The economic fallout of coronavirus

Summary

The video script discusses the impact of the COVID-19 pandemic on businesses like Katz's Delicatessen and the magnet theater in New York City, highlighting the challenges of keeping workers employed and businesses afloat. It features interviews with owners, employees, and economist Joseph Stiglitz, who emphasizes the need for government support and the pre-existing vulnerabilities in the economy. The script also touches on the emotional responses of investors and the importance of financial planning during such uncertain times.

Takeaways

• 🏠 Katz's Delicatessen, a New York institution for 132 years, is facing unprecedented challenges with its current shutdown due to the pandemic.
• 🍽️ Restaurants across the country are prohibited from seating diners, leading to a shift to takeout and delivery services.
• 👷‍♂️ Third-generation owner Jake Dell is trying to keep his 200 workers employed through various means, such as delivery and crowd control.
• 🔪 Long-time employee Alfredo Fernandez highlights the resilience of Katz's, which has weathered many crises but now faces a shutdown.
• 🎭 The closure of theaters like the Magnet Theater in Manhattan has a ripple effect on the many businesses and workers that support them.
• 🤹‍♂️ Actor Edy Herbst co-founded the Magnet Theater, emphasizing the importance of improvisation in dealing with uncertainty and change.
• 🏆 Nobel Prize-winning economist Joseph Stiglitz points out the vulnerability of the pre-pandemic economy, where many households and businesses were living on the edge.
• 💡 Stiglitz criticizes the pre-pandemic economy for its lack of resilience and the overemphasis on narrow-minded efficiency, leading to widespread vulnerability.
• 💸 The U.S. government is taking measures to provide financial support to both large corporations and small businesses, as well as to households.
• 📈 Financial advisor Michael Goodman advises against panic selling in the stock market, even for those nearing retirement, emphasizing the need for a long-term perspective.
• 🔍 Goodman suggests that now is an important time for individuals to assess their financial situation and obligations to ensure they can weather the crisis.

Q & A

How long has Katz's Delicatessen been in operation?

Katz's Delicatessen has been in operation for 132 years.

What is the current situation at Katz's Delicatessen due to the pandemic?

Katz's Delicatessen is prohibited from seating diners, and they are offering bagels and blintzes only to go.

How is Jake Dell, the third-generation owner of Katz's, trying to keep his workers employed during the crisis?

Jake Dell is having his workers do deliveries, crowd control, and prep work to keep them busy and paid.

What is the impact of the theater closures on the surrounding businesses and workers?

The theater closures affect not only the employees of the theaters but also the companies and workers that supply utilities, t-shirts, and beer, as they all feel the impact of the closures.

How does Edy Herbst, co-founder of the Magnet Theater, describe the current situation compared to the past?

Edy Herbst describes the current situation as nerve-wracking and different from any other economic period he has experienced.

What does Joseph Stiglitz, a Nobel Prize-winning economist, believe about the pre-virus economy?

Joseph Stiglitz believes that the pre-virus economy left many families and businesses exposed and at risk, with households living at the edge and businesses taking on too much debt.

What measures is the U.S. government taking to support large corporations and small businesses during the crisis?

The U.S. government is nearing an agreement to make half a trillion dollars available to help large corporations and small businesses.

What is the proposed financial assistance for households during the crisis?

There is another half a trillion dollars for households, amounting to one to three thousand dollars depending on the family size and income level.

What is Stiglitz's suggestion for financial assistance to people during the crisis?

Stiglitz suggests that the government should provide recurring checks to people for as long as the crisis lasts, rather than a one-time event.

What advice does Michael Goodman, president of Wealth Stream Advisors, give to investors nearing retirement during the market turmoil?

Michael Goodman advises that even for those nearing retirement, now is not the time to panic and get out of the market, as the average recovery is typically around 24 months.

How is the Magnet Theater adapting to the current situation?

The Magnet Theater is experimenting with putting performances online, using improvisation to deal with the uncertainty of the situation.

Outlines

00:00

🍽️ The Impact of Closures on Businesses

The first paragraph discusses the challenges faced by businesses, particularly restaurants like Katz's Delicatessen in New York, due to the COVID-19 pandemic. Katz's, a 132-year-old establishment, is struggling with the prohibition of seating diners and has had to adapt by offering only take-out options. The owner, Jake Dell, is trying to keep his 200 workers employed by reassigning roles such as having busboys do prep work. The paragraph also touches on the broader economic impact, with sports events canceled, factories and shopping malls closed, and theaters like the Magnet Theater shutting down, affecting not only the employees but also the network of businesses that support them.

05:02

📉 Economic Uncertainty and Responses

The second paragraph delves into the economic implications of the pandemic and the measures being taken to address them. It features insights from Nobel laureate Joseph Stiglitz, who highlights the unprecedented nature of the current crisis and criticizes the pre-pandemic economy for lacking resilience. The average American's financial vulnerability is underscored by the fact that many have savings insufficient to cover emergencies. The U.S. government's response includes lowering interest rates and proposing financial aid packages for corporations and households. Stiglitz suggests that the government should provide ongoing financial support to citizens as long as the crisis lasts. The paragraph also includes perspectives from financial advisor Michael Goodman, who advises against panic selling in the stock market and emphasizes the importance of understanding personal financial obligations during this time. The Magnet Theater's efforts to adapt by moving performances online are also mentioned as an example of improvisation in the face of uncertainty.

Keywords

💡Delicatessen

A delicatessen, often shortened to 'deli', is a type of store or shop where one can buy a variety of prepared foods, such as meats, cheeses, and salads. In the script, Katz's Delicatessen is highlighted as a historic establishment that has been serving corned beef and pastrami for 132 years, symbolizing a cultural staple that is now facing challenges due to the current economic shutdown.

💡Shutdown

A shutdown refers to the closing down of operations, often due to external circumstances. The script discusses the unprecedented global economic shutdown, affecting businesses like Katz's Delicatessen and theaters, which are now closed to prevent the spread of a health crisis, illustrating the drastic measures taken to protect public health.

💡Economic Pandemic

The term 'economic pandemic' describes a widespread and severe economic downturn that is affecting many sectors and regions simultaneously. The script mentions the transition from a health pandemic to an economic one, indicating the far-reaching consequences of the health crisis on businesses and individuals.

💡Resilience

Resilience in an economic context refers to the ability of a system or entity to recover quickly from difficulties. The script criticizes the pre-virus economy for lacking resilience, having left many households and businesses vulnerable to economic shocks, such as the one described.

💡Interest Rates

Interest rates are the cost of borrowing money and are set by central banks. The script mentions that the U.S. federal has cut interest rates to near zero, a measure taken to provide relief to consumers and businesses by making loans cheaper and more accessible during the economic crisis.

💡Financial Plumbing

In the context of the economy, 'financial plumbing' refers to the underlying systems that facilitate the flow of money, such as the banking system and financial markets. The script mentions actions to keep the nation's financial plumbing unclogged, indicating efforts to maintain the smooth operation of these systems during the crisis.

💡Crowd Control

Crowd control involves managing and directing the flow of people to ensure safety and order. In the script, Jake Dell, the owner of Katz's, mentions that waiters are now working on crowd control, reflecting the need to manage the limited number of customers allowed for take-out services during the shutdown.

💡Bull Market

A bull market is a period of time in which investment prices, such as stocks, are rising or are expected to rise. The script refers to the end of the longest bull market on record, indicating a significant shift to a bear market, characterized by falling prices, due to the economic impact of the health crisis.

💡Wealth Stream Advisors

Wealth Stream Advisors is a financial planning and investment management firm mentioned in the script. It represents the type of financial institutions that are advising clients on how to navigate the economic uncertainty, suggesting that even in times of crisis, there are strategies to manage and protect one's financial health.

💡Improv

Improv, short for improvisation, is the process of creating a performance spontaneously without planning or preparation. The script discusses the Magnet Theater, an improv theater, which is adapting to the shutdown by putting performances online, demonstrating the ability to adapt and respond creatively to challenging circumstances.

💡Uncertainty

Uncertainty refers to a state of being unsure or unpredictable. The script uses the concept of uncertainty as a central theme, with the theater and individuals alike having to improvise and adapt to the unpredictable nature of the current crisis, emphasizing the importance of flexibility and adaptability.

Highlights

Katz's Delicatessen, a 132-year-old institution, adapts to unprecedented shutdowns by keeping operations going with limited services.

Jill Schlesinger reports on the impact of the pandemic on businesses like Katz's, which are facing challenges unlike any in their history.

Restaurants across the country are prohibited from seating diners, leading to a shift to take-out and delivery services.

Jake Dell, third-generation owner of Katz's, discusses the efforts to keep 200 workers employed and paid during the crisis.

Workers at Katz's are reassigned to different tasks to maintain operations and morale during the shutdown.

The closure of major sports, factories, shopping malls, and theaters signifies a global economic shutdown.

The Magnet Theater in Manhattan, dedicated to improv, is forced to shut down, impacting not just employees but also related businesses.

Actor Edy Herbst, co-founder of the Magnet Theater, expresses concern for the future of the theater and the city.

Joseph Stiglitz, Nobel laureate in Economics, describes the current economic situation as uniquely nerve-wracking compared to past crises.

Stiglitz criticizes the pre-virus economy for leaving many households and businesses vulnerable due to living at the edge financially.

The economic shutdown is a necessary measure to protect health, according to Stiglitz, despite its unprecedented nature.

The U.S. federal government's response includes cutting interest rates and making funds available to support corporations and households.

Stiglitz advocates for recurring financial support to households as long as the crisis lasts, rather than a one-time check.

Michael Goodman, president of Wealth Stream Advisors, advises against panic selling in the stock market despite the downturn.

Goodman emphasizes the importance of understanding personal financial obligations to ensure stability during the crisis.

The Magnet Theater experiments with online performances as a way to adapt to the new reality of social distancing.

The transcript highlights the importance of improvisation and adaptability in both business and personal life during a crisis.

Transcripts

Anne Shiell Welby I see well no that's

yet another scary reality for many of us

in recent weeks we've asked our Jill

Schlesinger to calm the waters or Triton

at Katz's delicatessen on New York's

Lower East Side

they've been slicing the corned beef and

pastrami for 132 years listen we've gone

through everything right we've we've

seen depressions and hurricanes and

blackouts and terrorist attacks and and

we've been here through all that we've

we've never closed but now the chairs

are stacked on the tables

Katz's like most restaurants across the

country is prohibited from seating

diners

so the bagels and blintzes are only

available to go Jake Dell is the third

generation owner of Katz's he's

desperately trying to keep his 200

workers busy and more importantly to

keep paying them waiters for example are

doing deliveries or working on crowd

control

you know I have Busboys that I obviously

don't need to clean tables right now so

I'm having them do prep work basically

everyone is an all-hands-on-deck and we

take it one day at a time

Alfredo Fernandez has put his knife to

work at Katz's for 14 years at least

Katz's is still open as the global

economy enters an unprecedented shutdown

just look around major league sports

have left the field factories and

shopping malls are shuttered the lights

have gone dark on Broadway and the

curtain has come down for Manhattan's

independent theaters like the magnet

theater I'm sitting here in an empty

theater and it's empty every night we're

shut down New York City has shut down

actor edy herbs been co-founded the

magnet which is dedicated to improv he

remembers the good old days like a week

and a half ago

we were booming 35 to 40 shows a week

back-to-back each night the magnet has

50 employees but the damage goes beyond

those 50 there's a web of companies and

workers that supply everything from

utilities to t-shirts to beer they'll

all feel the impact of the theaters

closing I'm worried about the future of

this place well I'm worried about the

future of the city if you look back on

your life you've lived through a lot of

different shaky economic periods can you

tell me how this period feels to you

today versus what you've seen in the

past Oh

to me I think this is the most

nerve-wracking joseph stiglitz won the

nobel prize for economics in 2001 and is

a professor at columbia university this

is totally different we're we're

shutting down the economy to protect our

health

Stiglitz believes that the pre virus

economy was one where too many were left

exposed

we're both families and businesses alike

were at risk if conditions soured before

the the event many of our households

were living at the edge the average

amount in the bank you know 50% 70% of

Americans have is $500,000 on the other

side businesses have been really foolish

taking on debt as if no storms ever

going ahead and we always know that

there's going to be some storms they've

been really really foolish we pushed the

idea of efficiency in a narrow-minded

sense too far we've run our whole

economy that way no extra hospital bags

fine as long as you don't have a crisis

like the current one we developed a

system without resilience in which we

left large numbers of Americans

extraordinary vulnerable as the health

pandemic becomes an economic pandemic

the world is waiting for governments to

respond here in the US the federal

has cut interest rates to near zero to

help consumers and businesses access

cheaper loans and it's also taking

actions to keep the nation's financial

plumbing unclogged at the same time the

Trump administration and Congress are

nearing an agreement to make half a

trillion dollars available to help large

corporations and small businesses and

there's another half a trillion dollars

for households amounting to one to three

thousand dollars depending on the size

of the family and income level Stiglitz

says it's a start the idea of sending

checks to people not a one-time event

you are advocating something different

can you explain well if we knew this was

going to be a three week event a

one-time check would be fine it gets us

over the hump and we're on but the PT

biologists are not sure how long it's

going to take the best estimate is

months and that means a lot of people

really are anxious and and knowing that

if this crisis lasts for three months

there'll be another check a thousand

dollars for three months come on so we

really need to give them the assurance

that as long as this lasts they'll be a

check coming should we be concerned at

all about spending this money now

the answer is no I mean when we went to

World War two we didn't ask could we

afford that we had to do it we need to

do it can we afford it yes we have

enormous resources so are your clients

freaking out right now Michael well some

of our clients are definitely on edge

Michael Goodman is the president of

wealth stream advisors of financial

planning and investment management firm

doing this is a pretty scary time of

course and you would never want to

discount that there are clients however

I surprised to see that our anxious to

put some money into the market

Street has lost its been a frightening

ride for investors stocks have plunged

more than 30 percent over the past five

weeks ending the longest bull market on

record

but despite the market turmoil Goodman

says that even for a person nearing

retirement now is not the time to panic

and get out if I'm 60 years old and I

plan on retiring when I'm 70

should I make any changes in the account

right now if you're 60 and you're not

going to be retiring for another ten

years in these times there's this

temptation to make adjustments as scary

as this is as much as we don't know the

bottom to this market average recovery

is typically somewhere around 24 months

whether you're an investor or not

Goodman says now is an important moment

to take stock of your financial

situation I think the thing that people

should be focusing on right now is

making sure that they understand what

their personal obligations are over the

next several months so that they feel

that they can get through that this will

pass there will be damage because of it

and we will rebuild and grow back we've

done this before I don't fully fit under

the bed I do

back at the magnet theater they're

trying to get through it all by

experimenting like some of their big

league colleagues with putting

performances online the theater

dedicated to improv is well improvising

as we all are what we do is we train

people to deal with the fact that

everything is uncertain

it's improvising we're constantly saying

calm down take a breath

don't try to plan try to react and now

we're doing that for real in real life