Bleeding Edge

Traditionally, economies fall into recession and then move into recovery, beginning a new business cycle. But what we’re seeing with COVID-19 is a deep recession leading to a less pronounced but longer-lasting recession that could leave permanent scars on the economy.

Economists are warning about a looming recession within the recession, as more temporary layoffs become permanent and long-term unemployment rises. One economist told Axios “the U.S. economy is transitioning from a depression to a recession and not a recovery.”

Lawmakers were hoping to avoid this by passing the CARES Act in March, but most economists say more help is needed. And the road may stay rocky for a while: 80% of economists surveyed by the National Association for Business Economics say there’s at least a one-in-four chance of a double-dip recession.

Yet the parallels with the Great Depression are uncanny, because if you look at the pre-war period from 1929-1938 — the same thing happened.

After the great crash of 1929 and the subsequent depression it took us a couple of years all the way to 1930 when the stock market recovered all the way to 90% of pre-crash levels, without a fiscal stimulus or quantitative easing of any kind. Only bank support schemes were deployed and large company saving measures…

Then the reality of the true size of the 1929 crash set in, and of the real depression, and the stock market crashed down again.

Pf course there were small rallies, here and there — but the market didn’t get back to pre-1929 heights of the Glorious 20s all the way until the late 1950’s.

The difference here today, is that we have the fiscal stimulus, which however, is primarily going to “friends of the government” and the well connected colleagues and tribal affiliates of the current President and of the Republican administration — same as the past Quantitative Easement that was directed by the Democrats during the last Great Recession, went to their own friends and families.

When are we going to learn the lesson that playing party politics with our Economy will leave all of us homeless and hungry?

And obviously seeing today that the total Q.E. paid out to individual citizens and all other needy peoples is tiny relative to the total stimulus package that has been unleashed by the Treasury under there guidance of the Congress and the Executive.

It saddens me to see that we are saving large conglomerates, we are enriching the super wealthy and the darlings of the Stock market Trillion dollar companies while at the same time — we are intentionally letting our people drown in sorrows and fatigue of the troubled and turbulent waters of our Economic and Social malaise…

Is it any wonder that all the people are now contemplating taking up arms to tear down this bipolar and bipartisan travesty that rules over us like a Dynastic Hegemon?

Look at the signs and then call me a prophet Isaiah or Elizah or even a Kassandra, before you make up your mind about where we are heading…

• U.S. debt has reached its highest level relative to the size of the economy since World War II, and is forecast to surpass it next year, according to the Congressional Budget Office.
• The casualization of employment is a fact now, and indeed the most terrible thing for all the middle & working class people, regardless of being part of the white or blue collar jobs and regardless of the color of the skin that our folks sport…
• The off-loading of PPE maintenance and benefits costs has also left far too many people vulnerable to the ills & maladies of familial, social, political & economic malaise during this season of pandemic and pain.
• Bloomberg reports workers in America’s heartland who are keeping the nation fed are going hungry themselves, with food banks overwhelmed and the number of Americans fighting hunger expected to grow by 45% this year to more than 50 million.
• It is also important to consider the impact that the economic and health impact has on the mental health and well-being of our society. I see this as the second pandemic. So many older adults and family caregivers are struggling with the burden of stress and uncertainty during this difficult economic and public health crisis. We are working to help guide this population to relevant support and services, but this is only the beginning of a long-term chronic crisis of mental health that is hard to quantify the impact on society.
• Of course today, our economy is less than 5% agricultural, it was more like 25% in 1929. However, a large part of our economy is services, travel, entertainment, and COVID has probably put a 1.5 to 2 year hole where 25% of our economy has been reduced by 50%. Also, the saving rate has soared, people are spending less in general because of job and income insecurity. It’s not that different, we still have a pretty large part of our economy that is not working and productive. In addition, I think we are early in the economic crisis and the add on effects have not yet been fully realized. The lower savings rate, a second financial crisis, the inability to bring 15% of the economy back online mean a protracted crisis, not a “quick fix”.
• An excellent – and sobering – piece from Barron’s on the scale of the budget crisis facing the country’s states and #municipalities as a result of COVID-19. States and municipalities are taking a huge hit to their revenues and tax bases, while their expenses remain high. The prospect of reduced spending and layoffs will further impact the economic #recovery. While the politics surrounding the crisis will make it difficult, if we can get a program from the federal government to help states and municipalities, we’ll be better positioned to get through this crisis.
• A big issue you don’t hear about as much is that higher salary employees are being let go and companies are using the pandemic to get rid of them under the radar. This effects the buying power of the economy more then a lower wage worker being let go in say retail. Senior managers, pilots, and heads of departments like marketing and sales are being let go. Companies will then hire lower rate workers to say money when the time to hire comes. That purchasing power that is lost will keep the economy depressed for longer.
• There’s no doubt we’re seeing a mental health crisis, just look at what is going on in many of our cities around the nation… It’s just trying to figure out who has the bigger mental health issues, the rioters/looters, or those who refuse to put an end to the destruction of their cities. I’m going with the latter. How can an elected official sit back and watch the carnage and not do anything to stop it? And, they refuse help from the Federal Gov to stop it, but when this ends, they will be first in line to ask for money to rebuild what they allowed to be destroyed.

Trump’s “Super V Recovery” is simply a redistribution of US Dollar fiat into the pockets of the greedy money grubbers on Wall Street. Very little, if any of that money will ever make it to ‘Main Street.’

And while Trump PRAISES the booming Stock Market which essentially robs the ‘Middle Class’ by keeping prices of nearly everything overinflated, & with no proper “corrections”… a major cause of inflation & continually rising Real Estate prices (mostly since 2012). As long as Stock Prices remain artificially INFLATED, so too will the average lemming believe that the economy is prospering very well & good.

And, his actions speak more than a 10,000 word economics explaining the Fed Policy/Actions. Such actions cannot ever lead the USA back to a sound “economic policy” which will ever lead to renewed “prosperity” in America! Not now, not ever! Yet, Trump is using this to take credit for his ‘booming stock market’, which he would have the lemmings believe is a ‘booming economy.’

By the way — Obama did the exact SAME thing!

Yours,

Dr Churchill

PS:

Sadly, this time is a real struggle for our people suffering through a deep recession, depressions and division — while the stock market increases daily with so many wealthy people buying homes & displacing many others to the point that construction trades are booming…

Yet these new homes are not nearly enough for the demand…. with the unhoused peoples and the homeless numbers rising daily — we have an economy of two speeds and two differing directions.

Indeed, there is not enough available housing, bidding wars for the available housing stock cause price increases and yet some cruel folks of the Trumpian persuasion think that this is all a hoax.

We can help them see that they wish to not see, but we cannot make them comprehend the suffering of others, because the Trumpers are fully convinced that the whole thing is a made up fallacy, in the same way like last time when we saw that the doom and gloom economy forecasts by the mass media that didn’t work.

Yet, the first time that the media attempted to downplay the robust economy — when they swore that we would see a W shaped recession since every attempt was made to create panic — now here we go again as the continued attempts to destroy the U.S. economy, are exploding all around us with the Covid pandemic, creating excessive panic and fully realizing the “chicken little effect,” especially around election time.

It is a valid yet cruel argument that comes from a warm breath and a hot hearth with a full stomach — that caused the Trumpers to not care for the other people suffering in this Marie Antoinette socio-political & economic moment, ripe for a Revolution and a clutch of guillotines set up for the proper edification of some savagely wealthy beings…

To them — I’ve got only one thing to say:

May the Good God have Mercy on us.

Thanks be to God. Dr CHurchill