This pandemic shows the people just how absurd this version of capitalism is……..
And why would I say such a thing?
Because of the pandemic in the first quarter the GDP shrank by 4.8%
The United States’ gross domestic product (GDP) shrank at an annual rate of 4.8% during the first quarter of 2020, the Commerce Department reported Wednesday.
The contraction is the first in six years, and the worst since the Great Recession, which ended in 2009.
…….and about 20% of the work force is unemployed……
Now in its seventh week, the U.S. unemployment crisis continues to deepen. According to Thursday’s data release from the Department of Labor, 3.8 million more Americans filed for unemployment insurance during the week ending April 25. Although that represents the fourth consecutive week of decline in seasonally adjusted initial claims, the number remains historic. (Remember, no single week prior to March 21 had ever seen even 1 million initial claims since 1967, the earliest year that data is available from the Federal Reserve.) If we add up all of the initial claims filed since the coronavirus recession began,1 more than 30 million people — or nearly 19 percent of the total U.S. labor force — have filed for unemployment claims over the past month and a half.
And yet during the pandemic markets go up and up…..how can this be? And why?
The stock market is doing fine, even though everything else is definitely not.
Earlier in the coronavirus crisis, Wall Street had a meltdown. Stocks plunged amid fears of the disease’s spread and its potential impact on the global economy, sometimes to the point that trading was halted altogether to rein in the chaos. But in recent weeks, the market has been doing okay. It’s not at the record highs it was in mid-February, but it’s not bad — the S&P 500 is hovering around where it was last fall. And given the state of the world — a deadly global pandemic with no end in sight, 30 million Americans recently out of jobs, an economy that’s fallen off of a cliff — a relatively rosy stock market is particularly perplexing.
Sure, the stock market isn’t the economy, but right now, it seems particularly divorced from what’s happening on the ground. “The gap between markets and economic data has never been larger,” wrote Matt King, global head of credit strategy at Citigroup, in a recent note.
This scenario is NOT what Adam Smith envisioned in the Wealth of Nations…..(use Google for god’s sake)……
I Read, I Write, You Know
“lego ergo scribo”