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We hear a lot these days about providing benefits and income for the tens of millions of workers who are being laid off, required to ‘stay in place’ by government orders, or out of necessity have to stay home with young children now that schools have shut down. The recent passed CARES ACT provides some minimal and basic income and unemployment benefits for those without work.
But what about the working class that is still at work? Why are they being asked to sacrifice and get nothing in return but words of praise from politicians and media talking heads?

I’m talking about those workers who are required to continue essential work just in order to keep what’s left of the economy going. Those whose work keeps our increasing tenuous social system from flying apart.

I’m talking about workers who are making sure essential utility services aren’t cut off. Who are ensuring that food is available and delivered to stores and homes. Who continue to pick up our garbage in order to prevent a further health crisis. Who keep the pharmacies open so those who need essential medicines can still get them. I’m talking about all those warehouse workers at Amazon and elsewhere filling orders for food and other essentials. The firefighters who still call when emergencies happen. The workers still processing health insurance claims. The subway workers, bus drivers and railroad workers. The truck drivers, local and long haul. Postal workers who keep processing and delivering the mail. The assembly line workers still working their machines that produce the desperately needed PPE. And of course the nurses, technicians, doctors and administrative hospital staff. And let’s not forget the volunteers of all kind, who keep delivering meals to grandma and grandpa, and checking in on them to help with basic physical needs. Forget them at your peril because there are limits to what they can be asked to do.

They are the combat troops at the front line. The rest of us are on leave behind the line and not facing imminent danger.

Politicians keep telling us they are heroes. Yeah, we know that. They’re working in dangerous and hazardous and even life threatening conditions. But simply saying they’re heroes doesn’t cut it. It’s not enough. Words are cheap.

My point is this: Why aren’t we compensating and rewarding these folks too, just as we’re protecting those losing their jobs with expanded unemployment benefits? Why isn’t the ‘still working working class’ being properly rewarded for the hazardous jobs they’re doing, the long hours, the unhealthy working conditions?

We’re giving corporations and businesses trillions of dollars in grants, loans, and free money from the Federal Reserve bank. Why are we short-changing those workers who are the real source of keeping the entire system from collapsing during this crisis, who are keeping the economy—or what’s left of it—still running?

They are holding the entire economy and social system together in this crisis. Why isn’t that properly recognized? And rewarded?

Here’s what the politicians should be doing. Here’s what should be included in Congress’s next spending bill for those occupations who are now keeping the system itself from crashing during this crisis:

• Hazard pay at time and one-half base pay
• Time and one-half for all hours worked beyond 7 hours; double time beyond 10 hours
• Full health care coverage provided under an emergency new ‘Part E’ of Medicare
• 90 day moratorium on apartment rent or home mortgage payment
• Government reimbursement for minimum credit card interest charges for six months
• Government reimbursement for auto loan monthly payments
• Clothing allowance tax credit for costs of cleaning & PPE equipment purchases

There’s an analogy here that’s relevant. It’s a strike. When workers go on strike, any decent union strike fund will pick up their mortgage or rent when it comes due. The strike fund covers the monthly auto payment. It provides for food on the table. Everyone in the union pays into the strike fund during good times, so that those in need during a strike can continue.

Isn’t the country supposed to be a union? Don’t we all pay taxes into the ‘national strike fund’ that is the government budget? Well it’s time to use that budget to cover those in need. And that includes not just the unemployed but the employed as well—i.e. those who are keeping it all together during the crisis.
It’s not just the unemployed who are in need. We should recognize all those still working who are risking their lives for the rest. Who are out there on the front lines, risking their health, working extended hours, often under terrible conditions, worried about their families at home. Managers, professionals, and other occupations may be able to work from home. Or telecommute. Or use videoconferencing to keep their companies afloat as the economy shuts down. But workers who are essential must continue to go out into the world and work, or else the entire economic edifice will come down around all our ears.

So why aren’t we properly rewarding and compensating these folks who are keeping an even greater crisis and social collapse at bay?

Let’s not forget the working class still at work.

Forget them at your peril. Forget them and there’ll come a time, and maybe not too far off, when they just decide ‘the hell with this, it’s not worth it’, and just walk off the job in protest or disgust or just decide to take care of their own instead of all of us. And no nice words by politicians about being ‘heroes’ will bring them back.

Then you’ll see how important workers are to the economy and even to what we call civilization itself!


Dr. Rasmus is author of the just published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, January 2020. He blogs at jackrasmus.com and hosts the weekly radio show, Alternative Visions on the Progressive Radio Network. Join Dr. Rasmus for daily commentary on developments in the US economy and politics on Twitter at @drjackrasmus.
Jack Rasmus,
copyright 2020

Listening to Trump’s daily press conference, one gets injected with a healthy dose of how market based solutions are already saving us from the virus.

On a daily basis, Trump tells us what a fantastic job he’s doing, then trots out corporate CEOs before the camera, one after another, each telling us what they’re doing: US auto execs tell us of their plans to convert their idled factories and produce millions of ventilators (while states in desperate need are actually buying them from abroad, mostly China). Big Pharma companies are developing the new vaccine or interim medical treatments like hydrocholoroquinine (which Cuba has already produced and is giving free to Italy); silicon valley tech companies announce contributions of hundreds of thousands of N95 masks (from their offshore inventories purchased from Asia and elsewhere no doubt).

But the reality is that the free market and so-called free enterprise system is largely responsible for much of today’s health crisis. It is the ‘market’ that has given us the massive shortages in hospital beds, ventilators, critical personal protection equipment (PPE), and the long lag in developing interim medical treatments—let alone a vaccine.

Here’s just a few notable cases how the market has failed and continues to do so:

Hospital Beds

As others have pointed out, before the Neoliberal market system implanted itself in the USA decades ago with Ronald Reagan (deepening and expanding ever since), there were 1.5 million hospital beds in the country and an extensive non-profit public hospital system. Before 1980 there were 100 million fewer US citizens for those 1.5 million beds. Today there are 100 million more Americans, but only 925,000 hospital beds. We’ve added 100 million but reduced beds by 500,000. The reduction, of course, was all done in the name of ‘market efficiency’ by the for profit hospital chains who bought up and then shut down much of the non-profit public hospital system. Now, as the current health crisis deepens, we’re left setting up cots in auditoriums and college dorms and call them hospitals.

The crisis in hospital beds for virus patients can be traced largely to the program of Bill Clinton in 1994 called ‘managed health care’. That program permitted and incentivized the acquisition of the public hospital system by the for-profit chains who sought to reduce competition so they could raise prices. Under Clinton’s program, the for-profit chains were even exempted from US anti-trust laws that might have prevented the loss of half million hospital beds. Hospitals are one of the few industries totally exempt from anti-trust still today.

Personal Protective Equipment (PPE)

Why is the USA so short on ventilators, masks, safety clothing, even disinfectants? It’s because the market solution was to offshore the production of these critical items to Asia, Latin America, and especially China years ago. It was cheaper to move production offshore (experts call this today relocating the supply chains!). It was cheaper to import back these products to the US economy. Expanding free trade (again under Clinton) then made the cost of importing back to the US even cheaper and thus more profitable still. Offshoring and free trade are but two sides of the same coin. Add a third leg to the economic stool: tax laws were changed to provide tax breaks to corporations that actually offshored the production of PPE.

Fast forward and today we have China producing 115 million N95 and surgical masks A DAY! China’s surplus is so great it is giving ventilators and masks to Italy for free. But is the US saying anything about this in Trump’s press conferences? Has Trump ever admitted the availability of these critical PPE materials, ready for import to the US right now! No. Instead, health care providers, doctors, nurses, technicians, are told to re-use their masks and other equipment since there aren’t enough of them to go around. And we’re told by corporate representatives in Trump’s press conferences the materials are coming. Just be patient.

And then there’s the Hydrochloroquinine interim treatment for those sick with Covid-19. Trump mentioned that. But did he say where it was being already used? Some reports are now appearing that the treatment was successfully developed in Cuba, whose doctors have been sent to Italy to administer it there to the most ill patients. But no mention, however, that that treatment is taking place right now in Italy. You won’t hear that ‘non-market’ solution from market unfriendly Cuba from Trump.

Unemployment Benefits

The USA has one of the most miserly unemployment benefit payment systems among all the advanced economies. It provides barely a third of what’s needed to live on. And in many states not even that. In California, one of the more generous in relative terms, the top benefit is $450/wk. That’s about $1,800 a month. But the median rent in urban areas of California alone is $3,000 or more! In New York and other big cities, even more. And the insufficient benefits are paid for only six months.

But if you’re one of the tens of millions of temp, contract, gig workers you’re not considered an employee for the company you’re working for. You therefore are not eligible for even the insufficient unemployment benefits paid in the US.

That has temporarily changed as the US Congress CARE Act just passed. It now provides unemployment benefits for ‘gig’ and other contract workers, albeit for just four months. But the point is this: It’s not the ‘market’ that is helping the millions of gig and other contract workers with at least some benefits. It’s the government. With the CARES Act the government and taxpayer will now pick up the tab for the unemployment benefits for the millions of contract and gig workers that the ‘market’ has failed to cover. The market has allowed companies to avoid paying any unemployment benefits tax that would otherwise cover contract and gig workers. The taxpayer and government now will ‘pick up the tab’. The market failed and the government-taxpayer must clean up its mess and provide the benefits companies like Uber, Lyft, AirBnB and others have avoided and pocketed for themselves.
<br / Health Insurance

In the free market Nirvana that is the USA today, millions of companies are permitted to forego providing their employees health insurance coverage. 37 million have no insurance at all.> And 87 million are under insured. Millions with some insurance have deductibles of thousands of dollars per person a year.
Now the Cares Act once again, i.e. the government and taxpayer, is stepping in and ensure these millions—employed and unemployed—have some kind of health insurance coverage. The government is called upon to clean up the mess the market has left.

Paid Medical-Sick Leave

The richest country in the world, the USA, where the Fortune 500 largest companies have managed to distribute more than $1 trillion a year for the past nine years to their shareholders in stock buybacks and dividend payouts, only provides on average 6 paid sick leave days a year to employees. And that’s typically only where a union contract exists. Most get unpaid sick leave or none at all. Get sick, go find another job. That’s the ‘market solution’. In Europe and elsewhere, combined paid leave is typically 30 days or more a year. But not in Trump’s market solution America.

Once again, the consequence is that the government-taxpayer in the CARES Act will have to pick up the tab for paid medical leave for the millions who must stay home due to their Employer’s order, or government ‘stay in place’ guidelines, or school districts shutdowns.

Market Solutions for Worker Retraining

It used to be that companies trained their own workers to become more skilled and productive. There was once a very widespread on the job training culture in the USA. That disappeared as well with the deepening of Neoliberalism and globalization (aka free trade, offshoring, and foreign direct investment by US multinational corps). Under Bill Clinton, corporations were allowed to bring hundreds of thousands of skilled workers from their foreign operations back to the US to take some of the best US jobs. It still continues. Free market efficiency meant it was cheaper (and more profitable) just to transfer workers on H1-B and L-1/2 visas to the US. No need to train American citizens. Cheaper simply to import skilled labor. That was the ‘market solution’ to job training.

The CARES ACT: $500 Billion ‘Socialism for Corporations’

The CARES Act allocates $500 billion just to large corporations. (Another $367 billion to smaller businesses). But do the large corporations really need the $500 billion? And who will oversee the distribution of that largesse?

Take the Airlines. Do they need it for the next 60 days? Do they deserve it?
The airlines are getting $58 billion under the just passed Cares Act. Half of that in outright grants. No strings attached. Another half in loans. Reportedly, they’re now quickly taking the grants but not the loans. Why? They’re probably waiting for Congress to agree to convert the loans to outright grants later in the year.

But no one is asking how much cash on hand the airline companies have as they’re handed these tens of billions of $! And no one is mentioning that the same airline companies in recent years gave their shareholders and CEOs no less than $45 billion in stock buybacks and dividend payouts. So now they’re getting $58B to back fill the hole of $45 billion they gave away to themselves and their big investors (who together owned most of the $45B stock bought back).

Here’s another question unanswered: In recent years big corporations (Fortune 500) earned record profits and paid out more than $1T a year in buybacks and dividends. Under Trump, they’ve paid out a total of more than $3 trillion in buybacks+dividends. In addition to that, in the months immediately leading up to the March 2020 virus crisis, the same big corporations were drawing down hundreds of billions of dollars from their credit lines with banks. At the same time in recent months they have been issuing new bonds and raising billions more in cash. No less than $73 billion was raised from issuing new bonds in February, a record. Flush with mountains of cash from Trump 2018 tax cuts, from their bank credit lines, and from record corporate bond issuance, they now are being given $500 billion more by Congress in the CARES ACT. Do they really need it? Let’s open their books and see before they get even $1.

Not least, there’s the question of who will oversee who gets the $500 billion. The Democrats in Congress say the special board created must oversee. Trump in turn has said, no way. I’m personally going to oversee. Want to guess who’ll win that one?

The point is Big Corporations are loaded with cash. And they didn’t earn most of it from the ‘market’. They got it from Trump tax cuts, from bank credit lines, and from low interest corporate bond issuance made possible by convenient near zero interest loans from the Federal Reserve. Nevertheless, now the non-market sugar daddy, the US government, is giving them $500 more whether they need it or not!

Super-Socialism for Bankers & Investors

The $500 billion going to big business pales in comparison, however, to the multi-trillions that the central bank, the Federal Reserve, is now pouring into the bankers, shadow bankers (i.e. hedge funds, equity firms, investment banks, mutual funds, etc.), and even now into non-bank corporations for the first time as well.

In 2008 the Federal Reserve provided more than $4 trillion to bail out the banks. Now it is providing more than $6 trillion (thus far)—and this time the banks haven’t even failed yet!

The Fed has opened a free money spigot to investors, bankers, and to big business of all types, and has simply declared ‘come on in and take it’. And if the $6 trillion to date isn’t enough, we’ll provide more.

For the first time ever the Fed is now providing free money not only to bankers, but to credit card companies, mortgage companies, corporate bond holders, and even to investors in derivatives like Exchange Traded Funds, or ETFs. Next it will start buying stocks to prop up those markets. Its cousin central bank, the Bank of Japan, has been doing that for years now.

Subsidizing Capital Incomes by Government Not the Market

Both tax policy and central bank monetary policy are supposed to function as general economy stabilization tools, according to mainstream economists. But today that’s a fiction perpetrated by the corporate media. In recent decades, tax and central bank policy ‘tools’ have become virtual conduits for the subsidization of capital incomes.

They have become the vehicles of Corporate Socialism. The Capitalist State and its government is taking care of its own. The rest of us will be taken care of by ‘the market’, according to Trump.

Dr. Jack Rasmus
March 31, 2020

Dr. Rasmus is author of the just published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, January 2020. He blogs at jackrasmus.com and hosts the weekly radio show, Alternative Visions on the Progressive Radio Network. Join Dr. Rasmus for daily commentary on developments in the US economy and politics on Twitter at @drjackrasmus.
The following are my observations on the evolution of the Covid 19 Pandemic, the US Response, the Impacts on the US & Global Economy, the Fed, and Congress’s Stimulus plans, from my twitter posts. (Check out the daily running commentaries as the health and economic crisis deepens through April, at @drjackrasmus)

#USrecession What’s different then (2008) & now (2020)? (Mar 30)

In 2007: real economy booming; financial crash then brings down real economy. In 2020: real econ slowing fast 4Q19(USA), stagnant (EU), recession (Japan); real econ collapses (1Q/2Q20) causing financial shock (& crash next?)

#Banks (Mar 30)

may not be ‘root’ of the problem in this ‘Great Recession 2.0’, but may be the ‘trunk’-espec. shadow banks Capital mkts & Institutional investor. Problems in comm paper, corp bond, repo mkts=shadow banks pulling back & commercial banks not stepping in to provide liquidity.
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#Coronavirus (Mar 30)

Both S. Korea and US recorded their first cases on Jan. 20. Korea started national mass testing (15k/day) of everyone by Jan. 30. US still has shortage of tests and no such policy. >100,000 US dead will be the legacy of that. So blame Trump, but also Bush & Clinton.

#Coronavirus (Mar 30)

Why is there such shortage of PPE in US? Ask GW Bush whose tax cuts 2001-04 subsidized US manufacturers to move to China after (i.e. after Clinton in 2000 gave China special trading rights–i.e. free trade lite). From Reagan to Trump, US econ policies changed little

#Coronavirus (Mar 30)

Why is there such shortage of US hospital beds? Ask Bill Clinton, whose healthcare legislation provided tax & other incentives to hospitals to reduce hospital beds & who allowed private for-profit-hospitals to buy up public hospitals & avoid anti-trust laws doing it

#Fed (Mar 29)

has committed $3T of its promised $4.5T already. But nada to most unstable sectors: $2.2T junk corp bonds, $1.2T junk leveraged loans, and low rated local government bodies. When defaults here start watch for psychological contagion effects to spread to general credit mkts

#Fed (Mar 29)

QE & excess liquidity 2008-16 fueled asset bubbles >2008. Hiatus 2017-18. Renewed 2019. More Fed liquidity 2020-21 will now fuel even bigger bubbles 2021-30. “The Problem (excess liquidity) becomes the Solution to the Problem” & creates next crisis. Financialization new norm

#Coronavirus (Mar 28)

Ever wonder where Google and Apple got the hundreds of thousands of masks they said they are now donating in the US? Not from their cellars in Cupertino, CA where they are located. Could it be they’re buying them in China? And that guy who owns Virgin Atlantic.

#Coronavirus (Mar 28)

China’s mega entrepreneur, Jack Ma, has offered to donate 1m masks and 500,000 test kits to the US. But no mention of China’s offer to sell masks or Ma’s offer to donate in Trump press conferences.

#Coronavirus (Mar 28)

US health officials say we need 3.5B masks. China now produces 116M A DAY! 12 times more than before the virus. China giving them away to Italy. So why isn’t Trump buying them? What happened to the US-China trade deal?

#healthcare (Mar 26)

What’s going to happen to millions being laid off who had employer provided health insurance?Why not create new Medicare Part E temp plan to sign up when filing for unemployment benefits? Add a surtax to Medicare’s 1.45% & reimburse Employers & workers in tax credits

#jobs (Mar 26)

How does this week’s 3.28 million new unemployment benefit claims compare to last week’s? It was 282,000. And was averaging less than 300,000 per week for past several months. Economists had forecast the increase would be 1m but it’s 3.2m.

#Jobs (Mar 26)

Data today show 3.28 million more workers applying for unemployment benefits this week. That’s just the tip of the iceberg of what’s coming. Federal Reserve governors had forecast 2m more. Meanwhile, Repub. Senators want to cut $600 benefit in Senate bill already agreed on.

#Fiscalstimulus. (Mar 26)

Just started reading the 880p actual Senate bill. $1,027B going to business is not the whole story. Looks like hundreds of billions more in the form of corporate tax cuts as well. Will be reporting on all that here once I finish reading the monster handout doc

#bailout (Mar 25)

In Senate bill Airlines get $58B–half as loans & half as grants, the latter to pay their workers. Reports coming out airlines taking the grants but not the loans. Could they be not that starved of cash? Taxpayers/Govt paying the workers. Call that ‘Airline Socialism’?

#Fiscalstimulus (Mar 25)

What’s holding up the Senate signing off $2T fiscal stimulus bill agreed last night? Repub Senator (Sasse-Neb.) says the $600 unemployment too generous, keeps workers taking new job. In reply, Bernie Sanders says he’ll hold up bill if Sasse won’t approve the $600

#fiscalstimulus (Mar 25)

Trump admin., media, & some economists now downplaying the Senate bill as a ‘stimulus’ bill. Only helps put a floor under current collapse of US econ. Another fiscal stimulus needed after short term effects of Senate $2T. Senate bill only good for 6-8 wks support

#USrecession (Mar 25)

What will be the GDP impact on the US economy? Goldman & Morgan Stanley banks forecast -24% to -30% 2Q20 drop in GDP. IF A V-SHAPE recovery (not likely) a full yr. GDP contraction of -5% to-8%. If not V-shape, worse. Major drag effect to occur. Recovery more U-shape

#USSenate (Mar 25)

Check out my summary of the final agreement on the economic Stimulus passed last night by the Senate. My analysis why it won’t be enough. Go to my blog,

#Fiscalstimulus (Mar 25)

Check out my summary and analysis of the Senate’s final agreement on an economic stimulus bill earlier this morning. Summary is based on latest reports by WashPost and CNN on the Senate document. To read go to m blog,

#Fiscalstimulus (Mar 25)

Check out my preliminary preview of the Senate bill and deal (subject to change when final details released) on my latest blog post at

#fiscalstimulus (Mar 24)

Here’s some details of Senate bill: unemployment insurance increased $600 over base, but for only 4 mos. (Good news: part time/temps/contractlabor covered). $1,200 check to families + $500/child (max # kids and income eligibility cutoff both ?) Stay tuned for more
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#fiscalstimulus. (Mar 24)

This confirmed in pending Senate bill: After threatening Congress they will fire all their workers if Congress doesn’t agree, Airlines will get $32B CASH GRANT, + another $29B in loans.

#Fed (Mar 23)

what’s its new ‘backstop’ to Main St. just announced? Fed will ‘support’ student, auto, credit card & small business loans–not ‘make’ loans. Means Fed to allow card, student, auto securitized loans made by banks & investors to dump that debt on the Fed, which will buy it.

#stockmarkets (Mar 23)

Global stock mkts rose from $35T in 2009 to $85T in 2019. In Trump’s 3 yrs, from around $70T to $85T, artificially fueled by massive investor tax cuts & cheap rates. That artificial ‘last leg’ now imploding back to $70T. So why is Fed & Congress subsidizing it again

#fiscalstimulus (Mar 23)

Once again on the Dems refusing to vote fpr McConnell’s $500B big corp handout bill: why won’t Dems even vote on today’s procedural vote? Because it takes 60 votes to pass. If they agree now, McConnell then needs only 50 to pass the $500B handout for corp buddies.

#Fed (Mar 23)

announced today it will start buying corp bonds, not just govt Treasuries from investors. Just like Europe & Japan have been doing for years. What’s next? Buy stock ETFs, like Japan? Negative rates like both? Who says the Fed’s mandate isn’t fin. mkts. What a fiction.

#Trump (Mar 23)

reportedly ‘toying’ with a return to work despite virus mounting cost in lives. About to decide “let them go back to work”. Hey Donald, don’t forget Marie Antoinette’s “let them eat cake” famous line. (To be fair to DJT, other Dem politicians, like Cuomo, considering same)

#Fiscalstimulus (Mar 23)

What’s the ruckus about Dems holding up the $500b bill in Senate? It’s p. 391 of bill where it says the government can keep secret for 6 months which corporations get the non-bank bailout $500k free money? (Banks will be bailed out by Fed’s $6.2T printed money)

#USrecession (Mar 23)

Watch for Trump & politicians to move to getting folks to return to work, despite rising infection & death rates. Don’t want to pay the cost ($4T+) stimulus to cover unemployed & shutdowns. (But will get Fed to spend $6T to pre-bail banks, investors & Wall St.)

#Fed (Mar 23)

latest move today to support investors behind credit cards, student, small business loans. Why not support the borrowers (students, households, small businesses) not the lenders? Reduce card rates to 7%; student loans to 1% (10yr Tbond), suspend interest on small bus. loans

#USrecesssion (Mar 23)

As the econ contraction deepens politicians will begin talking about, and finding ways, to get people back to work despite the rising virus caseload and deaths. The econ crisis will take precedence over the health crisis. (NY gov. Cuomo already raising the point)

#financialcrisis (Mar 22)

Corp bond mkts far more important to stability than stocks. Corp bond mkt now shut down. No issues occurring, despite Fed’s $2.2T injections last week. So watch for big Fed bailout of corp bonds this week, esp. junk & BBB investment grade (half of which is junk)

#fiscalstimulus (Mar 22)

Why does McConnell insist on $350B in loans to big corps, when Fed to provide $4T in loans through banks to big corps? Is it because the $350B will be ‘forgiven’ at a later date & in effect become grants? Btw, no deal with Dems tonite. Watch big stock fall Monday

#USrecession (Mar 22)

We are at am economic ‘rubicon’–not for a recession, or even for a great recession. But for a possible cross over from great recession 2.0, now occurring, to a bona fide econ depression. (My prediction in my 2010 book, ‘Epic Recession: Prelude to Global Depression’)

#USGDP (Mar 22)

If you thought Goldman Sachs’ prediction of 2Q20 GDP contracting -14% was shocking, then consider Morgan Stanley tonight predicting -30%. Meanwhile, McConnell blames Pelosi for not agreeing to a bigger bailout of big corps instead of her insistence on unemployment benefits

#Financialcrisis (Mar 22)

Stock futures trading for monday already halted after fallen the max. Fin. mkts in trouble are: repos, muni bonds, commercial paper, mortgage bonds, oil-commodity futures, residential mortgage bonds, forex, corp junk bonds/BBBs. Panicked investor ‘dash for cash’

#Bailout (Mar 22)

Big corps complain Congress’ bailout for them is not cash grants but loans. After they gave their investors, CEOs/Mgrs more than $3T in stock buybacks & dividend under Trump, 2017-19, now they’re broke? Small bus. need cash grants & workers 3/4 pay unemployment benefits.

#fiscalstimulus (Mar 22)

bill in Congress. No deal as of late Sunday. Democrats want more unemployment insurance, more small business support, and states. McConnell & republicans want more for big corps and no unemployment insurance increases.

#Bailouts (Mar 21)

Correct that: Airlines spent $48B on buybacks over 10 prior years; Boeing spent $43B from 2013-1Q2019. Airlines want $58B grant ($50B passengers, $8B cargo). Boeing wants $60B govt loan. (Boeing’s debt already >$40B. Loan would raise to >$100B)

#Bailouts (Mar 21)

Here’s another stat re. piggie airlines: 96% of their total cash flow for 10 years was used for stock buybacks! (i.e. their $43B buyback binge). And now that execs & shareholders spent it on themselves, they want $58B from Congress & us. Watch Trump give it to them!

#Bailouts (Mar 21)

Boeing wants $60B too. Spent $43B on stock buybacks from 2013-2019. Only suspended buybacks when 737max flopped in early 2019

#Bailouts (Mar 21)

Airlines are ‘pigs at the trough’. After giving their execs and shareholders $45B in stock buybacks in recent years, they’re now demanding $58B in ‘cash grants’ + more tax credits from Congress. If don’t get it, threaten mass layoffs by August. Boeing wants another $60B

#Fiscalstimulus (Mar 21)

Oops. Forget my earlier tweet of $2T package from Congress. Latest news: only $1.3T. (The rest due to assumed ‘multiplier’ effect). But ‘multiplier’ will be minimal as consumers stay home & use check to pay debt. (btw, only ‘some’ will get the $1k check from govt)

#Coronavirus (Mar 21)

Big shortage PPE for drs-nurses-hospitals. 2 reasons: 1. US corps offshored production to China (now with surplus, giving to Italy). 2. Trump’s 2018-19 trade war with China reduced inventory. What happens when Drs-Nurses get sick? Can’t replace them like masks, etc.

#Fiscalstimulus (Mar 21)

Rumor that Congress will vote on $2T bailout bill on Monday. That’s half what’s needed to bail out unemployed, small businesses, & local govts. Fed is already pre-bailing out banks with planned $4.5T liquidity to repos, munis, MMFs, Comm.Paper, etc. + QE for bonds

#Trump (Mar 21)

keeps saying he prefers corps stop stock buybacks. What about dividend payouts? (Together both=$1.2T in each of last 2 yrs). Will corps now getting $500B US bailout still be allowed to do buybacks? Trump doesn’t follow up his ‘wish’ with any enforcement proposals

#Trump (Mar 21)

keeps saying he ‘authorizes’ moratorium on foreclosures & evictions. But HUD today says it has no authority to enforce that until Congress passes a law. Trump’s ‘authorization’ just says he supports a law

#USrecession (Mar 20)

For my latest update on the crashing US economy, my critique of Congress forthcoming recovery proposals, and my alternative fiscal recovery program (phases 1 & 2), listen to my Alternative Visions radio show podcast today at
Alternative Visions

#USrecession (Mar 20)

JP Chase forecasts 2Q20 US GDP contraction of -14%. That’s more severe than worst quarter 1932 during the Great Depression when the contraction peaked at -13% GDP. US will have to raise govt spending from 21% to 40% of GDP as 1942 = $4t more on top of present $4.4T

#USrecession (Mar 20)

Goldman Sachs predicts 2 million to be laid off in March. That’s twice as fast as the monthly lay offs during worst months of 2008-09 crisis, and faster than in the aftermath of the 1929 stock crash and 1930-31 banking crashes.

#Trump (Mar 20)

In press conf. today Trump says he’d like to stop corp buybacks if they’re to get $billions US aid. Well, do it Donald! And stop dividend payouts too. How much buybacks+dividends under Trump? $1.2 trillion/year last 2 yrs. Obama also ave. $800B/yr for 6 yrs (Airlines $45B)

#USrecession (Mar 19)

Want to know how the current crisis of 2020 compares with the last, 2008, & both with the 1930s great depression? Read my Sept. 2018 article, “Comparing 1929 with 2008 and the Next” predicting the current crash, which is reproduced on my blog

#Oil (Mar 18)

crude oil now at $25/barrel. That means > $1T in energy junk bonds on way to default. If so, credit crunch contagion to spread across mkts. Fed announces full backstop for money mkt funds. This IS great recession 2.0 (or potentially even worse).

#USrecession (Mar 18)

Trump raises stimulus to $1.3T. Need more than 2X that. (see my ‘Cornavirus Economic War Mobilization’ plan http://jackrasmus.com) Meantime, Fed keeps pumping more liquidity into corps & mkts. No effect. Credit crisis here. Buyers say 45% chance junk bond default

#financialcrisis (Mar 17)

Treasury Secretary Mnuchin today warns that current financial crisis is ‘worse than 2008’. Jobless rate could rise to 20%. Believes Trump’s fiscal package will prevent both. He’s right about first two points, wrong about the third.

#Fed (Mar 17)

opens another money spigot to financial institutions today. To ‘shadow banks'(fin. institutions like mutual funds & brokers that aren’t regulated by Fed). $1 trillion a day now available to Repo mkts (added to $2.2T last wk. Includes ‘commercial paper’ mkt for mutual funds

#USrecession (Mar 17)

Read my call for a ‘Coronavirus Economic War Mobilization Plan’ along the lines of US war mobilization of 1942. Why we are now in an ‘Economic Pearl Harbor 2020’. (This post follows up my two preceding on need for a $2.2T immediate spending program & how to fund it)

#USrecession (Mar 17)

What US needs now is a ‘Coronavirus War Mobilization Budget’! In 1940 Govt spending was 16% of US GDP. By 1942 it was 40%. Since 1947 govt spending has been 20% of GDP. We need 40% now. See my $2.2T proposal “Addendum to Recovery Program’

#Fiscalstimulus (Mar 16)

As Congress debates how much to spend to save Main St.–and the Fed spends $2.2T immediately to pre-emptively bail out banks & investors–the economy crashes. Read my own ‘Economic Recovery Program’ proposal (+addendum on financing it)

#Fiscalstimulus (Mar 16)

Dems Senate propose $750 billion in emergency stimulus. Too little. $2 trillion will be needed (which is what the Fed just gave banks in free money today). Senate’s McConnell is delay and prevent the $750B, let alone more. WHy? US deficit already at $1.4T this yr

#USstocks (Mar 16)

Markets down -30% so far as of today from prior Feb. highs. My prediction: will decline -50% before current crisis is over. Other financial mkts? Global oil prices will fall within 30 days to $25/bb. Junk bond defaults in US oil patch are inevitable, and already begin

#China (Mar 16)

independent business research sources say China’s 1q20 GDP will contract 10%-15%, though it won’t report it as such.

#USrecession (Mar 16)

What’s the difference between a ‘normal’ recession (R) & ‘Great’ recession (GR)? Ans: Financial markets crash that deepens & prolongs R. Between R, GR & Depression(D)? D occurs after series of banking crashes, as in 1930, 1931, 1932, 1933 in USA

#USrecession (Mar 16)

Here’s an especially scary stat about unserviced debt that leads to default, bankruptcies & mass layoffs: the average days of available liquidity for millions of US small businesses is only 27 days! After that, if no sales revenue, default. Mass layoffs coming in May

#Fed (Mar 16)

rate cuts & QE not about stimulating investment; nor about stopping stock collapse. About preventing bus. defaults contagion to banks that then crash in turn. US not just in recession, but on cusp of another great recession with financial crash overlaid on real recession

#DemocratDebate (Mar 15)

Tonight in debate with Sanders, Biden announces his VP will be a woman. In recent days his team negotiating with Warren. Biden adopts Warren’s bankruptcy & college tuition proposals. Warren selling self to highest bidder. Any bets she’ll be his VP choice anyone?

#USrecesssion (Mar 15)

I’m going to venture here a risky prediction: that despite the massive Fed liquidity injection the financial markets won’t respond all that positively. They may read it as ‘the situation is worse than it appears’. Of course, I could be wrong (hopefully). We’ll see.

#Fed (Mar 15)

back to the future! Fed adds another $500B + $200B in QE purchases as well as 0% rate. After last week’s $1.5T repo purchase. Add all that $2.2T to Fed’s already $4T debt balance sheet. Is that October 2008 deja vu? Free money has no effect in across-the-board “Dash to Cash”

#FED (Mar 15)

just announced rate cut to 0%. Watch for more massive QE & QE lite & term auctions. Fed back to 2008 crisis mode. Question: will this placate or worry markets even more tomorrow? Other news: Calif issues order everyone >64 must self quarantine now. Entire state locking down?

#USrecession (Mar 15)

Minimalist measures being proposed by Trump & Dems to check deep threat of virus to US economy. No major fiscal stimulus program beside Fed & more tax cuts, which won’t work. Read my ‘An Economic Recovery Program: Theirs vs. Mine’ at my blog,

#Fed (mar 14)

watch Fed before mtg to announce a ‘term auction facility’ for shadow bank system, esp. mutual funds and commercial paper. Looks like parts of the banking system are already near freezing up but no one is saying it publicly. Fed action adds to its $1.5T for Repo mkt already

#Fed (Mar 14)

Trump raises again today his right to fire Fed chair, Powell. Wants negative rates like EU & Japan (now in recession; so much for negative rates). Powell capitulated to Trump a year ago & lowered rates; now will move to 0 & QE fast. Won’t matter. Trump looking for scapegoats

#USrecession (Mar 14)

Consumers (66% econ) all that held up US econ 4Q19. Now collapsing. How bad: not just empty store shelves. Now online delivery system being overwhelmed. What will families with babes & young children do? Trump-Pelosi only agree on testing. No econ stimulus yet.

#USrecession (Mar 14)

Replying to ‘economic denialists’ on this blog: $1.5T repo injection ‘not a stimulus’; so bank loans don’t boost economy? Must be ‘paid back fast’; so 1 & 3 mos. repo terms won’t be rolled over? ‘No hoarding’ going on; so corp credit line drawdowns for stock buying?

#Fed (Mar 14)

Next moves this week (after $60B/mo. & $1.5T repo injections already): talk of 1% rate cut (back to 2008 levels of 0.25%) + ‘term auctions’ (a la 2008) QE4. Will Fed go ‘all out’? Or wait to April? Former, if mkts tank again (and they will). It’s a (great?) recession stupid!

#Junkbonds (Mar 13)

Energy junk bond analyst (interviewed on Bloomberg) predicts 30%-40% of junk-laden US oil fracking corps could default this year, should oil prices remain at $30/bb or less for 3-4 more months. (Watch junk heavy retail & travel corps follow as well before year end)

#Coronavirus (Mar 13)

Why first test kits were worthless: they tested for antibodies, not virus itself. New kits test for virus direct. Expect big run up in cases. Viruses are RNA proteins, that take over DNA in our cells. They’re insidious little bastards. And they change (mutate) often

#TreasuryBonds (Mar 13)

liquidity problems in the Repos. Why. Hedge funds took over much of role of banks as intermediaries in repos. Are hedgies now requiring more cash to cover positions elsewhere? Or banks needing more liquidity to service clients’ drawing down credit lines? Or other?

#TreasuryBonds Mar 12)

Why did T-bond rates rise this week, despite stocks collapse? What’s up? Hedge funds in the Repo mkt speculating with Treasuries leveraging bets on interest futures trades, the latter now unwinding due to their losses. Is Fed’s $1.5T repo injection to cover losses?

#stockmarket (Mar 12)

How much did the record 11 yr. stock market bubble create for investors (from Mar 6, 2009 to Feb. 19, 2020)? more than 500%.

#China (Mar 12)

& emerging markets. What’s going on there? Devaluing currencies and dollarized local bonds imploding. Think Argentina & Brazil in trouble now? Just wait. Collapsing currencies & trade means no import purchases. And then there’s China ….

#Creditcrisis (Mar 12)

Accompanying the panic rush to liquidity (i.e. sell off all other assets & hold cash), aka liquidity preference (Keynes) is the related ‘liquidity trap’–i.e. providing more liquidity results in just hoarding it, rather than investing or spending (households) it

#Creditcrisis (Mar 12)

Business media reports (Bloomberg) that the Fed has injected now $5 trillion of liquidity into markets to try to prevent liquidity crisis. The ghost of Keynes (liquidity preference over all other assets) now stalks the corridors of Corporate America everywhere!

#Gold (Mar 12)

Gold prices fall instead of rise. Reason? Same as for ‘safe havens’ like US Treasuries. Investors’ panic flight to hold cash. As Keynes would say: liquidity preference is trumping (no pun intended) demand to hold all other forms of non-cash assets, including the ‘safest’.

#USTreasuryBonds (Mar 12)

The $16T market for US Treasuries acting strange. US stocks fall 2,200 pts & Treasury rates rise (and prices fall). Not vice-versa. Reason: Flight to hold cash everywhere means investors cashing in T’s after big gains=excess supply & price decline & T rates rise.

#Coronavirus (Mar 12)

Head of Harvard Health School today on PBS estimates 40,000 US infected within 2 weeks. 10,000 right now. US worse response of advanced economies. Big problem with testing.

#Repos (Mar 12)

Trump said last night “it’s not a financial crisis”. Why then has Fed announced today a $500B injection into 1 mo. repos + another $500B 3 mo. repos? Reason for $1T ‘QE by another name’: corps drawing down bank credit lines at record levels to hoard cash as revenues crash

#Junkbonds (Mar 12)

The high yield (junk) corporate credit default swaps (CDS) index escalates to 10 year high now in just few days to insure against junk bond defaults (energy, retail, other). Watch for contagion to spread to BBB corporate bonds. But Trump said “not a financial crisis”

#Junkbonds (Mar 12)

For all you finance guys/gals out there: will oil patch high yield(junk) corporate bonds+Junk ETFs(2020 crash)become new subprime mortgage+CDS(2008 crash)? Or will it be oil futures? Repos? India banks? Italy’s? Japan’s central bank ETF losses? Black swans are flocking

#Trump (Mar 11)

bragged about the millions of test kits on the way. Calif. Governor Gavin Newsom said today the test kits California got came without the ‘reagent’. So can’t be used. It’s like sending a printer without the ink and saying write me a report Gavin about how well it’s going

#Repos (Mar 11)

Fed worried re. liquidity, increases one day Repo injection to $175B. (Meanwhile, Trump walks back some of his speech errors in a tweet, saying the freeze on travel from Europe to the US does not include cargo & freight. (It doesn’t have to go through London to get to US)

#Trump (Mar 11)

what do US markets think of Trump’s speech and travel ban? Dow futures down 1124 pts so far. Another -8% one day drop coming maybe?

#Trump (Mar 11)

says on Tv that “testing is expanding rapidly”. But Grand Princess incubator boat in Calif. testing only those with symptoms. Most of 2500 without symptoms told to go home. Not enough tests. (Compare: China tested 200K per day; S. Korea 15K/day. US so far 5k in past 4wks)

#Creditcrisis (Mar 10)

For my analysis of how deflating US-global financial asset mkts may lead to a US corp junk bond’/BBB/leveraged loan credit crisis, read my article, ‘Global Deflating Financial Asset Prices: Prelude to Next ‘Great Recession’ at my blog, http://jackrasmus.com.

#Banking (Mar 10)

watch out for global banking crises brewing: India shadow banks defaults. $10T non-performing bank loans global. Bank of Japan’s stock-buying QE program ($279B in stock ETFs) in big trouble, as it loses 14% of its assets. Medium size US banks in US oil-junk bond patch

#Fiscalstimulus (Mar 10)

Trump waffles on how to stimulate US economy now entering recession. Here’s what conservative Enterprise Institute says: “A little loan here and a payroll (tax) cut there – they are thinking far too small. They should be thinking this is a global financial crisis”

#USshale (Mar 9)

In response to Saudi price cut (their real target is US shale not Russia), US shale producers say they can still remain profitable at $31/bb. Texas crude now at $34. Saudis will keep driving lower prices until Shale with junk bond default & clear out some US players

#Repomarket (Mar 9)

To ward off a possible credit crunch the Fed boosted overnight Repos from $50B to $150B and 14 day Repos from $20 to $45B. In other words, QE lite by another name! Since last September Repo crisis Fed has pumped more than $500B into the market

#Coronavirus (mar 9)

Italy. Infected now 10,000 and deaths rise 25% in one day. Italy now more infections than So. Korea or Iran. Politicians announce ‘lockdown’ on entire country. No one is supposed to go anywhere. Sure. Let’s try herding cats. (not to say Italians are feline, of course

#financialcrisis (Mar 9)

US Dow down 1650 pts(-6%)mid-day. Asia mkts -6%. Oil futures<$30/bb. Spillover to credit mkts coming: $5T US junk/BBBs (energy, retail, then other). US now in recession. (Ditto EU, Japan, S.Korea, ANZ, Latin America, etc.) Bank crash India. Watch Fed more Repo+QE

#Corporatelending (Mar 9)

Global financial asset crash underway, soon to impact credit mkts starting with US junk in energy (oil fracking) and retail (big box), spilling over to rest of junk, then BBBs (most really also junk) and even I-grades. Dow down 1500. T’s all < 1%. Big QE coming

#Oil crashing. (Mar 8)

Saudi-OPEC declared ‘war’ on Russia. Lowered price 20%+ overnight. Saudi to pump 12mb/day, up from 9.7m Feb. Talk of oil prices falling to $20/bb. If so, many US shale producers go bankrupt. Energy junk bonds default. Retail junk bonds & leveraged loans next.

#CoronavirusEurope (Mar 8)

Reports now coming out that Germany last three weeks has had 40,000 ‘flu’ cases with 200 flu deaths. 3X normal. Could these have been coronavirus? Italians in north in exodus to south to flee virus in Lombardy-Milan region. How many will now spread it south?

#FinancialCrash (Mar 8)

now underway?? Oil falls to $30/bb today. US Stock futures down $1200 pts. 30-yr Treasury bonds fall to less than $1. Unprecedented financial asset crashes now in progress.

#CoronavirusUSA (Mar 8)

As US tested cases rise in hundreds, actual much higher. Why? Workers fear to get tested & told to stay home, with no paid sick leave, missed paychecks, no savings, unaffordable hospital deductibles (Drs. refusing office visits of infected), insured high ded/copay

#Oil (Mar 8)

Latest failed Russia-OPEC deal to cut output causes -9.4% collapse oil prices. High price Brent crude now $45/bb. Spilling over to stock & other financial asset prices: mideast stocks fall 8%-10% one day! Watch for falling oil to impact US energy junk bond mkt then BBB bonds

#Coronavirus (Mar 7)

Infections in Italy & Germany rising fast. Italy 6000 cases now, with 1200 in one day yesterday. Lombardy-Milan region ‘locked down’. Germany cases rise from 66 to 1000 in one week. So. Korea more than 7000. US East coast cases rising. Goldman Sachs says 2Q US GDP 0%

#USDeficits (Mar 6)

& social security cuts by Trump after Nov. In Scranton, PA today Trump said, “We will be cutting. It was not immediately clear whether he was referring to the mandatory spending programs, discretionary federal spending or both.” Source: Associated Press, March 6,

#globaleconomy (Mar 5)

China was center of virus crisis. Is India becoming center of next global financial crisis? Shadow banks failing, rupee declining, stock markets falling. No end in sight. What’s the financial contagion effect worldwide? Potentially bigger economic story than virus

#Fed (Mar 5)

quickly cuts rates 50 basis pts. Trump calls for more & says follow EU/Japan rates lower. Takeaways: Trump wants neg.rates; Fed now tail-ending financial mkts; Mkts ho-hum response so far to cut; except for res. housing, rate no effect on real econ; rate policy dead in water

#Fed (Mar 2)

Can Fed rate cut stop severed supply chains, falling foreign demand for US exports, US consumer hoarding, coming layoffs, crashing commodity prices? Absolutely nothing. Why rate cut then? Stop collapsing US stock & financial asset values. But that’s not its mandate, right?

#Fed (Mar 2)

Confirmed rumors that the Fed will cut rates wed. by 50 basis pts has turned stock prices around today. But the ‘buy the dip’ is weak. And money keeps flowing into safe haven Treasuries. This is ‘dead cat bounce’ week for stocks. As US econ weakens, decline will resume.

#Fed (Mar 1)

rumors growing of a Fed rate cut this week of 50 basis pts or .5% (lowering rage to 1%-1.25%), and coordinated with offshore central banks cuts as well. All designed to stop the freefall in equity prices. But wait! The Fed doesn’t target asset prices, right? Yeah, sure.

#stockmarkets (Mar 1)

More 500-1000 pt falls next week. Why so fast? Artificial run-up in stocks from Trump tax cuts boosting profits 25%, diverted mostly to fin. mkts as $1.2 trillion buybacks+dividends in both 2018 & 2019. Tax cut driven profits now disappearing. 2020 earnings now neg.

#Contagion (Mar 1)

Economic contagion deepening. Financial asset prices plunging everywhere. If continues, watch defaults in junk bonds & leveraged loans–starting with US energy & retail sectors. New financial crisis growing possible. As in 2008, followed by major real econ spillover

#coronavirus (Mar 1)

Confirmed cases in Italy surge more than 500 in one day! From 1128 to 1694. A week ago: 0. US-Trump still not stopping flights. Watch for ban on flight from Europe within weeks. Report of 60,000 ship containers locked up in wrong ports or on freighters offshore

#Chinaeconomy (Mar 1)

Predictions growing from legitimate sources that China’s economy will contract 1Q20 by -2% to -14%. Deep contractions Europe & Japan also. Global recession is here. Only question: how soon will it spill over to US.

#coronavirus (Mar 1)

Italy infected with 1128 cases, with 29 deaths, up from 0 week ago. More than 250 cases per/d reported, rising fast to=Wuhan’s 470 cases per/d. US deaths in Washington state, as new pocket in nursing home. Calif. shoppers clearing out grocery stores of cleaning goods

#coronavirus (Mar 1)

Unless it’s an N95 mask it’s totally worthless. Even with N95 masks, most contagion spread by virus on surfaces of objects and then touched with hands or other body parts.

#coronavirus (Mar 1)

Confirmed transmission from Italy to Canary islands and Mexico, due to visitors from Italy. Trump-US policy announced to ‘screen’ travelers from Italy means only those with symptoms. Not tests. Trump says US has 43m test kits. Calif. says it’s been given only 200.

Dr. Jack Rasmus
@drjackrasmus

Trump likes to call himself a ‘war president’. But his claiming this term turns the definition into a bad joke.

Here’s a few brief thoughts on that theme:

Today Trump announced he was ‘invoking’ the war production act to get GM to produce ventilators at its abandoned Lordstown, OH, auto plant.

But wait. Didn’t Trump already ‘authorize’ the War Production Act a couple weeks ago? Was ‘authorization’ just a PR stunt? Appears so. And authorize who to do what? Well, that was never defined either. Nothing happened after authorization. It was just a media soundbite. It was all a sales pitch and marketing spin to the nation. Kind of like someone bankrupt saying ‘the check is in the mail’. Or ‘call me on friday when I get paid’. You can’t believe a word he says.

If Trump were a true war president, instead of the fake and caricature that he is, he’d have seized the Lordstown GM plant weeks ago, ordered the requisitioning nation wide of all required materials to produce ventilators, moved all necessary technical personnel for production to the plant, used the Army Corp of Engineers to build new housing onsite at the plant for the new workforce; requisitioned local construction equipment necessary for such; then run the plant 24-7 and deliver ventilators via the USAF C-135 fleet to cities most in need.

If he were war president, he wouldn’t have ‘invoked’ the war production act just for ventilators, but for all needed medical-hospital equipment. And told everyone involved if they didn’t deliver on time they’d be fired.

In the interim, he would have ordered FEMA to immediately purchase all medical equipment worldwide asap, regardless the price (no negotiations), to be delivered again via USAF to needed cities directly, without diversion to warehousing by the Federal government.

No. Trump isn’t even close to a war president. He couldn’t stand in Franklin Roosevelt’s shadow. Or Harry Truman’s. Or Woodrow Wilson’s even.

No, Trump is a ‘true believer’ that the market solves everything and immediately. Just wave the magic market wand and it will appear! Like the Wizard of Oz behind the curtain, just pull a couple levers, make some loud noise, and it will all happen by itself. Just ask private enterprise and they’ll do it!

In 1941-42 Franklin Roosevelt activated US War Production. A special War Production Board was formed within days of December 7, 1941. It was empowered to requisition anything and everything considered necessary for the war effort. And it did. Roosevelt’s first executive order was to mass produce penicillin, which was thought impossible at the time. The US did it within a few months. Millions would be saved from infections during the war as a result. So where’s Trump’s Executive Order to produce a vaccine for the virus? He calls in a few CEOs from big Pharma and then conducts a media event. Why haven’t all the best medical research minds been mobilized, put in a room in Atlanta at the CDC or even the Pentagon, and told don’t come out until you have it?

During world war II the US didn’t wait for private enterprise to convert factories to war production. The government itself built factories and plants, then leased them over to the private sector to manage. It built entire sections of cities to house workers coming to the new facilities from around the country. You couldn’t obtain building materials to build a house during war time. Ford motor company made a total of 169 cars during the war. But was able to produce tens of thousands of trucks and tanks. So where’s our factories to produce ventilators, N95 masks, face shields, medical gowns, and all the rest of PPE needed. (I’ll tell you where, they were offshored decades ago by US capitalists seeking cheaper wages and greater profits…mostly to Asia and to China which, by the way, now has a surplus that it’s giving to Italy). But when US state governors tried to buy from offshore, the ventilators and PPE are seized by FEMA and the Federal Government. Trump’s administration not only can’t deliver, it’s become an obstacle to governors’ trying to do so. It’s like a general telling his troops to launch an attack but leave half your guns and ammunition here at headquarters company!

If Trump is a war president, he should be sacked, demoted, and sent to a base on the north shore of Alaska to count the caribou.

Trump is a Herbert Hoover wrapped in a Neville Chamberlain; an incompetent general who dribbles out ammunition to his colonels (governors) and tells them to steal from each other if they don’t have enough. He’s an armchair general whose chair has no arms! He’s all ‘talk the talk &amp’ and no ‘walk the walk’, as we used to say!

He’s a commercial real estate pitch man, a barker for a carnival sideshow government, and pathological liar who insults us by running his daily ‘dog & pony’ sales pitch he dares to call a press conference.

Give him a pension and send him away to count the Caribou. Better yet, to the US base in Antarctica to count penguins!

Dr. Jack Rasmus
March 27, 2020

Listen to my various radio interviews in recent days on the condition of the US economy’s ‘Great Recession 2.0’ underway; my summary & analysis of Congress’s just passed ‘CARES’ act stimulus bill; and my own Recovery Program proposals

    TO LISTEN GO TO:

1. By Any Means Necessary Radio Show (March 26)

https://www.spreaker.com/user/radiosputnik/massive-bill-set-to-pass-coronavirus-sti

2. Loud & Clear Radio Show (March 20)

https://www.spreaker.com/episode/24110690

3. Clearing the Fog Radio (March 16: 2nd half hour of show)

https://popularresistance.org/twenty-first-century-neoliberalism-is-failing-where-do-we-go-from-here/

Dr. Jack Rasmus

Just after midnight March 25, 2020 eastern time the US Senate passed a compromise bill of fiscal spending to address the accelerating economic decline. Both Democrat and Republican Senate leaders agreed on the terms. US House of Representatives Speaker, Nancy Pelosi, indicated she would rush approval of the package seeking a unanimous voice vote of the House.

Here’s what the terms of the stimulus package looks like, according to initial summaries by the Washington Post and CNN released within minutes of the bill passage:

Middle class and worker households would get $500 billion in the form of direct checks ($250B) and increased unemployment insurance benefits for the next four months ($250B)

Corporations and businesses would thus get $867B–$367B of which would go to small businesses, and another $500B to large corporations like airlines, defense companies, cruise lines, hotels and other companies.

Additional funding of $130B would go to hospitals to purchase needed medical supplies. State and Local governments get $150B. Other funds would be provided by the government’s Small Business Administration ($10B) to help pay their debt. Reference is made in the package as well for another $20 in farm bailout, raising that total from the $30B spent to date during the US-China trade war to $50B. While it appears the $130B for hospitals and $150B for local governments is in addition to the $867B to business and $500B to households, it’s not clear if the $20B farm bailout and $10B additional SBA are included in the $867B or not.

Here’s a further detail in breakdown of these amounts:

1. $500B to Business

The Airlines get their $58B they’ve been lobbying for. And if past breakdowns still apply, it means roughly half the $58B will take the form of outright grants, not loans, to the airlines and the remainder as loans. It is also unclear if the loans will be ‘forgiven’ after six months, as had been proposed before in past versions of the Senate bill.

Another $17B of the $500B is earmarked for defense companies considered important to national security. No details are released who these are and why such companies, not affected by consumer demand, should receive such an increase. (Possibly to back fill money that has been transferred from them by Trump to help pay for his wall).

Trump has also indicated he intends to have some of the $500B go to cruise lines and hotels which, along with airlines, are critical to his own company’s business.

The remainder of the $500 is designated for spending to support other industries. Whether in the form of loans, grants, or other forms of assistance is still unclear.

2. $367B to Small Business

The Senate bill always included $350B in loans for small business, and the provision that the loans would change to outright grants if used to pay wages and payroll costs. It won’t take clever accounting to use the $350 to cover wages and compensation (and payroll taxes, etc.), as companies move the money that would have been used for such purposes to other areas of their income statements. So consider the $350B as money without repayment—i.e. not a loan.

In addition to the $350B, another $17B is added now for small business to cover interest on their existing loans for six months. Finally, there’s the $10B from the Small Business Administration to help pay debts, which may or may not be part of the other totals.

Add in the $20B for farm support, the $10B from SBA, and the $130B to hospitals, it means Business Large & Small thus get $1,027B in direct assistance by the government in the new agreed on Senate-House stimulus package.

Another item that the Democrats demanded and received in part was to have an Oversight Board to review how corporations and businesses actually spent the government money. In the previous emergency economic recovery legislation in 2009, much of the direct assistance was ‘gamed’ by businesses that received it. Some even used it to buyback their stock and award bonuses to managers. The Oversight Board is supposed to prevent that. It remains to be seen, however. Who will be chosen to manage the Board will make all the difference. It can be assumed the Republican Senate or Trump will choose compliant board members. As Trump has said publicly when asked who will ‘oversee’ the distribution of the funds to business, he replied “I’ll be the oversight”.

Middle class families and workers get a total of $500B under the agreement, which is what it was before. It appears that the money was just ‘moved around’.

3. Direct Household Cash Assistance

Talk of $3,000 per household is now changed to a check of $1,200 for a single household member, or $2,400 for married couple, plus $500 per child. (It’s unclear if that’s for all children in a family or just up to two).

To qualify for the full $1,200/$2,400 an individual must make no more than $75,000 income annually. Income above $75,000 phases out until $99,000 after which no payment is made. For couples, the phase out is at $199,000 per household.

4. Increased Unemployment Insurance Benefits

The package includes an increase of $600 to the state’s defined level of unemployment benefits paid (that vary by state quite a bit). But it’s unclear if the $600 applies to the highest paid state benefit payment or to all levels of state benefit payments. For example, in California the top payment is $450/week. The new payment would be $1,050/week. But will those below the top payment level also get $600?

A plus to the unemployment insurance provision is that it will also apply to contingent work: that is, to part time, temp, contract labor not just to full time employed who are laid off due to the effect of the virus on company shutdowns.

On the negative side, all the improvements in unemployment insurance will take effect for only 4 months, then will expire.

It is clear, therefore, that middle class families will receive only the $500 billion that had been allocated before—in the form of cash assistance one time worth $250 billion and improved unemployment benefits for four months costing another $250 billion. It appears some of the cash assistance was redirected toward improvement in unemployment insurance benefits, but no net increase in the total $500B on the negotiating table before.

In other words, in the final stimulus bill businesses get more than twice as much as do households and the working class!

5.State & Local Governments

An additional $150 billion is allocated in the bill to assistance to state & local governments.

    THE TOTALS:

The totals in spending thus appear to be approximately $1,650 billion! It is being reported as a $2T stimulus effect and increase in US GDP overall. AS Trump’s advisor, Larry Kudlow, has said on a previous occasion, the $2T represents the spending plus the ‘multiplier effect’. $2T is not therefore the actual spending. That is less, around the $1,650T estimated here. The difference is a multiplier effect of about $400B.

But that’s a generous estimate of the multiplier. It’s based on normal economic conditions. And the current collapse of the real and financial US economy is anything but normal. The multiplier will be much less. That is because much of the spending by the government, to business and households alike, will be used to pay down debt, hoard the money due to expectations of future profits and employment insecurity, or to cover price gouging by businesses selling necessities.

The US economy spends monthly the equivalent of $1.7 trillion. The Senate’s stimulus package is thus a one month stop-gap at best! As this writer has been arguing in recent days, the stimulus needed to get through the summer will have to be $4 trillion, not $1.65 trillion.

The $2 trillion (spending + multiplier) is estimated at around 9% of US Gross Domestic Product, GDP, at present. A 20% increase of GDP is necessary, raising total government spending in GDP terms from the roughly current 21% of GDP to 40%.

40% of GDP is what the US government raised spending to in 1942, when we went to war at that time. It was an increase from around 15% pre-war. If the fight against the new enemy, the virus, is a kind of ‘economic war’, then the US will have to mobilize its economy again on a war footing. Trump’s activation of the War Production Act, and then doing nothing about it further, is not a war mobilization. Trump is not a ‘war president’, as he claims. Indeed, he allowed the enemy to actually penetrate our shores and spread among us with his delayed action to stop airline travel and cruise travel. It’s not an accident that the largest concentrations of the virus infections are in our coastal ports and airports—Washington state, California, New York, and now increasingly New Orleans, Philadelphia, Chicago and Miami.

Trump as ‘War President’ & Other Fictions

Unlike our prior war presidents, Roosevelt and Truman, Trump is not mobilizing production and distribution of key resources and supplies to fight the enemy. He simply asks the private sector to do it and then gives his daily ‘sales pitches’ to the nation press conferences to say what he’s doing when he’s not actually doing it. War supplies (masks, ventilators, PPE) are promised and promised but are slow to appear, if they ever do.

The question follows then whether the current Senate-House stimulus bill represents a sufficient stimulus to protect the US economy. The answer is no. It’s not even half way there for Main St.

In contrast, however, the Federal Reserve US central bank has quickly allocated no less than $6.2 Trillion so far to bail out the banks and investors, even before they fail this time. And promises to do more if needed and for as long as necessary. It is writing a blank check for the bankers and investors.

Meanwhile Congress provides one-fourth that, and only one third of that one fourth, for the Main St., workers, and middle class families.

Finally, it is clear from Trump’s statements in recent days that he knows this stimulus is only a one month hit to the economy. That’s why he—and the capitalist investors who have been lobbying him hard the past week—are turning up the message we should all start going back to work by mid-April.

As Trump put it, the timing is ‘beautiful’, at Easter. But it won’t be so beautiful when a surge in infections and death occur on top of the current surge underway occur by early summer.

But profits and money are more important to this wheeler-dealer, commercial property speculator capitalist in the White House. With the US budget deficit this fiscal year almost certainly to exceed $3 trillion, and his election looming on the horizon, Trump and friends see Wall St. and US business interests as more important than the rising death rate that is inevitable should we return to work prematurely by mid-April. Such action will all but ensure the eventual overwhelming of the US hospital system three months from now, an even higher death rate, and an even greater collapse of the US economy and financial system in the aftermath.

Trump may think he’s at war with the coronavirus, but it is the virus that is winning! And his poor generalship is aiding and abetting that enemy. Unfortunately, the American public—and especially the old and infirm—are becoming the ‘cannon fodder’ in Trump’s phony war.

Dr. Jack Rasmus
Copyright, March 25, 2020

Dr. Rasmus is author of the just published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, January 2020; ‘Central Bankers at the End of Their Ropes’ (2017), and ‘Systemic Fragility in the Global Economy’, 2016. He blogs at jackrasmus.com and tweets at @drjackrasmus. His website is http://kyklosproductions.com.

Here’s some details of what’s in the Senate fiscal bill agreed on today, but not yet released (as far as I know) as of 8pm est. My detailed analysis to follow tomorrow.

It’s a $2 trillion package. But as Larry Kudlow, Trump’s advisor admitted, that total includes an assumed multiplier effect and the total stimulus to US GDP, not the actual spending total. At $2T and an assumed multiplier impact of $700B (1.5), the actual spending total is $1.3 trillion, not $2 Trillion.

On the business side it includes $350 billion in small business loans. What’s ‘small’ is unclear. So too is whether some of that falls under the Federal Reserve’s announced $4T pre-emptive bailout of bankers, credit card companies, mortgage lenders, private student loan lenders, and auto finance lenders (What the Fed calls its ‘Main St. Package). The Fed claimed that package included loans to small business too. If that overlaps with Congress’ bill remains to be clarified. Clarified too will be how much of $350 is in loans vs. in outright grants to small business.

It’s also known that Airlines will get $61 billion–$32 billion in grants and another $29 billion in loans. Seems their management threat to layoff all airline workers if they didn’t get the $61 billion handout had their desired lobbying effect.

Democrats pushed to get oversight on the remaining loans/grants to big corporations. Unclear as yet what that means

What Pelosi-Shumer couldn’t get from McConnell, they got by going around him and negotiating with Mnuchin.

Some details favoring workers & middle class households include a $1,200 cash payment per family, plus $500 more per child. Limits on # children eligible for $500 also unknown as yet. Same for income level for eligibility. Also if only unemployed get the $1,200 cash or all families. Some estimates are this amounts to $300B total. Others, $500B.

Other provisions verified include $130 billion for hospitals and $150 billion for state and local governments Democrats were demanding.

Looks to me like they ‘moved the money around’, as they say in union negotiations. Instead of the previously $3,000 cash per family and more unemployment insurance for rest of year, the Dem leadership agreed to only 4 months for the latter, moving some of the $3k to unemployment and some to hospitals & local governments.

A full analysis to be posted here when available, as well as my assessment why it will not work and why $4T for households workers is need, not just $1.3T. Plus why the bankers and investors will be getting $4T from the Fed, plus another $.5T in the Senate bill, but workers only $.5T?

Looks like the Obama recovery package of 2009 in terms of total fiscal stimulus. That was $787 billion and failed to stimulate a normal recovery from recession in 2009-10. This economic contraction is more severe, with economy falling faster and deeper, with unemployment rising at 2 million a month instead of 1 million, and GDP forecasts for coming 2nd quarter at -24% to -30%. Unemployment rate could rise to 30%, according to St. Louis Fed governor, Bullard.

Giving money to business in loans and tax cuts will have absolutely no effect on the real economy recovery. It didn’t in 2008-09 and won’t now. If Trump’s 2018 $4.5 trillion tax cut plus 2019 additional $427B investor loopholes tax cut resulted in real investment declining all last year, 2019, more tax cuts and more loans now won’t have much effect either again.

$500 billion for the working class and middle class falls far short of the $4T that is needed. If the Federal Reserve can give bankers and investors $6.2 trillion ($2.2 trillion last week and another $4T to come) why are workers being ‘short changed’? Even if there were a recovery starting today, the longer term recovery will be slow and tortured for working families. Slower than even after 2009.

But this current economic crisis is still unfolding and has a long way to go. As this writer forewarned back in September 2018, this ‘great recession 2.0’ now unfolding promises to be significantly worse than the 2008-09 event.

Dr. Jack Rasmus
March 24, 2020