Pandemic And Economic Collapse

WE have a raging virus ripping through the country and world and our economy is a yo yo…..one day up two days down then one up, etc.

This thing could be a society killer…..

As of March 2020, the entire world is affected by an evil with which it is incapable of dealing effectively and regarding whose duration no one can make any serious predictions. The economic repercussions of the novel coronavirus pandemic must not be understood as an ordinary problem that macroeconomics can solve or alleviate. Rather, the world could be witnessing a fundamental shift in the very nature of the global economy.

The immediate crisis is one of both supply and demand. Supply is falling because companies are closing down or reducing their workloads to protect workers from contracting COVID-19, the disease caused by the new coronavirus. Lower interest rates can’t make up the shortfall from workers who are not going to work—just as, if a factory were bombed in a war, a lower interest rate would not conjure up lost supply the following day, week, or month.

https://www.foreignaffairs.com/articles/2020-03-19/real-pandemic-danger-social-collapse

The Fed is trying desperately to curb a recession/depression and the government is also trying to prop up businesses in this time of need……but will it be enough?

As the Covid-19 pandemic worsens, it’s hard to decide which are scarier: the conversations I’m having with epidemiologists or the conversations I’m having with economists.

“This is an economic tsunami,” Mark Zandi, chief economist at Moody’s Analytics, told me. Social distancing is economic distancing. We are telling people to cease going to stores, to restaurants, to workplaces. We are insisting they stop supplying their labor, making their goods. To slow a pandemic, we are forcing a recession, perhaps a depression.

It was common, in 2008, to hear economists say that nothing had changed in the real economy. The US still had just as many workers, factories, and machines. We hadn’t lost any land or knowledge. There was no physical reason the economy was in crisis. The collapse in credit markets had changed economic behavior — businesses were afraid to invest and hire, and families were afraid or unable to spend.

https://www.vox.com/2020/3/23/21188900/coronavirus-stock-market-recession-depression-trump-jobs-unemployment

Will collapse be in the cards as a result of this virus and the lack of adequate response by the government?

Trump and the Congress are trying hard to avoid the collapse….but will it be worth it?

I Read, I Write, You Know

“lego ergo scribo”

The Cash Scramble!

Just like the crash of ’08 businesses are scrambling to preserve their profits by getting the government to give them money……and now that the markets have slid another 3000 points the screams are growing louder by the day….

These daily slides have wiped out about 96% of the profits it created in the Trump years so far.  If this continues then Trump has lost his best re-election weapon.

How about those businesses like the airlines……seems everyone is scrambling to get a piece of the government’s pie.

“We’re going to be in a position to help the airlines very much,” President Trump said Monday when asked about possible government aid in the wake of the huge drop in passenger bookings. The airlines have now put an amount on that promise: $50 billion. That’s more than three times as much as they received after the 9/11 terrorist attacks, the Wall Street Journal reports; the tab for the auto industry bailout was $80 billion. Cash payments, loans and tax help could be part of the deal being discussed by the airlines with Trump administration officials and members of Congress. United Airlines said it plans to cut service in half for April and May because of the coronavirus outbreak and figures the flights it keeps running will only be one-fourth full. “We have to back the airlines,” Trump said. “It’s not their fault.”

The airlines also made a plea for urgency. “We cannot afford to wait long for assistance,” the A4A trade group said. “This is a today problem, not a tomorrow problem,” the group’s CEO said, per the Washington Post. Airports could ask for federal aid, too. “Airlines may be the most visible part of our aviation system,” a House GOP spokesman said, “but we have to ensure that a stabilization package addresses the needs of airports, regional and charter airlines, cargo airlines, manufacturers, and general aviation business.” An industry analyst called the plan “an aggressive request” but cautioned that it could be just a starting point. “You have to remember the A4A’s job is to shoot for the universe in hopes of getting the moon,” he said.

I say give the greedy bastards the money….but take it out of the Pentagon’s budget for it is pretty bloated.

My feelings are…”F*ck ’em”!

How much have they used to buy back their own stocks?  Maybe they should say screw short term gains and look to the future.

Just saying…….

And the games being played in the Congress is so typical of the gutless wonders we elect…..

With an urgency unseen since the Great Recession, Congress is rushing to develop a sweeping economic lifeline for American households and businesses capsized by the coronavirus outbreak. Democrats said at least $750 billion would be needed, the AP reports. “We will need big, bold, urgent federal action to deal with this crisis,” Senate Democratic leader Chuck Schumer said Monday. Republicans did not object, as a roster of America’s big and small industries lined up for aid. Senate Majority Leader Mitch McConnell said he wants a comprehensive approach with “significant steps” for the economy, particularly Main Street businesses. Senators had returned to an emptied-out US Capitol, clear of tourists or House members, to confront an even more dire situation than the one they left for a long weekend, before Trump declared a national emergency.

Stuck in the Senate is the aid package approved Saturday by the House, with sick pay, free testing and emergency food. Some Republicans want changes, and the House has technical corrections to make. Treasury Secretary Steven Mnuchin, who negotiated the package with House Speaker Nancy Pelosi, arrived late Monday on Capitol Hill to confer with Senate GOP leaders, saying they were trying to fix the hangup and turn to next steps. The House, Senate and White House agree the pending bill is not nearly enough. The Chamber of Commerce called Monday for legislation including a three-month cancellation of the taxes companies pay to support Social Security, Medicare and unemployment insurance, for example. The Democrats’ plan would boost hospital capacity, unemployment insurance and other direct aid for households, businesses and the health care industry.

Not to worry the Senate will go on a three day hiatus just when we need their worthless asses to get things done…..so typical.

I Read, I Write, You Know

“lego ergo scribo”

Siphon Off The Cash

Closing Thought–14Jan19

Well we watch the tube and the volatility of the markets….wild swings in losses and gains…..it is not normal.

And then there are the trade policies of our president…..his view of his tariffs are not anything like the views from financial pundits…..the news is not good from the tariffs…….out soy bean farmers think they are screwed even after the silly tariffs are removed….

With that said and reported……what about other sectors of our economy?

The financial magazine Forbes reports…..

President Trump likes to say that China and other countries are pouring money into the U.S. with the tariffs he has imposed. However, the countries that are sending goods to us aren’t paying the tariffs . The companies that import goods are paying them , which means U.S. companies need to raise prices (therefore a tax on consumers), lower their margins and have less profit (which also lowers the amount of taxes they pay to the government) or even go out of business.

The U.S. Treasury Department releases a monthly report, which provides how much in customs duties are received by the government (December’s is delayed due to the shutdown. so I have estimated that month’s result). Trump is correct that the payments have escalated in recent months. While they took a jump in the second half of fiscal 2018 (September) from the first half, they have almost doubled in the December quarter compared to the first half of fiscal 2018 before the additional tariffs were imposed.

First half of fiscal 2018: $3.1 billion per month

Second half of fiscal 2018: $3.8 billion per month

First quarter of fiscal 2019: $6.0 billion per month

Increase of 95% from the first half

Delta between $6.0 and $3.1 billion is $2.9 billion  The $2.9 billion monthly increase in customs duties over a full year is $35 billion, which is either passed on to consumers in higher prices or eats into company profits. This can potentially drive a company out of business such as a South Carolina TV manufacturer laying off 126 employees or a Missouri nail manufacturer laying off 200 of its 500 employees.

None of this “news” tracks with the bullsh*t fed to us by the “warrior from Wharton”……..(I still say this person did not get his degree legally…Daddy bought it for him)……these policies are doing NOTHING to make America Great again….NOTHING!

The Rich Get Richer

A Sunday and I feel like the idle rich……sitting in my garden sipping wine….eating cheese and nuts and fruit…..and enjoying the day without a care……

I try to make IST an entertaining blog and a little FYI thrown in……

Today I want to try and explain the saying “the rich get richer and the poor get poorer”……..this article in VOX will help one understand what is happening here in the US…..

Something massive and important has happened in the United States over the past 50 years: Economic wealth has become increasingly concentrated among a small group of ultra-wealthy Americans.

You can read lengthy books on this subject, like economist Thomas Piketty’s recent best-seller, Capital in the Twenty-First Century(the book runs 696 pages and weighs in at 2.5 pounds). You can see references to this in the campaigns of major political candidates this cycle, who talk repeatedly about how something has gone very wrong in America.

Donald Trump’s motto is to make America great again, while Bernie Sanders’s campaign focused on reducing income inequality. And there’s a reason this message is resonating with voters:

It’s grounded in 50 years of reality.

https://getpocket.com/explore/item/this-cartoon-explains-how-the-rich-got-rich-and-the-poor-got-poor

This article tells the tale that few can grasp……to massage the rich then the poor must pay…it is that simple and to pretend anything other is a LIE!

There are so many people that cannot grasp just how this system works….hopefully this will help in some small way…..

A new Congress and a Congresswoman has proposed, AOC, a 70% rate of the uber rich…..I have NO problem with that…..will not fly because most of those in our Congress are uber rich…..they will not vote to tax themselves….I give her an “A” for the try…..but disappointment waits.

And now the old professor will just sit and smile at the day…..I found an excellent Malbec from Argentina…..

May you be well and safe…….chuq

Closing Thought–18Dec18

The old say…”All’s well that ends well” may not be the best slogan to describe 2018…..

The one thing that Trump could point to in the past to keep his people in line is that the economy is doing well….in the last month the economy is tanking and tanking badly….from a high of 27000 to the plunge to around 23 and some change…..

The Dow Jones Industrial Average plunged 500 points, its second straight drop of that size and its fourth big decline this month, the AP reports. Longtime market favorites like Microsoft and Amazon took heavy losses Monday. Health care companies also fell sharply. A measure of small-company stocks fell into a bear market, a decline of 20% below their recent peak. The market is now well into the red for the year and the S&P 500 index is trading at its lowest level since October 2017. The S&P 500 fell 54 points, or 2.1%, to 2,545. The Dow lost 507 points, or 2.1%, to 23,592. The Nasdaq composite lost 156 points, or 2.3%, to 6,753. (Read more stock market stories.)

Is this a prediction of a recession coming true?

What To Expect From The Economy

I am spending Trump’s first full week writing about the situations that he will be facing and even predicting a few things to come…..

Just how are most Americans coping these days with the economy and their finances?

Minor emergencies like a busted pipe, flat tire or a root canal happen all the time. But for the majority of Americans, such inconveniences are potential recipes for financial ruin, according to a new survey by finance site Bankrate.com.

In the survey released on Wednesday, Bankrate found that 63 percent of Americans don’t have enough saved to cover even a $500 financial setback. And just half of higher income respondents (defined as $75,000 or more in annual earnings) said they have enough cash to handle such an emergency.

Source: Most Americans Lack Reserve Cash to Cover $500 Emergency: Survey – NBC News

Now there will be those on the Right that will have lots to say about these findings….none of which will be accurate…..

Let’s move on…….what can we expect in the economy in Trump’s first 100 days?

For President-elect Trump, boosting economic growth and creating more good-paying jobs recovery will not prove easy. George W. Bush campaigned on — and delivered — lower taxes and more limited government, but his economic expansion was no more robust than Barack Obama’s and ended with the 2007/08 financial crisis.

Mr. Trump has promised a lot that will be difficult to accomplish, because federal resources are limited. Without any new tax or spending initiatives, the federal deficit will grow as more baby boomers retire, and congress will not always cooperate.

Still public confidence is as important as government policies for inspiring growth, and he can still spell out a robust agenda during his first 100 days. Here are five things to look for in the new president’s first days.

Source: What to expect from the economy in Trump’s first 100 days | Fox News

FOX News, huh?

Not always the most accurate source for actual news but this one is something to consider when dealing with the economy….Morici is a respected economist so his opinions are worth considering…..

The last factor he, Morici, covers is that of trade…….and then word has come out about one of Trump’s first EOs….(more on EOs later today)…….

President Donald Trump on Monday will unravel the behemoth trade deal he inherited from his predecessor, as two sources familiar with the matter told CNN he plans to sign an executive order to withdraw from the negotiating process of the Trans-Pacific Partnership.

That executive order will send signals to Democrats and leaders in foreign capitals around the world that Trump’s rhetoric on trade during the campaign is turning into action. Trump vowed during the campaign to withdraw the US from the Pacific trade deal, commonly known as TPP, which he argued was harmful to American workers and manufacturing.
The executive order is expected to be the first Trump will issue Monday, a senior White House official said, and will amount to the administration’s first major action on foreign policy.
(cnn.com)
The economy will be one of the indicators to tell whether the Trump plans are working or not.

Only thing that is obvious is the Goldman-Sachs will have a good couple of years…..

Why saving money won’t help the American economy

To continue boring the crap out of my visitors…..I will remain on the economics thing…..sorry must feel it must be said……

Whenever some economists get together they put out a call for more Americans to save so that there will be an increase of investing and that way the economy will get into high gear and we all will benefit……

Not so fast…..that is just a pipe dream sold to those uninformed…….it is at best propaganda ……at worst Bullsh*t!

 

Why saving money won’t help the American economy.