Category: Health Policy

Sunday Cartoon Blogging – April 12, 2020

It was supposed to be all over by Easter. But this weekend, the time that we were supposed to get back to work, brings us 2000 COVID-19 deaths on a single day, and a mass grave on NYC’s Hart Island. One thing we’ve learned is that Trump isn’t a clairvoyant:

When you leave late, you get there late:

It takes a team:

Wearing a red hat doesn’t make America great. What DOES make our country great is the dedication and drive to serve that’s demonstrated by so many of us. The American spirit doesn’t require fondling the flag, or bloviating in front of the media. Our first responders and our service workers make us proud to be Americans.

Vote by mail should be the answer:

In Washington State when you vote by mail, you retain a paper copy. The state can call the voter and ask them what their vote was, if necessary. You get a few weeks to decide on the issues and which candidate you prefer.

It’s not socialism if it helps you. If your check was passed by Republicans, it’s a STIMULUS:

Real life has become a scary movie:

Facebooklinkedinrss

Saturday Soother – Back to Work Edition, April 11, 2020

The Daily Escape:

Great Sand Dunes NP, CO – photo by AddisonTract

Welcome to the 85th Saturday in April, fellow disease vectors! Here are the updated COVID numbers (as of 4/9):

  • There’s good news today. New infections are down dramatically as is the rate of new deaths.
  • The percentage of deaths to total cases has stabilized, at least for the moment.
  • Daily testing increased by 159,130. That’s helpful, but the growth in new tests still lags the growth in new infections.

America and the world are fighting a two-front war, one with the COIVID-19 pandemic, and another with our self-imposed, slow-rolling financial meltdown. Many think, like Trump, that the damage to the economy is worse than the loss of 50,000-100,000 American lives.

The irony is that it is the US governors that have precipitated the economic crisis while trying to moderate the public health crisis. And it has been the Trump administration that is trying to moderate the economic crisis by attempting to prematurely end the Coronavirus crisis.

A tenth of the work force has applied for unemployment benefits, while millions more are not working. In addition, small businesses are going under. So the GOP is pressuring Trump to declare victory and re-open the economy, and he’s looking for a plan to get people back to work.

But it isn’t just a plan. Attorney General Barr strongly suggested in a FOX TV interview that states don’t have the right to shut down businesses and schools during a public health emergency, and hints that the Trump administration could take action against states that don’t rescind shelter-at-home orders next month:

“When this period of time, at the end of April, expires, I think we have to allow people to adapt more than we have, and not just tell people to go home and hide under their bed, but allow them to use other ways — social distancing and other means — to protect themselves,”

Apparently, Barr is focused on what happens after the CDC’s guidelines on social distancing expire at the end of April. This is a clear sign that, while Barr is willing to allow states to do what they are doing now, his and the administration’s patience will expire when the CDC’s guidelines expire.

The WaPo reports that Trump is about to announce the creation of a second Coronavirus task force aimed at combating the economic consequences of the virus:

“The task force is expected to be led by Mark Meadows, the White House chief of staff, and include Larry Kudlow, the president’s chief economic adviser, and Mnuchin, the treasury secretary, along with outside business leaders. Others expected to play a role are Kevin Hassett…and the president’s son-in-law, Jared Kushner…”

One of the lynchpins of reopening the economy is supposed to be universal testing for the virus. But NPR reports the government is ending its funding for testing:

“…the federal government will end funding for coronavirus testing sites this Friday. In a few places those sites will close as a result.”

Reopening the economy without adequate testing is just like walking blindly in a minefield. And we know that testing remains generally unavailable.

The job of the administration should be to make the “5-minute” test kits cheap enough that every urgent care, every pharmacy, every clinic, can have two or three, and be running tests. Not just the current 10 -15 per state, but tens of thousands, so that widespread testing can be easily available.

Trump gave his game away yesterday when CNN’s Jim Acosta asked him:

“How can the administration discuss the possibility of reopening the country when the administration does not have an adequate nationwide testing system for this virus? Don’t you need a nationwide testing system for the virus before you reopen?”

TRUMP: “No.” pic.twitter.com/JokZYfy97T

What could go wrong? Plenty of things could go badly wrong.

If/when they do, Trump will blame the states, especially those with Democratic governors. Believe it or not, he will then campaign as the man who stopped the epidemic, and at least 40% of voters will say he accomplished it.

Let’s focus on relaxing for a few minutes with a new Saturday Soother. Wrongo hopes that you are staying healthy, productive, and in good spirits. If your income stream has been disrupted by the pandemic, Wrongo hopes you use the time constructively: Do something you’ve wanted to do for a long time.

Today we continue in the English pastoral idiom that we started last week.

Here is British composer Gerald Finzi’s “Introit for Solo Violin & Small Orchestra Op. 6”.  Played by the Northern Sinfonia with Lesley Hatfield on solo violin. It is conducted by Howard Griffiths. This is music that leads to private thoughts, something we all need right now:

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

Facebooklinkedinrss

Monday Wake Up Call – April 6, 2020

The Daily Escape:

Texas bluebonnets, Round Rock, TX – 2018 photo by dried_fruit

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 4/4)

  • Number of daily cases: 305,755, up 33,767 or +12.4% vs. April 3
  • Rate of case increase: 12.4% vs. 13.75% on 4/3 and 15% average for the past week
  • Number of deaths: Total 8,314, up 1,352 vs. April 3
  • Rate of deaths increase 4/4 vs 4/3: 19.4% % vs. 20.4% on 4/3
  • Daily number of tests 4/4 vs. 4/3: 1,623,807, up 226,945 over 4/3
  • Rate of increase in tests: +16.2% vs. previous day

The rates of growth in cases and deaths have begun to slow. In the past week, they are in a decelerating trend, declining by about 1%/day. Testing is growing, which is a very good thing.

Just when you think you can’t get any more cynical about America’s response to the pandemic, we tumble to the fact that about a third of hospital emergency rooms are now staffed by doctors on the payrolls of two physician staffing companies, TeamHealth and Envision Health. They are owned by two Wall Street private equity firms. Envision Healthcare employs 69,000 healthcare workers nationwide while TeamHealth employs 20,000. Private equity firm Blackstone Group owns TeamHealth; Kravis Kohlberg Roberts (KKR) owns Envision. Private equity is the term for a large unregulated pool of money run by financiers who use that money to invest in, lend to, and/or buy companies and restructure them.

Wrongo began hearing that despite the urgent pleas from hospitals on the front lines of the COVOID-19 outbreak, nurses and doctors were being taken off schedules in nearby places once “elective” procedures were suspended, as they are at many hospitals and clinics. That means the associated revenues were lost, or at the very least, postponed.

Here’s a report from Yahoo Finance:

“KKR & Co.-backed Envision, which carries over $7 billion of debt amassed through one of the biggest leveraged buyouts in recent years, reported steep drops at its care facilities. In just two weeks, it suffered declines of 65% to 75% in business at its 168 open ambulatory surgical centers, compared to the same period last year, the company said in a private report to investors. About 90 centers are closed.”

Private equity has taken over more and more of hospital staffing, including emergency departments. The legal fig leaf that allows private equity firms like Blackstone and KKR to play doctor is that their deals are structured so that an individual MD or group of MDs is the nominal owner of the specialty practice, even though the business is stripped of its assets. The practices’ operating contracts are widely believed to strip the MDs of any say in management.

Care of the sick is not the mission of these companies; their mission is to make profits for the private equity firms and its investors. In 2018, Paladin Healthcare, an entity owned by private equity baron Joel Freedman, bought Philadelphia’s Hahnemann University Hospital. This hospital served the poor, and Freedman closed it down so he could use the land to build luxury apartments.

When the city recently asked to use the empty hospital as part of its solution for the Coronavirus pandemic, Freedman demanded $1M/month in rent. Overcharging patients and insurance companies for providing urgent and desperately needed emergency medical care is bad enough. But holding a city hostage?

In another example, STAT reports on another private equity firm: (emphasis by Wrongo)

“Alteon Health, which employs about 1,700 emergency medicine doctors and other physicians who staff hospital emergency rooms across the country, announced it would suspend paid time off, matching contributions to employees’ 401(K) retirement accounts, and discretionary bonuses in response to the pandemic…The company also said it would reduce some clinicians’ hours to the minimum required to maintain health insurance coverage, and that it would convert some salaried employees to hourly status for “maximum staffing flexibility.”

NY’s Governor Cuomo and others are pleading to have doctors come out of retirement, and here we have skilled doctors who have the training and are being asked to work fewer hours? All of the Republican talk about “choice” and “markets” in healthcare is just self-serving BS that benefits their buddies.

Time to wake up America!

Why do private equity firms continue to benefit from the “carried interest” tax loophole? Shouldn’t they shoulder their part of the financial grief the pandemic is causing to our country?

To help you wake up, here is John Lennon’s 1970 song, “Isolation”. It appeared on John Lennon/Plastic Ono Band. It has a whole new meaning in today’s context:

Sample Lyric:

We’re afraid of everyone,

Afraid of the sun.

Isolation

The sun will never disappear,

But the world may not have many years.

Isolation.

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

Facebooklinkedinrss

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“:

https://www.youtube.com/watch?v=lr_tEdQvFcc&app=desktop

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

Facebooklinkedinrss

Sunday Cartoon Blogging – March 29, 2020

“To prevent the Black Death spreading in the 14th century, all ships thought to be infected were isolated for 40 days to prevent the spread of the disease. In fact, the word quarantine comes from the Italian quaranta giorni, meaning ’40 days’”.  via Ilargi

Some math. $2 trillion from Congress, and $4 trillion from the Federal Reserve so far is how much per family? 83.5 million families divided into $6 trillion = $71,856 per family of new national debt. Hard to know exactly, but households are likely to see only about $3,400 of that $71,856, assuming it is a two-person, two-kid family that makes under $150,000/year. Your mileage may vary.

This shows that our government has once again misdistributed the stimulus. Isn’t it always the case that in a crisis, our Crisis Capitalism government never misses a chance to give money to the corporations and the rich? Why is it so difficult to distribute the funds more equitably? Because they want to distribute as little as possible to the people.

Don’t you think that Trump should wait until every state has all the tests, medical gear and ventilators they need before he starts prognosticating on what date we can all return to normal lives?

As part of his deflecting of responsibility, Trump blames Obama for not stockpiling medical masks during his presidency. But Trump has been president for the past three years, he owns the stockpile. Clearly, he made no effort to add new medical masks in his time in office. He owns the shortage.

NY Governor Cuomo has shown miles more leadership ability than Trump in dealing with the crisis. He’s been blunt, factual, and realistic. In contrast, Trump has downplayed and lied about the pandemic. On to cartoons.

Anything you need in order to revive the bull:

Trump’s driving the Death Train:

The pandemic shows that our safety net is full of holes:

Hypocrisy begins with the GOP:

Our new reality:

Stay at home used to be for the timid:

Facebooklinkedinrss

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.

Facebooklinkedinrss

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:

Facebooklinkedinrss

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.

Facebooklinkedinrss

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.

Facebooklinkedinrss

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.

Facebooklinkedinrss