Category: Economic Policy

Sunday Cartoon Blogging – May 10, 2020

The National Bureau of Economic Research (NBER) has an interesting new report showing that New York City’s subway system was a major disseminator of COVID-19 during the coronavirus’ initial infection of the city during March 2020.

They show that subway ridership correlates directly with new cases, particularly in Queens. The near-shutdown of subway ridership in Manhattan (down by 90%) at the end of March correlates strongly with the reduction in the rate of increase in new cases in Queens thereafter.

They superimposed maps of subway station turnstile entries with zip code-level maps of reported coronavirus incidence. That showed Coronavirus propagation followed a process strongly consistent with subway riding. Moreover, local trains appeared to have a higher propensity to transmit infection than express trains, perhaps because people spent longer on those trains. Bus hubs served as secondary transmission routes out to the periphery of the city.

The subway was shut down because of staffing issues on March 25, not because the mayor or governor thought it was an important disease vector. Since then, at least 98 transit workers have died from coronavirus. On to cartoons.

Jogging in Georgia requires evasive tactics:

Trump did it again:

It never ends. On Fox and Friends, Trump said there is “no question” the video of the Ahmaud Arbery shooting is troubling. But, he hinted that further evidence might emerge that could possibly exculpate the shooters:

 “You know, it could be something that we didn’t see on tape. There could be a lot of — you know, if you saw things went off tape and then back on tape”

BTW, the NY Daily News reported that no burglaries had been reported for seven weeks before the shooting.

Small man sits near a great man:

America grows smaller as the president tries to make himself bigger, all the while failing at the actual mission of leading the Republic.

Pro-life doesn’t get in the way of reopening:

The only animal Trump wants at the White House:

Dropping charges against Flynn looks partisan:

Another reason to stay indoors:

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Saturday Soother, Covid Plateau Edition – May 2, 2020

The Daily Escape:

Spring flower bloom at Keukenhof Garden in Holland. (Hat tip to Ottho H.)

Remember when we had fifteen COVID-19 cases, and they were just going to be gone, like a miracle?

If you ask Trump, that’s where we are, plus a few orders of magnitude. All of the recent happy talk about reaching or being past the peak have omitted the detail that so far, “flattening the curve” isn’t substantially reducing the number of cases, or deaths.

The theory was that once we “flattened the curve”, we could ease up on social isolation, mask-wearing and get back to work. When we think about the downside of the curve, we think bell curves, with a sharp rise and fall from a high peak. As Wrongo said on April 20, that was unlikely to be the outcome, because it didn’t happen like that in countries that started fighting the virus long before us. And that’s how it seems to be working out. Here is where we are:

Source: Washington Post

The chart tracks a 3-day average of cases, since that smooths out some of the big day-to-day variances. As of April 29, it seemed clear that we have reached a peak, but we’re not showing any real signs of a rapid decline. This means the COVID-19 curve could remain elevated for a long time.

And we should remember that 878,839 cases are still active.

Politicians are obsessed with “the peak.” Are we at it? Are we past it? When will it come? Has it come? Now they’ve turned to communicating their plans for reopening the economy. That makes sense. Re-opening is becoming urgent, with more than 30 million Americans out of work, but it’s dismissive for politicians to say we’re past the worst of it “medically” while more people go to the ICU every day.

Massachusetts governor Charlie Baker (R), sees the plateau, and wonders when the curve will start to decline:

“Baker focused on hospitalizations and ICU admissions, saying, we’ve basically been flat for 12 days. We’re flat at a high level. But 12 days, 13 days counting today — you’re not going to find a lot of other places that just sit like this for 13 days.”

Former FDA Commissioner Scott Gottlieb MD, an advisor to Baker, tweeted:

IHME (mentioned in the tweet) is a closely watched model from the University of Washington Institute for Health Metrics and Evaluation.

What we do over the next few weeks will determine whether we get this right, or whether COVID remains a large ongoing threat. We need to understand the potential risks that come with a decision to reopen, and make plans to mitigate these risks as best we can. Some states, like Connecticut, are planning carefully.

If we look state by state, in about half of the country, the numbers of cases are still rising. In about another third of the country, there is a leveling off. Only in a minority of states are the numbers actually coming down on a daily basis. New York, Washington, Louisiana and Idaho have had reductions of more than 50% from their peaks in new infections.

According to STAT, there are several possible outcomes: Recurring small outbreaks, a monster wave of cases, or a persistent crisis. And no one knows which outcome is most likely. We should expect new infections to start rising again in states without much testing, but with large populations that opened early like Texas, Florida and Georgia.

We should also realize that in some states, cooking the books about new cases and deaths will happen. Newsweek reported data compiled by Florida medical examiners was no longer being reported by the state government. The official state data has not been updated in over a week.

Acting like we’re flattening the curve when we really don’t know if we are, is likely to create a San Andreas-sized political earthquake if cases spike again.

But let’s try to get past all this, because it’s time for another Saturday Soother, when we stop checking Twitter, and think about spring.

Here on the fields of Wrong, the pear, plum and cherry trees have flowered, while the crab apples are soon to bloom. We have bluebirds nesting in both bluebird houses. Our weather remains cold and wet, so stay indoors and brew up a hot mug of Bengal Spice tea.

Now grab a socially distant chair and have a few minutes of fun with a song parody by the Opera Guy, Matthew Ciuffitelli. Here’s his parody of “Phantom of the Opera”, called “Phantom of the Quarantine”. Wrongo promises you won’t be disappointed:

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

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Sunday Cartoon Blogging – April 19, 2020

One week ago, the cumulative US COVID-19 death toll was 15,000. Seven days later, the death toll is now 36,000. That means in a week, about 21,000 Americans have died, a growth rate of 140%. In the past two months, here’s how US coronavirus deaths have grown:

  • Feb 17: 0 deaths
  • March 17: 111 deaths
  • April 17: 36,997 deaths

Although deaths are a lagging indicator for how successful we are in our efforts to contain the Coronavirus, and despite all the happy talk about flattening the curve, this looks like a rocket ship leaving the launch pad.

The Navy has now tested about 94% of the crew on the USS Theodore Roosevelt, the aircraft carrier that was sidelined with a Coronavirus outbreak. As of Friday, 660 crew members (of about 4,865) have now tested positive for Coronavirus.

However, of those 660 who were positive, 60% have not shown any symptoms associated with the illness. This should cause us to question the true rate of infections in the US. The proportion of people who are asymptomatic carriers worldwide remains unknown, but at 60%, the Theodore Roosevelt’s figure is higher than the 25%-50% range Dr. Fauci laid out in early April.

Taking these two data points together, America should proceed carefully as it leaves the lockdown.

On to cartoons. Another day, another spin of the big blame wheel:

With big business, some things never change:

If not his signature, then certainly his fingerprints:

The right’s narrative that can kill:

Individual responsibility has consequences:

John Roberts has to live with his Wisconsin voting decision:

 

 

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Trump Not Gaining in Polls

The Daily Escape:

Grinnell Glacier Trail, Glacier NP, MT– September 2018 photo by shinyoutdoors

Here’s today’s update from the Covid Tracking Project:

  • We’ve added new data showing the daily change, increase or (decrease) for cases, deaths and tests.
  • There’s no good news today. Today registered the highest number of new infections.
  • The daily rate of deaths rose by 3,629, the highest so far. The percentage of deaths to total cases continues to rise.
  • Daily testing increased 280,569, the highest so far. That’s some good news, but the worst news is that the ratio of new infections to new tests is 22.1%.

We’re now down to the most likely two candidates for president, barring some last minute event. The new Quinnipiac Poll has some interesting head-to-head comparisons.

“When asked who would do a better job handling a crisis, voters say 51 – 42% that Biden would do a better job than Trump. Biden tops Trump by a similar margin on health care, as voters say 53 – 40% that he would do a better job than Trump at handling the issue.

However, voters say 49 – 44% that the president would do a better job than Biden handling the economy.”

And the pandemic scares people:

“More than 8 out of 10 registered voters, 85%, say they are either very (50%) or somewhat (35%) concerned they or someone they know will be infected with the coronavirus, a spike of 31 percentage points from early March….Three-quarters of voters say they are either very concerned (39%) or somewhat concerned (36%) that they or someone in their family will need to be hospitalized because of the coronavirus.”

Quinnipiac also says the head-to-head matchup favors Biden:

“In a head to head matchup between President Trump and former Vice President Joe Biden, Biden beats Trump 49 – 41%. Republicans go to Trump 91 – 7%, while Democrats go to Biden 91 – 4% and independents favor Biden 44 – 35%.”

As always, it will come down to messaging and turnout, and after Wisconsin, expect a sustained effort by the GOP to hamper Democrats’ attempts to cast ballots in November.

And in the current CNN poll:

“A majority, 52%, say they disapprove of the way Trump is handling the coronavirus outbreak, and 45% approve. Both figures have risen since early March, when 41% approved, 48% disapproved and 11% weren’t sure how they felt about the President’s handling of the viral outbreak. Still, just 43% say the President is doing everything he could to fight the outbreak, while 55% say he could be doing more — including 17% among those who approve of his handling of it so far and 18% of Republicans.”

CNN says Trump’s overall approval hasn’t changed much since he started holding daily briefings:

“The President’s overall approval rating stands at 44% approve to 51% disapprove, little changed from a 43% approve to 53% disapprove reading in each of the previous three CNN polls.”

It isn’t clear why people would think Trump will do a better job on the economy than Democrats, but jobs and stock market values fell off so quickly and so steeply that it may take a few more weeks to see if voters actually blame Trump for what is certain to be a terrible economy.

Overall, Trump isn’t moving the political dial in his direction in either of these polls.

When the outbreak started, voters saw his performance as a positive. But once he began his daily briefings, acting like they were campaign rallies, or political theater, and offering unvetted solutions, his numbers returned to the basement.

Biden isn’t a lock. He is a weak candidate, and he’s far from mentally or physically robust. There’s 207 days left before the election. Anything can happen.

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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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Sunday Cartoon Blogging – March 22, 2020

We have a ton of cartoons today, so just a brief comment. Neoliberal economics bears a major responsibility for the pathetic pandemic response by our corporations and government. It encourages efficiency over all other aspects of a complex product/service delivery system. We now see that it is fragile, without the resilience necessary to meet surges of demand/need.

Our CEOs and politicians now think only in terms of equilibrium, when equilibrium is the last thing we need in the middle of a runaway exponential disease process like COVID-19.

We’re seeing how difficult it is to source things like gloves, masks and sterile gowns. The delays procuring those items will pale against the delay in sourcing ventilators and ultimately, a vaccine in sufficient doses to truly stem the tide.

One thing to think about is how nations with authoritarian or collectivist societies have responded to the Coronavirus better than those in the west, where we celebrate the individual, occasionally to the detriment of society. Our way works fine when things are good, but not so well when things turn bad.

What would you expect, given an educational system that doesn’t teach people what “exponential” means?

Finally, imagine Trump if he were FDR right after the attack on Pearl Harbor: Standing in front of Congress declaring: “This Japan thing will go away!” On to cartoons.

Whose responsibility is this?

There’s only one real cure for Trump syndrome:

He’ll never have clean hands:

Sadly, it’s not just his hands that don’t measure up:

Sen. Burr and the others can’t explain their actions. They’re guilty:

 

Let all the people keep the checks, but nothing for corporations:

Dem primaries showed us something:

The core problem for Democrats today:

Work from Home withdrawal setting in:

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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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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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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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