Political Economics

[DougMacG]

"FDR’s policies prolonged Depression by 7 years, UCLA economists calculate"

"vice chair of UCLA’s Department of Economics"
"Journal of Political Economy"
These are NOT right wing think tanks.

Before we set up another New Deal to do this again, does everybody know the last one nearly killed us?
--------------------------------------------
https://www.ff.org/fdrs-policies-prolonged-depression-by-7-years-ucla-economists-calculate/
...
After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

“Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. “We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”

In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

“President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services,” said Cole, also a UCLA professor of economics. “So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies.”

Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt’s policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data.

In the three years following the implementation of Roosevelt’s policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.

Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.

“High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns,” Ohanian said. “As we’ve seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market’s self-correcting forces.”

The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.

Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.
Roosevelt’s role in lifting the nation out of the Great Depression has been so revered that Time magazine readers cited it in 1999 when naming him the 20th century’s second-most influential figure.

“This is exciting and valuable research,” said Robert E. Lucas Jr., the 1995 Nobel Laureate in economics, and the John Dewey Distinguished Service Professor of Economics at the University of Chicago. “The prevention and cure of depressions is a central mission of macroeconomics, and if we can’t understand what happened in the 1930s, how can we be sure it won’t happen again?”
NIRA’s role in prolonging the Depression has not been more closely scrutinized because the Supreme Court declared the act unconstitutional within two years of its passage.

“Historians have assumed that the policies didn’t have an impact because they were too short-lived, but the proof is in the pudding,” Ohanian said. “We show that they really did artificially inflate wages and prices.”

Even after being deemed unconstitutional, Roosevelt’s anti-competition policies persisted — albeit under a different guise, the scholars found. Ohanian and Cole painstakingly documented the extent to which the Roosevelt administration looked the other way as industries once protected by NIRA continued to engage in price-fixing practices for four more years.

The number of antitrust cases brought by the Department of Justice fell from an average of 12.5 cases per year during the 1920s to an average of 6.5 cases per year from 1935 to 1938, the scholars found. Collusion had become so widespread that one Department of Interior official complained of receiving identical bids from a protected industry (steel) on 257 different occasions between mid-1935 and mid-1936. The bids were not only identical but also 50 percent higher than foreign steel prices. Without competition, wholesale prices remained inflated, averaging 14 percent higher than they would have been without the troublesome practices, the UCLA economists calculate.

NIRA’s labor provisions, meanwhile, were strengthened in the National Relations Act, signed into law in 1935. As union membership doubled, so did labor’s bargaining power, rising from 14 million strike days in 1936 to about 28 million in 1937. By 1939 wages in protected industries remained 24 percent to 33 percent above where they should have been, based on 1929 figures, Cole and Ohanian calculate. Unemployment persisted. By 1939 the U.S. unemployment rate was 17.2 percent, down somewhat from its 1933 peak of 24.9 percent but still remarkably high. By comparison, in May 2003, the unemployment rate of 6.1 percent was the highest in nine years.

Recovery came only after the Department of Justice dramatically stepped up enforcement of antitrust cases nearly four-fold and organized labor suffered a string of setbacks, the economists found.

“The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. “Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”

[DougMacG]

All measures in economics are imperfect but I will try to put the best numbers I can find to this.

Numbers before corona virus, rounded:

US economy  = $22 Trillion
Federal government spending = $5 Trillion
Federal taxation = $ 4 Triillion
Deficit  = $ 1 Trillion
State and local government spending = $ 3 Trillion
US Govt Debt:  $ 23 Trillion

Government / public spending was a 36% burden on the economy.  Visualize that any number of ways.  At that ratio, one has to earn $1.57  to keep, spend, save or invest 1.00.  Much of that is in hidden taxation and even more burden yet comes from regulations.  It's a heavy burden, it has been killing economic growth, but we were living with it, almost, falling behind by a trillion a year in debt.

Enter Chinese Wuhan Corona Virus and all the shutdowns.  One optimistic estimate by Goldman today sees an economic decline of 35%:
https://www.cnbc.com/2020/04/14/goldman-downturn-will-be-four-times-worse-than-the-financial-crisis.html
That makes a new GDP rate 14 trillion per year, with government trying to make up the difference of 8 trillion.  Federal spending if they did that becomes $13 trillion (not counting state bailouts, on let's say revenues shrunk to $3 trillion.  New deficit rate is $10 trillion/year, almost equal to the new GDP.  That is why they started with a spending package of $2 trillion, sounds big, but buys you not 2 months, or as Trump called it, up to 6 trillion which gets you not fully through the summer and early fall.  And it's money we don't have, not spending down a reserve we tucked away for times like these.

Meanwhile 50 state governments go bankrupt or get bailed out by federal printing presses.

What could possibly go wrong?

[G M]

All measures in economics are imperfect but I will try to put the best numbers I can find to this.

Numbers before corona virus, rounded:

US economy  = $22 Trillion
Federal government spending = $5 Trillion
Federal taxation = $ 4 Triillion
Deficit  = $ 1 Trillion
State and local government spending = $ 3 Trillion
US Govt Debt:  $ 23 Trillion

Government / public spending was a 36% burden on the economy.  Visualize that any number of ways.  At that ratio, one has to earn $1.57  to keep, spend, save or invest 1.00.  Much of that is in hidden taxation and even more burden yet comes from regulations.  It's a heavy burden, it has been killing economic growth, but we were living with it, almost, falling behind by a trillion a year in debt.

Enter Chinese Wuhan Corona Virus and all the shutdowns.  One optimistic estimate by Goldman today sees an economic decline of 35%:
https://www.cnbc.com/2020/04/14/goldman-downturn-will-be-four-times-worse-than-the-financial-crisis.html
That makes a new GDP rate 14 trillion per year, with government trying to make up the difference of 8 trillion.  Federal spending if they did that becomes $13 trillion (not counting state bailouts, on let's say revenues shrunk to $3 trillion.  New deficit rate is $10 trillion/year, almost equal to the new GDP.  That is why they started with a spending package of $2 trillion, sounds big, but buys you not 2 months, or as Trump called it, up to 6 trillion which gets you not fully through the summer and early fall.  And it's money we don't have, not spending down a reserve we tucked away for times like these.

Meanwhile 50 state governments go bankrupt or get bailed out by federal printing presses.

What could possibly go wrong?

Funny you should ask that:

https://thehill.com/opinion/finance/491503-far-worse-to-come-covid-19-collapse-of-state-and-local-governments

Far worse to come: COVID-19 collapse of state and local governments
BY GRADY MEANS, OPINION CONTRIBUTOR — 04/12/20 09:00 AM EDT 
View Latest Opinions >>
 
Another sudden and unexpected factor will transform this year’s elections. Many states, cities and counties are about to, suddenly, run out of money. Wages won’t be paid. Services won’t be delivered. Institutions will shut down abruptly. Many state colleges may fold. And yet most state and local political and administrative leaders just sit and watch. Voters will not be pleased.

Millions of American workers filed for unemployment insurance during the past two weeks. That is a record and represents a collapse of our local economies. Across the country, in every state, county and city, businesses have been shut down, and many will not return after the coronavirus crisis is over. Tens of millions have lost jobs, homes, savings and retirement incomes that will never return. Owners of rental property will go under when their loan payments come due and renters can’t pay. Across the country, state and local economies are being badly damaged — many of them permanently.

The result is that state and local tax revenues will plummet. States and localities will burn through any reserves they’ve maintained like wildfire. Since most of our politicians and government managers have been raised during a decade of expanding economies, their first instinct will be to wait and then panic and then raise taxes to cover shortfalls — perhaps a special “coronavirus surtax.” Taxpayers across the country have tolerated various forms of high state and local taxes; the politicians would naturally ask, “Why should now be any different?”

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But it is different. The resulting increased tax burden would be a disaster. Businesses that were barely hanging on would go under. Workers and homeowners who were barely surviving would go under. State and local tax bases would collapse even faster. There would be social unrest, possibly requiring martial law. People would migrate from high-tax states toward new jobs, accelerating a downward spiral. These large migrations would make the 2020 census results nonsense.

The only answer for the states, counties and cities that want to survive is to slash budgets now — probably 30 to 50 percent — eliminate all nonessential spending and reduce taxes today. Business leaders know that, in these types of situations, the only way to save a company is to cut costs immediately. There is no other answer, and those who act first and most aggressively are the most successful in saving the company and the greatest number of its employees. In short, “fiscal distancing” — that is, separating politicians from taxpayers’ money by cutting budgets and taxes now — is literally the only useful thing that state and local governments can do to prevent further economic and social catastrophe.

There is actually no other significant role that states and local governments can play in saving their economies, tax bases and quality of life. Only the federal government can provide truly useful, significant financial help to businesses and individuals during this historic disaster because only the federal government can print money in a crisis. Cutting taxes is the only state and local option to help their economies. Spending extra money now is throwing rocks into their own lifeboats.

I've talked to and written to many state and local officials over the past couple of weeks. Their recorded messages say they are all “working nonstop on coronavirus task forces.” Not to be rude, but most of that is a complete waste of time and public resources. With few exceptions, little or nothing useful will come of that. Only private businesses, individuals and the federal government are able to address this problem. For the most part, state and local governments will be in the way, except for critical, essential services such as police forces, fire departments and health care. Nearly everything else must go, now.

Of course, I’m not optimistic that many officials or politicians at the state or local levels will take massive budget cuts or slashing taxes seriously — yet. They were raised in a different world of explosive economic growth. Most would prefer to promote vanity and virtue-signaling projects from their towering sandcastles they’ve built with taxpayer money over the past couple of decades, even as their castles crumble around them. They could never grasp that cutting taxes is the only tool they have to preserve their states, counties and cities. The concept is far beyond their political vocabulary — none of them could grasp the public finance, let alone the Darwinian game theory, aspects of the enormous challenge in front of them.

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States are now furiously competing for ventilators. Tomorrow they will be fighting for taxpayers. Their primary (only) goal today should be to support and save their local economies — businesses, homeowners and other taxpayers — so that they have a foundation left on which to build later. If they kill off their tax base or drive businesses and taxpayers out of their states or localities, they will have poured salt on their fields and they will starve in the future. Their political careers will be over.

And so, as the coronavirus preys on the weakest human bodies, it also preys on the weakest state and local politicians. We can only hope that the fiscal mortality rate among those will be lower than the models suggest. In the end, though, the ruthless force of American politics probably will claim a new crop of unexpecting victims.

Grady Means is a writer (GradyMeans.com) and former corporate strategy consultant. He served in the White House as a policy assistant to Vice President Nelson Rockefeller. Follow him on Twitter @gradymeans1.

[ccp]

growing up I never would have dreamed this could happen here.

A friend of mine 40 ish yrs ago was right :

https://pittsburgh.cbslocal.com/2020/04/15/emergency-money-for-the-people-act-stimulus-bill/

[DougMacG]

Hopefully he convinces the President NOT to have the government take an equity position if the companies bailed out.

Laffer’s even less charitable when it comes to Mnuchin’s push to have the U.S. government hold an equity stake in airlines and other businesses: “That’s really what you want now? We can become Venezuela – whoooaaa!” 
https://www.realclearpolitics.com/articles/2020/04/14/art_laffers_inside_track_to_trumps_economic_recovery_team__142939.html#2

[ccp]

Isn't that real fascism

the binding of government with private business .............

[DougMacG]

Isn't that real fascism

the binding of government with private business .............

I don't know, but that is what the most infamous fascist did.

There is a struggle between what needs to be done in an emergency and what values and principles we have that CANNOT be violated.  Government owning the means of production certainly is socialism and communism.  Government controlling the means of production is really the same thing.

[G M]

https://wilderwealthywise.com/ripples-in-the-fabric-of-the-world-what-happens-next/

[G M]

https://dailyreckoning.com/worst-recession-in-150-years/

[DougMacG]

https://dailyreckoning.com/worst-recession-in-150-years/

"This bear market has a long way to run. And we could actually be looking at the worst recession in 150 years if one economist is correct."

Most likely true on both counts.  Worst recession ever by some measure perhaps.  '

Bear market' means: 'prolonged price declines...securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment over a sustained period of time—typically two months or more.

Right, this hasn't fallen enough to handle all the bad news already scheduled.  We are forcing and paying people to be unemployed.  I've never seen anything like it.  Not even in a  history book.  [Maybe not in a fiction book.]  If there is another big round or two of market drops it will span two months easily.

Similarly, recession means two quarters of negative growth [arbitrary definitions for general terms.]  Yes that will be true, but it will only be two quarters and there will most certainly be growth on the other side of this as things reopen and we learn better how to handle the future outbreaks.  Nothing like the Great Depression - unless we screw it all up, starting with the Nov elections and including what other nations do.

[G M]

Check out these numbers.

https://listwithclever.com/real-estate-blog/financial-impact-coronavirus/

https://dailyreckoning.com/worst-recession-in-150-years/

"This bear market has a long way to run. And we could actually be looking at the worst recession in 150 years if one economist is correct."

Most likely true on both counts.  Worst recession ever by some measure perhaps.  '

Bear market' means: 'prolonged price declines...securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment over a sustained period of time—typically two months or more.

Right, this hasn't fallen enough to handle all the bad news already scheduled.  We are forcing and paying people to be unemployed.  I've never seen anything like it.  Not even in a  history book.  [Maybe not in a fiction book.]  If there is another big round or two of market drops it will span two months easily.

Similarly, recession means two quarters of negative growth [arbitrary definitions for general terms.]  Yes that will be true, but it will only be two quarters and there will most certainly be growth on the other side of this as things reopen and we learn better how to handle the future outbreaks.  Nothing like the Great Depression - unless we screw it all up, starting with the Nov elections and including what other nations do.

[DougMacG]

quote author=G M
Check out these numbers.
https://listwithclever.com/real-estate-blog/financial-impact-coronavirus/
---------------------------------
"45% of renters don't have enough in savings to cover their rent payment for one month"
"Homeowners are at greater risk of becoming delinquent or defaulting on their mortgages due to stay-at-home mandates."

The Left has a plan for that.  I had the pleasure of hearing Jeremiah Ellison on liberal radio Friday.  He is my inner city, city councilman, son of Keith Ellison, current state attorney general.  You will hear of him.  His plan is simple, cancel rent and mortgage payments during coronavirus [before cancelling them forever].  Co authors in St. Paul and other cities.   He said Rep. Omar has same plan with some different terminology.  This is going viral.

[G M]

Cloward-Piven 2020

quote author=G M
Check out these numbers.
https://listwithclever.com/real-estate-blog/financial-impact-coronavirus/
---------------------------------
"45% of renters don't have enough in savings to cover their rent payment for one month"
"Homeowners are at greater risk of becoming delinquent or defaulting on their mortgages due to stay-at-home mandates."

The Left has a plan for that.  I had the pleasure of hearing Jeremiah Ellison on liberal radio Friday.  He is my inner city, city councilman, son of Keith Ellison, current state attorney general.  You will hear of him.  His plan is simple, cancel rent and mortgage payments during coronavirus [before cancelling them forever].  Co authors in St. Paul and other cities.   He said Rep. Omar has same plan with some different terminology.  This is going viral.

[G M]

https://moneymaven.io/mishtalk/economics/as-unemployment-claims-rise-so-do-missed-mortgage-payments-dws51EfOMEWsaayJG7OY1A

[G M]

https://medium.com/handwaving-freakoutery/the-long-term-economic-benefits-of-a-deadly-epidemic-dea1606ac68e

[DougMacG]

[Reply #1861 on: April 19, 2020] "the plan is simple, cancel rent and mortgage payments during coronavirus [before cancelling them forever]...He said Rep. Omar has the same plan..."

PJ Media, 3 days later, reading the forum:
https://pjmedia.com/trending/ilhan-omar-wants-to-cancel-rent-for-coronavirus-and-upend-the-entire-housing-market-in-the-process/

"Omar's "Rent and Mortgage Cancellation Act of 2020" would indeed cancel rent and mortgage payments until a month after the end of the national emergency President Donald Trump declared on March 13. All payments would be canceled across the entire country, "regardless of income or payment level." Tenants and homeowners would not have to make payments, while landlords and lenders would not be able to use their failure to pay as a cause for eviction or foreclosure. The inability to pay would also have no impact on credit scores."
https://omar.house.gov/sites/omar.house.gov/files/Bill%20Text%20-%20Rent%20and%20Mortgage%20Cancellation%20Act%5B1%5D.pdf
----------------------------------------------------

Why single out housing?  They didn't even single out people who face hardship!  Why not cancel all obligations on all business contracts?!

In Hennepin County (Minneapolis), traffic court is open; housing court is closed.

To the Left, the more important the industry, the more they want to get away from basic economic principles that work and switch to ones that don't.

Imagine for a second that we cancel the other side of that contract.  People don't get the house but the rent and mortgage money is taken from them anyway.  Ridiculous.

The consequence of default on a contract IS part of the contract, an ESSENTIAL part.  No one will give you the keys to the apartment if they can't take it back when you don't pay.  No one would lend on a house if there is no consequence on default.  For most people, no lending on a house and no rentals means you don't get a house until you save up for 30 years.  But under their system, the banks wouldn't still have your money you tucked away for 30 years, so that wouldn't get you a house either.

Would you do that in other industries, have all the goods in the store but no cash register.  Rich or poor, you don't have to pay.  Does it take me ranting to point out the obvious result of that?  No one is going to replenish the merchandise in the store.  No one is going to open a store.  No goods will be available.  No housing would be built, renovated, maintained or made available.  This isn't theoretical.  It is SO Soviet and has been tried in so many places at so many times with a 100% failure rate.  Third world countries have unenforceable contracts, and every country that acts like one, becomes one.

Does anyone think this proposal is limited to housing?  They want free healthcare, mandated that someone provide, free transportation, free food, free clothing, free energy, free phone and free housing.  It's God Damned COMMUNISM when it is no longer a safety net, and it is Fascism when you mandate people to provide instead of the government funding. 

None of these things get provided at all in their system without the total coercion, surveillance, compliance and punishment by an all powerful BIG GOVERNMENT.  Leftists think this is better, more "liberal", than free people making their own choices in a free market - with limited government enforcing a fair playing field??

How does that kind of communist, fascist totalitarianism have appeal beyond a tiny cult of the economically ignorant and deranged?  Why won't the Democratic party demand their brand name back from these people, call them out and win back those seats?  How come the Republican party can't win in all 50 states until the Dem party distinguishes its message and an economic system from what just failed in Venezuela, Soviet Union and Republic of the Congo that they want us to have here?

[Crafty_Dog]

https://dailyreckoning.com/worst-recession-in-150-years/

[Crafty_Dog]

second

 
Michael Nocerino and Josh Levine

ChangeWave’s latest survey on the consumer economy produced results that offer a stark contrast to the optimism seen in the months leading up to the stateside COVID-19 outbreak. Importantly, the findings present an accounting of a stunning rate of change as a consequence of the nationwide stay-at-home orders and vast business closures.

Our March survey picked up only the front edge of the wave of fear and uncertainty as it began to infect the consumer spending outlook. This month’s results pull no such punches in describing an economy brought to its knees by severe restrictions on social contact and commerce.

In addition to the plunge in spending activity, consumers’ expectations for the economy and confidence in the job market have been deeply shaken. We note that during the two weeks when this survey was in the field, the number of reported deaths in the US from COVID-19 surged more than 400%, before leveling off in the subsequent days.

This report represents the findings of an April 1-14, 2020 ChangeWave survey of approximately 1,100 primarily North American respondents from 451 Research’s Leading Indicator panel focused on consumer spending plans for the next 90 days, as well as consumer sentiment and personal finances.

Consumer Spending Goes Off the Cliff

April’s consumer spending outlook took a remarkable dive as the full effect of the coronavirus crisis and related mitigation efforts precipitated a widespread shutdown of consumer activity. This follows our reading in March, which indicated that people had turned more cautious as risks of the virus outbreak grew more apparent.

The chart below reflects the power and swiftness of the pandemic’s impact on the US economy. With three-quarters (75%) of respondents saying they plan to spend less over the next 90 days compared to only 7% saying more, the net 55-point drop versus March indicates a systemic shock; the magnitude of such a rapid change is unrivaled in the post-war era.
 
Consumer spending is being negatively impacted with equal force across both higher income (>$125,000) and lower income (<$125,000) households, with 59-point and 58-point declines, respectively, compared to March. However, the proximity of these numbers is a bit deceptive. Higher income households typically have the advantage of larger safety nets in their personal finances than lower income households. This affords them greater flexibility because even at reduced spending levels, the higher income group benefits from more options in their discretionary spending.

Another important aspect is the juxtaposition of households reporting that spending will remain the same. More lower income households (18%) cited this compared to higher income households (12%). It indicates that more lower income households are at risk of reaching the limit of their spending capacity, while losing the ability to trim expenses without resorting to cuts in essential products and services. 

Multiple Threats to Economic Well-Being

Each month we ask respondents about the macroeconomic forces posing the greatest threat to their personal finances. In response to the near total shutdown of non-essential businesses across the country, concerns over the US job market (21%; up 16-points) spiked in relation to the March reading. This finding corresponds to the unprecedented jump in initial unemployment claims in recent weeks, which increased by 22 million in just four weeks. We address our findings on job security in the next section.
 
Coronavirus (81%; up 8-points), already the leading threat last month, increased in the current survey as the pandemic ravaged the country’s healthcare system. The fact that coronavirus jumped to an even higher level reflects the sweeping force of its impact, the urgency to contain it, and the pressure to loosen restrictions on certain parts of the economy.

One of the side-effects of the COVID-19 crisis is that it has diminished threats that until recently had weighed heavily on consumers. China economic slowdown (6%; down 27-points) and trade war/tariffs (7%; down 15-points) have mostly dissipated since February. Like so many other consequential drivers, trade issues are now thrown into the maelstrom that is blurring visibility for all economic actors.

Job Security Fears Soar on Devastation to Employers, Workforce

Unemployment claims in recent weeks have overwhelmed the filing process as layoffs and furloughs swept through industries such as restaurants, hospitality, retail and transportation. Small and medium-sized businesses most affected by social distancing directives are especially at risk of being unable to meet obligations such as payrolls, regardless of how quickly they reopen.

In fact, concern is growing that many of these businesses will struggle to recover, with millions of jobs at risk of disappearing for the long-term. The Paycheck Protection Program, which was initially funded at $349 billion in Congress’s $2 trillion economic rescue bill, ran dry on April 16 as the Small Business Administration had stopped accepting loan applications. A new small business package is nearing finalization.

Still, further aid will likely be needed. Our April findings mark a stunning break from the unusually steady, long-term employment trend that we’ve tracked over the last few years. Currently, 41% of respondents now say they worry a great deal or quite a bit about someone in their family losing their job with only 16% saying they do not worry at all – a net -41-point reversal from March.
 
Last month we found essentially no differences between higher and lower income households with regards to the initial increase in respondent worries. We noted it was a warning for potential mounting job losses at all income levels. Our new findings reinforce this position.

Once again, we find that the escalation in the current employment crisis equally cuts across higher income (net -40) and lower income (net -42) households. Although these numbers are nearly identical, their implications are vastly different. Mainly, higher income households – due to savings, retirement funds and alternative sources of income – are generally in a far better position to withstand job loss of family members than lower income households.

In a separate question, we asked respondents the most important reasons why they were spending less over the next 90 days. Here the findings uncover differences based on household income in four key areas – underscoring the more perilous situation confronted by lower income households.
 
Despite the nearly equal impact of employment concerns on each income level, lower income households are more likely than higher income households to cite reduced income (8-point margin), paying off debt (3-point margin) and inflationary pressures (5-point margin). Alternatively, we find higher income households more inclined to save money (4-point margin).
Enormous Differences in Affects of COVID-19 on Various Spending Categories

Restrained social contact due to the COVID-19 outbreak and mitigation efforts targeting containment is impacting spending categories in wildly different ways. Due to restrictions on travel and social gatherings, it’s no surprise that planned spending over the next 90 days on travel/vacation (net -73) and restaurants/everyday entertainment (net -71) are experiencing massive declines.
 
The only categories that indicate positive spending momentum are household repairs/improvements (+20) – as consumers tackle projects while cocooned in their homes – and healthcare (+17). Additionally, we see a large increase in spending on ‘other’ (+17), which includes items such as groceries and cleaning supplies that were not included in the listed category choices.

In a follow-up question, we looked at the products and services that respondents have increased using as a result of the coronavirus outbreak. Here we also saw cleaning supplies (54%), groceries (43%) and personal safety products (38%) as the items experiencing the greatest rise in usage among consumers.

Depressed Sentiment Levels Sink Further

The extremely negative view of the economy and stock market reported in last month’s survey has worsened, as the full disruption of the pandemic came into greater relief while our April survey was in the field.

Consumer Outlook Engulfed by Dark Clouds. Consumer expectations for the overall direction of the economy declined further as more stringent coronavirus mitigation efforts went into effect that severely limited economic activity and pushed millions of workers to the sidelines. An astonishing 80% of respondents expect the economy to worsen over the next 90 days, with only 13% expecting it will improve. At net -67, this reading is now the highest number of respondents with a pessimistic view that we have ever recorded in a ChangeWave survey. The last time we saw comparable numbers was at the bottom of the Great Recession in early 2009.
 
It is noteworthy that lower income households (-58) offer a considerably less pessimistic view than higher income households (-76). Although we can speculate on everything from lifestyle to political leanings, one bit of data we can point to is mild inflation and energy costs: lower income households regularly show a greater sensitivity to these factors than higher income households. In an environment where the national average price of regular gas has fallen 35% in the last year, price-sensitive consumers are effectively gaining a tax break.

Investor Sentiment Plummets to Anemic Level. Confidence in US stocks has tumbled to the weakest reading ever in a ChangeWave survey, with 80% of respondents now saying they are less confident in the US stock market and only 4% saying more confident (net -76). Additionally, the number of respondents saying they are more confident matches the lowest ever recorded.
 
As the chart above illustrates, investor sentiment is prone to wild swings in reaction to the daily news cycle. Yet, the sharp decline over the last three months is a direct response to the real-world impact of the coronavirus shutdown of the economy and excessive volatility in the equity markets.

Overall, the survey paints a disturbing portrait of diminished consumer activity due to the public health crisis and large-scale efforts to restrict social contact to only essential activities. While the impetus for this shutdown was health and safety and not a fundamental breakdown in the economy, the results – barring a viable therapeutic for the virus in the near future and a relatively quick reopening of states and major cities – will likely be the same.

No matter when and how the country returns to some semblance of normalcy, there will be large numbers of businesses – especially small and medium-sized – that do not survive. Potentially millions of jobs may be permanently lost as companies are forced to shutdown or downsize in response to the new realities of the economy.

Of course, pent up demand and summer weather will help to catalyze the economy, but we shouldn’t expect a return to comparable levels of consumer activity that existed prior to the crisis. There will be many more households in dire straits in the aftermath seeking to reclaim lost wages, coping with debts, and replenishing depleted savings.   

A challenging path to recovery lies ahead for the US, which is grappling with striking the right balance between the health and welfare of the population and of the economy and its productive engines. ChangeWave’s monthly consumer surveys – combined with our quarterly business trends survey – will continue to deliver context and insight as our research captures the rate of relative change in pivotal economic indicators.   

[DougMacG]

Watermelon environmentalism = green on the outside, red on the inside

"The trouble for environmentalists is that the public is getting a big taste of degrowth right now with the current privation and danger from a more immediate threat than climate change. To a public that has been showing signs of apocalypse fatigue for some time, it is dawning on many that the current lockdown, and the palpable enthusiasm of so many politicians toward extreme control, is a dry run for the permanent regimentation of the Green New Deal. To which many environmentalists lend credence with their current celebrations of how great it is that the lockdown is lowering pollution, not to mention some famous old environmental hits such as the research biologist for the U.S. Geological Survey, David Graber, who wrote years ago in the Los Angeles Times that humans “have become a plague upon ourselves and upon the Earth… Until such time as Homo sapiens should decide to rejoin nature, some of us can only hope for the right virus to come along.”

Earth Day at 50, Prof. Steve Hayward
https://www.realclearenergy.org/articles/2020/04/23/earth_day_at_50_489793.html

[ccp]

darwinism which has always been filter out the weakest

to filter out conservatism

survival of the most politically correct

the rest can perish ............

[DougMacG]

darwinism which has always been filter out the weakest
to filter out conservatism
survival of the most politically correct
the rest can perish ............

As I say to my Leftward friends,

The Left overstepped,

The establishment of the right couldn't distinguish itself from the establishment of the Left,

And now we have Trump.

[DougMacG]

The three most harmful addictions are heroin, carbohydrates, and a monthly salary.
-------
Risk management isn't about being very prudent and careful - it is about eliminating risk of ruin so that you can very AGGRESSIVELY take non-ruin risks.
-------
https://twitter.com/nntaleb

[Crafty_Dog]

https://amgreatness.com/2020/04/22/the-deadly-costs-of-extended-shutdown-orders/

[G M]

https://raconteurreport.blogspot.com/2020/05/counting-casualties.html

[DougMacG]

https://raconteurreport.blogspot.com/2020/05/counting-casualties.html

Much truth and much to agree with there.  I also differ with parts of it.

Education is exposed for the sham they have become.  Forever changed.

The oil industry is screwed.  The untimeliness of the Saudi-Russia feud was beyond bizarre.  Obviously US producers are similarly hurt and many destroyed.

How does the airline business get back to where it was.  It doesn't.

One factor he doesn't account for is bankruptcy.  When one owner defaults, another gets the assets at lower to zero cost.  Fewer airplanes fly, but airplanes do fly.  Masks, sanitizers, vaccines, antibodies, better spacing and fewer flights.  I never understood the attraction but plenty of people are eager to travel "when this thing is over".  The definition of over will be in the eyes of the beholder.

Cars?  I would be more worried about mass transit.  The personal automobile is the solution, if unenlightened government will let us have and use them.

Bricks and mortar offices?  If half the people work from home and offices require twice the spacing, that equals same square feet plus a big investment to make the change.

Offsetting that is that people who still have jobs and money are putting more emphasis on their home and home office.  If that's where your time goes, that's where your money will go.

It's a shift, not necessarily a meltdown.  Investors will freak when they hear of oil, auto and airline bankruptcies.  They should freak when they hear of the fabricated money put in to prevent that.  They will freak when they hear the Q1, Q2 GDP numbers, and forced unemployment.  What they should look at is GDP per day, not per quarter.

Previously in this thread:  DougMacG, Political Economics,  GDP Now = 3.1%
« Reply #1837 on: March 23, 2020, 07:51:26 AM

About a week off in their data, that was the best estimate of the economic health the day before the economy closed, I would say March 15, so we lost a half a month of Q1 to the virus, to our reaction to the virus.  We are losing April and much of May also, two months out of three in Q2.  That is the bottom.  The economy is slowly reopening to differing degrees in almost every state right now.  GDP per day is increasing already and will every day from now until the election, when America decides whether of not to change course, and in which direction.

There will be more outbreaks, new quarantines  and more re-openings.  There will also be new news stories about treatments, testing, protections and immunizations.

But this recession is over, except for the antiquated way we measure it in economic quarters.  It lasted half of March, all of April and half of May.  That's two months.  Or as the dismal scientists call it, two or more quarter of negative economic growth.  But  `it's not 6 months, it was two months.   We aren't back to where we were in December or early March, blind to the biggest risk we faced.  We are back to where tomorrow is better than yesterday, economically.

It will come back differently and restructured from where we were.  Hopefully better and stronger, and there is plenty of room for public policy people to screw this up in every way.
MHO

[Crafty_Dog]

https://enewspaper.latimes.com/desktop/latimes/default.aspx?edid=adffe755-553f-4d93-ae9a-9a4cfbd2f62b

[Crafty_Dog]

https://www.theepochtimes.com/health-experts-say-pandemic-could-lead-to-154000-deaths-of-despair-due-to-substance-abuse-suicide_3344899.html?__sta=vhg.qblkmhbwphzxphzemdsbg%7CHJV&__stm_medium=email&__stm_source=smartech

[Crafty_Dog]

https://www.wsj.com/articles/older-europeans-reject-calls-to-remain-in-isolation-as-lockdowns-ease-11589112002?mod=djem10point

[Crafty_Dog]

https://www.wsj.com/articles/should-mild-coronavirus-cases-isolate-at-home-many-asian-countries-say-no-11589108401?mod=djem10point

[DougMacG]

[ccp]

worse is the Bill and Melinda Gates

cure

Have everyone on Earth monitored with regards to location
immunity status
and have all that data go to MSFT

which can analyze the data and then tell all of us what we can and cannot do and where and where not we can go

and of course share with the Gate's favorite political party .

sound so cozy and neat and "data driven" and "scientific".

This everything thing on the planet now is "data" driven
with regards to populations
I see it is medicine too and it drives me nuts.

NO I don't want to give Gates that kind of control over the world

F him and his wife

[Crafty_Dog]

https://www.vox.com/policy-and-politics/2020/5/1/21243357/coronavirus-covid-19-trump-protests

[Crafty_Dog]

Elon Musk Isn’t Taking It Anymore
The mercurial Tesla CEO has a point about disparate lockdown treatment.
By The Editorial Board
May 12, 2020 7:26 pm ET
SAVE
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TEXT
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Tesla CEO Elon Musk
PHOTO: HANNIBAL HANSCHKE/REUTERS
Tesla CEO Elon Musk is no Paul Revere. But his defiance of Alameda County’s shutdown order captures the frustration among businesses like Howard Beale’s primal scream in the movie “Network.”

California Gov. Gavin Newsom last week allowed some non-essential businesses to begin to reopen, but six Bay Area counties including Alameda, where Tesla assembles most of its electric cars in the U.S., doubled down on their lockdowns.

“Frankly, this is the final straw. Tesla will now move its HQ and future programs to Texas/Nevada immediately,” Mr. Musk tweeted Saturday. “If we even retain Fremont manufacturing activity at all, it will be dependen [sic] on how Tesla is treated in the future. Tesla is the last carmaker left in CA.”

A decade ago Mr. Musk rescued and retrofitted an auto-manufacturing plant in Fremont that Toyota had abandoned. The plant now employs 10,000 middle-class workers, many of whom live in rural San Joaquin County where another Tesla factory has been allowed to operate amid California’s shutdown because it is classified as essential.

“This disparate [government] treatment is arbitrary and without a rational basis,” Tesla states in a lawsuit against Alameda County, pointing out that the infection and fatality rates in Alameda and San Joaquin counties are similar. Mr. Musk also argues that Tesla is an essential business because it makes electric motors and battery systems that are “critical infrastructure.”

“The County’s order violates the Due Process Clause of the Fourteenth Amendment because it fails to give reasonable notice to persons of ordinary intelligence of what is forbidden under the law,” the lawsuit argues. He has a point, and arbitrary government distinctions about which businesses can stay open often seem to be based on politics rather than public health or science.

You can understand Mr. Musk’s frustration when Alameda County officials have allowed pot shops to stay open while shuttering his Tesla plant though the company has developed protocols to protect workers. Other governors including Michigan’s Gretchen Whitmer have given the green light to auto plants run by Tesla’s competitors.

Mr. Musk dared Alameda officials to arrest him when he reopened Tesla’s plant Monday, and he may get his wish. We don’t encourage lawbreaking, but a legal test of disparate lockdown treatment might rein in the inner dictators who are appearing in many places in America in these pandemic days.

[DougMacG]

https://www.washingtonexaminer.com/opinion/as-in-the-1960s-violent-rioting-hurts-the-most-disadvantaged

Who knew?

[Crafty_Dog]

   
    Recession or Depression
By: George Friedman

In March, we declared our 2020 forecast null and void. The COVID-19 pandemic had essentially rendered it irrelevant. The question we posed in March was whether the disease and the steps taken to manage it would lead to a recession or a depression. A recession is a cyclical financial process inherent in the business cycle. It is inevitable, stabilizing and somewhat painful. A depression is entirely different. It includes myriad financial dimensions as well as an added element of physical economic damage. It can destroy businesses and dramatically increase unemployment and thus transform our very existence. I would encourage you to read Studs Terkel’s “Hard Times: An Oral History of the Great Depression.” The greatest effect of a depression is on the existential reality of daily life. In that sense, we must all care about what this is.

The answer has not yet emerged – I will explain why below – but the numbers are ominous. We are close to completing the second quarter of 2020 and the Federal Reserve Bank of Atlanta is predicting a 48.5 percent decline in gross domestic product. Others are speaking of a 30-40 percent decline. Unemployment is at 15 percent and climbing. Even the more optimistic numbers are staggering not simply because of the size of the contraction but because of the speed with which it is happening. In the United Kingdom, the economy contracted by 20 percent in May alone. Germany expresses the most confidence: a 10 percent contraction in the second quarter. Most countries are expecting more modest declines in the third quarter, and then recovery in the fourth quarter.

Numbers of this sort indicate massive dysfunction in the economy, but the question is whether it is recoverable, and how quickly. The airline industry, for example, dramatically curbed its operations, leaving many pilots, ticket agents, mechanics and baggage handlers out of work. But unless all these workers found employment elsewhere already, the industry will probably survive and probably rehire them as soon as the economy recovers. (The airlines were among the hardest hit businesses. The kind of economic damage they suffered may well affect other businesses later, but for now it’s most visible in the airlines.)
An equally ominous but not quite clear force is the apparent increase in hospitalizations of COVID-19 cases in states that “opened up” in early June. There’s a debate over whether the increases signal a new wave. I am certainly not an expert, but if the virus is as infectious, and if it is as deadly, then it would seem that ending sequestering would simply have the same effect now as before. And if that’s true, and people who know more than I do disagree, then we should see not another wave but the consequences of opening up.

The root of the economic crisis is based on the fact that medical research has so far yielded no vaccine nor much in the way of mitigation. The only medical solution was sequestration. That meant that people should avoid contact with other people, since they could be infectious without knowing they carried the disease. In a sense, the medical problem was not the cause.

Medicine, except for helpful suggestions, was irrelevant. What drove the problem was that the only viable solution would hurt the economy. There is, after all, a social aversion to accepting deaths in return for a viable economy.

Therefore, if there’s a chance that the disease will swell as reopening occurs, and that that will lead to the reimposition of sequestration, then we are heading to a depression. Or rather, we are in a depression according to the numbers, but we are protected temporarily from a full depression by the speed by which it is taking place. That speed buys time to make economic reconstruction possible. But it is a window that will close. Using March 1 as the starting date, we have now been in this cycle for nearly four months. If we assume that we will reverse in September, it would be seven months. That’s a long time for a business with thin margins to survive without layoffs, and a long time for the unemployed to wait for reemployment.

The primary reason that forecasters are looking for a turnaround in the third or fourth quarter is the expectation that a vaccine will be developed. There are indications that there may be one by then, and even that production is already on the way. The problem is that it is unlikely to match demand (especially global demand) by then. As important, the logistics of distributing and administering the vaccine in the context of a massively disrupted economy will mean that at least two months will be required. You will recall how long it took to manufacture and distribute ventilators.

If my assumption is correct, and if an effective vaccine is released on, say, Sept. 15, then administering the vaccine would take until Nov. 15 at the earliest, which would be nearly nine months from the time the country was shut down. It also means five months of soaring unemployment and economic contraction on a global scale. It’s hard to imagine that we would be able to rapidly reconstruct the economy by this point. Obviously, the government could print more money, and that would basically fulfill both John Maynard Keynes and Milton Friedman’s prescription. Keynes called it increasing demand, and Friedman called it monetary management, but in both cases it uses increased money to prime demand.

However, in this case there is a difference. The foundation of economics is land, labor and capital. The origin of this crisis is the shortage of labor. The problem is not lack of demand but lack of supply. What you get from that is inflation, as happened in Weimar Germany. There are two arrestors in this process. One is a massive shift in the public’s willingness to accept the risk of disease. The second is a rapid medical solution.

A change in public attitude is possible for two reasons. The first is that time routinizes risks. People may be shifting their risk models. The second is that the meaning of depression has been abstract for them. We have not seen a depression for 80 years. I am old enough to have known some of those who lived through the Great Depression. I remember one clearly. He was in his second year of medical school during the Depression, but the money wasn’t there to finish. He got a job in a Kosher deli on Jerome Ave. in the Bronx. Forty years later he was still there. The Depression robbed him of the life he dreamt of.

If you get a chance, read Terkel’s book. Gambling with this virus is dangerous. But we all need to see that the economic problem isn’t about banks and corporations. It is how the Great Depression destroyed lives.

Am I predicting a depression? I still can’t. The ability of the American people to rally is enormous. The power of American science is remarkable. Still, the numbers we are seeing, if they pan out, are stunning.   

[DougMacG]

G M:  "What is the probability of the Twin Cities bouncing back vs. plunging deeper into Detroitification?"
[Moving this over from google thread]

My opinion only, 100% chance of a bounceback in the short run anyway.  Twin Cities does not rely on one dying industry or a dozen industries for that matter.  The economy is very strong and resilient.  700 buildings damaged is like America losing the World Trade Center.  It's devastating, it's scary, but it didn't touch the real wealth.

"At $99,764, the median family income for Minneapolis was at a new inflation adjusted high in 2018." [Plus relatively low cost of living compared to many other big cities]
https://www.deptofnumbers.com/income/minnesota/minneapolis/

The politics in the city is bizarre.  I can't figure out why the wealthy are on the same political page as the underclass.  But somehow they keep surviving bad governance. 

I'm more worried about the nation surviving this.  People are on edge because of virus lockdown.  The tensions of being lied to about Ferguson, Baltimore and police killings nationwide boiled to the surface when people saw the knee hold video.  Next will be the not guilty verdicts designed to re-incite.  I should get property insurance in place for that.

[Crafty_Dog]

Interesting and bizarre.

[G M]

G M:  "What is the probability of the Twin Cities bouncing back vs. plunging deeper into Detroitification?"
[Moving this over from google thread]

My opinion only, 100% chance of a bounceback in the short run anyway.  Twin Cities does not rely on one dying industry or a dozen industries for that matter.  The economy is very strong and resilient.  700 buildings damaged is like America losing the World Trade Center.  It's devastating, it's scary, but it didn't touch the real wealth.


Keep in mind that food might get real expensive in Minnadishu:
https://nypost.com/2020/06/13/truckers-wouldnt-deliver-to-cities-that-defund-police-poll/


"At $99,764, the median family income for Minneapolis was at a new inflation adjusted high in 2018." [Plus relatively low cost of living compared to many other big cities]
https://www.deptofnumbers.com/income/minnesota/minneapolis/

The politics in the city is bizarre.  I can't figure out why the wealthy are on the same political page as the underclass.  But somehow they keep surviving bad governance. 

I'm more worried about the nation surviving this.  People are on edge because of virus lockdown.  The tensions of being lied to about Ferguson, Baltimore and police killings nationwide boiled to the surface when people saw the knee hold video.  Next will be the not guilty verdicts designed to re-incite.  I should get property insurance in place for that.

I hope that insurance includes firearms and training, as well as beans, bullets and bandages.

[G M]

https://www.powerlineblog.com/archives/2020/06/liberals-bring-the-war-home.php

G M:  "What is the probability of the Twin Cities bouncing back vs. plunging deeper into Detroitification?"
[Moving this over from google thread]

My opinion only, 100% chance of a bounceback in the short run anyway.  Twin Cities does not rely on one dying industry or a dozen industries for that matter.  The economy is very strong and resilient.  700 buildings damaged is like America losing the World Trade Center.  It's devastating, it's scary, but it didn't touch the real wealth.


Keep in mind that food might get real expensive in Minnadishu:
https://nypost.com/2020/06/13/truckers-wouldnt-deliver-to-cities-that-defund-police-poll/


"At $99,764, the median family income for Minneapolis was at a new inflation adjusted high in 2018." [Plus relatively low cost of living compared to many other big cities]
https://www.deptofnumbers.com/income/minnesota/minneapolis/

The politics in the city is bizarre.  I can't figure out why the wealthy are on the same political page as the underclass.  But somehow they keep surviving bad governance. 

I'm more worried about the nation surviving this.  People are on edge because of virus lockdown.  The tensions of being lied to about Ferguson, Baltimore and police killings nationwide boiled to the surface when people saw the knee hold video.  Next will be the not guilty verdicts designed to re-incite.  I should get property insurance in place for that.

I hope that insurance includes firearms and training, as well as beans, bullets and bandages.

[G M]

Well, maybe not Detroit...

https://www.frontpagemag.com/fpm/2020/06/minnesota-state-rep-antifa-and-muslim-groups-plan-robert-spencer/

Sharia Law and Order!

https://www.powerlineblog.com/archives/2020/06/liberals-bring-the-war-home.php

G M:  "What is the probability of the Twin Cities bouncing back vs. plunging deeper into Detroitification?"
[Moving this over from google thread]

My opinion only, 100% chance of a bounceback in the short run anyway.  Twin Cities does not rely on one dying industry or a dozen industries for that matter.  The economy is very strong and resilient.  700 buildings damaged is like America losing the World Trade Center.  It's devastating, it's scary, but it didn't touch the real wealth.


Keep in mind that food might get real expensive in Minnadishu:
https://nypost.com/2020/06/13/truckers-wouldnt-deliver-to-cities-that-defund-police-poll/


"At $99,764, the median family income for Minneapolis was at a new inflation adjusted high in 2018." [Plus relatively low cost of living compared to many other big cities]
https://www.deptofnumbers.com/income/minnesota/minneapolis/

The politics in the city is bizarre.  I can't figure out why the wealthy are on the same political page as the underclass.  But somehow they keep surviving bad governance. 

I'm more worried about the nation surviving this.  People are on edge because of virus lockdown.  The tensions of being lied to about Ferguson, Baltimore and police killings nationwide boiled to the surface when people saw the knee hold video.  Next will be the not guilty verdicts designed to re-incite.  I should get property insurance in place for that.

I hope that insurance includes firearms and training, as well as beans, bullets and bandages.

[G M]

https://nypost.com/2020/06/27/minneapolis-council-members-who-voted-to-abolish-cops-get-private-security/

Well, maybe not Detroit...

https://www.frontpagemag.com/fpm/2020/06/minnesota-state-rep-antifa-and-muslim-groups-plan-robert-spencer/

Sharia Law and Order!

https://www.powerlineblog.com/archives/2020/06/liberals-bring-the-war-home.php

G M:  "What is the probability of the Twin Cities bouncing back vs. plunging deeper into Detroitification?"
[Moving this over from google thread]

My opinion only, 100% chance of a bounceback in the short run anyway.  Twin Cities does not rely on one dying industry or a dozen industries for that matter.  The economy is very strong and resilient.  700 buildings damaged is like America losing the World Trade Center.  It's devastating, it's scary, but it didn't touch the real wealth.


Keep in mind that food might get real expensive in Minnadishu:
https://nypost.com/2020/06/13/truckers-wouldnt-deliver-to-cities-that-defund-police-poll/


"At $99,764, the median family income for Minneapolis was at a new inflation adjusted high in 2018." [Plus relatively low cost of living compared to many other big cities]
https://www.deptofnumbers.com/income/minnesota/minneapolis/

The politics in the city is bizarre.  I can't figure out why the wealthy are on the same political page as the underclass.  But somehow they keep surviving bad governance. 

I'm more worried about the nation surviving this.  People are on edge because of virus lockdown.  The tensions of being lied to about Ferguson, Baltimore and police killings nationwide boiled to the surface when people saw the knee hold video.  Next will be the not guilty verdicts designed to re-incite.  I should get property insurance in place for that.

I hope that insurance includes firearms and training, as well as beans, bullets and bandages.

[DougMacG]

Just some context on the Twin Cities.  Population of Minneapolis is 400+k (smaller than Omaha).  Population of the Twin Cites metro area is 4 million.  90% or more of the local economy is outside the city.  So when you see the city run by 14 nutty Leftists, know that this group alone cannot take down the economy of the area. 

3M is headquartered in the east suburbs, Mayo clinic southeast, Medtronic (among the largest medical device companies in the world) in the north suburbs, General Mills, Cargill (largest private co. in the US), United Health Group (largest healthcare company in the world) and Optum all on the west side of town, Best Buy headquarters, south of the city, Mall of America, south suburbs, MSP airport outside the city, even the Minnesota Vikings built outside the city.  In other words, the 14 nutty leaders of Mpls couldn't shut down the food supply or the main industries if they tried.  When the suburbs go nutty-Left too, that is another matter. 

The last Republican mayor of Minneapolis finished his term I think in 1978.  The processes of people fleeing the core and others coming in have been going on for decades.  Somehow, life goes on.

One reason Minnesotans mostly trusted the DFL as they are known (Democrat party), Hubert Humphrey kept the Chicago and east coast mafia/mob/organized crime out of the city in the 60s.  Can you say that today?  More like it's a breeding ground for antifa and international terrorism, including al Qaida:
https://www.twincities.com/2010/08/04/12-minnesota-residents-charged-with-aiding-terrorists-in-somalia-linked-to-al-qaeda/

My question for the politics of the moment, as the Democrats turn Left to Ellison, Omar and the far Left, will the rest in the state flip to Trump?  If so, will that flip bring a Senate seat and a House seat with it?  And the Minnesota House too?  If so, so goes the nation.  If Trump carries MN, he's already won 40 states.

Ask the question in reverse, do the crises of the times give people confidence in Democrat Party governance?  How could anyone honestly answer yes??

[Crafty_Dog]

Thank you for that background context.

[DougMacG]

Strangely, the dollar has fallen dramatically over the time that Biden opened a lead over Trump,while Democrats lead in House and Senate expectations too.  The reason for the dollar plunge is said to be "political uncertainty".

Why don't they say the truth, the dollar falls, the value of the nations income and wealth falls when Marxism is immanent.  Will voters really vote against their nation's economic interest?  We have just a few months to find out.

"The US dollar has tumbled the most in a decade this month, propelling sterling and the euro sharply higher, on questions over the recovery of the world’s biggest economy and growing political uncertainty. The greenback weakened 0.4 percent against a basket of its trading peers by mid-morning on Friday in Europe. The greenback has shed 4.9 percent in July, its worst monthly sell-off since September 2010. Other currencies made gains as the dollar slipped. The euro rose 0.3 percent against the US currency to $1.1886, its highest level in two years, while the pound gained by the same amount to trade above $1.31. Japan’s yen rose 0.3 percent to ¥104.43 a dollar, a more than four-month high. “The dollar sell-off remains relentless,” said Lee Hardman, currency analyst at MUFG." - Financial Times today

[Crafty_Dog]

Millennials Slammed by Second Financial Crisis Fall Even Further Behind
The economic fallout of the Covid pandemic has been harder on millennials, who are already indebted and a step behind on the career ladder from the last financial crisis. This second pummeling could keep them from accruing the wealth of older generations.

By Janet Adamy
Aug. 9, 2020 1:07 pm ET




The economic hit of the coronavirus pandemic is emerging as particularly bad for millennials, born between 1981 and 1996, who as a group hadn’t recovered from the experience of entering the workforce during the previous financial crisis.

For this cohort, already indebted and a step behind on the career ladder, this second pummeling could keep them from accruing the wealth of older generations.

Jaclyn Jimenez put herself through college working for her father’s manufacturing company, but couldn’t find anything comparable when she graduated amid the economic slump of 2008. Even though she lowered her sights, she was turned down for roles from office assistant to drugstore worker. As credit-card debt piled up, she took a job selling wedding gowns at a bridal salon, then leveraged that experience to land a sales position at Nordstrom. She was finally gaining traction, she says, having worked her way up to manager.

Then the pandemic struck the nation in February, sending the economy into a tailspin. She lost her job, and Ms. Jimenez has now joined the 4.8 million millennials who the Federal Reserve Bank of St. Louis says lost work since the new coronavirus triggered a recession. The group had more losses than the two previous generations.

“It’s been difficult to struggle so much and think that you’re getting somewhere, and you’re moving forward, and you finally see a glimmer of hope, and then this all hit,” said the 34-year-old Orange, Calif., resident. “Am I ever going to have an opportunity to have what my parents had?”

The 12.5% unemployment rate among millennials is higher than that of Generation X (born between 1965 and 1980), and baby boomers (1946 to 1964), according to May figures from the Pew Research Center.

One reason is that some of the hardest hit industries, including leisure and hospitality, have a younger workforce.

Millennials have found it fundamentally more difficult to start a career and achieve the financial independence that allowed previous generations to get married, buy a home and have children. Even the most educated millennials are employed at lower rates than older college graduates, research shows, and millennials’ tendency to work at lower-paying firms has caused them to lag behind in earnings.

“It’s a sign that something has broken in the way the economy is working,” said Jesse Rothstein, professor of public policy and economics at the University of California, Berkeley, and a former chief economist at the Labor Department during the Obama administration. “It’s gotten harder and harder for people to find their footholds.”

As a result, the millennial generation has less wealth than their predecessors had at the same age, and about one-quarter of millennial households have more debt than assets, according to the St. Louis Fed.

Harder Hit

More millennials than older generations have lost jobs because of the coronavirus-triggered recession.
People who became unemployed between February and May 2020*
Source: Federal Reserve Bank of St. Louis
*Not seasonally adjusted
.million
Millennials
GenX
Boomers
0
1
2
3
4
5
About one in six were unable to cover a $400 emergency expense before the pandemic started; that share is about one in eight among all Americans, the bank found.

Millennials are now at risk of falling further behind because they entered the pandemic in a weaker position than older Americans.

Caitlin Robles, 35, said she felt lucky to get a job maintaining a website for Sacred Heart University when she graduated from there in 2007 with a business management degree. But with $67,000 in student loans, she needed a second job to pay for them and cover $650 a month in rent to live with two friends in Milford, Conn. Ms. Robles eventually got a second job working the front desk at a Massage Envy wellness franchise 15 hours a week. She planned to work there just long enough to make a dent in her debt.

Instead, she’s still working there nine years later and doubled her hours to pay the rising interest rates on her student loans and knee-surgery bills. Even after being promoted at both jobs, to associate director of web content at the university and to assistant manager at the spa, the $70,000 to $80,000 she earned a year wasn’t enough to pay down all her debt. She skipped a family vacation to save money. Her 70-hour workweeks left little time for dating.

To improve her credit score and lower her interest rates, Ms. Robles last year borrowed $30,000 from her 403(b) retirement account to pay off her student loans. She planned to pay off that loan in five years and start saving so she could buy a home when she turned 40.

That plan got derailed in March when Massage Envy shut down because of the pandemic, leaving Ms. Robles without a second income for three months. Since her location reopened in June, she has worked only seven hours a week because the company cut its hours and services. To conserve cash, Ms. Robles deferred payments on her retirement loan. Now she doesn’t know when she’ll be able to buy a home.

“I don’t want to work this way for the rest of my life,” Ms. Robles said. “I thought I had that figured out. And I don’t think I do now.”


Caitlin Robles graduated in 2007 and has worked two jobs for years as she chips away at her school debt.
PHOTO: TRACY DEER-MIREK
Economists are most concerned that millennials’ scars from starting their careers amid the last recession never went away. Millennials on average missed out on more than $25,000 in pay, or 13% of their total earnings, during the decade that ended in 2017 as a result of the rising unemployment rate that started in 2007, according to an analysis published last year by Census Bureau economist Kevin Rinz.

That was a greater share than Gen X, which had their earnings reduced 9% over that time, and baby boomers, which didn’t get 7%. That’s mainly because millennials were less likely to work for high-paying employers than older Americans.

Although younger workers’ employment rates recovered more quickly than those of older workers, millennials’ earnings didn’t bounce back, Mr. Rinz found.


Lead barista Dani Marina cleaned tables last month at Albi in Washington.
PHOTO: ALYSSA SCHUKAR FOR THE WALL STREET JOURNAL
Demographers say that financial instability is prompting some millennials, who are aged 24 to 39 this year, to cohabit instead of wed, and to delay or forgo childbearing. Millennials helped push down the marriage rate to its lowest level on record in 2018, and drove the general fertility rate to an all-time low the following year.

“Exposure to something like this twice in the early part of your career,” Mr. Rinz said, “could certainly have important and negative long-term effects on people’s finances, on their work prospects and all sorts of other family outcomes as well.”

Millennials’ early headwinds mirror those of the G.I. Generation, born between 1901 to 1924, said Neil Howe. The economist and demographer coined the phrase “millennial generation” in 1991 with co-author William Strauss. The G.I. Generation was first hit by recessions that followed the Spanish flu pandemic of 1918, and then the stock market crash of 1929 and the subsequent Great Depression. They recovered economic ground later in life thanks to a sharp rise in schooling and a booming post-World War II economy.

Michael Rafidi, a 35-year-old chef, spent more than a decade working at top eateries in Philadelphia, Washington and San Francisco while dreaming of opening his own restaurant. In 2016, he started raising more than $1 million to develop an upscale Levantine restaurant that drew on his Palestinian heritage with dishes like smoked lamb and sumac carrots. He named it Albi (“my heart” in Arabic) and opened its doors in Washington’s hip Navy Yard on Feb. 20.

“I didn’t think twice about the timing being wrong,” Mr. Rafidi said. “D.C. is going in the right direction with restaurants. The dining scene is incredible. Everything was aligning perfectly.”

For the first few days, Albi was so popular that it was hard to get a table. Three weeks later, the pandemic forced Mr. Rafidi to shut down and switch to a limited takeout menu. He secured a Paycheck Protection Program loan. He said it isn’t enough to replace the lost revenue from operating at just over a third of his original capacity.

“I’m worried,” said Mr. Rafidi, who is relying on outdoor seating, a few inside tables and a newly added cafe serving pastries and coffee. “I put everything on the line these last couple of years to do this.”

Millennials with a bachelor’s degree have about four times as much wealth as their peers who lack that diploma, according to Ana H. Kent, a policy analyst at the St. Louis Fed. Yet the most educated millennials lag behind older college graduates in the job market.

Old Scars

Millennials came into the pandemic in weakerfinancial shape than older generationsbecause they haven't recovered from the lastfinancial crisis. They have less savings...
Percentage of households that wouldn't beable to pay for a $400 emergency
Source: Federal Reserve Bank of St. Louis
Note: Data as of 2019
%
Millennials
GenX
Boomers
All
0
5
10
15
20
...They had bigger losses on overall earningsduring and after the last recession...
Average cumulative loss of earnings from2007 through 2017
Source: Kevin Rinz, Census Bureau
%
Millennials
GenX
Boomers
0.0
2.5
5.0
7.5
10.0
12.5

...And even after the overall jobs picture recovered, millennial jobs continued to lag behind older workers.
Employment rate among college graduates
Source: Jesse Rothstein, UC Berkeley
Note: Seasonally adjusted
%
RECESSION
Age 22-30
Age 31-40
1980
'85
'90
'95
2000
'05
'10
'15
70
75
80
85
90
Berkeley’s Prof. Rothstein studied employment rates among recent college graduates and identified what he calls a dramatic structural break for the group that entered the workforce around 2005. He found that each successive year’s group of college graduates has had lower employment rates relative to older workers in the same labor market than those before them.

Prof. Rothstein concluded that adverse early conditions permanently reduce college graduates’ employment prospects. That adds to a body of research showing that starting your career in a bad economy often carries a long-term penalty.

What surprised him was that when employment rates rose significantly following the 2007-09 recession for those already in the workforce, new entrants didn’t share in this improvement, he found in a paper he released last month.

Even college graduates who started their careers in 2015, and enjoyed several subsequent years of a strong labor market, were less likely to work.

For example, 24-year-old college graduates had an employment rate of 79.8% in 2015. Had the age-24 employment rate improved at the same rate as for older workers from 2009 to 2015, their employment rate would have been 81.6%, Prof. Rothstein found.

“It’s a finding that I don’t have a great explanation for,” he said. “I would have thought that the people who finished college in 2017, 2018 would be doing pretty well. But you don’t see that.”

Seeking to mitigate that penalty is Ankur Jain, an entrepreneur who founded the venture fund Kairos, which builds businesses that help make life more affordable for young adults. Last month, Kairos started to place thousands of young adults in home health-care jobs through CareAcademy and Care.com and pay for them to earn the necessary certification.

Although home health jobs typically pay low wages, Mr. Jain said the program will include a path toward becoming a licensed practical nurse, which pays more and can act as a springboard for a career in health care. “What we need to do is find ways to get people back on their feet,” said Mr. Jain, chief executive of Kairos.


Millennials have some advantages as they face a second severe recession. A larger percentage have college degrees than previous generations, which could pay dividends over time. They will also help fill gaps in the workforce as the large baby boomer cohort retires. The young workers behind them, members of Generation Z, who this year are 23 and younger, have even higher rates of unemployment and less experience to buffer them from the economic fallout of the pandemic.

Ms. Jimenez, the former Nordstrom employee, paid her way through college at California State University, Fullerton, with the roughly $45,000 a year she earned helping run her father’s printed circuit boards design and fabrication business. She expected she would at least match that salary soon after graduating with a business degree in 2008.

But as she sent out resumes during the crisis, no one wanted to hire her. Even office manager or executive-assistant jobs required five years of experience that she didn’t have. As her father’s business took a turn for the worse, she started applying for hourly positions at CVS and Disneyland. They didn’t bite either.

Desperate for a paycheck, Ms. Jimenez took a few shifts a week at a bridal shop in Orange, where her mother worked. She was barely getting by when the bank foreclosed on her parents’ home, where she lived with her younger sister. Ms. Jimenez moved into an apartment with both of her sisters and a niece and leaned on her credit cards.

“That really locked me into being permanently behind,” she said.

By 2013, she was still struggling to get traction. She parlayed her bridal-salon experience into a job selling wedding dresses at Nordstrom in Brea, Calif., for $12 an hour plus commission. She made about $22,000 a year. Although she was grateful for the steady paycheck, her inability to find a professional job felt defeating, she said. “This is not where I thought I would end up.”

Still, she stuck with the upscale retail chain because it offered a path for advancement. Over the next six years, she moved up little by little, first to an interim wedding suite manager, then to an assistant manager in a few other departments. Last year, she clinched a job as service experience manager at the chain’s Riverside location, which paid $56,000 a year plus a $4,300 bonus.

Ms. Jimenez grew more optimistic about her career. She started thinking about one day becoming a Nordstrom regional manager, or even a director. With her bonus, she set her sights on whittling down the $12,000 of credit card debt she had accumulated during years of scraping by.

“I was finally on the track of basically almost becoming an adult because honestly I have never felt that way,” said Ms. Jimenez. “Then Covid hit.”

Nordstrom told workers in May that it would permanently close the Riverside store as part of a broader retrenchment. That put Ms. Jimenez out of a job in early July. Now she feels like “it’s 2008 all over again.”

Ms. Jimenez got $7,000 of severance that will help her pay the $700 a month she spends to live with her younger sister, a friend and the friend’s 7-year-old daughter. She is considering going back to school to earn an advanced degree in psychology so she can eventually become a therapist.

Recently a friend offered to help her get a job as a front office administrator at a dermatology practice in Newport Beach. It would pay about $15 to $17 an hour. She hasn’t decided whether to pursue it.

“I do feel like I’m starting back at square one,” she said.

[G M]

https://www.intellectualtakeout.org/when-half-of-nycs-tax-base-leaves-and-never-comes-back/

I was told by a very smart person with Credentials this doesn't happen!

[DougMacG]

https://www.intellectualtakeout.org/when-half-of-nycs-tax-base-leaves-and-never-comes-back/

I was told by a very smart person with Credentials this doesn't happen!

The out-migration of disgruntled people from failed liberal states is strangely bringing failed liberalism to formerly red states.  We haven't figured how to convince them to leave their bad ideas behind.

[DougMacG]

https://www.powerlineblog.com/archives/2020/08/this-week-in-racial-retribution.php

Steve Hayward:  I have previously referred to Kurt Vonnegut’s famous 1961 short story “Harrison Bergeron,” which is a mordant satire of the tyrannical world of perfect equality. If you’ve never read it, here’s the first paragraph:

Kurt Vonnegut:  THE YEAR WAS 2081, and everybody was finally equal. They weren’t only equal before God and the law. They were equal every which way. Nobody was smarter than anybody else. Nobody was better looking than anybody else. Nobody was stronger or quicker than anybody else. All this equality was due to the 211th, 212th, and 213th Amendments to the Constitution, and to the unceasing vigilance of agents of the United States Handicapper General.

Hayward:  In order to make everyone equal, handsome men and beautiful women had to wear masks; very intelligent people had to wear a headset that blared loud noise in their ears every 20 seconds or so to prevent them from using their higher intelligence, talented ballerinas had to dance with weights on their ankles—you get the picture. It makes clear as well as a thousand pages of Hayek that achieving perfect equality requires tyranny.
----------------------------
He goes on to connect that with Dem proposals today.  It shouldn't be that hard to argue that equality is not the natural state of things, and that moving toward equality requires massive, coercive force, not offensive to today's radical left.

[DougMacG]

https://governor.utah.gov/2020/08/28/utah-ranked-best-economy-in-u-s/

[Crafty_Dog]

Positive Policies to Cut the Debt Burden To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 9/8/2020

When government forces businesses to close (even if it is for a pandemic), it's a "taking" in the legal sense. And we can think about $3 trillion in extra federal spending as "just compensation" to businesses and workers for that taking. Basically, we decided to borrow from future generations in an attempt to stop a virus and save the economy.

Federal borrowing is already more than 100% of GDP and politicians are debating how much more money to borrow as shutdowns drag on. Some of this potential borrowing, up to $1 trillion, is for direct state bailouts. And it appears some of that borrowing is to bailout states for problems that already existed. For example, in Illinois, unfunded pension obligations were roughly $200 billion before COVID hit. Illinois politicians are not letting a crisis go to waste and want to get bailout money now.

Those who worry about federal spending and the "moral hazard" of rewarding bad financial behavior by states look at a bailout as a huge mistake. The question is: Could there be anything positive that comes from this? What policies could the US put in place to limit the damage to future generations from all this borrowing? If we are asking our children and grandchildren to pay for this, are there things we can do that boost growth and limit the odds of more bailouts ahead?

We think there are.

First, the Treasury should issue 50- and 100-year Treasury bonds to finance Coronavirus debt. While the virus will pass, the economic costs will not and should be financed over a long period of time.

One of the reasons this has not happened already is that, in the normal budget process, issuing longer-term debt at higher interest rates than short-term borrowing rates increases debt costs and therefore total government spending. This takes away short-term budget dollars that politicians hope to spend on other things, so they don't like it. But these days, nobody in Washington, D.C. seems to care about adding to spending. So, lock-in the financing costs for decades to come. After all, that's realistically how long it will take to pay it back.

Second, if US taxpayers are going to bail out states, we should force states to change policies so bailouts are less likely in the future. This means the President and Congress should ask for three changes in the way state and local governments manage their affairs.

Taxpayers should demand that sates immediately shift to defined contribution pension plans (like 401-K's) from defined benefit plans. The private sector has already done this; states should too. It limits the liabilities of state and local governments and pushes government workers to think more about their own retirement rather than putting the burden on taxpayers. If taxpayers are going to bailout Illinois for running up $200 billion of unfunded pension debt, they deserve to know it won't happen again.

Taxpayers should require any states getting a bailout to provide universal state-wide school-vouchers so that parents can choose where their kids go to school with the property taxes they already pay. Right now, private schools in many states are open for in-person education, while public schools are not. The incentives are all wrong and vouchers will adjust those incentives.

Any state that gets a bailout should be forced to pass a Right-to-Work law and follow Wisconsin's example of making Union dues truly voluntary, with no gimmicks about when a worker has to give notice to stop paying dues. Unions support more pay and bigger pensions for government workers with campaign donations to government officials. This helped create the budget problems that state and local government currently have today and government workers have not been hit as hard by shutdowns as private sector workers.

If taxpayers need to spend $1 trillion to bail out state and local government for decisions made prior to (and during) COVID, and these states are unwilling to open up their economies today, these states should be willing to make changes that will limit the chances of similar problems recurring in the future.

And if Washington, D.C. made these changes a requirement to receive bailouts, it would help offset the financial burden that federal taxpayers are being asked to shoulder. Any bailouts should come with conditions. Every bailout of banks in 2008/09 came with conditions, why shouldn't states be required to do the same?