Tuesday, March 24, 2020
Mnuchin is Wrong About Both COVID-19 & the Recession
He recently claimed---
1. The economy should rebound once the new virus is "contained". [There are two assumptions in that view: the bug will be contained; and our economy will or should rebound.]
2. The designation, Recession, is not "terribly relevant" because it's the gov't that is effectively shutting down large parts of the economy. The downturn is not due to underlying economic conditions. Instead, it's due to measures necessary to slow down the spread of the virus.
All the above sounds reasonable, but is it? Consider the following.
1. Containment does not mean eradication. It means limiting the virus to a smaller number of areas. The way things are looking, it's too late for that. [Nevertheless, "flattening the curve" is important.] This virus, officially designated by WHO as SARS CoV-2 or SARS 2, spreads easily and rapidly. [SARS = Severe Acute Respiratory Syndrome.] Too many younger people (in particular) appear to be spreading it all over...because, since most cases of infection are mild to moderate, the younger crowd seems to think it's no big deal. The fact is, covid-19 (SARS CoV-2) is spreading like wildfire both here and globally. Containment is not likely. The best we can hope for is slowing the spread and rate of infection (flattening the curve), thus giving the medical establishment time to get caught up, so to speak. That means rapid testing, isolation, and more PPE (Personal Protective Equipment...for health care staff).
2. The slow initial response re testing, and the continued slowness of testing, means that this virus is now in all 50 States here...and in people who currently are showing no symptoms whatsoever. Add to that the instances where people simply are not practicing social distancing at all. Except for the three cities with large numbers of known infections, I'm mostly convinced that too many people (everywhere else) are not taking proper precautions. I know for sure they're not in this little valley where I live.
3. An unknown number of people infected with this bug are going to work. They're showing no symptoms yet. Some people with symptoms are going to work anyway; they have little financial choice.
4. Bottom line re covid-19 in the USA: it already has become widely spread, and continues to do so.
5. The Administration is reluctant to use the word, Recession (which we're already in); arguably, we're rapidly approaching a full-blown, economic Depression. [The 1930's Great Depression, which lasted about ten years, was not so named until halfway through it.] There are at least two economies in the USA: one for the top 20% (or so) of income earners; and one for the bottom 80%. When Trump & Crew refer to "our great economy, the greatest in our history", they're referencing the economy of the top tier, not that of the overwhelming majority of Americans. Even then, they're inaccurate. Our greatest economy was during the Golden Age of American Capitalism, from about 1946 to the "Nixon Shock" in 1971. The Trump years aren't even in the same universe, never mind ballpark, as that economic boom. By the way, mega biz was taxed at up to 90% then... and they still prospered.
6. In several fairly recent past posts, I've detailed the reasons for the contention immediately above. No time or energy to repeat all that, but here's a partial, truncated list of those reasons.
a. Record national/public, corporate, and personal DEBT...and it's all coming home to roost. U.S. TOTAL Debt is now over $76.8 trillion.
b. 50% of workers in the USA make less than $33,882 per year. The Middle Class continues to shrink. (See: usdebtclock.org)
c. The Gov't Jobs Report fails to identify how many jobs are part-time, temporary, or both. Too many people are struggling with two or more jobs.
d. The unemployment stats put out by the Feds are always way too low. See this post: http://individualsovereignty.blogspot.com/2018/02/the-real-state-of-union-rather-than.html
e. Many countries are dumping Dollars, forming their own currency exchange agreements, and their own Trade agreements. Trump has so alienated them that they are by-passing the USA. Even prior to The Don, the same thing was going on in order to oppose American hegemony. We are becoming isolated in the world economy. Other countries are tired of our Govt's bullying.
7. Mega Banks and other Mega Corporations do little to nothing to help increase the number of good-paying jobs and manufacturing in this country. Despite the current Admin's rhetoric, factories & jobs continue to flow South or overseas.
8. Bizarre financial Derivatives continue to threaten our Financial Sector and/or our economy and the world's, as well. Essentially nothing is being done to correct that situation.
9. Mega monopolization in the Business world is stifling small businesses in the USA.
10. Rampant Financialization (since the 1970's) continues to destroy jobs and manufacturing, suck up Middle and Lower Class income, and cause an exponential rise in income inequality.
11. Bottom line re Recession: even without the covid-19 trigger, we were right on the cusp of the overdue Recession. The virus wasn't the cause of the Recession we're in now; it was merely the trigger. The causes I just listed above. Our economy is not resilient. Even the workers are always in a precarious situation--- insecure jobs, poor benefits, essentially flat wages, low wages, obscene health care costs, etc. The economist, Guy Standing, refers to them being in the Precariat Class.
Even people who are doing okay, living paycheck to paycheck, have little to no way of saving for a rainy day. The Establishment doesn't want them to save. It wants them to spend, spend, spend... and to increase their debt... so that the consumer society can expand, expand, expand. Debt will be our downfall.
12. Finally, on both the disease and economic fronts, this is not about only the USA. It's worldwide. On the economic front, most of the "Developed" countries (not only here in the U.S.) are on the cusp of--- or already in ---a Recession. We in the USA cannot be unaffected by that. The next Depression, like the last, will be worldwide.
p.s. The reason the Dems in Congress haven't yet (as of about 7 AM) agreed to pass the COVID-19 Relief Bill--- or whatever it's called ---is because the money going to corporations has too few to zero conditions on it. Remember the last Bailout Congress passed re the Mega Banks? No restrictions as to use of that money. Did they loan it out to stimulate the economy? Answer: very little of it.
Not only my opinion. Be Well