|
Across the country, from political leaders, to small business owners, to parents who just want to take their children to the park, resistance is growing to the authoritarians who have effectively suspended the Constitution and placed most of the country under house arrest. Lawsuits are also challenging unlawful "stay at home" orders. What if all the hysteria-driven orders have actually made the virus outbreak even worse? More scientists are coming forward to argue for the "Sweden model" of moderation rather than lockdown.
By Jeff Deist
"South Dakota is not New York City." A seemingly innocuous statement, made last Wednesday by Governor Kristi Noem in response to calls for her to issue a coronavirus shutdown across a state with the motto "Under God the People Rule." South Dakota, after all, is one of the least densely populated states in the vast American West. Surely local circumstances should inform local responses to a communicable disease? Not so, according to Noem's scolds at Change.org. They want the same "theory" applied in Brooklyn and in prairie towns with eleven residents per square mile. To her tremendous credit, Governor Noem has held firm against the tide of state officials ordering lockdowns and shelter-in-place directives. As of today five US states do not have statewide shutdown orders in place, and some sheriffs too have stood bravely against impositions of soft martial law. Here are some of Governor Noem's excellent recent statements regarding South Dakota's response to the pandemic: The calls to apply for a one-size-fits-all approach to this problem is herd mentality.
Refreshing, and also a needed reminder that all crises are local. No matter how rich you are or where you live, you are enormously dependent on localized medical care, food, water, electricity, gas, and general lawful behavior. Every calorie, kilowatt, and drop of water must make its way to your location no matter how complex the underlying economy is today. Doctors, nurses, and drugs must be available within a reasonable distance of your location. None of the physical substances necessary for your survival can be sourced from a global supply chain unless "last mile" delivery remains intact. If faraway production facilities, farms, warehouses, trains, trucks, and power plants break down, eventually Governor Noem's constituents will feel it. People seem to intuit the local impact of a global crisis, and the reality that the greater world is not coming to save them. South Dakotans are entitled to think locally, out of self-preservation, in this crisis.
So are Japanese, Singaporeans, South Korean, and Swedes, for that matter. There is no UN agreement or statement at work concerning the pandemic, nor any universally agreed-upon supranational guidelines. International bodies such as the World Health Organization have been unable to project authority during the crisis, much less gain international compliance with their shifting recommendations. Countries around the world have implemented a hodgepodge of policies, and they've done so unilaterally. China brutally locked down its Hubei Province, while Sweden chooses to keep public life largely unaffected, with virtually no quarantines or business shutdowns. Many countries chose an intermediate path. In Europe, the 1985 Schengen Area Agreement allowing open travel between twenty-six European countries has broken down due to the virus, with Germany, France, Spain, Austria, Switzerland, and others closing off borders with armed guards. In a crisis, it turns out a German or French passport really is not a "European" passport after all. Nationalities and citizenship, the bane of political globalists, exist. Whether this fact of life is inherently illiberal depends both on one's perspective and how various nations act internally under duress. Is Germany too trenchant in its response to the virus and Sweden too liberal? Who's to say? The calculation becomes more and more difficult at scale, moving from the local to regional to national to international to global level. Crises remind us exactly why local matters. This is exactly what we should expect, and want, in a pandemic: competing visions as to the severity and scope of the problem, differing localized approaches, experimental treatments, and nimble entrepreneurial provision of resources and supplies. To an extent, there will be scoreboard. Some countries and some US states will fare better than others. But questions about top-down control from Washington. DC, or beyond will not go away. Federal agencies such as the Centers for Disease Control and Prevention have looked foolish and impotent throughout this crisis, as has the Trump administration's infectious disease expert Dr. Fauci. If in hindsight cheap antimalarial drugs and antibiotics prove to be effective treatments, the entire narrative of ventilators and lockdowns will appear foolish and destructive. Yes, there will be accusations, recriminations, and calls for more bureaucracy and more regulations. The political class will gain; the American people will lose. But there is a silver lining as our already dangerously polarized country begins to understand more deeply how South Dakota really isn't New York City at all—and question why that same political class wants one set of rules for 330 million people. After all, if Brooklyn and Sioux Falls don't need the same policy on coronavirus, what about taxes, guns, abortion, climate change, and everything else?
This article was originally published at The Mises Institute.
Rep. Thomas Massie (R-KY) became "the most hated man in America" when he dared to demand that Congress actually vote on the biggest bailout of Wall Street in history - the two trillion dollar "coronavirus" bill. What happened behind the scenes and what are the dangers? Rep. Massie tells all in today's Liberty Report.
By David Stockman
Based on the shocking 6.6 million of new unemployment claims, we’d bet they’ll be some explosive political fireworks soon in this country about Covid-containment versus keeping the main street economy alive. There have now been an unprecedented, off-the charts 9.96 million new unemployment claims in the last two weeks. For point of reference, it took fully 28 weeks to generate the same level of cumulative new claims after the beginning of the Great Recession. During that interval, the largest weekly number was 387,000 during the week of March 29, 2008. Even when you scroll forward (not shown) to the worst week after the Lehman Bankruptcy meltdown commenced on September 15, the peak number was only 665,000 during the week of March 28, 2009. So today’s new claims number was 10X higher! So, yes, some politically incorrect pundit is likely to note that there are now:
Well, yes, it seems that our establishment betters can’t get rabid enough urging on a total shutdown of the US economy. 
Indeed, the thinly disguised subtext in the whole daily MSM narrative for the last couple of days has been that the benighted governors of the Red States are not doing their part to order their economies into instant cardiac arrest. But it took the perennially obnoxious liberal columnist for the New York Times, David Leonhardt, to come right out and say it.
Thus, opined Leonhardt: Donald’s Trump’s minions have been putting the public health in grave danger. Much of red America is finally going on lockdown. After resisting the pleas of public health experts for days, the governors of Florida, Georgia, and Mississippi – all states won by President Trump in 2016 – announced yesterday that they will be ordering their residents to stay home, effective Friday. The turnabout from Florida’s governor, Ron DeSantis, was especially stark….These new lockdowns are welcome, because they will help slow the virus. But they are also coming much later than they should have, A big reason that the virus has been recently spreading more rapidly in the United States than in Europe or Asia is the slow response from American political leaders. Trump spent almost two months falsely claiming the virus was going away…Many Republican governors have chosen to echo him, DeSantis, for instance, acted as if he could stop the virus by merely keeping New Yorkers out of his state. There you have it – a shrill dump of left-wing agitprop and lies that are coming front and center to the debate real soon. Namely, the charge that Trump and his GOP minions caused the coronavirus crisis – so now the regulatory machinery and fiscal resources of the state must be mobilized without limit to wrestle the monster to the ground. Then again, by the statistics you might conclude that DeSantis has a point about pulling the welcome mat from New Yorkers. As of yesterday, nearly 62,000 Floridians have been tested, but the infection rate has been just 10.2%compared to New York’s 37%; and it’s infection rate per 100,000 population was just 29 compared to New York’s 389. That’s right. The infection rate in New York is 13.4X higher than Florida’s, while New York’s hospitalization and death rates are 21X and 22X higher, respectively. Yet this sanctimonious Big Apple brat has the gall to accuse the governor of Florida of being a Republican moron or even criminal. The fact is, DeSantis was right not to go full retard shutdown. For crying out loud, the coronavirus death rate in Florida to date is just one-third of a personper 100,000 population. At some point the idea of quarantining the aged, infirm and vulnerable rather than shit-canning the entire economy might make more sense. But as of the moment, the liberal commentariat and it Washington collaborators are on their high horse and won’t rest until they have intimidated the entire country into a heretofore unimaginable Economic Cardiac Arrest. In fact, you might as well call it the Anderson Cooper/Chris Cuomo Memorial Depression and be done with it. After all, it’s the same old shtick. Namely, that the liberals’ unhinged case for plenary economic shutdown is allegedly driven by “science” and that anyone who dares question the fashionable prescriptions is some kind of antediluvian rube. Of course, in many ways the Donald is exactly that – such as with respect to the entire economic, financial and monetary policy file. There his views are downright neanderthalish. But that’s what makes this whole Covid-19 imbroglio so forebodingly dangerous. The MSM and Washington political class are turning it into the next phase of the RussiaGate/UkraineGate/Impeachment inquisition against the Donald; and the litmus test of choice is, effectively, shut-it-down-and-lock-them-up at home from coast-to-coast; and keep them there until the Donald’s Greatest Economy Ever is pounded to smithereens. Ordinarily, the main street economy would have a fighting chance against that kind of ad hoc statist assault on production, which is now accelerating to a full gallop. That’s because the business community – large, small and in-between – would be descending on Washington in waves that would put even the Zulu army to shame. But not this time. The fact is, we have an Ersatz Socialist and economic primitive in the Oval Office who has managed to club to death like a baby seal whatever was left of GOP fiscal, monetary and free market orthodoxy. So the $2.2 trillion Everything Bailout (soon to be $4 trillion) was effectively a giant advance from Uncle Sam to hold one-and-all harmless for any lost ground occasioned by the shutdowns which are now sweeping across America like a prairie fire. In general terms, UI and helicopter money will be keeping paychecks close to 100% of take home, while trillions of easy-peasy loans/grants to business will also cover paychecks (double dip?) for employees – working and not working – as well as most other cash outflows for utilities, overheads, insurance, loan service and the CEOs’ paychecks. Yet when nearly everyone is held harmless, three very bad things are sure to happen. To wit:
But in the interim, the eruption of statist intervention and fiscal profligacy will reach literally hysterical excesses. That’s because the economic contraction now upon us is nothing like your grandfather’s recessions, which were triggered by the Fed and the collapse of credit and stock market cycles. By contrast, this one was being prepped by the Fed for years as it fostered egregious excesses of debt, speculation and hand-to-mouth fragility throughout the system. But it is actually being triggered by sudden shutdown edicts from governors, mayors and public health authorities – amplified by both prudent and hysterical precautionary actions being undertaken by the broad public. It is therefore proceeding with warp speed, as today’s claims data dramatically illustrates. When placed in historical context, the reported 6.6 million of initial unemployment claims (thin red line on the right margin) filed thru last Saturday truly give the notion of being “off the charts” a wholly new definition. 
And here is where 30-years of incessant monetary and fiscal intervention and “stimulus” will take its toll. That’s because America’s chattering classes, politicians and business leaders alike have been house-trained on the misbegotten assumption that capitalism has a death wish; and that once it goes into a contraction there is nothing stopping it from disappearing into an economic black-hole, save for the heroic interventions of the state and its central banking branch.
What is coming down the pike in terms of the “incoming data”, therefore, will generate sheer panic in the Imperial City and on Wall Street, too. Thus, as recently as February 19 when the stock market was 35% higher, the talking heads put the odds of recession at essentially zero. After two more weeks of the massive claims reported today, however, the BLS unemployment survey taken in mid-April is likely to find upwards of 15 million newly unemployed and a U-3 unemployment rate of 12-15%. That will rattle their teeth to the bone on both ends of the Acela Corridor. After all, last time they went into an end-of-the world panic mode during the Great Recession, it took the U-3 rate 31 months from the cyclical low of 4.4% in March 2007 to reach the 10.0% peak in October 2009. Likewise, the worst quarterly GDP SAAR during that downturn was 8.7% in Q4 2008, while Q2 2020 could hit 3X that rate at negative 25% or worse. 
Indeed, the shocker will come on the first Friday of May when the monthly number of newly unemployed workers will be reported for April.
During the bottom of the Great Recession in February 2009, that number peaked at 840,000, but April’s gain could come in at 15X-20X that level. So get set for a hideous hair-on-fire orgy of monetary and fiscal stimulus demands on both ends of the Acela Corridor, as if we have not gone off the deep-end already. Indeed, when you add in the automatic stabilizer outlays to the $2.2 trillion Everything Bailout, the hemorrhage of Federal spending and borrowing will be damn near incalculable. By the end of April, for instance, there will easily be 15 million continuing unemployment insurance claims: Even under pre-existing eligibilities and benefit levels (which were massively expanded by the Everything Bailout) the annualized run rate of outlays would rise from $28 billion in FY 2019 to upwards of $250 billion. 
In short, this is merely not your grandfather’s recession; it’s actually a Bubble Finance era Doomsday Machine.
With the establishment media keeping the US economy on lockdown – and we mean that literally, as even Dr. Fauci is now saying there should be no relaxation of the economic freeze until there are zero new cases and zero deaths – and the Trumpified GOP keeping the spending machine and Fed printing press at full throttle until at least the November election, it is truly impossible to imagine the level of madness ahead. The tragedy, of course, is that the blistering fiscal and financial calamity ahead is totally unnecessary. Public health measures to contain the virus until the summer heat kills it off could be far more targeted and less intrusive via a policy of protective isolation for the vulnerable populations, and maximum flexibility and personal protection (masks, gloves etc.) for the workers and participants in daily commerce. Likewise, to the extent that commerce and household and business spending are sharply curtailed until the contagions pass, there is no need for Washington’s idiotic 100% make whole policy. The overwhelming bulk of the truly needy and economically marginal population is already protected by the $3 trillion Welfare State and the automatic stabilizers, which will soon be pumping additional hundreds of billions into income support for the unemployed and disadvantaged. But the greatest folly ever to beset our fiscal democracy is now racing full speed ahead. Instead, of belt-tightening, work-arounds, payment deferrals and negotiated price and wage adjustments for a few months among the bulk of US businesses and households, the current and future taxpayers are being saddled with trillions of unnecessary obligations, which will prove to be the final straw on the debt-ridden camel’s back which pre-existed the Covid-19. And why has America elected to make this insane tradeoff? Because the ship-of-fools in the Eccles Building have led Washington and Wall Street alike to believe in what amounts to the greatest lie in financial history – that we can borrow and print our way back to prosperity!
This article was reprinted with permission from David Stockman's Contra-Corner.
David Stockman began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street. Stockman is an Advisory Board member for the Ron Paul Institute for Peace and Prosperity.
100 years ago, American politicians convinced Americans that a new age was here. Individual liberty was yesterday's news. The principles of the Declaration of Independence and Constitution were ideas of a bygone era. Government would now take over. It would micromanage, "regulate" and "run" life in America. After 100 years of never-ending wars and intervention into our lives, the rotten fruit of that massive shift are now in full bloom.
In a shocking press conference yesterday, President Trump and his advisors announced that the US military would begin conducting a "counter-narcotics operation" in the eastern Pacific and Caribbean. Perhaps not coincidentally, Trump's Justice Department indicted Venezuelan president Maduro on drug trafficking charges. Is the US about to "do a Noriega" on Maduro based on half-baked charges that the Venezuelan leader is some kind of drug kingpin? Have the president's war-braying neocons convinced him that the best thing to get our minds off of coronavirus is a "nice little war"?
Keep the Ron Paul Liberty Report broadcasting with your tax deductible donation to the Ron Paul Institute: http://www.RonPaulInstitute.org/support
Yesterday the Mises Institute published a brilliant article titled "End the Shutdown," making the point that continuing the "house arrest" of Americans and the shutdown of the economy will have much worse consequences than the coronavirus itself. With the infection to fatality ratio at about the rate of the seasonal flu (as per a new Lancet study), is the continued destruction of American economic and social life worth it?
By Chris Rossini
You've heard how our computers and electronic devices run on nothing but a bunch of 0's and 1's right? Well, our minds work in a very similar way. That's because ideas rule the world. Good ideas and bad ideas. Good ideas are those that are true, and bad ideas are those that are false. In order for man to survive and thrive, he needs to accept ideas that are true, and reject those that are false. He must do this on his own. No one can do it for him. Good ideas are those that are in line with human nature, while bad ideas try to change or alter nature. Since neither truth, nor nature, can be altered or reversed, it is a bad idea to try to do so. It can only produce bad results. In this venue, we speak of Individual Liberty, which is an aspect of human nature. Liberty is a part of our individuality. It precedes anything like the formation of government, or any other man-made construction. Individual liberty means the freedom to choose, and the #1 thing that we each individually choose for ourselves (at all times) is what we believe. Let's put beliefs into computer terms. Let's say that 0 = Reject, and 1 = Accept. Say that you believe and accept that the Earth is round. You reject that it is flat. So in your mind: "Earth is flat" = 0. "Earth is round" = 1. This can be imagined for all of the beliefs, preferences and desires that we embrace. These beliefs influence how we see and interpret the world we live in. You will see things differently from a person who believes that the "Earth is flat." You will have no fears of reaching the "edge of the Earth, and falling off," while another person will have such fears. In this example, you believe in a good idea that is true, while the person who believes that the "Earth is flat" believes in a bad idea, that is false. Belief in the false hinders his individual life for as long as he holds onto it. In that aspect of his life, he's not dealing with reality, but a fantasy. But since every individual is by nature free, it means he is free to believe in bad ideas. He is so free that he can believe in ideas that can harm his life. In this milieu, we argue that it is a good idea to accept individual liberty, voluntary interactions, and peace as the way that human beings should relate to one another. We believe that this is the truth, and that the truth cannot be altered or changed. Since that is what we believe should be accepted, we concomitantly believe that people should reject tyranny, authoritarianism, and force as the way human beings should interact with one another. In other words, to put it into computer terms again, we believe: Tyranny = 0. Liberty = 1. In mankind's history, the dominant belief has been to accept tyranny, and reject liberty; to accept that someone else is responsible, and reject individual responsibility. Because of this, countless numbers of people, both past and present, have hindered their lives greatly. They have not been dealing with reality, but a fantasy. They have suffered greatly as a result. And as long as tyranny is accepted and liberty rejected, they will continue to suffer, and greater still. Now a quick knee-jerk reaction might be: "Oh, this is easy! Just tell people the truth! Once they hear the truth about Liberty, they won't choose to believe in tyranny anymore. How could they?" No..no..no...it's not that simple. Even after hearing the truth, a person can still cling to the ideas of tyranny. Why is that? Why knowingly accept that which is false? Because even truth itself can be accepted or rejected. That's how free we are. We can hear the truth, understand the truth, and still reject it. That's how all-encompassing our individual liberty is. Speaking the truth to others is an absolute necessity. Others surely won't believe in liberty without at least hearing about it first. But it must be spoken again, and again...generation after generation, century after century. Look at the difference between the environment of America's founding and today. In the 1700's, liberty was a burning fire in heart of Americans. They breathed the freest air than perhaps any other people that has existed. Today, the 0's and 1's are reversed. Many Americans are begging, (literally begging) for tyranny and authoritarianism. The results must be what they must be. The truth cannot be altered, so suffering must be the result if a critical mass embrace this false belief. It would be such a pity for such a great nation to fall like so many of those before it. But it has not happened yet. It is not written in stone either. Like a computer, those 0's and 1's can be flipped back. Individuals can change at any moment in time. That is why it's so important to accept that one can never speak enough about the value, virtue and beauty of Liberty. 
By David Stockman
Did we say it’s getting stupid crazy down there in the Imperial City? Well, we probably have....ad infinitum. And we are doing so again but not merely owing to today’s abomination in the once and former Peoples’ House, which thinks so little of its oath to defend the constitution and the rights of current and future taxpayers that it approved the $2 trillion Everything Bailout without even a roll call vote. Then again, like the late night TV pitchman says— wait, there’s more! Consider the chart below, which surely the Fed heads have not. To wit, it took the Fed 95 years after its doors opened in 1914 to print enough money to fund a $600 billion balance sheet. It wasn’t exactly the Ohio State offense– three yards and a cloud of dust—which accomplished this. But it was pretty close—even including Greenspan’s first years at the helm. Between the famous Treasury Accord in 1951, under which the Fed was liberated from Treasury-ordered yield pegging, and 1999, its balance sheet grew at a modest 5.2% per annum. And, by your way, the Fed’s relative stinginess with the printing press was a great big no nevermind. Real GDP grew at 3.4% per annum over that near half-century period, and real median family income more than doubled from $35,000 to $74,000. 
We are pondering the number “$600 billion” today because its capsulizes the insanity loose in the Imperial City. What took 95 years to accomplish in the purportedly benighted 20th century, has now taken just five days!
You truly cannot make this stuff up. The Fed has purchased $622 billion of USTs and MBS since March 19th, meaning that its balance sheet has expanded from $4.75 trillion last Thursday evening to $5.372 trillion last night. And, yes, we do have a calculator which generates compound annual growth rates by the day. Even giving credit to the fact that these madmen/women rested their printing press, apparently, on Saturday and Sunday, the growth rate in the box below computes to, well, 61,084% per annum! Even Uncle Milton Friedman, the evil genius who started all this at Camp David back in August 1971, is surely rolling inconsolably in his grave. 
If there is any doubt that this madness is literally destroying the bond markets, you need look no further than the side-by-side charts below. The massive corporate bond bubble that 10 years of the Fed’s foolish interest rate repression generated is now coming unstuck at the seams.
As we have said all along, the specious assurance from the Eccles Building that the financial system is sound because banks have been passing their ludicrously rigged “stress test” was malarkey of the first order. For crying out loud, Waldo wasn’t hiding in bank balance sheets! That was the last rodeo. The latter have been repaired as a result of savaging returns on the bank deposits held by millions of savers and retirees. But that just meant Waldo scampered over to the trillions of new corporate bond mutual funds and ETFs which have risen up to quench the desperate thirst for yield among asset gatherers. But now these hideously low yields are being clobbered by the Covid-19 shutdown panic, causing a run on the bond funds like no brick and mortar bank run ever before. In just the last two weeks there has been a $218 billion outflow from these funds, including $34.6 billion on “bond capitulation day” on March 20 alone. We’d say, better late than never. In an honest market, corporate bond yields would be rising smartly and the C-suite geniuses who trashed their own balance sheets over the last decade to fund rampant stock buybacks and financial engineering adventures might well be getting a tap on the shoulder from their own complicit boards, who might not otherwise relish the prospect of spending the rest of their days in shareholder litigation. Alas, the last thing our monetary central planners wish to see is honest bond yields or any other kind of honest financial asset prices. So that’s why they are virtually flaunting the law and setting up a thinly disguised corporate bond buying double-shuffle with the US Treasury in order to flood the bond pits with a massive state-financed bid for the bonds being dumped by real money private investors. That is, the 5%, 7% or even 10% corporate bond yields that today’s hyper-leveraged corporate balance sheets deserve would finish the job of puncturing the stock market bubble where Covid-19 left off. That moment of reckoning, of course, must be precluded at all hazards, even if it means fostering an even more incendiary blow-up just down the road. That is to say, when the Fed/Treasury owns all the bonds and the private world is sitting on a mountain of cash (nee trash), look out below! 
We leave it to another occasion to ponder the financial market implication of the absolute monetary mayhem which has issued from the Fed during the last two weeks, and only hinted at by the above observations.
But the ever prescient Jim Bianco today summarized the action neatly, and what it actually amounts to. In effect, said the great Bianco, meet your new de facto Fed chairman—Donald J. Trump! In just these past few weeks, the Fed has cut rates by 150 basis points to near zero and run through its entire 2008 crisis handbook. That wasn’t enough to calm markets, though — so the central bank also announced $1 trillion a day in repurchase agreements and unlimited quantitative easing, which includes a hard-to-understand $625 billion of bond buying a week going forward. At this rate, the Fed will own two-thirds of the Treasury market in a year.
Now that’s not only a downright frightening thought, but actually at the present fraught moment there is only one entity more dangerous than the Donald and that is the entire lot of numbskulls and morons which comprise the U. S. Congress (with the exception of the Heroic Rep. Thomas Massie, who had the cojones to futilely stand up to the braying herd and demand a recorded vote).
In effect, every shred of historic resistance on Capitol Hill to unhinged spending and borrowing has been vaporized by the Fed’s lunatic nationalization of the bond, loan and money markets. The politicians now literally feel free to borrow like crazy because they know the Fed will monetize every single dollar of it. But here is one thing we do know because we have been there and when it comes to Congressional politicians and the public debt, we have stared into the very white of their eyes. The one and only thing they feared back in the day was that massive borrowing by Uncle Sam would hog the available funding supplies, thereby driving up interest rates and crowding out the only two things they care about: • Room in the budget for their favorite charities and pork; • Angry homeowners, businessmen, farmers and car buyers in their districts getting hammered with high rates or squeezed out of the market entirely. But that’s now a distant memory for the old-timers still in Congress (like our successor, Rep. Fred Upton who has been there 36 years) and most especially the 21st century crop of ne’er-do-wells who, apparently, have no experience with fiscal discipline whatsoever. Thus, this morning we actually heard one of them on CNBC— the former GOP chairman of the House Ways and Means Committee, Rep. Brady— urging a voice vote. That is, the body which the framers charged with originating spending and financing bills was to wave through unread and sight unseen $2 trillion worth of Senate-passed crony capitalist bailouts, coast-to-coast soup lines and $340 billion of new appropriated pork—all contained in 883 pages scribbled together in the dead of night Wednesday. And Rep. Brady was one of the more sober voices rushing for the cameras. Celebrating her 80th birthday in this life and accession to immortality in the financial hall of shame, Nancy Pelosi promised, in effect, that you haven’t seen nothing yet. It seems that another, probably even larger bailout #4 for states and municipalities is already being plotted: @ChadPergram: Pelosi says both bodies of Congress should work on the phase 4 coronavirus response. “Four corners,” as she said....Says she urged Mnuchin to do the direct payments more quickly
We fear even prayer isn’t up to the task. Not when you even scratch the surface of what this drooling pack of fiscal incontinence just gummed through by voice vote.
For instance, it includes $250 billion for unemployment insurance, with most of the money going to a $600 per week boost in normal benefits over the next four months and increasing the standard benefit period from 26 weeks to 39 weeks. Of course, we haven’t heard even the sky-is-falling nitwits on CNN arguing that the shutdown will last for 26 weeks, to say nothing of making provision through next New Year’s Eve (39 weeks). But what takes the cake for mindless profligacy is the $600 per week add-on to benefits which in most states already range between $400 and $700 per week. In this context, we have been insisting that this massive tsunami of money really isn’t about humanitarian concerns or even a modest helping hand for workers and families caught up short, and that’s exactly what we have with the $600 benefit raise. That is, it’s just another plank in the 100% GDP replacement program aimed to restore the false prosperity on main street and the egregious bubbles on Wall Street embodied in the January 2020 status quo ante. That’s why the maximum rate now payable to laid off workers will reach the following per hour equivalents for the next four months; and these figures are based on an assumed 40 hour week, which virtually none of the claimants actually log (US average is about 34 hours per week): • NY ($27.60); • TX ($28.03); • PA ($29.33); • CT ($30.33); • CO ($30.45); • ND ($30.82); • NJ ($32.83); • MN ($33.50); • WA ($34.75); • MA ($35.58) No, we don’t begrudge wage earners getting a generous portion of the loot. But replacing wages at this level on the taxpayers dime for a short-term emergency is just plain ludicrous. Indeed, the reason this insanity is even in the bill is because that’s what the Donald and McConnell had to cough up to Chuckles Schumer and the labor/progressive Dems in order to get what they really wanted: Namely, the massive $4 trillion front door (US Treasury) and back door (Fed) bonanza of crony capitalist handouts that are the real reason for the Everything Bailout. We will address this abomination in detail in Part 5, but consider this: No business should get a dime from Washington to keep people on the payroll who aren’t working (regular UI is already taking care of that); and if they have trashed their own balance sheets over the years, they should pay-up the market rate of interest to borrow the money to cover other cash shortfalls during the Covid-19 shutdown. Take the example of the restaurant chain called the Cheesecake Factory (CAKE), which yesterday ostentatiously announced it would not pay April rents on its 620 locations. Fine. The landlords can throw them out or, more likely, work out a rent abatement program for the relatively short-term duration of the Covid-19 dislocation. In fact, exactly those kinds of adjustments are what happens on the free market and are actually happening from coast-to-coast at this very moment. But we mention CAKE because it was one of those momo stocks awhile back where the top management couldn’t resist the temptation to goose their share price and stock options by trashing the company’s balance sheet to pump a tsunami of money back into Wall Street. To wit, during the past 10 years, the company generated $1.12 billion of cumulative net income and $1.31 billion of operating free cash flow. But, alas, it spent over that same 10-year period $1.50 billion on stock buybacks and dividends. That is, it returned 133% of net income to Wall Street and spent 115% of free cash flow on appeasing the trading gods and robo-machines of Wall Street, not building sustainability and rainy day reserves into its own balance sheet. In fact, the company’s debt currently stands at $1.6 billion or a debilitating 11.2X annual free cash flow. And, yet, these cats want a bailout! Now they will surely get one from the $4 trillion cheap money bonanza the GOP has just rammed through without a vote and even a day of hearings and analysis. As we said, there has never been a Day of Shame on Capitol Hill like that which has just transpired.
This article was reprinted with permission from David Stockman's Contra-Corner.
David Stockman began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street. Stockman is an Advisory Board member for the Ron Paul Institute for Peace and Prosperity.
Keep your eye on Pompeo! President Trump is understandably distracted by the coronavirus outbreak in the US but in the "never let a good crisis go to waste" mode, the neocons in his Administration - led by Pompeo - are launching their war plots without the normal scrutiny. Venezuela, Iran, Syria, Russia - the long knives are coming out. Trump has been able to put the kibbosh on Pompeo's plans before, but a distracted Trump is in danger of losing control of his foreign policy. Launching a foolish war in the midst of the current crisis would surely spell disaster for the president...
|
Archives
April 2020
 
 
 
 
|
RSS Feed