On today's BradCast, it's concierge service from the Fed for Wall Street during the crisis, as American workers are left fighting for table scraps to stay alive. Again. [Audio link to full show is posted at end of summary.]
New weekly unemployment numbers out on Thursday from the U.S. Dept. of Labor suggest that while new jobless claims are beginning to slow, they are still coming in each week at all-time record numbers. Another 2.1 million Americans filed new claims last week, bringing the number of unemployed to Great Depression era levels of nearly 41 million Americans out of work. Another way to look at it is that a staggering one in four working Americans has filed for unemployment over the past 10 weeks since the COVID-19 crisis began in earnest in the U.S. Those official government numbers [PDF], however, are still lower than the real unemployment numbers, as millions are believed still stuck in line or having trouble getting through to still-overburdened state unemployment offices.
"A closer depiction of reality in the crisis," our guest DAVID DAYEN of The American Prospect, reports today, is a recent Census Bureau survey finding "that nearly half of all households have lost income" since the crisis struck in mid-March. At the very same time, however, as jobs are still disappearing and S&P 500 companies report an average 13% loss in profits during the first quarter of the year, the stock market has been soaring of late. Even with today's record jobless numbers, the market continued to rise (though it dropped a bit just before today's close) with the Dow up over 1,000 points in the past three days and the S&P 500 reporting record gains over the past month.
Another study cited by Dayen today comes from the Institute for Policy Studies, finding that "since March 18, as 100,000 died from COVID-19 and 40 million lost their jobs, billionaires in America have added $485 billion in wealth." Must be nice. So why is this happening? Why does the economy appear to be tanking everywhere except for on Wall Street?
Dayen, who, in his daily "Unsanitized" columns at The Prospect has been reporting for weeks on the "$4.5 trillion money cannon" unleashed by the Federal Reserve, with the approval of Congress in the CARES Act. He explains how that relief bill gave the go-ahead for the Fed to signal in late March, for the first time in history, that they will backstop corporate debt for huge companies. Without spending a dime, the signal the Fed gave on March 23rd is that investors didn't have to worry about about any risk associated with buying bonds from those companies. The Fed would back them up in the event the companies failed. So, as Dayen detailed this week, troubled firms like Carnival Cruise Lines, which is unable to make a penny now in the cruise line business, and Boeing, which was already in trouble before the coronavirus crisis began, are still raking in tens of millions (even billions) of dollars in the bargain. And, since the funding is coming from private equity firms and hedge funds (as guaranteed by the federal government), that "mothers milk", as Dayen describes it, is coming with no strings attached, unlike direct loans from the Government's CARES Act might have. That means, he says, that at least 49 major companies have brought in enormous sums of money during the crisis this way, even as they've laid off tens of thousands of workers at the very same time while using their windfall of cheap money to pay executive bonuses and purchase stock buybacks as working class American suffer in a way they haven't since the Great Depression.
"What idiot would send money to Carnival Cruise lines right now?," Dayen quips, before explaining how the Fed's announcement gave the go ahead to private equity firms to invest in the company anyway. "What they're saying is 'We're going to support the entire market'. ... They're essentially saying to investors, we will take care of you, we will do whatever it takes. The markets take that as a signal that they're going to be coddled, they're going to be protected, and that's all it takes."
This was all done with the approval of both parties in Congress, even as some Dems are now beginning to regret giving no-string attached approval to Donald Trump's Treasury Dept./Federal Reserve money cannon. "When you defer to the Fed as your main policy-making engine in the country, you're going to get disproportionate responses, because the Fed deals with banks and they deal with large corporations. And that's who is going to get the relief. Not the average person on the street."
"When ordinary people, 40 million strong, have to go on to the unemployment lines, they get limited, temporary relief that will probably go away very soon, and they struggle to obtain food and figure out how to maintain their shelter," Dayen explains. "The problem is not that large companies got a bailout from something that wasn't of their own making --- the coronavirus crisis --- the problem is that there's one system for elite investors and large corporations and one system for everybody else."
How long can this last? Dayen discusses that as well, as states and municipalities around the country are themselves facing massive revenue shortages and fiscal year budget deadlines by July 1 in many cases. Without Congress enacting another relief bill for those states and municipalities, critical local services will soon be slashed. Cops, firefighters, teachers, and even medical workers will be laid off amid the continuing global pandemic, gutting revenue to those states even further. Democrats in the House have already passed a $3 trillion bill to help out state and local governments. Republicans in the Senate, however, have said they are in no rush to take any further action for now.
We also discuss the unimaginable politicization of this pandemic, where even the idea that measures to keep Americans alive has now become a political hot potato just five months before the crucial November elections.
That unimaginable politicization is now on full display in Pennsylvania, where a Republican state lawmaker disclosed on Wednesday that he had tested positive for the coronavirus. While he had known for at least ten days, he told only his Republican colleagues in the House. Democrats were left in the dark, even as GOPers in the gerrymandered House demanded in-person committee hearings where Dems were unknowingly put in contact with colleagues who had been in contact with the infected Rep and didn't even bother to wear masks during hearings demanding the reopening of businesses in the state. One Democratic Representative from Philadelphia unleashed a tirade during a Facebook Live video Wednesday night (which we share on today's show), calling on the GOP Speaker of the House to resign and for the state Attorney General to consider prosecution of those members who endangered the others along with their families. All of which underscores, yet again, the importance of the upcoming election and the reckoning that should come with it.
To that end, we've got some good news out of the state of Wisconsin (for a change), where the bi-partisan state Election Commission voted unanimously on Wednesday to send absentee ballot applications to all of the Badger State's 2.7 million registered voters before the November election. That, in hopes of avoiding the nightmarish consequences of the state's April 7th primary when GOP state lawmakers refused to agree to the Democratic Governor's attempt to postpone the election or extend absentee balloting to keep residents safe during the crisis. So, will Donald Trump threaten to cut off funding to WI as he did last week when Michigan announced their intention to also sent absentee ballot applications to all registered voters? Stay tuned.
Finally, we're joined by Desi Doyen for our latest Green News Report with troubling predictions from NOAA for hurricane season; the plague of locusts spreading from Africa to India; New York and New Jersey reject a proposal for a new fracked-gas pipeline; and a new $14 million ad campaign ties Trump's deadly coronavirus denial to his long-standing deadly denial of our climate crisis...
(Snail mail support to "Brad Friedman, 7095 Hollywood Blvd., #594 Los Angeles, CA 90028" always welcome too!)