What have you heard about the storm that tore through Iowa? From the WaPo:
“The scope and breadth of the disaster is still being calculated, but by some estimates, more than 10 million acres, or 43 percent, of the state’s soybean and corn crops have been damaged. A quarter of a million Iowans are still without power.…So far, the only elected leader calling for a presidential disaster declaration is Rep. Abby Finkenauer (D)….Gov. Kim Reynolds (R) and Republican Sens. Charles E. Grassley and Jodi Ernst have toured some disaster sites, focusing on crop damage, but have remained silent when it comes to demanding national help.”
It hasn’t gotten much coverage on the east coast, although there wasn’t a lot of coverage for Connecticut’s struggle with TS Isaias. The lack of media attention and a federal response are both troubling.
Wouldn’t it be a good idea for Biden-Harris to call for disaster aid, and arrange a visit this week?
On to cartoons. Trump takes personal control of mail-in voting:
No Post Office for you:
Mailbox bashing is usually done by young punks, not old thugs:
Essential weapon against Fascism:
Senate left town. You just have to hold on, because they have to rest:
Buying stamps at the post office, Siren, WI – July 1941 photo by John Vachon for the Farm Security Administration, via Shorpy.
The Senate has adjourned until after Labor Day, despite not coming to an agreement on the much-needed next Coronavirus stimulus package. From CNBC:
“Congress and the White House have spent the past few weeks debating what to include in the package, but have been unable to come to an agreement. One of the biggest sticking points: Jobless benefits. Democrats want a continuation of the enhanced unemployment payment of $600 per week, while Republicans say that amount is too high. Democrats are also pushing for more than $900 billion for state and municipal aid, and $60 billion in food assistance, far higher than what Republicans have proposed.”
This means any deal could be weeks away. Meanwhile, around 28 million Americans remain unemployed and many of the relief provisions from the first stimulus package have dried up.
And Postal Service funding is also broken and lying in the weeds by the side of the road.
McConnell offered a new COVID economic aid bill (the HEALS Act) 10 weeks after the House had approved its version, called the HEROES Act. Then, Mitch dismissed the Senate for a month rather than allow Senators to negotiate with the House Dems about adding USPS funding to the HEALS Act, which included no funding for the USPS. The House’s HEROES Act passed in mid-May contains $25 billion for USPS.
There is no accountability for any of these birds except at the ballot box, and the GOP is making it very hard to remove them by voting. Only a very few Republicans, notably House Minority Leader Kevin McCarthy, (R-CA) and Sen. Roy Blunt, (R-MO) have broken with Trump on the need for funding the Postal Service.
We mentioned mail sorting machines on Friday. We now know that in May, the USPS planned to remove a total of 969 sorting machines (about 20%) out of the 4,926 it had in operation as of February. Most (746) of the sorting machines scheduled for removal were delivery bar code sorters (DBCS), the type that sort vote-by-mail ballots and other similarly sized pieces. You can view the USPS equipment removal presentation here.
WaPo reported that the USPS sent letters in July to 46 states and Washington DC warning that they may be unable to deliver mail-in election ballots by the deadlines set by the states for them to be counted. About 186 million voters are subject to the Postal Service’s heightened warning. The states that were not warned about potential issues were Oregon, Nevada, New Mexico and Rhode Island. The USPS letter was only released on Friday.
This is a huge and serious escalation in concerns that even if people follow all of their state’s election rules, the pace of Postal Service delivery may disqualify their votes.
There’s a big disconnect between the public and the government. They no longer really want to help you solve your problems. You can no longer rely on them to count your votes. You’re about to be kicked out of your apartment. You’ve got no money left in the bank, and after years of being told it’s your fault, you know nothing could be further from the truth.
Sorry, no coffee for you this week, we’re already too jacked up by the prospect of losing our democracy. On the other hand, we still need a break from the steady beat of the Trumpian drums, so it’s time for our Saturday Soother.
We lost four large trees on the fields of Wrong last week during the half hour that TS Isaias was with us. The outcome was that we were without power for five days, and it took about a week to cut up and move all of the downed wood.
This week, we left our daily 14+ hours of summer sunlight behind. Today we have 13 hours and 53 minutes, and it, like our politics, will just get worse.
Time to settle back at an appropriate physical distance, and listen to two love themes composed by Dominic Frontiere that originally appeared in the TV series “The Outer Limits”. They are performed here on George Winston’s album “Summer”, recorded in 1991:
Those who read the Wrongologist in email can view the video here.
“Health departments track the virus’s spread with a distinctly American patchwork: a reporting system in which some test results arrive via smooth data feeds but others come by phone, email, physical mail or fax, a technology retained because it complies with digital privacy standards for health information.”
The problems are compounded by human error:
“These reports often come in duplicate, go to the wrong health department, or are missing crucial information such as a patient’s phone number or address.”
Before the pandemic, nearly 90% of laboratory test results for diseases tracked by public health departments were transmitted digitally. But the need for substantially greater Coronavirus testing has brought many more players into the public health arena, including companies that usually run employment screening tests, and small clinics that usually test for diseases like the flu and strep throat.
This has increased the share of lab tests coming to public health departments via fax and phone.
The result is unreliable information. The Times quotes Janet Hamilton, executive director of the Council of State and Territorial Epidemiologists: (emphasis by Wrongo)
“Nationally, about 80% percent of coronavirus test results are missing demographic information, and half do not have addresses…”
Hard to trace an infected person without an address. America’s health system is a jumble of old and new technology that make it difficult to track what’s really going on with the COVID pandemic.
Also, the Trump administration’s guidelines on demographic data haven’t taken effect yet. In June, they required laboratories to report a patients’ age, race and ethnicity, so public health officials could better understand the demographics of the Coronavirus pandemic. But, those rules won’t take effect until August, and they only state that laboratories “should” provide patients’ addresses and phone numbers. They do not mandate it.
Dr. Frieden, former CDC director says:
“You’ve got hundreds of laboratories and thousands of tests. Nothing is interoperable because they haven’t been mandated to do that.”
Other countries have a unique number identifier for each patient, something that Congress refuses to provide in the US. Instead, data often come to public health authorities using only the information that laboratories need to track the record, not the details that public health officials need to help manage the disease.
Anyone who has healthcare knows that patients routinely fill out the same information on multiple forms in multiple offices. The need for doctors and testing services to use fax machines betrays the fundamental lack of modern technology in some health care settings.
And remember, it’s not for lack of money: There’s plenty of money in the US health care system.
The second item regarding COVID data is more troubling. The NYT reports that: (emphasis by Wrongo)
“The Trump administration has ordered hospitals to bypass the Centers for Disease Control and Prevention and, beginning on Wednesday, send all coronavirus patient information to a central database in Washington — a move that has alarmed public health experts who fear the data will be distorted for political gain.”
From now on, HHS, and not the CDC, will collect daily reports about the patients that each hospital is treating, how many beds and ventilators are available, and other information vital to tracking the pandemic.
This is seen as an inherently political move by outside public health experts. The NYT quotes Nicole Lurie, who served as assistant secretary for preparedness and response under former President Obama:
“Centralizing control of all data under the umbrella of an inherently political apparatus is dangerous and breeds distrust….It appears to cut off the ability of agencies like C.D.C. to do its basic job.”
This is more disturbing than finding out that the data are terrible. Alex Azar, who runs HHS, is a Trump crony and has clearly used his position to be helpful to Trump’s re-election campaign.
If there ever was any hope for a dispassionate, reasoned, and scientific FEDERAL response from Trump, it is certain that these two problems, one with the quality of the data, and the second with how it will be spun as it is reported, show we’re doomed.
How many health care workers will have to die? How many people living in states run by Trump’s personal bootlickers will get the treatment that they need?
(Blogging for the rest of the week will be light and variable, as Wrongo and Ms. Right embark on our first trip since COVID entered our lives)
Wrongo’s initial reaction to the smaller-than-expected crowd in Tulsa on Saturday was that quite a few Trump supporters actually had common sense, despite what they might have said to the press about COVID.
“Mary Jo Laupp, a 51-year-old from Fort Dodge, Iowa, said she had been watching black TikTok users express their frustration about Mr. Trump hosting his rally on Juneteenth. (The rally was later moved to June 20.) She “vented” her own anger in a late-night TikTok video on June 11 — and provided a call to action. ‘I recommend all of those of us that want to see this 19,000-seat auditorium barely filled or completely empty go reserve tickets now, and leave him standing there alone on the stage’….When she checked her phone the next morning…the video was starting to go viral. It has more than 700,000 likes, she added, and more than two million views.”
This will be spun many ways over the next few days, but a few days ago, the campaign claimed the equivalent of a quarter of Oklahoma’s population had requested a ticket. Today, they blamed invisible Antifa’s for both the cancellation of the planned overflow outdoor speech, and that the indoor venue was not even half full.
This shows how far the Trump campaign has to go in the next 132 days.
Today’s real topic is AG Barr’s firing of the US Attorney for the Southern District of New York (SDNY), Geoffrey Berman. First, Berman was asked to resign, and he refused to comply. Then Barr said that Trump had fired Berman, so Berman then agreed to leave.
Wrongo has no position on Berman’s worth as a federal prosecutor. He was the Assistant US Attorney for the SDNY while Rudy Giuliani was the US Attorney. He later became a partner at the law firm, Greenberg Traurig. Still later, Rudy Giuliani also joined Greenberg Traurig.
Berman’s dismissal seems to be either questionable judgment, or an effort to obstruct ongoing investigations. We’re way past the point of optics. Trump and Barr are in a scramble to do ANYTHING to get re-elected. Their hope is to keep the conspiracy going for four more years.
And their latest effort, to short-circuit the ongoing criminal investigations of Trump’s affiliates and associates, is only the most recent evidence. If Barr continues down this road, he will make John Mitchell, Nixon’s disgraced attorney general, who did time for his transgressions, look like a man of principle.
When Barr was up for Senate confirmation, he was the old Washington hand everyone respected and who, we were assured, had nothing but respect for the law. Now it’s clear that he’s someone who had a pedigree and the right connections, but no moral center.
Time to Wake up America! None of Trump’s people have a moral center. We have a few weeks remaining to register and turn out voters in such overwhelming numbers that these bastards are thrown out of office.
If you want to know where Trump is headed on civil disobedience in 2020, consider this about China’s Tiananmen Square demonstrations. Nicholas Kristof reminded NYTreaders what Trump had to say about it in 1989:
“When the students poured into Tiananmen Square, the Chinese government almost blew it, Trump told Playboy Magazine….Then they were vicious, they were horrible, but they put it down with strength. That shows you the power of strength.”
Overwhelming force is Trump’s plan, just like the Chinese. Here’s a list of the military, government police units and militia-like components of the US Government that are walking the streets in Washington DC:
That’s 14 discrete police and military groups patrolling DC. And it didn’t stop there. The Trump campaign just changed his MAGA hats from red to camouflage, and is calling supporters the “Trump Army“:
Yep, Trump wants an army to fight off the liberal mob.
The Daily Beast reported that Trump and Barr have come up with a possibly legal way to bring troops into America’s cities:
“The idea was to…rely on the FBI’s regional counterterrorism hubs to share information with local law enforcement about, in Barr’s own words, ‘extremists’.”
More from the Beast:
“That’s when Barr turned to an existing counterterrorism network—Joint Terrorism Task Forces (JTTFs)— led by the FBI that unite federal, state and local law enforcement to monitor and pursue suspected terrorists….The construction we are going to use is the JTTF. It’s a tried and true system. It worked for domestic homegrown terrorists. We’re going to apply that model….It already integrates your state and local people. It’s intelligence driven. We want to lean forward and charge… anyone who violates a federal law in connection with this rioting.
We need to have people in control of the streets so we can go out and work with law enforcement…identify these people in the crowd, pull them out and prosecute them…”
See any reason to be concerned?
According to multiple current and former Justice Department and law enforcement officials, Barr is misusing the Joint Terrorism Task Forces (JTTFs) in support of Trump’s insistence that antifascists are “terrorists” exploiting the nationwide protests. Using the JTTF against the protesters is a political ploy to make being anti-Trump look like terrorism.
Authoritarians world-wide call domestic demonstrators “terrorists”. Saddam did it in Iraq, so does al-Assad in Syria. Duterte does it in the Philippines, as does Erdogan in Turkey. Xi does it in China.
And now, it’s happening here.
On Wednesday, Trump again violated the First Amendment by authorizing federal police to block clergy’s access to St. John’s Episcopal Church (the one he used for his photo-op), effectively “prohibiting the free exercise” of religion.
That, from the holy defender of religious rights.
Monday wasn’t the worst day in American civilian-military relations. But the use of force to create a photo-op, including ordering military helicopters to fly low, scattering protesters with the rotor downwash, broke many established norms.
Trump followed that by deploying many different groups of uniformed “peace-keepers” to the streets of DC. So Monday became the worst day for American civilian-military relations since the military attacked the veterans march on Washington when Herbert Hoover was president.
If Trump insists on sending troops to states where governors don’t want them, will they go? On Monday, elements left their bases for operations in DC, which has a special status that Trump could legally exploit. That’s different from sending regular US forces into states without an invitation. That would cross a red line.
How will the public react? The US military is one of America’s most popular institutions. In part, because it is seen as non-partisan, whereas most other government institutions are viewed as partisan. If the US military enters American cities, public support of the armed forces will surely drop.
Trump’s rhetoric continues to support white supremacists and far-right militias, while encouraging violence by his followers.
His effort to label the demonstrators as outsiders is meant to justify an increasingly aggressive police/military response. In the past few days, we saw them attack regular people on the streets, along with the journalists reporting on what was happening.
Former high-ranking military officers are finally calling out Trump, but his authoritarian instincts combined with Barr’s right-leaning reflexes pose a clear and present danger to our democracy.
Let’s hope the republic is still here for us to defend by overwhelmingly voting him out on November 3d.
They’re already telegraphing how they might respond if they lose.
Fall sunset, Shenandoah NP, VA – photo by juliend73
Sorry, but this column is going to be a downer.
We’ve been talking for the past few days about how hard it is to get politicians to focus on fixing what’s wrong in America. Wrongo originally started down this path in 2009. His plan was to lay out the problems, and to suggest ways in which America might fix them.
But 11 years later, little of what has been suggested here has occurred. Explaining what’s wrong has made very little difference.
Our really big problems now seem to be locked in: Climate change will happen. We can’t (or won’t) deal with the burgeoning disinformation platforms that threaten civil society. It’s difficult to see what will change our growing income inequality. As always, politicians are itching for a fight with some country. Today, the villain is China. Globalization has won, our supply chains now hold us hostage, and our economic future is increasingly controlled by Asia.
America is fast becoming a failed state: Our president tells people to drink bleach. There are more than 100,000 dead in the pandemic, and a significant percentage of them probably were needless deaths.
We have the ability to deal with the crises,but we’re choosing not to. Trump and McConnell, along with Biden, Pelosi and Schumer, all have access to the same, or more likely better information than we do.
They are choosing to ignore that the country is going to hell. Instead, they use each individual crisis for their own political benefit, and for their patrons’ financial benefit. They choose to ignore the near-certainty of a second wave of infections in the fall of 2020, bringing with it the possibility of a second economic collapse, along with more deaths.
We no longer provide the basics for our citizens. We live in a nation where income, savings, happiness, trust in government, and social cohesion are all in free-fall.
This is a recipe for social collapse.
In America most infrastructure is decrepit, from airports, to schools, to roads, because there hasn’t been much public investment. That’s because Americans don’t want to pay higher taxes like the Europeans do. Politicians on both sides still believe the evidence-free ideology of neoliberalism: We’ll all be rich if we invest in nothing, and wait for Mr. Market to correctly allocate resources.
No one cares about anyone else. Nobody will support any group’s pursuit of any goal unless it is also their goal. American life is becoming purely individualistic, adversarial, and acquisitive.
We haven’t invested in the systems that provide healthcare, education, retirement, and childcare. As a result, the average American family now goes without many of these things, since they’re priced out unless they have high paying jobs.
We pay absurd prices for health care. Having a child? That’ll be $50K. An operation? It will cost about what you would pay for a starter home. If she didn’t have health insurance, Wrongo’s daughter’s medication would cost $10,250/month. These basics of life are affordable in the rest of the rich world, but in America, they cost more than the average person can pay.
The average American now dies with $62k in debt. Life has become a sequence of unrepayable loans. Student debt becomes credit card debt and a mortgage, which leads to medical debt. These forms of debt define life in America. The average American is now a poor person, in the sense that they barely make enough to pay for the basics of life. Today, 80% of Americans live paycheck to paycheck, struggle to pay their basic bills, and 63% can’t raise $500 for an emergency.
These are the statistics of a nation that is descending into poverty.
Can it be fixed? Sure, but who’s going to pay for it? If taxes can’t be raised, if deficits can’t grow, what will happen? Nothing.
Except that we will move closer to a collapse. Our leaders say it’s because there isn’t an alternative. They say that we don’t have the money to pay for the changes we want. 70% of Americans say they want decent healthcare, retirement, and education, but they never vote for it.
Not even when it is offered during the primaries.
And it’s never offered in the general election, because nobody will vote for higher taxes to fund a functioning society. The idea simply isn’t acceptable to either of our political parties.
Wrongo’s decade of writing about what’s wrong hasn’t changed anything. Change requires a commitment to taking political risks, and massive voter turnout.
Otherwise, same old, same old is the path to our society’s destruction.
When it comes to ending the lockdown, the theory is that once we’ve “flattened the curve” we can ease up on social isolation, mask-wearing and get back to work. The problem is that when we think about the downside of the curve, we think parabolas. This chart demonstrates that even with the “flattening”, we’ve been told to expect a sharp drop-off in cases:
“The dying won’t be over nearly as soon as it [a curve like that] suggests.”
O’Neil looked at the curves for Italy and Spain. Both had uncontrolled outbreaks and climbed the curve about two weeks ahead of the US. They also turned to lockdowns late, leading to overburdened hospitals. So, they offer a decent indication of what to expect in in America:
“Their curves…are not symmetric curves. They go up fast, flatten out and then descend slowly. How slowly? It’s still hard to tell, but the shape strongly suggests that the bad news won’t go away nearly as quickly as it arrived.”
Here’s Italy for example:
It’s too early in the virus’s growth in the US to know what the right side of our curve will look like, but the evidence from Europe suggests that the descent will be slow. More from O’Neil:
“New York Governor Andrew Cuomo has said ‘the worst is over’ and ‘we’ve reached the peak.’ He should have followed with “now comes the long wait.”
She’s saying that the far side of the curve is likely to be a long, slow slog. This is food for thought for politicians who must decide when to end the lockdown.
It should also be food for thought for all of those protesting the lockdowns. In addition to the shape of the curve, we still have almost no idea what the actual prevalence of the virus is in the general population.
Abbott Labs has developed a 5 minute serology test that it says has 100% sensitivity and 99.6% specificity (Sensitivity means the test detects the presence of antibodies triggered by the COVID-19 virus; specificity means it successfully avoids mistaking that virus for similar coronaviruses).
The test was used in the Boston suburb of Chelsea. It found that of 200 randomly sampled residents who were stopped on the street and asked to give some drops of blood, 64 had antibodies. That’s 32%. The study was conducted by physicians at Massachusetts General Hospital.
John Iafrate, a pathologist at Harvard and the study’s principal investigator, said:
“We don’t know at this point what percent of these antibody-positive individuals are still carrying virus, but a fair estimate is likely 30-50%.”
Soumya, a health reporter for the LA Times, tweeted: (emphasis by Wrongo)
“LA County just released the results of their antibody study. Tests found that 4.1% of the county’s population has antibodies to the coronavirus. That figure is 55 times higher than what is suggested by the official case count.”
This suggests that there are many more infected, but asymptomatic people than are in the official numbers.
So, we need to be more sensible about both the shape of the curve, and about how little we know about who has the disease, and who doesn’t.
We’re still flying almost totally blind, four months after the government found out this was coming.
World War II lasted six years. Americans from coast to coast planted victory gardens; turned bacon grease into bombs; recycled paper, metal, and rubber. Staples like sugar were rationed. Mothers went to work in defense plants. The war lasted six years, and half a million Americans died.
Fast forward: While some might say we’re not at war, it sure feels like we’re under attack. But our flag-waviest Americans today can’t even last six weeks, much less pull together.
Turns out, we have lost most of our social cohesion, the collective will to commit to a path, and work together to make the goal a reality.
In the past, we had a set of unwritten expectations that members of our society were expected to comply with, like voting, paying taxes, and displaying tolerance for others. Even these deminimus expectations are fraying today.
We’re being told that we’re on one team, or the other: Team working, or Team lockdown. Each is supposed to do the best it can to help control the virus, but people are becoming frustrated and angry.
If you need a visual representation of the reasons why, take a look at this chart from Visual Capitalist:
The chart graphs jobs by income and degree of risk of catching COVID-19. They used the following criteria to establish level of risk:
Contact With Others: How much does this job require the worker to be in contact with others in order to perform it?
Physical Proximity: To what extent does this job require the worker to perform tasks in close physical proximity to others?
Exposure to Disease and Infection: How often does this job require exposure to hazardous conditions?
Visual Capitalist then assigned a Risk Score between 0 and 100, with 100 representing the highest possible risk to each job. More from Visual Capitalist: (emphasis by Wrongo)
“Many individuals have been practicing social distancing by working from home in recent weeks. While this arrangement can be a great way to reduce one’s exposure to COVID-19, it’s a luxury that’s available to just 29% of Americans.
The situation for the remaining 71% is uncertain, to say the least. A significant portion of the population has lost their jobs due to business shutdowns and mandated lockdown orders. Others employed in “essential services” have continued working as usual, but may face a higher risk of potential exposure to the virus.”
Andrew Noymer, a public-health professor and an expert on the 1918 influenza pandemic, observed:
“Someone is at home wondering how he’s going to make rent and feed his family,” he said. “And someone else is wondering if they can binge-watch the first season of The Sopranos…”
So it’s understandable that at least 71% of America want to end the lockdown. They are business owners who stand to lose plenty, or unemployed workers who have nothing left to lose.
There’s a disconnect with the end the lockdown reasoning and the world in which we live. We live, work, play, and eat together. We buy from and sell to each other. We depend on the farmers, the truck drivers, the street repair people, and the bankers. More than ever, we depend on the medical people, the teachers, and the people who run all kinds of business, big and small. And they depend on all the people who work for them.
The virus has disrupted all of that.
Are the lockdown protesters ready to pitch in and take the high risk jobs above? Will they drive the buses? Wait on tables? Deliver the groceries? Clean hospital rooms? Work with people who may be infected in nursing homes?
Time to wake up, America! We need to reach back and try for more social cohesion, or we’re lost. To help us wake up, we turn to Bob Dylan. Let’s listen to his “Slow Train Coming”:
Today, it’s no longer a Slow Train. It’s high-balling down the track.
Big-time negotiators, false healers and woman haters
Masters of the bluff and masters of the proposition
But the enemy I see wears a cloak of decency
All nonbelievers and men stealers talking’ in the name of religion
And there’s a slow, slow train comin’ up around the bend
People starving and thirsting, grain elevators are bursting
Oh, you know it costs more to store the food than it do to give it
They say lose your inhibitions follow your own ambitions
They talk about a life of brotherly love show me someone who knows how to live it
There’s a slow, slow train comin’ up around the bend
Those who read the Wrongologist in email can view the video here.
We’ve already lost more Americans to the Coronavirus in the month of March than we lost during the 9-year long Iraq war.
Here are the latest national numbers (which will be out of date by the time you read them). From The COVID Tracking Project: (as of 4/3)
Number of daily cases: 271,988, up 32,889 or +13.75% vs. April 2
Rate of case increase: 13.75% vs. 15% for the past week
Number of deaths: Total 6,962, up 1,178 vs. April 2
Rate of deaths increase 4/3 vs 4/2: 20.4% % vs. 23.1% on 4/2
Daily number of tests 4/3 vs. 4/2: 1,407,344, up 139,596 over 4/2
Rate of increase in tests: +11% vs. previous day
There is some evidence above that “flattening the curve” is working. Wrongo recommends visiting The COVID Tracking Project which has the most comprehensive data, both nationally, and by state. It is updated several times a day and can be exported to your device, if you are interested.
On to cartoons, starting with a chart Wrongo originally posted on Wednesday, now updated by Sharpie, showing why wearing a mask may be a very good idea:
Georgia governor Kemp said he didn’t know the virus could be spread without symptoms. Why do so many Republicans excuse their behavior by saying “I didn’t know“? Aren’t they the party of personal responsibility?
Kushner and Pence: little men trying to operate WAY beyond their abilities:
Remember when George W. Bush was the most incompetent president imaginable?
Remember when George W Bush was the most incompetent president imaginable?
Perhaps, “Thou shall not run a church as a money making enterprise” might help:
Why is gathering in a church not as dangerous as sitting in a restaurant? Is it because God will protect you in a church but not at Applebees? Or is group praying simply worth the risk? Or that Republican governors are afraid of pissing off their evangelical base?
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.
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.