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The Wrongologist

Geopolitics, Power and Political Economy

Call It the Great Virus Crash of 2020

The Daily Escape:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Saturday Soother – September 22, 2018

The Daily Escape:

Bridge of Sighs, Venice, Italy — photo by _enk

Another week in Trumplandia is in the books. And, for the second consecutive year, there was no “Trump’s Summer Reading List“. That idea seems so preposterous that his handlers don’t even try to fake it. He’s never wandered far from the limo or the hotel lobby. He’s simply not interested in our world.

With that as background, consider Trump’s meeting with Spanish Foreign Minister Josep Borrell in which Trump suggested building a wall across the 3,000 mile-long Sahara Desert to prevent African migrants from making their way into Europe:

You need to build a wall around the Sahara…When Borrell asked Trump if he understood just how big the Sahara is, Trump argued that “it can’t be bigger than our border with Mexico.” Borrell then informed Trump that the Sahara is far bigger than the U.S. border with Mexico.

And this was in The Guardian, not The Onion. Hold on to Trump’s fixation with walls for a bit, and read this tweet:

I want to know, where is the money for Border Security and the WALL in this ridiculous Spending Bill, and where will it come from after the Midterms? Dems are obstructing Law Enforcement and Border Security. REPUBLICANS MUST FINALLY GET TOUGH!

— Donald J. Trump (@realDonaldTrump) September 20, 2018

He tweeted this because the Senate approved their conference report with the House by a bipartisan 93-7 majority. It funds the departments of Defense, Labor, Health and Human Services, and Education for the next fiscal year.

The best part was that it included a continuing resolution to keep the rest of the government agencies funded until after the mid-term election, so no shut-down, unless Trump refuses to sign the bill.

And, Congress designed it to prevent a standoff about Donald Trump’s border wall. Apparently, the lack of wall funding was a surprise to Trump, so he asks via tweet, “where is the money for the WALL?”

Once the Kavanaugh/Dr. Ford’s: “is it attempted rape, or just teen-age hijinks?” debate stops sucking up all of the oxygen in DC, Democrats should start praising Congressional Republicans continuously for defying Trump about the wall.

Dems should loudly praise Republicans for sending Trump a bill he can’t veto. They should hammer that wedge hard.

And, if Trump does veto it, we’ll see an instant shipwreck for the Republicans.

But right now, you need to get away from it all for at least a few minutes. You need to let your brain calm down. Wrongo calls this the Saturday Soother. We start by brewing a hot steaming cup of coffee. Today, we return to coffee roaster Geoffrey Martinez of Compton, CA’s Patria Coffee. Wrongo purchased a 12 oz. bag of Patria’s Peru Amazonas WP Decaf, and it was liked by all. So why not brew up a Vente cup of that, and enjoy. (A blog reader asked Wrongo if he receives any payment for these weekly coffee recommendations. He does not.)

Settle back in a comfy chair and watch the fall season begin outside your windows. Here, on the fields of Wrong, the crab apple, birch, and tulip trees are losing their leaves. The deer visit the crab apples several times a day to eat the fruit that falls to the ground.

Now, wearing your Bluetooth headphones, listen to trumpeter Chris Botti and violinist Lucia Micarelli perform “Emmanuel” live in Boston as part of Botti’s 2009 PBS special. The music was written by Michel Colombier, and released in 1971. Emmanuel was written to honor the memory of Colombier’s son, who died when he was only 5 years old. This piece will help you forget about Trump, Kavanaugh, and the Russians for a while:

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

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Saturday Soother – January 6, 2018

The Daily Escape:

Athabasca Glacier, Alberta, Canada. It’s the most visited glacier in North America – 2013 photo by Yan Gao

The publication of Michael Wolff’s book “Fire and Fury” about Trump, seems to have validated what we on the outside already knew, that the election of Der Donald was a terrible mistake.

Wolff struck a chord that resonates by saying that everyone he talked to in the West Wing of the White House during his year researching the book agrees that Trump is “like a child”, and that every one of them agrees that Trump simply cannot function in the job.

Joe Scarborough asked in the WaPo if we can survive Trump: (emphasis by the Wrongologist)

We are a nation that spent the past 100 years inventing the modern age, winning World War I, defeating Hitler and winning World War II, and liberating half of Europe by beating the Soviets in the Cold War. But today we find ourselves dangerously adrift at home and disconnected from the allies abroad that made so many of those triumphs possible. The world wonders how the United States will survive Donald Trump. And I ask, what will finally move Republicans to deliver a non-negotiable ultimatum to this unstable president? Will they dare place their country’s interests above their own political fears? Or will they move to end this American tragedy only when there is nothing left to lose?

A consensus seems to be emerging that we have a president who is not capable of performing his duties. And so the question before the GOP powers that be is: Should they try to remove him? It looks like denial of the obvious is no longer enough. The GOP’s dilemma is: which is worse, continuing to cover for Trump? Or cover in the 2018 mid-terms for a Congress that didn’t acknowledge the danger he poses?

This is where we are at the start of 2018: In the midst of an accelerating decline of America’s capabilities at home, and a weakening of our global reach. The gap between what the US used to be able to do, and what it can still do today is widening, and we really don’t know just how wide that gap is. We don’t know what has fallen into the gap, or what remains on firm ground.

With Trump in the Oval, each passing day looks more like a crap shoot, both domestically and globally. Egypt, a US ally, has quietly leased several air bases to the Russians. This is the first time since 1973 that Russia has had a military presence in Egypt. In the past, the US would have moved heaven and earth to stop this from happening; now Trump does nothing.

The pressure will be to wait and see if Robert Mueller comes up with something.

That is understandable, but Trump’s possible criminality isn’t the primary risk to the country. Events in the world may overtake Mueller’s investigation. Korea could erupt in a nuclear confrontation, the Iranian government is being challenged in the streets, and if weakened, Saudi Arabia and Israel may see a chance to attack Iran, something that would otherwise be far too risky.

We’re entering a period of great consequence. It is probable that some of the most crucial events in the year ahead (Korea, Middle East) will be decided by one man’s gut feeling that is set in motion by tweeting at three in the morning, in response to fragmentary data about a situation too complex for him to understand, or to solve.

And we’ll live with those consequences for decades to come.

Now it’s up to the GOP, who are in a position to solve this problem. They didn’t ask for Trump, but they got him. And then, they caved until he owned them. Every Republican has jumped on the bandwagon.

Otherwise, we must force Republicans from control of the House in the 2018 mid-term election.

Nothing soothing in any of those words. But, it’s Saturday, and time to kick back. If you are in the Northeast, the prime directive is to stay warm. Grab a cup of Death Wish coffee, the world’s strongest. Death Wish has a saying:

Be the best you can be with the clarity and focus that comes with strong coffee.

It’s probably not strong enough to turn Trump into a thinker, but your mileage may vary.

Now, listen to “Deborah’s Theme” from Once Upon a Time in America, a 1984 epic crime film co-written and directed by Italian filmmaker Sergio Leone and starring Robert De Niro. The music is by Ennio Morricone, who was Sergio Leone’s long-time musical collaborator:

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

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