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The Wrongologist

Geopolitics, Power and Political Economy

Saturday Soother – Even More Pandemic Edition, April 4, 2020

The Daily Escape:

Spring in Town – Grant Wood, 1941

Welcome to Saturday, fellow disease vectors! Here’s a quote often mis-attributed to Winston Churchill: “If you’re going through Hell, just keep going”. Those are words to live by in pandemic America.

You remember Joe Biden, right?

His campaign was premised on Trump’s complete unsuitability for the presidency, and on Biden’s particular experience and fitness for it. Biden wasn’t running on the issues, he was hammering on Trump. Before the pandemic, according to Joe Biden, Trump was:

“A threat to this nation unlike any I had ever seen in my lifetime.”

But lately, Biden could be a picture on a milk carton. He’s disappeared. Rather than holding a news conference in public every day, demanding to know why the administration isn’t providing enough tests and PPE to the states, Biden’s trying to organize a phone call with Trump. To share lessons learned from Obama-era pandemic responses. That will certainly change everything.

Does Biden have a strategy to win in November? The ABC/WaPo poll found that only 24% of Biden’s supporters were ‘very enthusiastic‘ about him, compared with 53% of Trump’s. While ABC News reminded us that in 2016, “Hillary Clinton’s ‘very enthusiastic’ score was 32% in September.”

These numbers are from the poll that has Biden beating Trump by only 2% points. Now, this poll could be an outlier, since the Real Clear Politics Polling Average has Biden at 50.6% to Trump at 44%.

Regardless, Biden needs to get off his ass, get out in public, and act like the leader of the opposition.

And speaking of leadership (again), Raúl Ilargi Meijer has a great column about leadership in the pandemic era. He differentiates between the visionary giants like Gandhi and Martin Luther King, Jr.  and our current crop who he calls “Little Managers”:

“They all failed to a horrific extent at their #1 task when it comes to Disasters, Pandemics, whatever their respective governments file these events under: Prevention. But now we’re in a whole new world. Now these failed leaders move into a situation they actually MAY be able to handle. That is, the -crisis- management that inevitably follows AFTER the failure at their #1 task of Prevention.”

Ilargi says that they might be able to succeed at crisis management because they were trained to be little managers. He describes them: (emphasis by Wrongo)

“Core characteristic: these people don’t act, they re-act. Prevention is a job they’re absolutely not qualified for… Trump, Macron, BoJo, Merkel, Rutte, Xi, Abe, Conte, you name them, they’re all little managers…they have no ideas or visions, at least not original ones. People with original ideas don’t become politicians…”

Worse, politics isn’t policy. More:

“For now, the only thing to do is hope the little managers are better at step 2, Crisis Management, than they were at step 1, Prevention. Because there are no ready alternatives. When they say stay home, that’s the best thing to do right now.”

And finally:

“Can we blame our own respective…little managers? To an extent, sure. They didn’t do what they promised to when they swore their respective oaths. But maybe just maybe we should blame ourselves more, for picking little managers to lead our countries in the first place. We should have known that they were never going to be more than 2nd rate “leaders” who were never going to deliver more than 2nd rate societies.“

Hard to improve on that.

We’re all going through hell with no choice but to keep going. So, let’s take a breath, and try to spend our self-isolating time concentrating on something other than COVID-19. Here are “Two English Idylls” by the little-known George Butterworth, who was part of the English pastoral idiom.

These are Butterworth’s earliest surviving orchestral pieces, with No. 1 dating from 1910-1911, while No. 2 is from 1911. Butterworth and Ralph Vaughan Williams were close friends, and you may hear similarities in their music. Butterworth was killed in 1916 in WWI during the Battle of the Somme, he was 31.

Here it’s performed by the Academy of St. Martin-in-the-Fields, under Sir Neville Marriner, in 1975. The accompanying photography of the English countryside is transporting and wonderful, so Wrongo urges you to take a few minutes to watch:

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

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Monday Wake Up Call – Leadership Edition, March 30, 2020

The Daily Escape:

Last light, Tombstone Territory Park, Yukon, AK – fall 2019 photo by tmsvdw

A few days ago, Wrongo heard someone say that we should be careful what we wished for from Trump. He was talking about Trump’s lack of leadership regarding the pandemic. His thought was that the last thing people should want was Trump in full command, and attempting a vigorous response. We’re already failing, and that wouldn’t make it better.

OTOH, it’s been terrible to learn how ill-prepared we are, and how passive-aggressive the administration has been about doing more. It’s past time to accept the excuse that these people are well-intended but awful managers. Take this bit of news from the WaPo:

“On Feb. 5, with fewer than a dozen confirmed novel coronavirus cases in the United States but tens of thousands around the globe, a shouting match broke out in the White House Situation Room between Health and Human Services Secretary Alex Azar and an Office of Management and Budget official….Azar had asked OMB that morning for $2 billion to buy respirator masks and other supplies for a depleted federal stockpile of emergency medical equipment…”

Several weeks later, the request was cut to $500 million. Now, there’s $16 billion in the stimulus bill for the strategic stockpile, but that’s at least six weeks too late. The government has been overwhelmed by urgent requests for masks, respirators, gloves and gowns since the first US case of Covid-19 was confirmed. But on February 7th, Secretary of State Pompeo announced that we were sending:

“…nearly 17.8 tons of donated medical supplies to the Chinese people, including masks, gowns, gauze, respirators, and other vital materials.”

Yes, this was after there were already 12 confirmed cases in the US, and after the HHS request for $2 billion to buy the same things was denied.

Then there’s Trump’s strategy, “better be nice to me if you want any medical gear”. More from the WaPo:

“Anecdotally, there are wide differences….Democratic-leaning Massachusetts, which has had a serious outbreak in Boston, has received 17% of the protective gear it requested….Maine requested a half-million N95 specialized protective masks and received 25,558 — about 5% of what it sought. The shipment delivered to Colorado — 49,000 N95 masks, 115,000 surgical masks and other supplies — would be “enough for only one full day of statewide operations…”

But, when Trump’s guy is in charge, as in Florida, it’s a different story: (emphasis by Wrongo)

“Florida has been an exception in its dealings with the stockpile: The state submitted a request on March 11 for 430,000 surgical masks, 180,000 N95 respirators, 82,000 face shields and 238,000 gloves, among other supplies — and received a shipment with everything three days later…It received an identical shipment on March 23, according to the division, and is awaiting a third.”

So, three times what they asked for, while California, with Trump nemesis Democratic Governor Newsom in charge, actually got worse than nothing. KRON-TV in San Diego reports that Los Angeles received 170 broken ventilators from the national stockpile. Surely, a simple clerical error.

California also asked for 20 million N95 respirators, and has received 358,381.

Trump is actually doing what he’s been saying: “I am sending aid to states that like me, and withholding aid from states that don’t like me.” That’s Trump’s re-election strategy: Support the states he needs to win for an Electoral College victory.

Reward your friends, punish your enemies. Is that the kind of leadership America needs?

You know leadership when you see it. Sadly, even the UK’s Prime Minister Bozo Boris Johnson shows more leadership than America’s Bozo. After Johnson’s terrible start fighting the Coronavirus, one that rivaled Trump’s, things have turned around. There is consistent messaging: The government has adopted the slogan “Save lives”, “Protect the NHS” [the national health system], and “Stay home”. Simple and clear, something the entire country can rally around.

In the US? No message is simple, or clear. Most messages are conflicting or simply unworkable, like Trump’s suggestion of issuing an executive order quarantining the states of NY, NJ and CT, an unconstitutional and unenforceable idea. How about THAT for leadership.

Trump’s plan for re-election is: “If you aren’t dead, I saved you. Show some appreciation. I take no responsibility for those whose governors failed to save you“. Favoring those states he may need in 2020 is outrageous and criminal.

Two audio-visual aids today for your Monday Wake Up. First, a staggering animated chart showing the growth in Coronavirus cases world-wide during March, with a particular focus on the US:

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

Second, a hilarious YouTube video done to Queen’s “Bohemian Rhapsody”. Naturally, it’s called “Coronavirus Rhapsody“:

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

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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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Sacrificing Resiliency For Efficiency

The Daily Escape:

Convict Lake, Eastern Sierras, CA – photo by wild_NDN. It got its name after a group of escaped convicts ambushed the posse at the lake in 1871.

There will be a few winners in the race to source products for the Coronavirus fight. One winner is Puritan Medical Products Co. of Guilford, ME. If you’ve been tested for Covid-19, it’s quite likely that the swab used to collect a sample from inside your nose was made by Puritan.

Puritan is one of two companies that produce the world’s supply of the swabs used for coronavirus testing. (The other, Copan Diagnostics Inc., is in Italy). From Bloomberg:

“If swabs are necessary for testing, and if testing is crucial to slowing the virus’s spread, then it wouldn’t be an overstatement to say that the world’s future depends, at least in part, on Puritan.”

Unless the method for conducting the COVID-19 tests changes, Puritan’s ability to make more swabs will remain the long pole in the tent for figuring out which Americans have the virus. Puritan sells 65 different kinds of swabs. It has more than $45 million yearly in sales revenue.

On March 12, Puritan started getting calls from the US government. Bloomberg quotes Timothy Templet, executive vice president:

“We are ramping up to produce and wrap a million swabs a week that we need to put into the supply chain across the US…”

Please think about that. The Trump administration first contacted the swabs guy on March 12th, two and a half months after we should have known we needed as many as we could get, assuming America was interested in testing for the Coronavirus.

Early tests used two swabs—one for the nose, and another for the back of the throat, but the swab shortage forced changes to CDC guidelines, and now, only one is required. Puritan has two swabs patented for this purpose, and they’re making and shipping both, but scaling up production isn’t simple. Workers are in short supply, with more aging out of the workforce than entering in rural Maine. More from Templet:

“The whole labor shortage has created difficulties to have enough machines and build equipment…I could use 60 people tomorrow.”

Second, let’s talk the shortage of hospital safety gear, including disposable face masks, eye protection, gloves and gowns. Farhad Manjoo had an Op-Ed in Thursday’s NYT, “How the World’s Richest Country Ran Out of a 75-Cent Face Mask”, that details another sourcing problem:

“The answer to why we’re running out of protective gear involves a very American set of capitalist pathologies — the rise and inevitable lure of low-cost overseas manufacturing, and a strategic failure, at the national level and in the health care industry, to consider seriously the cascading vulnerabilities that flowed from the incentives to reduce costs.”

Twenty years ago, most hospital protective gear was made domestically. But like the apparel and consumer products business, face mask manufacturing has since shifted largely overseas. Today, China produces 80 % of masks worldwide. More from Manjoo:

“In January, the brittle supply chain began to crack under pressure. To deal with its own outbreak, China began to restrict exports of protective equipment. Then other countries did as well — Taiwan, Germany, France and India took steps to stop exports of medical equipment. That left American hospitals to seek more and more masks from fewer and fewer producers.”

In 2006, Congress funded adding hospital protective gear to a national strategic stockpile. At one point, it contained 52 million surgical face masks and 104 million N95 respirator masks. But in 2009, about 100 million masks in the stockpile were deployed to fight the H1N1 flu pandemic, and the government never bothered to replace them. Today, we have about 40 million masks in the stockpile — around 1% of the projected need for the Coronavirus fight.

Fighting the coronavirus is forecasted to require 3.5 billion face masks, according to DHHS. Mask producers say it will take at least few months to significantly expand production. Here’s a chart of the shortfall:

3M says that they are ramping up towards 100 million masks/month.

But, until that happens, the forecast is that we’re going to be short 170 million masks per month. Most of that must be sourced from China at a time when there is huge global demand, and Trump is fighting with the Chinese.

The real issue is that our system is built to optimize efficiency, not resiliency. But we’ve just learned the hard way that without resiliency, we could lose many more Americans.

This is where our priorities are misplaced. We have plenty of redundancy built into our military hardware, and our bloated defense budget assures it will stay that way. But pandemics are also a significant (and growing) threat to our national security.

How about rebuilding the “strategic reserve” of protective gear with some defense dollars? To add 300 million masks at $0.75 each would cost $225 million.

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Stimulus Bill Blocked By Rogue GOP Senators

The Daily Escape:

Late winter, NH – February 2020 photo by Betsy Zimmerli

Just when you think that the two Parties and the White House have found agreement on a massive stimulus bill, a few rogue Republicans decide that there’s too much welfare in it for them. From NBC News:

“A handful of Republican senators on Wednesday threatened to delay the $2 trillion coronavirus spending bill over a proposed increase to unemployment insurance.

Sens. Tim Scott, (R-SC), Lindsey Graham, (R-SC), and Ben Sasse, (R-NE), said that the bill “could provide a strong incentive for employees to be laid off instead of going to work” because some people could theoretically make more by being unemployed. Senator Rick Scott (r-FL) jumped onto the obstructionist bandwagon as well.

More from the Senators’ statement:

“If the federal government accidentally incentivizes layoffs, we risk life-threatening shortages in sectors where doctors, nurses, and pharmacists are trying to care for the sick, and where growers and grocers, truckers and cooks are trying to get food to families’ tables.”

The fight is over an additional $600 per week payment to each recipient on top of their unemployment insurance payment. The proposed benefit also extends to workers who typically would not qualify, such as gig economy workers, furloughed employees, and freelancers.

Imagine! These Senators are so out of touch, they think you can receive unemployment payments if you quit your job.

This is hypocrisy in action: These Republicans obstructionists pretend to be suddenly concerned about either deficit spending, or about government fraud and abuse after they blew a trillion dollar hole in the our last budget to give unneeded money to their wealthy benefactors.

The bill was supposed to be voted on late yesterday, but the Senators who are objecting could hold up the bill by forcing votes on amendments. Sen. Chris Murphy, (D-CT), tweeted:

“Let’s not over-complicate this…several Republican Senators are holding up the bipartisan Coronavirus emergency bill because they think the bill is too good for laid off Americans. “

From Charlie Pierce:

“Right on cue, of course…Bernie Sanders threatened to block the bill unless the stooges dropped their opposition. Which, of course, is exactly what every Republican everywhere would like. The stooges are running a bluff. They don’t want to be the people who block this. They just want to talk about blocking it. If Sanders does them the incredible favor of blocking it himself, thereby pulling Mitch McConnell out of the ditch into which the Democratic minority has rolled him, they’ll all get re-elected.”

So the question is what is Majority Leader McConnell prepared to give up to pass the bill? And are Chuck and Nancy prepared to give up anything in order to move the bill on to the House?

It seems likely that McConnell wants to meet their demands with no real Democratic pushback. Is that likely to happen?

So, a few Republican supporters of our capitalist super heroes want to reduce the crumbs provided to ordinary workers. They have a small point about people not “earning” more from the government than they did on the job. The problem is that each state has its own unique unemployment insurance system, and it would be a nightmare to adjust each payment for each worker just to make Lindsay Graham feel good.

That’s the trouble with grifters. They simply can’t understand that there are people who aren’t always grifting.

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It’s the Economy Stupid. Or Is It?

The Daily Escape:

On Tuesday, Trump was in the Rose Garden for a “virtual town hall” on Fox News. The Boston Globe reported that he wants the country “open and raring to go” by Easter, which is less than three weeks away. “I think it’s possible, why not?” he said with a shrug.

Watching Trump do a press conference is like watching the kid who didn’t read the book give his book report.

The top health professionals have called ending social distancing by Easter far too quick. But, Trump compared the potential for Coronavirus fatalities to our annual flu casualties and, to automobile accidents. That led Charlie Pierce to say:

“I can speak with some authority on this. On December 9, I got hit by a car. It has been three months now. Nobody I came into contact with in the aftermath has been hit by a car.”

It’s important to remember that Trump is saying this while we still have no idea how many Americans have, or have had, the virus. It seems safe to say the number is vastly higher than the number of people who have tested positive (nearly 50,000). Here’s a terrifying tweet:

(James Gallagher is the BBC’s Health and science correspondent)

Trump’s “let’s get America back to work” plea comes at a time when we have no idea about the extent of the virus’s impact, or how large the tsunami of cases will be. Trump is sounding a bit like General Buck Turgidson in 1964’s “Dr. Strangelove“:

“I’m not saying we wouldn’t get our hair mussed. But I do say no more than ten to twenty million killed, tops.”

There are operational issues involved in conducting a safe economic restart while the virus remains rampant in the country: It would require testing all who enter the workplace, every time they come to work. Where do those test kits come from when we can’t get enough for America’s hospitals? Who will read the tests and get the data back to the individual and the business? Can social distancing really be practiced at work? In offices?

Obviously there are conflicting opinions about how long to use severe Coronavirus mitigation and suppression measures when the economic consequences of that mitigation could be disastrous. The medical experts can tell us what the consequences of various courses of action are most likely to be in terms of illness and fatalities.

But the willingness to endure the likely costs of a particular course of action is a political, and possibly an ethical question. Last week, Wrongo asked:

“Is restoring our economy, and putting Americans back to work worth a million lives lost? Is it worth 300,000?”

Trump is right both to wrestle with this question, and to be concerned that Coronavirus could end his presidency. Here’s a chart that shows how long prior stock market crashes took to return to the pre-crash level:

This compares three prior crashes and the time it took to recover. Only the 1987 crash was a sharp “V” recovery, and that recovery took nearly two years. Both of the others took four years.

This most likely means Trump can’t run as a peace and prosperity president. He’ll simply be running as another Republican who ran up the debt with the crucial difference that Americans died on the home front on his watch, after trying to go back to work prematurely.

A few words about the attempted bailout. As Wrongo writes this, it’s likely that there may be a “deal” sometime late on Tuesday . The stock market has already closed up more than 2,000 points, or 11% on the hope of a deal.

The bailout deal should absolutely be as big as possible, but Mitch, Trump and the GOP have it wrong. We should be pointing our water hoses where the immediate fire is: Low – moderate income households and small businesses that have a week or two of cash reserves, and little access to credit markets.

While this is an emergency, it’s no excuse for another GOP round of opportunistic, potentially wasteful spending with little oversight. We have more important things to do than setting up a $500 billion Republican slush fund in an election year.

Trump will no doubt make an announcement that “America is again open for business”. But, that’s not really within his power. The economy is not usually like a faucet you can turn off and on.

It also means that Trump’s replacement will have a major job starting in 2021 trying to restore the stock market and the employment level to where they were pre-Coronavirus.

It is the highest duty of the US President to keep the country safe, and protect its people. Trump’s downplaying of what his science and security advisers have told him is doing exactly the opposite.

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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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Saturday Soother – March 21, 2020

The Daily Escape:

David Hockney (a new painting) — here’s a quote from Hockney: “Do remember they can’t cancel the spring 2020”.

Blog reader Fred VK emails:

“How do you know if you could be in a third world country? When you go see the Doctor, she greets you wearing a face mask that says ‘made by Mr. Coffee’”.

It is difficult for people to talk about anything else. COVID-19 is on the march, and America isn’t prepared for what’s coming. Worse, we’re unsure if this is a one-two month problem, or something that will last a year or longer. Most countries think that the virus will grow exponentially, and will kill many of their citizens. This leads nearly all governments to order many businesses to close. No one is traveling, except to their local stores. In Connecticut, no one is able to get a haircut for the duration.

But since Wall Street is still open, anyone who owns stocks has taken a huge haircut this week. Friday’s drop leaves Trump looking at a Dow average that’s 3% below what it was when he took office. He’s presided over the worst week in the stock market since 2008.

This market crash is due to investors trying to understand the extent of the damage to the US economy that’s being done by how we’re fighting COVID-19.

In order to save our society over the longer run, we’re actively putting ourselves into a very deep recession. That may mean that people will be out of work for a short, or a long time. If it’s a long fight, that may lead to a very dark economic time for all Americans.

A fundamental question is:

“What unpleasant decisions would our federal and state governments be willing to take to get us out of a deep recession, if the virus is still around a few months from now, and still killing a lot of people?”

Is restoring our economy, and putting Americans back to work worth a million lives lost? Is it worth 300,000?

Remember that before 9/11, no one thought we would surrender our freedoms for 3,000 deaths, but we did. No one thought we’d fight a nearly 20 year war that killed 6,789 and wounded 52,353 Americans, but we did.

Those wars have cost the American taxpayers $5.9 trillion since they began in 2001. We’ll easily spend $2 trillion between here and September to prop up the economy while fighting the Cornonavirus.

What kind of sacrifices will we be willing to make if the Coronavirus is still killing Americans on Election Day 2020? Which Party will be saying we should put people back to work?

It’s likely to be both Parties.

Dark, right? There are encouraging signs. Small acts of kindness in supermarkets, artists performing for free on the internet, people trying very hard to avoid making the elderly sick. These are all wonderful things, and we need much, much more of them.

Some say that it takes a common enemy like the Coronavirus to unite us. If we become united in the fight, and stay united once we’re victorious, that would be also be a wonderful thing.

So, let’s take a beat, and think hopeful thoughts about the arrival of spring. Here in northwest Connecticut, the peepers began singing a week ago, and the daffodils are blooming. The first dandelions are peeping through the grass, but we’re expecting snow on Monday. So winter isn’t over just yet.

Let’s try to soothe ourselves by listening to two pieces of spring music. First, “Spring Morning” by Frederick Delius, written around 1888. This is always a Wrongo favorite in spring:

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

Second, listen to Vivaldi’s Four Seasons: “Spring” (La Primavera) in a complete version, performed live in February 2020 by Alana Youssefian and the Voices of Music. This isn’t a “Vivaldi as usual” performance. Wrongo had never heard of Youssefian, but listening to her and the Voices of Music’s original instruments is a treat.

Subtitles in the video are words by Antonio Vivaldi!

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

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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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Can the Economy Endure a Two-Month Shutdown?

The Daily Escape:

Cannon Beach, OR – 2020 photo by franks28

The short answer to the question above is no, not without outright financial support for individuals by the government. That support if it comes, is likely to be too little, too late.

But the Fed tried something. On Sunday, it announced that it slashed its federal funds rate by a full percentage point, to a target range between 0% and 0.25%. In addition, they launched a new Quantitative Easing program for another $700 billion.

Investors threw up all over the Fed’s Sunday moves, because we’re looking at a “demand shock”, the state-enforced loss of consumer sales,something that can’t be stimulated away. The S&P futures immediately plunged 5% to hit its downside limit. That made for an interesting Monday, with the Dow ending down nearly 3,000 points, or another 13%. In the past month, the market has lost nearly a third of its value.

All these efforts to provide stability actually showed the market that our leaders have no idea what they’re doing. It’s the exact opposite of inspiring confidence.

Did the Fed panic? Fed Chair Jay Powell lowered rates right after Trump said he had the authority to remove Powell. That makes it seem, true or not, like the Fed is now in Trump’s pocket. No confidence-builder there.

Looking through a wider lens, Mr. Market has decided that the Fed is pushing on a string. Rates were already so low that there was little gain from the interest rate reduction, and little else that the Fed could do. Mostly, the Fed signaled that it is very frightened about the prospect of a global recession.

In addition, the market understood that the stimulus bill working its way through the House and Senate is inadequate to the task ahead. For one thing, Pelosi’s bill promises paid sick leave, but as written it only covers about 20% of all workers.

Again through that wide-angle lens, the growing COVID-19 business lockdown strategy will have an economic impact similar to a natural disaster, like a hurricane, but played out over a longer time frame. FEMA has found that 40% of businesses close in a natural disaster. And of the businesses that reopen, only 29% survive the after the following two years.

Since our economy is 70% services, many industries facing the lockdown, like tourism, casinos, restaurants, and hotels, will soon be in meltdown mode. The Fed has no answer to a massive drop in consumer spending, only the president and Congress can solve that.

We know that 40% of Americans don’t have enough cash on hand or room on a credit card to handle a $400 emergency. Many service industry workers will be hit with either cutbacks in their hours, or outright job losses. Without financial assistance, we’ll quickly see defaults on rent or mortgages, and delinquencies on credit cards and car payments.

So the Fed creates some more money. But just like in 2008, rather than distributing it to every citizen, they’re giving it to the banks. Somehow, all that money is going to people who already have plenty, while those who need it get nada.

Why is the answer always to give more to the supposed “job creators” when we get basically nothing in return? Why not just send a check to the actual people who need it?

Finally, what will this interest rate cut do for the economy?

  • Are restaurants going to start hiring workers that can’t actually come to work just because loans are cheap?
  • Are workers not collecting a paycheck going to go out and buy a new car/TV/house because interest rates dropped a bit?
  • Are banks going to lend cheap money to airlines, restaurants, and cruise lines when we have no idea how long this will last?

Every company on the planet has simultaneously realized that it is in an existential cash-flow crisis due to COVID-19. The big and smart companies already have drawn down their unused loan facilities to ride through the slowdown.

The slower and the smaller firms are staring at an economic nuclear-winter scenario where their revenue plunges for months, and they can’t pay their staff, or make their fixed payments.

The speed and comprehensiveness of the lockdowns, and their drastic impact make what’s going to happen very clear. Our leaders are in a fog of denial. They don’t see that much of what was the traditional mode of operating our system is crumbling.

During the 2008 financial crisis, we learned that events can move too quickly for anyone to intervene and limit the damage. Our business environment’s drive for highly efficient systems, from just-in-time inventory sourcing to reducing the number of hospital beds per capita, have created fragile systems that are now being stress-tested.

We may be learning, to our collective detriment, that all of these systems along with our leaders, have failed us.

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