by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus
The Financial Collapse
The Fed Backfires: Shock and Awe Rate Drop to 0%, Emergency Bond Buying Program Leads to Limit Down Drops in US Equity Futures as Real World Coronavirus Damage Worsens[Naked Capitalism 3-16-20]
Reserve Requirements
[Federal Reserve, Naked Capitalism 3-19-20]
[Twitter below via Naked Capitalism Water Cooler 3-17-20]
I can't believe I'm entering the second global financial meltdown of my adult life and more or less the same people are still in charge of everything
Fed Announces Program for Wall Street Banks to Pledge Plunging Stocks to Get Trillions in Loans at ¼ Percent Interest
Pam Martens and Russ Martens: March 18, 2020 [Wall Street On Parade]
Veterans on Wall Street think of it as the cash-for-trash facility, where Wall Street’s toxic waste from a decade of irresponsible trading and lending, will be purged from the balance sheets of the Wall Street firms and handed over to the balance sheet of the Federal Reserve – just as it was during the last financial crisis on Wall Street.
Capitalism in the time of COVID
Green Jobs Are the Answer to the Coronavirus Recession
How To Structure the Coronavirus Bailout
Matt Stoller [via Naked Capitalism 3-19-20]
The coronavirus outbreak is exposing the devastating gaps between the rich and poor at a moment when America is primed for class warfare
[New Republic, Naked Capitalism 3-19-20]
Franklin Roosevelt used the Public Works Administration, Civilian Conservation Corps and Works Progress Administration, so that the federal government directly hired millions of people to give them a steady paycheck. Today, the federal government should be hiring millions of people and begin teaching them how to care for people that are ill with COVID19, or how to manufacture medical equipment, or how to operate emergency food distribution.
Why is there no discussion of the federal government building new emergency hospitals, or building new manufacturing plants to make ventilators, face masks, and other medical equipment? Why is there no discussion of the federal government seizing control of any drug company or medical device manufacturer or producer or seller of handiwipes that tries to take advantage of this crisis to price gouge? Because people have been indoctrinated with the idea that such a direct government role in the economy is bad. What we’re about to find out is, that idea is what’s bad. Another example of how our unquestioned economic ideology limits our options.
Franklin Roosevelt used the Public Works Administration, Civilian Conservation Corps and Works Progress Administration, so that the federal government directly hired millions of people to give them a steady paycheck. Today, the federal government should be hiring millions of people and begin teaching them how to care for people that are ill with COVID19, or how to manufacture medical equipment, or how to operate emergency food distribution.
Why is there no discussion of the federal government building new emergency hospitals, or building new manufacturing plants to make ventilators, face masks, and other medical equipment? Why is there no discussion of the federal government seizing control of any drug company or medical device manufacturer or producer or seller of handiwipes that tries to take advantage of this crisis to price gouge? Because people have been indoctrinated with the idea that such a direct government role in the economy is bad. What we’re about to find out is, that idea is what’s bad. Another example of how our unquestioned economic ideology limits our options.
How To Structure the Coronavirus Bailout
Matt Stoller [via Naked Capitalism 3-19-20]
But the bailout cannot and should not simply flow into the sticky hands of financiers so they can buy more private jets after the crisis has passed. Right now, the American corporate apparatus is designed as a sort of pass through entity for financiers. For instance, Toys R’ Us became a mechanism for a private equity company to grab cash, and only incidentally a toy retailer. Any bailouts - particularly to large businesses - must be conditioned to stop these kinds of transfers.
It’s unlikely most corporations could handle a shock like what they are experiencing, but our big businesses are particularly unsuited to do so now. For the last forty years, Wall Street thinned out the ability of our corporations to handle risk by loading them up with debt and encouraging mergers and offshoring. American corporations used to have little debt, as well as localized production facilities and responsible executives who understood production. It was a resilient system, able to handle swings in the economy. That is no longer the case.
Since William Simon and Michael Milken in the 1980s organized junk bond fueled takeovers, American finance has been organized around smashing our industrial systems for cash, and injecting hidden risk into American society. The lack of capacity to make our own medicine or masks is precisely a result of this hidden risk....
Financialization and private equity is about loading up corporations with hidden risk. We cannot afford that anymore. So here are the conditions to put on large corporations who need cash from the government.
- No bailouts for shareholders. Shareholders took the risk and upside, they should get the downside too. A bailout means the stock value goes to zero.
- No more buybacks ever, and no more dividends for five years. It’s time to stop asset-stripping, and restore the cushion inside corporations so they can invest in production.
- Strict executive compensation limits. No more get rich quick schemes and golden parachutes. We need long-term leaders focused on building institutional strength.
- No more lobbying, as well as limit public relations spending. The Housing and Economic Recovery Act of 2008 killed the ability of Fannie Mae and Freddie Mac to lobby, and that killed their political power. By contrast, Wall Street got bailouts with no strings attached, so they largely wrote the Dodd-Frank bill. (I was there, I saw it). Don’t repeat this.
- No more mergers and acquisitions for five years. If you get bailouts, you have to run your business as a business, not as an acquisition target. I can imagine an exception if the business fails as a stand-alone, but exceptions need to be very narrow.
[Business Insider 3-21-20]
Wealthy people are paying private labs for coronavirus tests, taking private jets out of infected areas, and spending thousands of dollars stockpiling air purifiers, Ebola hazmat suits, and $4,000 cuts of meat....
A Pew survey found that the majority of people making more than $100,000 said they would continue to get paid if coronavirus caused them to miss work for at least two weeks. Just 16% of those making less than $30,000 said the same. 41% of white workers said they would continue to get paid, compared to 27% and 23% of Black and Hispanic workers, respectively.
While many companies have updated their sick-leave policies, and a new bill requires companies with 50 to 500 workers to provide paid leave tied to the coronavirus, millions are still not covered. Lower-income workers are far less likely to have paid sick leave — 31% of the lowest-earning 10%, versus 94% of top earners, according to Pew. Many gig economy workers, such as Lyft drivers and Seamless delivery people, still do not have paid sick leave as part of their jobs.
Nine Thoughts On COVID-19 And What’s Coming
[Caitlin Johnstone, via Naked Capitalism 3-17-20]
3 – I think this is going to hit America much harder than other countries, unfortunately. Combine a literal joke of a healthcare system with a president who up until just today has been dismissive of the threat the virus poses, the fact that the majority of Americans can’t afford a $1,000 emergency expense at a time of mounting layoffs while being chronically uninsured or underinsured, an inability to make anything happen without massive corporations voluntarily going against their own profit margins, a culture of rugged individualism with a reflexive distaste for collectivist organization for the good of the whole, and a highly religious population with many preachers telling their underinsured parishioners to demonstrate their faith by gathering at the megachurch and shaking hands with everyone, and you’ve got a recipe for disaster....
8 – Also interesting is watching people react to the way so many of the corporate and government policies which have been causing ordinary human beings to suffer great pains are now simply being canceled all around the world in response to the pandemic. This Slate article documents a number of the changes which have been made just in America, like how for people being thrown in jail for minor offenses, “San Antonio is one of many jurisdictions to announce that, to keep jails from being crowded with sick citizens, they’ll stop doing that. Why were they doing it in the first place?” Or how “Trump has instructed government agencies who administer loans to waive interest accrual for the duration of the crisis. But why on earth is our government charging its own citizens interest anyway?”
We’re seeing immense burdens lifted from people with an easy “Oh, that’s making the pandemic worse? Okay we’ll stop that then.” And we’re seeing people react with fully justified indignation with, “Well why were you doing that to me in the first place??”
Facing Pandemic, Grover Norquist's Dismantled State Stumbles
[The Atlantic, via Naked Capitalism Water Cooler 3-18-20]
Mihai Andrei March 20, 2020 [zmescience]
Coronavirus Capitalism — and How to Beat It
We were warned in 2012, when the Rand Corporation surveyed the international threats arrayed against the United States and concluded that only pandemics posed an existential danger, in that they were “capable of destroying America’s way of life.”
We were warned in 2015, when Ezra Klein of Vox, after speaking with Bill Gates about his algorithmic model for how a new strain of flu could spread rapidly in today’s globalized world, wrote that “a pandemic disease is the most predictable catastrophe in the history of the human race, if only because it has happened to the human race so many, many times before.” If there was anything humanity could be certain that it needed to prepare for to prevent the deaths of a lot of people in little time, it was this.
We were warned in 2017, a week before inauguration day, when Lisa Monaco, Barack Obama’s outgoing homeland-security adviser, gathered with Donald Trump’s incoming national-security officials and conducted an exercise modeled on the administration’s experiences with outbreaks of swine flu, Ebola, and Zika.A graphic timeline of Trump’s statements on the coronavirus
Mihai Andrei March 20, 2020 [zmescience]
Impact of non-pharmaceutical interventions (NPIs) to reduce COVID19 mortality and healthcare demand (PDF)
[Imperial College COVID-19 Response Team, via Naked Capitalism 3-18-20]
This is the report that finally got the Trump administration’s attention, per one of the White House task force leaders, Dr. Deborah Birx. Coronavirus Capitalism — and How to Beat It
[The Intercept, via Naked Capitalism 3-17-20]
This video is less than nine minutes in length. It features Naomi Klein, author of the important 2007 book, The Shock Doctrine: The Rise of Disaster Capitalism, which ripped the mask off the brutal ghouls like MIlton Friedman and his “Chicago School” of predatory economics.
[Graph below, via The Big Picture 3-16-20]
‘We should blow up the bridges’ — coronavirus leads to class warfare in Hamptons
Democrats balk at $1,200 rebate checks in stimulus plan
This video is less than nine minutes in length. It features Naomi Klein, author of the important 2007 book, The Shock Doctrine: The Rise of Disaster Capitalism, which ripped the mask off the brutal ghouls like MIlton Friedman and his “Chicago School” of predatory economics.
[Graph below, via The Big Picture 3-16-20]
“Coronavirus Shows Capitalism Is a Razor’s Edge”
[In These Times, via Naked Capitalism Water Cooler 3-16-20]
[In These Times, via Naked Capitalism Water Cooler 3-16-20]
“The systems that are breaking down in this crisis were already broken before it began, and a radical reimagining of what could replace them is the best and only option—for this public health crisis, and for the ordinary, everyday crises that go unremarked. Universal income, Medicare for All, an immediate end to the brutal sanctions regime worsening the outbreak in Iran and around the world, a moratorium on evictions, the freeing of prisoners: Anything less than full social mobilization in the name of solidarity will leave us falling without a net. Or biking without health insurance, to a job that could evaporate.”Coronavirus Showed That America Wasn’t Up to the Task
[Atlantic, via Naked Capitalism 3-17-20]
[Smart Air, via Naked Capitalism 3-18-20] Handy chart:
I ran the White House pandemic office. Trump closed it.
Mark Sumner, March 21, 2020 [DailyKos]
There’s a Giant Hole in Pelosi’s Coronavirus Bill
I ran the White House pandemic office. Trump closed it.
[Washington Post, via The Big Picture 3-15-20]
[Business Insider 3-21-20]
[Buzzfeed, via Naked Capitalism 3-15-20]
The coronavirus outbreak is a good time to ask why our leaders sat by as so much of the US pharmaceutical industry was shipped abroad.
China’s Hubei province is the epicenter of the global coronavirus outbreak. It’s also home to at least 12 drug plants supplying the US with everything from painkillers to antibiotics. And beyond Hubei, an estimated 80% of pharmaceutical ingredients are sourced from China and India (which, in turn, sources nearly 80% of its drug ingredients from China).Kentucky vs. Tennessee on coronavirus may be the best example of 'elections matter' in decades
Mark Sumner, March 21, 2020 [DailyKos]
Last November, voters in Kentucky handed the governorship to Democrat Andy Beshear in a narrow victory.... Tennesseans elected Bill Lee as their 50th governor. The Republican governor has rejected efforts to expand Medicaid in the state.... Tennessee had its first case on the same day as Kentucky, and Bill Lee did … nothing. As Beshear was closing schools in Kentucky, Lee told the people of his state that there was no reason to close schools or workplaces.
The result of these two policies is that the neighboring states are on very different paths. While Kentucky has seen an increase in cases, that increase has been slow. Not only does Kentucky have only 48 identified cases, it has conducted 768 tests. Tennessee now shows 228 cases resulting from many fewer tests, and it’s on an arc that is growing at a much higher rate.
There’s a Giant Hole in Pelosi’s Coronavirus Bill
Editorial Board [New York Times, via Naked Capitalism 3-15-20]
Pelosi tweeted: "I don’t support U.S. taxpayer money subsidizing corporations to provide benefits to workers that they should already be providing." Uhh, madame Speaker, corporations not providing benefits to workers is a ship that sailed a long, long time ago.
[Twitter below via Naked Capitalism Water Cooler 3-18-20]
My brother got laid off yesterday from Marriott.
He applied for unemployment; they called to check his employment status.
Marriott HR says he’s NOT laid off but on a ZERO hour schedule. So he can’t qualify for unemployment NOR does he have health insurance.
He applied for unemployment; they called to check his employment status.
Marriott HR says he’s NOT laid off but on a ZERO hour schedule. So he can’t qualify for unemployment NOR does he have health insurance.
[KHN, via Naked Capitalism 3-18-20]
“The measure would still provide two weeks of sick leave to a wide swath of workers affected by the pandemic, but for the next 10 weeks, paid leave would be limited only to workers caring for a child whose school or day care had been shut.”Biden Sides With Big Pharma Against Plan That Could Make Coronavirus Vaccine Affordable
[Sludge, via Naked Capitalism 3-20-20]
18% of U.S. workers have lost jobs or hours since coronavirus hit, poll finds
18% of U.S. workers have lost jobs or hours since coronavirus hit, poll finds
Los Angeles Times, via Naked Capitalism 3-18-20]
As fallout from the coronavirus pandemic hits the economy, it’s slamming the American workforce: Some 18% of adults reported that they had been laid off or that their work hours had been cut, a new poll found.
The proportion affected grew for lower-income households, with 25% of those making less than $50,000 a year reporting that they had been let go or had their hours reduced, according to a survey released Tuesday by NPR, PBS NewsHour and Marist of 835 working adults in the contiguous United States.“Trump Pushed Aides to Seek a Trillion Dollars in Virus Response”
[Bloomberg, via Naked Capitalism Water Cooler 3-18-20]
“President Donald Trump encouraged aides to enhance an $850 billion stimulus package to address the coronavirus crisis, telling them to go big and bump the number up to a trillion dollars, people familiar with the matter say.”Lambert Strether added: "Assuming it’s true, this is in great contrast to Obama’s behavior in 2008; and even if it’s not, it shows the Republicans know what message to send."
‘We should blow up the bridges’ — coronavirus leads to class warfare in Hamptons
[NY Post, via Naked Capitalism 3-20-20]
[Politico, via Naked Capitalism 3-20-20]
Here's who would benefit from the Senate GOP plan:
- U.S. Airlines: $58 Billion
- Small Businesses: $300 Billion [loans! wtf?]
- Hospitals: Not The $100 Billion They Wanted
- Retailers, Restaurants and Hotels: $15 Billion
- Taxpayers: Direct Payments
- Businesses in General: Tax Relief
[The Hill, via Naked Capitalism 3-21-20]
Sen. Cory Booker (D-N.J.) on Friday afternoon hit the GOP rebate plan for “skipping over” people who need the most help. “The current proposal would exclude exactly the people and households who actually need it most,” he said. “By creating an income requirement and phase-in, this plan currently proposed would be skipping over the most vulnerable people.”
[The Intercept, via Naked Capitalism 3-15-20]
[The Atlantic, via Naked Capitalism Water Cooler 3-20-20]
“We’ve built a global supply chain that runs on outsourcing and thin margins, and the coronavirus has exposed just how delicate it is. ‘I guess we’ve done a good enough job within the health-care supply chain of getting pricing down to the point that the vendors don’t have a lot of extra margin or slack to play with,’ [Doug Watkins, who oversees the supply chain at the Medical University of South Carolina health system] said. So when demand spikes, everyone feels it. The Institute for Supply Management, which conducts monthly economic surveys, found that nearly 75 percent of the companies it contacted in late February and early March reported some kind of supply-chain disruption due to the coronavirus. And 44 percent of the companies didn’t have a plan to deal with this kind of disruption. “That is a little surprising in this day and age,” ISM’s CEO, Tom Derry, said in an interview. ‘However,’ he added, ‘you have to realize that there’s almost no industry sector—and when I say that, I mean manufacturing and nonmanufacturing—that isn’t reliant on China in the United States.” • So how’s that globalization thing workin’ out for ya?
[Business Insider, via Naked Capitalism 3-18-20]
Fear of China Made Taiwan a Coronavirus Success Story
Fear of China Made Taiwan a Coronavirus Success Story
[Foreign Policy, via Naked Capitalism 3-18-20]
The Carnage of Establishment Neoliberal Economics
Robert Skidelsky Says More…
[Project Syndicate, Mar 17, 2020]
[The New Republic, March 20, 2020]
[Project Syndicate, Mar 17, 2020]
Robert Skidelsky: My major concern is that we could drift back toward the bad old days, when the fiscal-policy “tap” was turned on and off out of panic or for political reasons. Fiscal policy should aim to balance the economy at full employment. Politicians must not be allowed to play fast and loose with taxes and spending.
We thus need to distinguish between long-term capital investment and short-term stabilization policy. Capital investment should aim to achieve a steady flow of investment projects independent of the business cycle. Short-term policy should aim to strengthen the “automatic stabilizers” by means of a public-sector job guarantee. Both establish a degree of automaticity in the management of long-term and short-term demand....
RS: My view of [Modern Monetary Theory] – essentially, the idea that the state’s only “budget constraint” is inflation – is that it is technically correct, but can’t be sold politically, because it violates the ancient constitutional principle that the state should spend money only with taxpayer consent.
By contrast, the idea that the state should be “employer of the last resort” is very sellable – and very old. Long before economists supposedly proved that unwanted unemployment was impossible, governments routinely provided employment in times of crisis through public works. A job guarantee today would abolish unemployment for the first time since the Industrial Revolution!Our Never-Ending Recession
[The New Republic, March 20, 2020]
For the last four decades, “the economy” has been less a measure of any kind of shared prosperity than a weathervane for the investment portfolios of the 1 percent.... it’s worth recalling that the same record-breaking market didn’t deliver much to the majority of Americans over the last 11 or so years. Most crucially, the bulk of economic gains during the Great Recession recovery went to the rich: According to one 2016 report from the Economic Policy Institute, the top 1 percent captured over 85 percent of total income growth between 2009 and 2013. In fact, it wasn’t until 2017—a full 10 years after the official start of the recession and about two before the first case of the coronavirus was reported—that median household income finally bounced back to pre-recession levels. And even that just meant a return to real wages that had barely budged for decades.
Anna Stansbury and Lawrence Summers [Brookings Institute, via Naked Capitalism 3-20-20]
A decline in workers’ power, rather than an increase in corporations’ monopoly power, likely explains the co-existence of four significant trends in the U.S. economy since the early 1980s: a declining share of national income going to labor, increased market values of corporations, low average unemployment, and low inflation....
Increased monopoly power is commonly believed to explain the trends in labor income and corporate profits—but it is hard to reconcile with the substantial falls in average unemployment and inflation over the period, [but a] decline in worker power can explain all these trends, they argue.
“Declining unionization, increasingly demanding and empowered shareholders, decreasing real minimum wages, reduced worker protections, and the increases in outsourcing domestically and abroad have disempowered workers with profound consequences for the labor market and the broader economy,” the authors write in Declining Worker Power and American Economic Performance.
“Before the rise of Fascism, both Italy and Germany had a robust social safety net and public services. In Italy, the trains were nationalized, and they ran on time while serving rural villages in 1861. The telecom industry was nationalized in 1901. Phone lines and public telephone services were universally available. In 1908, the life insurance industry was nationalized. For the first time, even poor Italians could ensure that their family could be taken care of if they died a premature death…. In 1934, Nazis outlined their plan to revitalize the German economy. It involved reprivatization of significant industries: railways, public works project, construction, steel, and banking. On top of that, Hitler guaranteed profits for the private sector, and so, many American industrialists and bankers gleefully flocked to Germany to invest. The Nazis had a thorough plan for deregulation….”
Predatory Finance
Banks Pressure Health Care Firms to Raise Prices on Critical Drugs, Medical Supplies for Coronavirus
[The Intercept, via Naked Capitalism 3-20-20]
“Hospitals, Cities Hit by Surging Interest Rates in 2008 Echo”
Over the past few weeks, investment bankers have been candid on investor calls and during health care conferences about the opportunity to raise drug prices. In some cases, bankers received sharp rebukes from health care executives; in others, executives joked about using the attention on Covid-19 to dodge public pressure on the opioid crisis.
Remdesivir is an antiviral that began development as a treatment for dengue, West Nile virus, and Zika, as well as MERS and SARS. The World Health Organization has said there is “only one drug right now that we think may have real efficacy in treating coronavirus symptoms” — namely, remdesivir.
The drug, though developed in partnership with the University of Alabama through a grant from the federal government’s National Institutes of Health, is patented by Gilead Sciences, a major pharmaceutical company based in California. The firm has faced sharp criticism in the past for its pricing practices. It previously charged $84,000 for a yearlong supply of its hepatitis C treatment, which was also developed with government research support. Remdesivir is estimated to produce a one-time revenue of $2.5 billion.
During an investor conference earlier this month, Phil Nadeau, managing director at investment bank Cowen & Co., quizzed Gilead Science....Wall Street is predatory. Just a fact.
“Hospitals, Cities Hit by Surging Interest Rates in 2008 Echo”
[Bloomberg, via Naked Capitalism Water Cooler 3-20-20]
“On Wednesday, as a hospital system in Memphis, Tennessee, was preparing for how to combat the spreading coronavirus, the havoc the pandemic was causing on Wall Street rippled down with its own financial hit. Investors were rapidly hoarding cash as the economy grinds to a near halt, creating an exodus from the corner of the municipal-bond market where the health-care provider had raised cash. With short-term yields surging, U.S. Bank more than doubled the interest rate on $124 million of variable-rate bonds issued by Methodist Le Bonheur Healthcare to 5% — threatening to add almost $4 million a year to its annual debt payments.”Lambert Strether added: "Guess we’ll have to take those interest payments out of the ventilator budget….."
Climate and environmental crises
“No, the coronavirus is not good for the climate”
[The Correspondent, via Naked Capitalism Water Cooler 3-16-20]
“Wishing for a disaster to make the large-scale changes that scientists say are necessary to prevent a planetary collapse is counterproductive. Remember, we’re doing this to *save* lives. Cheering on the coronavirus because of climate change isn’t progress, it’s eco-fascism. It’s the same logic that eugenicists use to argue for population control, or racists use to preach ethnic nationalism and anti-immigration policies in an era of climate emergency. Discrimination and death are not the way to reduce emissions. Ending the climate emergency is not just about reducing emissions. It’s about treating each other better. And, it’s very likely that the ultimate climate legacy of the coronavirus will be a setback to global efforts to transition to a zero-carbon society. Due to the sudden drop in aerosols, temperatures could actually rise this year.Greenland’s Melting Ice Raised Global Sea Level By 2.2mm In Two Months
[Guardian, via Naked Capitalism 3-21-20]
[Fast Company, via Naked Capitalism Water Cooler 3-16-20]
Health Care Crisis
“Copper kills coronavirus. Why aren’t our surfaces covered in it?”[Fast Company, via Naked Capitalism Water Cooler 3-16-20]
“When influenzas, bacteria like E. coli, superbugs like MRSA, or even coronaviruses land on most hard surfaces, they can live for up to four to five days. But when they land on copper, and copper alloys like brass, they die within minutes. “We’ve seen viruses just blow apart,” says Bill Keevil, professor of environmental healthcare at the University of Southampton. ‘They land on copper and it just degrades them.’ No wonder that in India, people have been drinking out of copper cups for millennia. Even here in the United States, a copper line brings in your drinking water. Copper is a natural, passive, antimicrobial material. It can self-sterilize its surface without the need for electricity or bleach… In the face of an unavoidable future full of global pandemics, we should be using copper in healthcare, public transit, and even our homes. And while it’s too late to stop COVID-19, it’s not too early to think about our next pandemic.”
Information Age Dystopia
[Business Insider 3-21-20]
Collapse of Independent News Media
How Fox News misled viewers about the coronavirus
[CNN, via The Big Picture 3-15-20]
Barry Ritholtz, March 18, 2020 [The Big Picture]
[The Big Picture, via The Big Picture 3-15-20]
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