CNBC’s Jim Cramer on Monday laid out four moves he thinks the U.S. government could take to stave off a potential coronavirus-induced recession.
The major stock indexes all sold off more than 7%, putting more pressure on bond yields, due to ongoing fears of the COVID-19 virus’ impact coupled with a breakdown in OPEC discussions to cut oil production.
“Rightly or wrongly, people are terrified of this pandemic. It’s very hard to be constructive about most stocks when the government’s focused more on optics than on appropriate precautions,” the “Mad Money” host said. “If the President wants to reassure the markets, he needs to consider a new approach — and if he takes it, call me a buyer.”
After the Federal Reserve issued a half-point interest rate cut last week, there’s not much more that monetary policy can do to help, Cramer said.
“The government should be offering no-interest loans to small businesses that won’t be able to handle the downturn,” he said. “We should subsidize companies that give their employees paid sick leave because it’s very hard to quarantine yourself if you’re living paycheck to paycheck.”
Change of tack from Trump
President Donald Trump should remain hopeful, but also plan for a worst-case scenario regarding the coronavirus outbreak, Cramer said. He suggested that the federal government expand capabilities and administer more tests, including everyone on cruise ships, those traveling from overseas and people in large gatherings, to inject more confidence in the general public.
“I don’t think this shows weakness, and it doesn’t undermine the idea that things might be better than most of us believe,” Cramer said.
“We need to take a short-term hit here if we’re going to contain this thing: self-quarantine, work from home, stay away from crowd,” he added. “All of this slows down the pace of the infection and gives health care workers a chance to breathe, which is what really matters.”
Help scientists discover solutions
“We need the White House to push for a vaccine or a treatment or even just some better information [and] data that would allow our scientists to solve this thing,” Cramer said, suggesting to convene a “Manhattan Project” or handing out incentives to organizations that make progress on a solution.
Support state and local governments
“We need to back our community based health system with unlimited resources, everything from mobile army surgical hospitals to ventilators and respirators and hazmat suits,” the host said. “State and local governments don’t have the money to pay for these things; this is what the federal government is for.”