no longer attached to their employer.
So when you -- and that's just for two weeks, and I'll remind you that during the recovery of the -- from 2009 to 2010, for the next decade, U.S.
created 20 million jobs. So we've essentially lost half of that in two weeks. It's just a staggering number.
When people are unattached to their employer, if you reopen the economy, you don't get an immediate snap back, right? Because they're no longer
attached to the employer or to their jobs, and so there is some dispersion that happens. And that's really what we have to fear. The duration of this
is really the problem, not the depth so much. It's the duration.
CHATTERLEY: Yes, one of the other challenges here is the speed of the decline that we saw, to your point, the speed of the, the job rises that
we've seen. If we go back to history, and I'm not sure how much it helps us at all, quite frankly. It takes months for a stock market to find its feet,
to find the floor and then regain confidence and move higher.
Is history in any way helpful to what we're seeing here, given all the uncertainty that you just mentioned? And what's your advice to investors?
LEVINE: So history is important because you need some sort of framework for analyzing what to do today, right? What do I do with fresh capital
today?
So the analysis that we have done shows that when markets drop 25 percent, and you enter a bear market, and you have a recession, so the two together
-- a market drop ends a recession -- it can sometimes take longer than 24 months to actually recover to the old highs, and even have any positive
move at all because there's essentially a price finding mechanism that the market is engaged in.
And with the heightened uncertainty, with the VIX still remaining in the mid-40s, it tells you that the market is not completely certain about where
we're going here.
[09:25:26]
LEVINE: So all that means is that if you have at least a two to five-year time horizon, this is an excellent opportunity to start building positions
and finding companies that you think will come out on the other side of this.
This is not an index call. This is an individual company call, strong balance sheet, remaining cash flow, who is going to be surviving and
thriving on the other side of this? This is the time to do it as long as you have a longer time horizon.
CHATTERLEY: Yes, it's a great point, Alicia. Very quickly, does earnings season -- because that's going to begin next week -- does that give us more
information or does that just confirm the lack of certainty that we know we have at this moment?
LEVINE: So 2020 and 2021 earnings are a black hole.
CHATTERLEY: Yes.
LEVINE: The published estimates today are -- it's not just that they're stale, there's simply not believable. And, you know, I've never actually
seen stocks go up when companies project declining earnings, declining cash flow and declining profitability.
So it will be a difficult situation. I think the best we can assume for this year is that earnings are down 25 percent at best, and that assumes a
V-shaped recovery, and at worse, it would probably get cut in half to about, you know, $89.00 to $90.00 a share, $85.00 a share, you know, on the
S&P.
And if that's the case, there could be another leg downward, but ultimately markets are forward looking discounting machines and so you want to look
out, what does it look like for the next three years? Does it take us three years to recover to that 165 level in the S&P? If that's the case, then
this is an okay time to start building positions.
But you shouldn't think that you know, the all clear is given just because first quarter earnings came in not as bad as expected.
CHATTERLEY: Yes. Cautious. Be cautious and think of your time horizon. Alicia, great to have you with us. Thank you so much. Stay safe, please,
and we'll talk to you again soon.
LEVINE: Thanks. Thank, Julia. Nice to see you.
CHATTERLEY: Alicia Levine there with the BNY Mellon Investment Management and beautiful children, of course, over your shoulder thereto. Stay with
us. We're back after this. The market opens next.
(COMMERCIAL BREAK)
[09:30:47]
CHATTERLEY: Welcome back to FIRST MOVE. We've got U.S. stock markets up and running this Wednesday. As expected, a higher open following
yesterday's initial gains and then a flat finish as we've described.
The bottom line is, as Alicia Levine was mentioning there, we remain pretty much in the dark about the severity of the health crisis and how we reopen
economies after it, and I think yesterday's volatile markets reflect that.
Tomorrow's U.S. jobs data will be key. All signs are pointing to another sharp spike in those claiming for jobless benefits perhaps even worse than
last week's record rise of 6.6 million people claiming for help.
JPMorgan says seven million people in the past week may have claimed and asked for help.
The owner of TJ Maxx says it will furlough most of its U.S. workforce. Tesla is cutting pay for all workers and furloughing hourly workers and the
airline group AITA says the airline body, AITA says -- the A-I-T-A says 25 million jobs across the world are at risk in that industry.
We're seeing green arrows for oil on the eve of tomorrow's OPEC Plus meeting. Markets are hoping for production cuts of some 10 million barrels
a day.
Now as millions of Americans lose their jobs every week, the unemployment rate is expected to skyrocket in the world's largest economy. It already
has.
Bank of America forecasts tomorrow's weekly jobless claims could reach six and a half million people. It's time to act.
Princeton University Professor and "New York Times" columnist Paul Krugman -- Professor Paul Krugman joins us now. He's also 2008 Nobel laureate, and
he is the author of the book, "Arguing with Zombies: Economics, Politics and the Fight for a Better Future."
Professor Paul Krugman, sir, great to have you with us on the show. We'll talk about who the zombies are in a second, quite frankly. But let's start
just micro with the U.S. economy.
You've said many times we're under estimating the damage that we're seeing even in the short term. How high do you think the unemployment could get?
PAUL KRUGMAN, NOBEL PRIZE LAUREATE: Oh, it's quite easy -- oh, I should say, I'm no longer at Princeton, I am at the City University of New York.
My school will be unhappy with that.
CHATTERLEY: My apologies.
KRUGMAN: It's probably -- we can quite easily get over 20 percent unemployment. We've lost, at I'd guess, at least 15 million jobs in the
last three weeks, and the unemployment rate best estimates suggest that as of a few days ago, it was already probably 13 to 14 percent and rising.
So this is -- this is a -- the best guess I could make is we're looking at a slump that's three to five times as deep as the great recession of 2007
to 2009. And that raised the unemployment rate by five percentage points.
This one is going to be much, much worse than that, at least initially.
CHATTERLEY: The St. Louis Fed President told us a couple of weeks ago that he could envisage as high as 30 percent unemployment, could we see that?
KRUGMAN: It's not unreasonable -- I'm sorry?
CHATTERLEY: Yes, you were saying.
KRUGMAN: Yes, I mean, we've shut down something like, again, we shut down 25 or 30 percent of the economy. So that can lead to some pretty, awesomely
huge employment numbers.
The trouble is where, you know, this is just moving -- all of our economic data are designed to deal with movements that may be large over the course
of a month, but we're not used to seeing a full scale, you know, the deepest recession, the deepest decline anyway, since basically ever over
the course of weeks, so everything is moving on COVID time, but it does look extremely severe.
CHATTERLEY: I mean, the point that I think the White House, the administration would make is this shows that the shutdown is working, and
why they've put the measures in place to get cash to people, to get cash to businesses, to try and stem some of the job losses.
What do you make of the plan that they've announced, admittedly, we're seeing delays and getting the money to people, but is more money required?
[09:35:03]
KRUGMAN: Yes more money is required. The CARES Act that was passed -- and already, it seems like months ago, but actually, just a little over a week
ago is better than I expected actually.
What we need right now -- the economy is going through, I've been saying it's sort of the economic version of a medically induced coma, where you
deliberately shut down some brain functions in order to give the patient a chance to heal and the most urgent thing under those circumstances is not
stimulus, but relief. You need to provide people with money to tide them over.
And the bill for the most part, there are some dubious parts of it. But for the most part, it was expanded unemployment benefits, lending to small
businesses that can be converted into grants if they use the money to maintain payrolls.
What's absent from the bill? There's two things. One is, it is not remotely now paid to state local governments, which are on the frontline here, have
to balance their budgets, and they're suffering terribly from the crisis.
The other thing is that we are falling down really badly on the implementation, and we have state unemployment offices, you know, we're
running this enhanced program supposedly through the states and the State Unemployment Offices can't keep up with the new claims even before the
extra money starts to flow.
And most indications are that the small business lending is off to a very rocky start as well.
So basically, we did on paper, we did a lot of the right things, but not enough of them. In practice, we haven't provided much relief. People have
already, you know, exhausted food banks very quickly.
So it's a lot of harsh -- but we -- assuming that this money starts to flow, we still have some big holes to fill. And yet, even though the
numbers look huge, in fact, we need another big one.
CHATTERLEY: How big?
KRUGMAN: Well, I mean, what we're seeing from House Democrats right now is $500 billion which is if anything, I think less than we're going to
potentially going to need, but there's a combination of more small business lending, but also extra money for states, extra money for hospitals, which
are really both crucial areas.
I'm concerned that the stuff -- the unemployment benefits and that's actually -- it's very good -- if the money can actually get delivered. It's
actually a very good thing. But it expires after four months and there's a lot of reason to believe this is going to go on for longer than that.
The forgivable business -- small business loans, it's only eight weeks. So I don't think the legislation so far addresses -- the one big hole is state
and local governments, and the other big problem is duration. It's anybody's guess when the economy really restarts.
CHATTERLEY: I'll ask you that. But to your exact point, what I'm hearing is that small businesses are saying, look, I can only get relief on two
months of payroll, my workers would be better off taking four months of unemployment benefit, which I think Congress recognizes perhaps is quite
challenged.
But obviously, there's a delay in getting that money out to people. How quickly assuming that money flows in the next couple of weeks can we bring
the unemployment rate down once we start to restart the economy? Yes.
KRUGMAN: Yes. I mean, this is mostly a question for the epidemiologists. I mean, this is -- for what it's worth, there's an overwhelming consensus
among economists that you don't -- that GDP is not the goal here.
In fact, in terms of GDP, over a slightly longer period, much better to wait until you've really got this under control.
If we look at some of the countries that have been relatively successful at containing this, there are some ominous signs, places like Singapore, that
seem to have done a really good job and started to say, okay, people can start to go back to work, then they start to see a second wave of
infections.
And so it's really -- we're probably quite a few months from being able to go into it and we may be able to liberalize a few things, but a full
restart of the economy is not indicated right now.
CHATTERLEY: Now, my view, and I'm hearing it from more and more people is that billions as in hundreds of billions of dollars needs to be pumped into
medical science to try and come up with more tests, to come up with immunology tests to work out who has actually got some level of immunity to
this.
But Professor Krugman, I want to ask you something about a comment that you've made. And you said, look, I'm a patriot. I'm very proud of the
United States of what we've achieved over a number of years. Although at the same time this has become the land of denial and death because the
support infrastructure to tackle economic weakness is not there. What must change after this? And will it?
[09:40:07]
KRUGMAN: Yes. One thing is that, I think we need to say that in cases of national emergency, the response needs to be Federal and we are all talking
about the medical equipment thing where the current administration has consistently refused to take charge and take responsibility for delivering
protective equipment, ventilators and all of that, which is crazy.
This is if -- if this is anything like a war, which in some ways it is, then you always nationalize the crucial weapons of war, which in this case
is masks and ventilators and all of that.
But also, I've been looking at the emergency unemployment benefits. You know, our neighbors to the north have also got an emergency unemployment
benefits program. Theirs is being administered at a national level. They set up a website, a free call and line and people are getting their
benefits very, very quickly in Canada.
We are running it through state offices, which have been massively neglected. In some cases, the states -- Florida actually deliberately set
up its system to make it hard to collect unemployment benefits, they wanted to discourage people from seeking benefits and now suddenly, they're
completely overwhelmed and nobody can get through.
But even you know, even New Jersey, which is a blue state has been neglecting the governmental infrastructure. There's a desperate search in
New Jersey now for COBOL programmers. Nobody knows that. Nobody younger than me knows how to program in COBOL. But it turns out, we've got a four-
year-old computer system running in the Unemployment Office.
So that's telling us that we should -- we should be prepared. We should have national -- a comprehensive system of national health insurance. It
doesn't have to be single payer, but something that's comprehensive.
We should have a national response when we're delivering emergency benefits and this combination of shortchanging nickel and diming and then refusing
to federalize things that are national issues is really deadly.
CHATTERLEY: We've got to take ownership and responsibility in a crisis. Professor Paul Krugman, fantastic to have you with us. Professor of
Economics at the Graduate Center at City University of New York. I got it right the second time, sir. We'll get you back.
KRUGMAN: That's right. That's right.
CHATTERLEY: Thank you.
KRUGMAN: Take care.
CHATTERLEY: Thank you. You too. All right, we're going to take a break. Still to come on FIRST MOVE, we need more specialist masks, and we need
them now, but manufacturers of the N-95 respirator say this takes time.
We will speak to the CEO of a company behind a system that makes them reusable. That's next.
(COMMERCIAL BREAK)
[09:45:59]
CHATTERLEY: Welcome back to FIRST MOVE. The U.S. government is looking to buy 600 million vital N-95 masks, but even that may be nowhere near enough.
Ramping up the production could take months, so the United States is relying on import, too, but now there's an additional way --
decontaminating those N-95 masks already in use.
U.S. regulators recently approved a mobile system created by research and development company Battelle that does just that. Lewis Von Thaer is the
President and CEO of the company, and he joins us via Skype. Sir, fantastic to have you with us. This is some incredible innovation in times of crisis.
Talk to me about where the idea came from and how quickly because the speed here is crucial, you managed to get this process up and running.
LEWIS VON THAER, CEO AND PRESIDENT, BATTELLE: Well, thank you, Julia, and good morning.
Yes, it's really been remarkable. We actually had one of our engineers had this idea. They remembered a study that we had done five years ago for the
F.D.A., and in that study, we proved that we could reuse these masks, basically decontaminate them for reuse up to 20 times -- no degradation.
We'd never thought about scaling it before though, so the idea came up that we could scale this, and literally within nine days, our team worked around
the clock and actually built out a system of a large ISO container, like you see going, the trucks pulling down the road, instrumented and laid out
with racks, it could hold these mask.
We apply hydrogen peroxide in vaporized form for a certain dwell time and get the masks clean. So we had the system up and running. We were able to
create data along with the study data we did before, got approval from the F.D.A., I think 10 days ago now, and I am very happy to report that we're
up and operating in Ohio today, just going online in Seattle, and Stony Brook in Long Island, and we will soon be online in Boston in the next few
days.
CHATTERLEY: I mean, it's incredible. I was doing the math there. I think that's 23 days between coming up with the idea and finally getting
approval. How much of a battle was it going back and forth and back and forth with the F.D.A. here in order to get this emergency approval? Because
this is key.
VON THAER: Well, I think first I would accommodate everyone. This has been a team effort from not just our team, but the F.D.A., our local politicians
and others have helped because of the emergency.
And everyone just came together to do this as quickly as possible. By the last days of this, we were literally in hourly conversations with the
F.D.A. lead, to answering their questions, getting any documentation they were concerned about.
And that's so -- it's really remarkable. It's really a case of I think it's America. We may not be the best planners in the world, but boy, we are
great at responding when emergency comes and we've proven that over and over again in our history.
CHATTERLEY: Yes, speed of innovation, I think unparalleled quite frankly. Talk to me about these decontamination systems because I saw a comment from
you saying, look as a company we have a strong balance sheet. We're a not for profit. We will figure out the financial details later.
I know you donated one as well to Washington State. Talk me through this.
VON THAER: So what we're doing right now is really working with our partners to be able to scale this very quickly.
CHATTERLEY: Yes.
VON THAER: Right now, we believe we can build about five of these a week starting next week. Within three weeks, we think we can build more than one
a day.
The Federal government and others are talking to us, local and state governments as well. Our model to start with this was we would charge
hospitals for the actual cleaning of the masks at a rate, and then we would drop that rate as soon as we kind of recovered our capital costs to
basically the rate that it costs to clean the masks with some help that could be coming from other sources soon. Hopefully, we'll be able to
provide this service near free or for free to the hospitals.
So it's all about speed. It's all about getting things in the country where they need them. See how many of these systems can be deployed. We're also
learning in this process that it takes a while for the hospitals to build their logistics chain out.
They spent their whole careers learning how to not do this. Learning how to use, you know, 12 to 14 of these mass a day, one for each patient, and now
to change those processes inside these hospitals, which purposely were always built not to be very flexible because our health is at stake, we're
learning that they've got a lot of work to do on their end to get the supply chain up and running, too, so we're doing a lot of work with them in
this process as well.
[09:50:18]
CHATTERLEY: Absolutely. And who takes responsibility at the moment if they don't have the system in place to deliver the mask to you, to then get them
cleaned? And how are you protecting your employees? Because this is clearly critical, too.
VON THAER: Yes, so what we've done is, today, the hospitals are using their standard couriers to deliver them to us in the bags. The masks are
double wrapped. The outside plastic bag or box that are sent to us is wiped down with alcohol to make sure there's no coronavirus on them and shipped
to us.
We're also talking to national partners that could speed this process and do this on a much grander scale than we're able to do or any individual
hospital and hope to have those places online soon.
So our goal is to set up regional system and multiple hospitals come into that region because we can clean so many masks at one time.
CHATTERLEY: It's fantastic. What a call to action and a response from your whole team. Thank you. Thank you so much and stay in touch, please because
we'd love to hear your progress.
The President and CEO of Battelle there, sir, stay safe, please.
VON THAER: Thank you, Julia.
CHATTERLEY: Thank you. All right, when we return, Wuhan's airports reopen, and among the departing passengers, there have been some very special
farewells to show you. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back FIRST MOVE. Square and Twitter CEO, Jack Dorsey has pledged $1 billion to coronavirus relief efforts. It may sound simple,
but it gets more complicated.
The donation comes in the form of an equity stake in Square. Paul La Monica joins me now. Paul, it's still a quarter of his wealth, I believe, but
uncomplicate the complications for us. How does this work?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes. Dorsey getting a lot of praise for his efforts here about a billion dollars mostly Square stock, because
that's where a big chunk of his wealth comes from, not Twitter. He is going to be donating this to coronavirus relief efforts.
And then after that, he says that he wants to continue investing in other charitable, you know, things like girls health, universal basic income,
education efforts. So this is kind of like the Giving Pledge of, you know, Bill Gates and Warren Buffett, but supersized, so a lot of praise for Jack
Dorsey for this extremely charitable donation that he is making at a time where we really need it.
CHATTERLEY: Yes, we really need this kind of response and that's a monster one even if it is in the form of stocks, there's things you can do without
that even in the short term to leverage that money. Oh, I think we've lost you there. Paul. Great to have you with us though. Paul La Monica, thank
you so much for the update there.
The joys of live TV.
Now, as we prepare to say goodbye, I want to show you some farewells that took place at an airport in Wuhan today.
[09:55:10]
CHATTERLEY: Over two months ago, medical support staff flew in to help treat an overwhelming number of patients. Now, they finally get to go home.
These nurses have been pretty much to hell and back running towards danger instead of away from it, and we thank them all for it.
Those images there are breathtaking and that is happening all around the world. We thank them.
Thank you for watching, guys. I'll see you tomorrow.
(COMMERCIAL BREAK)
HALA GORANI, CNN INTERNATIONAL ANCHOR: Hello and welcome. We are bringing you the very latest on the coronavirus pandemic and we start in Britain.
[10:00:10]
END
