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The Wrongologist

Geopolitics, Power and Political Economy

Monday Wake Up Call – May 18, 2020

The Daily Escape:

Colorado River, from South Kaibab trail, Grand Canyon NP, AZ  – photo by DJ Memering. The bridge is called the Black Suspension Bridge. It is 5,260 ft below the canyon rim.

The CARES Act was sold as emergency funding for individuals and small businesses. In all, Congress has authorized $3.3 trillion in coronavirus relief in four separate acts over the last two months. The stated intent of those bills was to protect the American economy from long-term harm caused by the overall impact of the virus.

Alas, Congress also took care of their true constituents, Big Oil and other fossil fuel companies. Those companies got CARES Act tax breaks. The subsidies were supposed to help bail out small businesses pounded by the pandemic, but at least $1.9 billion of it was sent to fossil fuel companies and their executives.

Bloomberg News reports:

“$1.9 billion in CARES Act tax benefits are being claimed by at least 37 oil companies, service firms, and contractors”

Bloomberg used the example of Diamond Offshore Drilling Inc. who manipulated the bailout: (emphasis by Wrongo)

“As it headed toward bankruptcy, Diamond Offshore Drilling Inc. took advantage of a little-noticed provision in the stimulus bill Congress passed in March to get a $9.7 million tax refund. Then, it asked a bankruptcy judge to authorize the same amount as bonuses to nine executives.”

But, Diamond’s refund wasn’t all. Some went to their larger competitors. More from Bloomberg:

“…$55 million for Denver-based Antero Midstream Corp., $41.2 million for supplier Oil States International Inc. and $96 million for Oklahoma-based producer Devon Energy Corp.”

In addition, Kevin Crowley reports that Marathon Oil got $411m, Occidental $195m, and Valero $110m.

Hats off to all of our Senators, Congresscritters and the Trump administration! They all continue pursuing a pro-fossil fuel agenda, even as the economic disaster of the pandemic unfolds. Bernie Sanders tweeted:

“Good thing President Trump is looking out for the real victims of the coronavirus: fossil fuel executives,”

But, Bernie apparently voted for the bill, which passed the Senate in a unanimous vote. Hypocrisy much, Bernie?

These loopholes in the Act were deliberately written in so that corporations could feed at the trough along with small businesses, and we the people. Moreover, the initial bill was written in the House, although presumably in consultation with Trump and the Republicans. So, you can view this as either the cost of doing business for Democrats, or as just another day at the office listening to the lobbyists. Subsidy legislation has been a bipartisan objective.

Its always been this way. Here’s a cartoon from 1920 that could be drawn today:

Let’s remember that a big issue was the requirement for oversight, particularly after Trump said he wasn’t interested in having any. A compromise was struck so that an oversight commission could be empaneled to keep track of how the money was spent.

Today, it remains without a leader. Four of the five members of the Congressional Oversight Commission have been appointed, but Speaker Nancy Pelosi, (D-CA) and Senate Majority Leader Mitch McConnell, (R-KY) have not agreed on a chair.

While the current members of the panel can perform some oversight, without a leader, it can’t hire staff or set up office space. In addition, the four members have not met as a group since the economic rescue law was passed. The PBS NewsHour quotes John Coates, a professor of law and economics at Harvard Law School:

“If the commission is not functioning — which it is not — then there is no oversight on a huge part of the economic rescue law…”

We seem to be able to bail out the rich every few decades, and we always seem to do it on the backs of the poor. It will probably happen again in another 10 years or so. Between these bailouts, politicians and pundits appear on all of the news shows, and write very serious articles proclaiming the need to resist socialism and to preserve “the free market” for the sake of “wealth creation and innovation”.

Time to wake up America! This great con has been going on for all of Wrongo’s lifetime and by looking at the cartoon above, for a few lifetimes before. Yet voters seem to be oblivious to this insidious form of corruption each and every time they go to the polls.

To help America wake up, let’s listen to Drive by Truckers, and their tune “Armageddon’s Back in Town” from their 2020 album, “The Unraveling

Sample Lyric:

There’ll be no healing
From the art of double-dealing
Armageddon’s back in town again

Those who read the Wrongologist in email can view the video here.

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Sunday Cartoon Blogging – May 3, 2020

Last Sunday, PA Governor Tom Wolf requested:

“…as many people as possible wear a nonmedical or homemade mask when leaving their homes.”

This week in Mercer PA, a protest against the Pennsylvania governor’s stay at home restrictions yielded this sign:

If this woman thinks wearing a mask is slavery, then she has no idea what slavery is. She, (along with the rest of us) aren’t permitted to drive on the wrong side of the road, either. This isn’t the time for people who are asked to stay at home and to wear a mask when outside to sing: “Nobody knows the trouble I see”.

Speaking of masks and rules, how about Mike Pence:

Why didn’t the Mayo Clinic say: “Thank you for visiting us, Mr. Vice President, but I’m afraid you can’t enter the clinic without a mask per our policy.” Mayo may do fantastic work, but they failed utterly by letting Pence go in unmasked.

Will Mitch pass aid to the states?

Where Wrongo lives, the nurses, fire fighters, police, and town workers are preponderantly Republican voters. Have they been screwed enough to realize they’ve been voting AGAINST their own self interests?

Biden can’t run from this, no matter how many Dems hope he can:

Even the cows know opening meat processing plants without PPE is wrong:

We’re entering a different kind of graduation season:

(It’s control P for a PC)

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Time to End The Shit Show

The Daily Escape:

Early snow at Schwabacher Landing, Grand Teton NP, WY – October 2019 photo by travlonghorns

The shit show visited on America by Republican nihilists must end. Here are three of the latest examples.

First, Bloomberg reports that Trump says he won’t allow federal aid for states facing budget deficits caused by the Coronavirus unless they take action against their sanctuary cities: (brackets by Wrongo)

“We would want certain things…as part of a deal with House Democrats to aid states, [Trump] he said at a White House event on Tuesday…including sanctuary city adjustments, because we have so many people in sanctuary cities.”

Yes, Trump wants to hold Democratic states and cities hostage unless they end their sanctuary designations. He has previously tried to cut off their federal funding unless they change their pro-immigrant policies, and he thinks now he has some leverage.

Second, Mitch McConnell and industry lobbying groups want to make immunity from COVID-19 lawsuits a condition for state aid. In a Monday interview on Fox News Radio, McConnell said he considers liability protections for companies a non-negotiable demand for the next coronavirus stimulus legislation:

 “That’s going to be my red line….Trial lawyers are sharpening their pencils to come after healthcare providers and businesses, arguing that somehow the decision they made with regard to reopening adversely affected the health of someone else.”

McConnell is arguing that companies should have the right to be negligent, and suffer no consequences for negligence that kills their staff.

As some states begin opening their economies, lobbyists say retailers, manufacturers, restaurants and other businesses struggling to start back up need temporary limits on legal liability. The lobbyists want to give companies more protection against lawsuits by customers or employees who contract the virus and accuse the business of being the source of the infection.

Think about this: Workmen’s compensation takes care of what might happen to an employee, and does so at ridiculously low rates, even for death benefits. So this means that the primary corporate liability issue is over employees who bring the virus home from work and infect family members. Under the new legislation, family members would be precluded from filing a suit against the employer.

What about corporate liability for retail customers? Would retailers be held harmless if people getting sick are traceable to their store? There is a tension between companies having confidence to reopen, and employees and customers having confidence that they will be protected from unsafe practices that raise their chance of infection.

Lobbyists and Republicans want permanent changes to the business liability laws, while Trump is looking at how they could create some of those shields either via regulation, or executive order. But McConnell wants permanent legislation. His leverage is to make it a part of the next stimulus package.

Finally, GOP governors are holding their own constituents hostage: return to work immediately with no protection from the virus, or lose your unemployment checks:

“If you’re an employer and you offer to bring your employee back to work and they decide not to, that’s a voluntary quit,” Iowa Gov. Kim Reynolds (R) said Friday. “Therefore, they would not be eligible for the unemployment money.”

The only exception for workers getting unemployment after not returning to work is if they are ill with the virus or taking care of a family member who has the disease. The situation is similar for workers in Texas, where Gov. Greg Abbott (R) on Monday gave the go-ahead for retail stores, restaurants, movie theaters and malls to reopen on Friday.

“According to the Texas Workforce Commission, to qualify for unemployment benefits in the state, a worker must be “willing and able to work all the days and hours required for the type of work you are seeking…..employees who choose not to return to work will become ineligible for unemployment benefits.”

The only solution to these anti-worker policies is re-unionization of workers in nearly every industry, and these Republican efforts during the pandemic may energize that unionization.

Mitch wants to protect employers. Trump says the whole problem is China’s fault.

Now they’re teaming up to protect Smithfield, a Chinese company since 2013, to shield it from not protecting its American workforce. A positively Chinese idea!

At least there’s no pretense that they’re really just trying to increase employment.

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More on What’s Next

The Daily Escape:

Sunrise, Mauna Kea, HI – 2020 photo by laramarie27

Here’s the COVID-19 tracking report as of April 12:

The rate of increase in infections and deaths appear to have plateaued, while deaths as a percentage of cases continues to rise. Testing hovers around 140,000 per day, still growing slower than the rate of new infections.

The next chart seems to indicate that opening the lockdown would be a mistake. The impression is that the rest of the country isn’t doing as badly as New York. Here is a comparison of cases in New York to cases in the rest of the US:

On the 12th, infections in the rest of the US started to grow faster than new infections in NY. The rate of new deaths in the rest of the US has also become a larger share of total US deaths. So far, there is little evidence to conclude that the administration should reverse the lockdown strategies of the states.

Today we continue with yesterday’s question, “what’s next?”

When parts of the US, and eventually all of it come out from physical and economic quarantine, we will attempt to return to “normal”. Normal will bring with it a level of economic devastation, bankruptcy, and household impoverishment that will almost certainly be beyond what politicians can now imagine.

To bridge across to a sustained level of economic activity, the Federal government and the Federal Reserve will have to add substantial stimulus beyond the $2 trillion so far, possibly an additional $5+ trillion, in new stimulus.

Most of those new funds will have to go to individuals and small businesses in the form of outright grants. Otherwise, small and medium size firms will not be able to reopen their doors after a prolonged shutdown.

Grants to individuals will be most important. Renters and homeowners will have no means to become current on back rent and mortgage payments. Without these funds, the impact within the financial sector will exceed that of the Great Recession, as rents and mortgages would go unpaid for months. Foreclosures and evictions would skyrocket.

Local and state governments that rely on tax revenue from sales taxes, income taxes, real estate and property taxes will be deeply affected as well.

Bipartisan talk in DC of a new effort to create $2 trillion in infrastructure funding makes sense as a source of jobs and needed economic revival. It will also jump start the downstream suppliers of steel, cement and heavy equipment.

The Federal government may have to take equity stakes in large companies like it did in the 2008 auto bailout. In a fashion, this will make the US look a lot more “socialist” than it did in 2019.

There will also be psychological fallout that will be difficult to anticipate. Axios thinks the Coronavirus may be a defining experience for Generation Z, shaping its outlook for decades to come, disrupting its entry to adulthood and altering its earning potential, trust in institutions and views on family and sex.

Pew Research says that nearly half of workers ages 16-24 held service jobs in bars, restaurants and hotels — many of which have now been shut down or greatly scaled back. And young workers with less experience are the first to be let go.

Nearly 25% of US workers, 38.1 million out of 157.5 million, are employed in industries most likely to feel an immediate impact from the COVID-19 lockdown. Among the most vulnerable are workers in retail trade (10% of all workers) and food services and drinking places (6%). In total, these two industries employ nearly 26 million Americans. More from Pew:

“Workers in these industries have lower-than-average earnings. Across all industries, the average weekly earnings in January 2020 were $975. By contrast, workers in food services and drinking places earned only $394 per week on average. Workers in the other high-risk industries had earnings ranging from around $500 to $600 per week.”

Hence the need for a financial bridge by the federal government.

Part of the new normal must be adequate inventory of medical supplies to deal with any future replay of the Coronavirus or another pandemic. The NYT reports that China today makes about 80% of the world’s antibiotics, along with the building blocks for a long list of drugs. That supply can be shut off at any time, for any reason. It is now painfully obvious that health care must be a primary national security concern, something our politicians were blind to just a few months ago.

Will these, and other necessary things change?

So far, we have a redux of 2008. The Fed and Treasury have decided to bailout speculative capital and big corporations, let small businesses fail, and let the working poor employed by small business to become even more impoverished.

Will there be a Marshall Plan for us?

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Monday Wake Up Call – What’s Next Edition

The Daily Escape:

Chamisa plants near Abiquiu, NM – photo by zuzofthewolves

(Publishing of daily COVID-19 data is on hold while Wrongo tries to understand inconsistencies in the data)

Trump isn’t wrong to begin thinking about what comes next. At some point, we will again poke our heads out of our burrows, and feel the warmth of sunlight. We’ll attempt to resume the life we had before the virus struck. There are two risks in this: First, will we be back in the swing of things too soon? And second, what should we demand be different, given what the nation has experienced?

In Trump’s view the answer is simple. He wants most people back to work in time to have a robust economy come Election Day. He’s targeted May 1st as the start date for his governor buddies to begin revitalizing the economy.

Once again, the Trump administration is showing itself to be utterly incapable of dealing with this crisis.

He’s moving the country to re-open, despite warnings from public health officials and from most state governors. Here’s a germane comment on Wrongo’s Saturday’s column by long-time blog reader Terry McKenna:

“We really know so little. To begin with, we don’t know how the virus spreads. We are learning but that’s all. In the beginning, we guessed wrong that it was not spread by healthy (asymptomatic) persons. Doctors disagree over the size of the droplets that carry the virus. So we are almost like we were before we had the germ theory where all we can do it isolate.

Also “test” is a simplistic word. Which test? We need a test that tells a clinician that someone had the virus in his system, and a test with a fast result is essential. But a negative test means little, especially in a healthy (asymptomatic) person, because in the absence of a vaccine, that person could be infected next week or next month. So we need a test of antibodies – but even still, we don’t know how long immunity lasts.

And then we have the notion that the president can order the country back to work. Even if a business reopens, who will come? And yes, I know someone will, but imagine the NY Mets having their opening day May 15. Will anyone show up? And if they do, will we see a spike in sickness a few weeks later?

We need time for the science to do its work. We may get lucky, viruses do became less virulent over time (sometimes to re-emerge with vigor).”

A partial re-opening of those portions of the economy that are now shuttered is a risk both to the workers, and to the returning customers. Terry is right to ask if we’ll see a spike in sickness a few weeks later, and if we do, what will be Trump’s plan then?

Broadening out our view, many are starting to think about what needs to be different post-pandemic. As we emerge from this crisis, we have a rare opportunity to focus on change: Do we want a Star Trek, or Blade Runner future? A utopian, or a dystopian one?

As Viet Thanh Nguyen said in the NYT:

“Our real enemy is not the virus but our response to the virus — a response that has been degraded and deformed by the structural inequalities of our society.”

We have a once-in-a-generation opportunity to rebuild for tomorrow. Or will we just prop up the economic and political process that has given us today’s problems? As an example, if we don’t want sick and contagious people trying to go to work, America must have paid sick leave.

During the lead up to passing the CARES Act, Democrats in Congress recognized this, but at the behest of business lobbies, the Act exempted 80% of all workers, including all those working at firms with over 500 employees AND those working at firms with under 50 employees!

Here’s an illuminating chart:

And in America, add $600 for four months for 20% of our workers. This is post-Reagan America. Assistance to the poor and working class is given grudgingly, and with strings attached. The rich and corporations are showered in subsidies since they are too virtuous and important to let fail. MAGA really means “Make Americans Grovel Again”.

What has to die after Covid-19 is the myth that America is the best country on earth. We’re not as healthy as we thought we were. The symptoms — racial and economic inequality, callousness and selfishness, have been covered up by our unquestioned acceptance of American Exceptionalism.

We’ve lost our right to that view, despite the many, many small acts of heroism every day by health workers and all the “essential” hourly workers who face becoming infected every day.

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Saturday Soother (Not) – March 28, 2020

The Daily Escape:

Mono Lake, CA, just after sunset – 2020 photo by hodldeeznutz. Those columns are called tufa, and are made of limestone.

Trump has finally made America number 1! We’re again showing the world our exceptionalism by having more COVID-19 cases than any other country in the world.

The House has also passed the stimulus bill, and Trump has signed it, so we will also spend the greatest amount of money on the pandemic, with the smallest fraction of it going to the people who really need it.

Or on the medical equipment that we need the most.

Don’t let anyone tell you that the $2 trillion does a whole lot more than provide relief to very rich people and corporations. This from the NYT:

“Senate Republicans inserted an easy-to-overlook provision on page 203 of the 880-page bill that would permit wealthy investors to use losses generated by real estate to minimize their taxes on profits from things like investments in the stock market. The estimated cost of the change over 10 years is $170 billion.”

The NYT explains that under the existing tax code, when real estate investors generate losses from depreciation, they can use some of those losses to offset other taxes.

This is a big tax break because depreciation is a paper loss, resulting in cash flowing to the investor while tax deductions also flow to the investor.

But the use of those losses was limited by the 2017 tax cut. The paper losses could be used only to shelter the first $500,000 of a married couple’s nonbusiness income. Any leftover losses had to be carried forward and used in future years.

The new stimulus bill lifts the $500,000 restriction for three years, this year, and two retroactive years, a boon for couples with more than $500,000 in annual capital gains or income from sources other than their business.

The IRS says the group that benefits comprises the top 1% of taxpayers. Final words to the NYT:

“A draft congressional analysis this week found that the change is the second-biggest tax giveaway in the $2 trillion stimulus package.”

As we approach a new week, doesn’t it seem like fear is setting in? One thing that might have helped would be an empathetic leader in the White House, but you fight the pandemic war with the bozo you have.

In the Thursday evening Coronavirus briefing he acted like a mafia boss, saying that one governor:

“Used to be a big wise guy but not so much anymore…we saw to it he’s not so much anymore.”

He’s referring to New York’s Andrew Cuomo asking for more ventilators. This is GoodFellas meets House of Cards.

As long as Trump controls the distribution of federal resources, he will use it to bully and threaten states for his own political benefit. And think about this: Trump is willing to hand out $500 billion to corporations to save executives, but isn’t willing to spend $1 billion on more ventilators to save sick Americans?

This is what the Trump administration has become:

Trump is NEVER going to do what is necessary to bring this pandemic under control. Success will only be achieved through cooperative action by the States. And, by the rest of us.

Reality is sinking in, we’re gonna be in our houses for a long time. 2020 is becoming the people vs. Donald Trump.

But, there are uplifting moments if you look carefully. Here’s a small effort at a Saturday Soother, aided by the students of Berklee College of Music in Boston MA. After the school closed down and the kids left for home, they created a virtual performance of Bert Bacharach’s “What The World Needs Now”:

Despite Trump, the rest of us are in this together. Protect yourself and your loved ones, this will eventually end, and you want to be here.

Those who read the Wrongologist in email can view the video here.

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Monday Wake Up Call – March 23, 2020

The Daily Escape:

Great Wave off Kanagawa – Japanese woodblock print by Hokusai c. 1829. The wave could represent a tsunami of COVID-19 cases, or could it represent the rising of malign intent by Trump towards our democracy?

Are we in the midst of a national emergency or not? Is a tsunami of COVID-19 cases about to inundate America, or not? Let Wrongo answer: It’s a national emergency. When there’s a national emergency, does the federal government let the states take care of the problem? It does not.

Here’s America’s worst excuse for a leader on twitter Sunday afternoon:

He says it’s not the federal government’s job to lead in a national emergency. As Haberman and Baker said in the NYT: (emphasis by Wrongo)

“For years, skeptics expressed concern about how he would handle a genuine crisis threatening the nation, and now they know.”

Any other president, even the weakest, would have acted differently. Despite the fact that his policies are generally pretty standard right-wing Republican, Trump has managed to make a national disaster worse than it had to be.

Now all Americans should know how it feels to be Puerto Rican.

Bloomberg reports that Trump’s directive for governors to buy their own medical supplies to fight the coronavirus ran into a big problem when the federal government outbid them for the products! Earlier that day, Trump said that his administration is not a “shipping clerk” for medical gear that the states require to fight the virus.

Another example from the NYT: (emphasis and brackets by Wrongo)

“…on Saturday {Trump] sought to assure an anxious American public that help was on the way…and that private companies had agreed to provide desperately needed medical supplies to fight the fast-spreading coronavirus.

But Mr. Trump [said] he would not compel companies to make face masks and other gear to protect front-line health workers from the virus….. Mr. Trump said the clothing company Hanes was among those that had been enlisted to start churning out masks, although the company said they would not be the N-95 masks that are most effective in protecting medical workers.”

Trump could simply order companies like Hanes to make them, but instead, Hanes is making masks that don’t actually protect medical personnel. Capitalism @ work!  At a time of national emergency, Trump is letting the market do it, and simply declaring victory.

Another: In the on-going (Sunday) negotiations on the Coronavirus bail-out package, it turns out that Treasury Secretary Mnuchin and the White House are demanding that the relief package include $500 billion to be provided to corporations at the discretion of Treasury Secretary Steve Mnuchin.

The best part is that it permits the Treasury secretary to withhold the names of corporate recipients for up to six months. How is it possible to use taxpayer money for corporate bailouts and demand that taxpayers can’t know who’s received the funds?

Finally, here’s an example where Trump is unhappily, showing leadership. He wants to suspend habeas corpus, the Constitutional right to appear before a judge after arrest, and seek release:

“The Justice Department has quietly asked Congress for the ability to ask chief judges to detain people indefinitely without trial during emergencies — part of a push for new powers that comes as the coronavirus spreads through the US.”

The DOJ is looking for broad authority, including the ability to ask chief judges to detain people and to pause court proceedings during emergencies. It would apply to:

“any statutes or rules of procedure otherwise affecting pre-arrest, post-arrest, pre-trial, trial, and post-trial procedures in criminal and juvenile proceedings and all civil process and proceedings,”

This means you could be arrested and not brought before a judge until they decide that the emergency or the civil disobedience is over. Shouldn’t we be even more careful about granting new powers to the government if we’re in a national emergency?

We can hope that the House will block this nonsense.

We should remember that the US government was founded for the very purpose of solving some rather serious problems that the individual states couldn’t handle. That role of federal leadership has worked for 230+ years, but that doesn’t work for Trump.

You should be asking why.

It seems certain that at some point, Trump will say that the states were unable to solve the virus emergency, so he’s stepping in. He’ll try to use COVID-19 to assume extraordinary emergency powers between now and the election. That’s beyond frightening.

More will die because Trump won’t lead in the fight to contain the Coronavirus. And in the background, he’s busy laying the groundwork for emergency powers.

Wake up Democrats!

It’s time to ask, what are the DC Democrats doing to block all of this?

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Call It the Great Virus Crash of 2020

The Daily Escape:

Desert bloom on Siphon Draw Trail, AZ – photo by ericatect

That was the term used on Wednesday by Ed Yardeni, president of Yardeni Research:

“It’s all at once a health crisis, financial crisis and economic crisis. We need to fix the health part of it before we have it solved, but we can take financial and fiscal steps to blunt its effects.”

JPMorgan Chase said it forecasts a 14% decline in gross domestic product in the second quarter. That’s enough to scare anyone. In a partial response, the Trump administration suspended evictions, authorized the Defense Production Act, and is eyeing a stimulus package worth about $1 trillion.

The headline is that Trump wants to give Americans direct cash assistance. He wants to send two $1,000 checks to many Americans. Beginning April 6th, $250 billion would be issued, and another $250 billion would be issued beginning May 18th. Payments would be tiered based on income level and family size.

The Treasury Department is circulating a two-page sheet of priorities that it wants to see in the final deal:

  • Part of it is a $50 billion “airline industry secured lending facility” that would allow it to make direct loans to “U.S. passenger and cargo air carriers”.
  • The Treasury would also earmark $300 billion to help small businesses avoid mass layoffs.
    • Eligible borrowers would be companies with less than 500 employees.
    • Loan amounts would be limited to 100% of 6 weeks of payroll, capped at $1540 per week per employee.
  • The Treasury also wants Congress to allow it to temporarily guarantee money market mutual funds. Some are worried that an investor panic could lead to a run on these funds. This was done before during the Great Recession.
  • Finally, there would be a $150 billion fund to prop up other sectors, including hotels.

And Wednesday was another day when Trump appeared in front of the press, attempting to look as if he’s a war president. The bad news was that they again halted trading on the stock markets during his press conference.

At Wednesday’s close, the Dow was down another 1,338 points. We’ve now lost almost all of the gains accrued during the Trump administration. Nearly every asset class – stocks, bonds, gold, and oil – fell as investors fled to the safety of cash.

Mr. Market has decided that cash is king. The smart money can’t decide whether Trump’s offering too much stimulus. If so, things must be really bad. And if he’s not offering enough, then there’s no leadership.

Here’s one way to look at the Dow’s performance:

  • First 1153 days of Obama’s presidency +67%
  • First 1153 days of Trump’s presidency  +0%

The WH needs to shut him up. Each time he speaks, things get worse for the rest of us.

Inside this crisis is perhaps the biggest political challenge for Democrats: They have to agree to help an incompetent president and his Party avoid killing their constituents.

That’s a bitter pill, particularly in an election year.

It isn’t a stretch to see how Democrats would be painted as obstructionists if they fail to support what Trump wants at a time when millions of people need a cash bridge to help them across economic difficulties.

Wrongo thinks helping people is a good idea, and a total of $2,000 is better than nothing, but what will it really do? The average US mortgage payment is over $1,000, while the median rent for a 1-bedroom apartment is $1,234. So for a couple, in most cases, one month’s housing costs will eat up about 25% of the total cash from the government. The rest will go to car expenses, the cell phone, perhaps student debt payments. Maybe, if people can stretch, it will last two months.

It’s helpful, but far from enough if employers remain closed for two months or more.

And loans to small businesses? Will small businesses willingly take on more debt when they can’t be sure when their income will return, or if the business will survive?

Any loans to large corporations is a huge mistake. The big four US airlines – Delta, United, American, and Southwest – whose stocks are getting crushed because they will run out of cash in a few months, would be the primary recipients of that $50 billion bailout. But together, they incinerated $43.7 billion in cash on share buybacks since 2012. Now they are looking to get that back from the taxpayers. Those buybacks enriched the very shareholders that Trump now wants to bail out.

Perhaps Trump said it best, although it was a while ago: “We’re seeing a stock market like no one has ever seen before.”

Trump spent the first three years of his presidency trying to erase Obama’s legacy.  Now, The Great Virus Crash in Trump’s last year will erase his.

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We’re In Uncharted Territory

The Daily Escape:

Sunset, Factory Butte, UT – photo by goat_chop56

Blog reader David K. emailed:

“Now, what do we common folk do?  Start our “victory gardens” and shelter in place?  Volunteer to help our local farmers raise food? Hoard?  Wish I had a great idea, because I agree that our leaders don’t have a clue how to respond.”

That gave Wrongo pause. What do those of us who aren’t part of the “smart money” crowd supposed to do, particularly if what we’re facing is a worldwide depression? John Pavlovitz frames the existential issues quite clearly:

What happens if the stores run out of essentials for good?
What if you run out of money to stockpile them?
What if your neighbors stop sharing with you?
What if the government won’t help you?
What might you do then?

Politicians say we’re at war, but as Kunstler says: “At least in wartime, the bars stay open. That’s how you know this is a different thing altogether from whatever else you’ve seen in your lifetime.”

We’re attacked by a novel virus that’s created a completely novel social and economic situation. By definition, we aren’t prepared for an abrupt crash of both our social fabric, and our economic well-being.

Our politicians have no answers, despite most of them having been around for the 2007-2008 Great Recession. The Fed hasn’t done us any favors since then, either.

Last Saturday, Wrongo said that we’re crossing a threshold between what we know and an unseen future. Our traditional systems are no longer capable of keeping society and the economy on an even keel. Nobody really knows how deep and how harsh this will get, but the situation presents two questions:

  • How much disorder will we have to endure?
  • What does the world look like when this thing is over?

All this is happening in an election year, when the entire government and the political parties’ power structures are vulnerable, and could change. We are facing a new reality, for which no one has any answers.

Politics being what it is, the White House and the Congress are trying to work together to come up with solutions. On Monday, Trump gave another press conference on COVID-19. During his talk, the stock market dropped nearly 3,000 points. It was the market’s worst day since Black Monday in 1987.

The smart money was behind Trump in order to get its corporate tax cuts, but now, they’ve voted with their money. And Trump’s starting to look a little bit like Herbert Hoover.

Sen. Mitt Romney (R-UT) floated Democrat Andrew Yang’s idea of giving every American $1,000. He was joined in principle by Sen. Tom Cotton (R-AK). We’ll see if this is just more Republican grandstanding, or if they actually back a real plan of support for working people.

With Trump, you can expect to see bailouts for several industries, including banks, airlines, casinos and cruise lines. Imagine: Casinos are asking for help from the guy who only knows how to bankrupt casinos.

Reuters reports that the US airline industry said that it needs $50 billion in grants and loans to survive the dramatic falloff in travel demand from the COVID-19 outbreak. This is just more socialism for America’s corporations.

Two thoughts: First, $50 billion is higher than the book value of all the airlines combined. Why should they have any of our money? Either Republicans are for free market capitalism, or they should just shut up. Most of these airlines have implemented stock buyback programs when they should have been building contingency funds instead.

Second, this $50 billion should be added to whatever Congress spends on small businesses that are forced to close due to quarantine, or on parents forced to stay home to take care of kids who aren’t going to school anymore. They’re the ones who are really hurting.

We’ve lived through a time of unprecedented affluence. We’ve told ourselves we deserved it all, that we were entitled to all that our country has provided.

But that’s most likely over, and it might not return in Wrongo’s lifetime.

We have to think about what must change if we are to have a functioning society and economy in the decades to come.

The list of all the things that we need to change is far too long to enumerate here. At a minimum, we need to reform capitalism, make health insurance universal and strengthen worker’s rights.

We have to do a better job of sharing the wealth. It we don’t do that voluntarily, our children’s children’s generation will come and fight us for what we have.

To protect our families and their future, we need to become even more active politically in order to make these and other changes happen.

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Biden’s Win and Trump’s Economic Stimulus

The Daily Escape:

This week’s Supermoon over Three Fingers, WA – March 2020 photo by Alpackie

Today we’ll talk superficially about two topics. First, a quick take on Tuesday’s Democratic primary, and second, about whatever it is Trump is cooking up with Republicans as an “economic stimulus” in this time of Coronavirus and stock market volatility.

Here’s Jameson Quinn with a pithy summary of the primary:

“Right now, the best-case scenario is that Joe Biden will be the next president of the USA; the worst-case is that Trump is the last one. That is to say, we will have a choice between a guy whose primary campaigns twice flamed out from self-inflicted errors and who, the day he takes office, will be the oldest president the country has ever had; and a narcissistic, mobbed-up reality television star whose platform is focused on his core base of racists, trolls, and racist trolls.”

But how do you really feel?

That said, Wrongo was always for Elizabeth Warren, but now, that door has closed. Wrongo like many others, overestimated the importance of competency and policy. Most people don’t read policy papers, and they knew that Biden had been Obama’s VP. That was enough to get them to vote for Biden.

People make their voting decisions based on things like personality, perceived connection to their tribe, perceived electability and an “X” factor, vague trust in a candidate’s judgment. Would Biden be a good president? Who really knows?

Moving on to Trump’s economic stimulus: It isn’t surprising that Trump promises some more corporate socialism and the stock market likes it. And it isn’t surprising that no one in the media notices that the Party of Obama Derangement Syndrome had zero concerns about debt/deficits once Orange became the new black.

But, rather than proposing tax cuts, good policy starts with identifying the problems:

  1. Sick people: They require costly medical care. Many can’t afford it, even if it’s available, and even if they have insurance.
  2. Unemployment: Unemployment will rise. Sick people without sick leave will lose their jobs. Businesses will have less revenue.
  3. Goods shortages: Much of our goods come from China, including medical supplies and drugs. Trade has already been disrupted, and it will get worse. Italy finds it needs thousands of ventilators, and China is supplying them.
  4. Childcare: Schools and daycare centers are closing, and working parents are in a jam. Worse, parents will be hospitalized with no care arranged for their kids.

Tax cuts won’t address these problems. Most sick people don’t have much income, so tax cuts won’t matter to them. Unemployed people won’t have income either. The idea that the government can wall off the economic impacts of a virus-caused recession is correct. Once the economic slowdown spreads, the right kinds of government programs could soften the blow.

Here’s Wrongo’s prescription for Trump and Congress:

  • No bailouts for any industry
  • Targeted financial help for hospitals and the health care sector
  • General financial relief paid directly to workers and families

America’s businesses and capitalists had a fantastic decade. Let them and their rich executives weather this economic downturn on their own.

Trump’s people floated the idea of a push back of the April 15 Tax Filing Deadline. This does nothing for people, and shows just how little the administration is prepared to do.

Trump’s suggestion of a payroll tax cut is also misplaced. It’s been tried in the past, including by Obama. But tax cuts are less effective than simply providing lump-sum payments to families below a certain income threshold.

Also, payroll taxes are the primary source of funding for Social Security and Medicare. So this opens the door to another GOP stealth attack on Social Security. Trump has already said he plans to cut Social Security if reelected.

Jason Furman, Obama’s head of the Council of Economic Advisers, proposed an immediate, one-time payment of $1,000 to every adult, plus $500 for every child. Such payments would help cover rent, food and other costs, without a large administrative burden of trying to determine who got sick, or who lost work due to the Coronavirus.

Furman’s proposal would add up to $350 billion. The right wing will say no financial stimuli for Joe Sixpack. Those things must be paid for.

But Trump thought it was fine to dig a $ trillion hole in the budget for an unnecessary tax cut during good economic times.

What we need now is urgent. It requires smart, humane, and energetic action.

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