== Wisdom about markets and all those concocted trillions ==
Where will we 'get' the trillions about to be thrown into the economy, to prevent a deflationary depression? Let's share some perspectives from one of the newsletters I get (and I have a column there, from time to time) - Phil’s Stock World. Phil is a master trader who grasps puts, call, hedges and all that. He has this to say about market panic right now:
“Let's say 80% of the people still get paid. US payrolls are $6.5Tn or $500Bn a month and Bernie says give us $600Bn a month so - THANKS! That's why Yang (and me!) is right that $1,000 a months for people over 18 (210M) would be a more realistic $210Bn a month or $2.5Tn a year, which is by no means a crazy number in a $20Tn GDP - a simple 10% VAT would take care of it and redistribute the wealth from the people who spend to the people who don't have any money." (DB note: it would have to be accompanied by increased taxes on the wealthy and yes, international wealth transparency.)
“So there's no reason for the economy to collapse based on that though I imagine that each month 10% less people will get regular paychecks as more and more businesses begin to shut down.
“Then the real problem becomes spending. $500Bn a month only becomes a $20Tn GDP (there's other income besides wages, of course) due to the money multiplier effect, which is roughly 3.5x. In other words, you get paid $5 and you give it to SBUX who pays the barista who goes to the supermarket to buy a whole pound of coffee for $8 (because they are not a sucker like you!) and the Supermarket pays the cashier who combines it with food stamps (because those wages suck) and they get a turkey, etc..."
DB note: This multiplier effect is crucial. It leads to money velocity which is high when you spend billions on infrastructure jobs - long -thwarted by the GOP - and MV drops below zero for the billions handed over to the rich by Supply Side never-once-right voodoo. See below.
DB note: This multiplier effect is crucial. It leads to money velocity which is high when you spend billions on infrastructure jobs - long -thwarted by the GOP - and MV drops below zero for the billions handed over to the rich by Supply Side never-once-right voodoo. See below.
“So money moves through the economy and poor people spend whatever they get so they move money the best but, when you give money to rich people they put it in the bank (0x multiplier) or, even worse, they put it into an instrument that produces NOTHING and demands interest, which sucks even more money out of the economy (-0.1x). Since the rich have 100x more than the poor - that's a lot of sucking!
“Still, unless we are heading into a real Zombie Apocalypse, where humanity wiped out and replaced by a mindless hoard with no interest in food, fashion or fun - we will survive - even if surviving means locking ourselves in a bubble and shopping via Amazon drones with our Universal Basic Incomes.
“Even THAT would still have our GDP around $12Tn, down 40% from where it was but certainly not $0 - that's why a sell-off past these levels is silly and can't last - and that's the worst possible case - the actual case is probably quite a bit better than that - we just have to get through the next few months."
DB followup points:
1) Since infrastructure jobs offer the best multiplier effect with well-paid jobs that ripple through the economy and that actually build stuff we’ll actually use for a century, can we do that EVEN DURING A PLAGUE?
Elsewhere I offer the Pothole Gambit. Get thousands of workers busy doing a zillion repairs in our cities in small, carefully managed teams of just 2 or 3. Such jobs can be managed with a lot of “social distancing” among workers! Hence, there is zero reason any city should have any remaining POTHOLES or bad sidewalks or ill-maintained schools after Covid 19, since small teams of 3 or so can handle such gigs. Especially if they are not only trained in sanitation but given priority testing.
Seriously, YOU should help spread this idea for how to make use of this urban down time, keep folks busy, employed and doing something useful, while staying safe.
Elsewhere I offer the Pothole Gambit. Get thousands of workers busy doing a zillion repairs in our cities in small, carefully managed teams of just 2 or 3. Such jobs can be managed with a lot of “social distancing” among workers! Hence, there is zero reason any city should have any remaining POTHOLES or bad sidewalks or ill-maintained schools after Covid 19, since small teams of 3 or so can handle such gigs. Especially if they are not only trained in sanitation but given priority testing.
Seriously, YOU should help spread this idea for how to make use of this urban down time, keep folks busy, employed and doing something useful, while staying safe.
2) We all need to realize that the Reagan and Bush and Trump Supply Side tax cut gifts to the rich were a scam robbing us and our economy of tens of trillions. And not those fake-ghost trillions “created” by the Federal Reserve, but the real things, outright stolen from us all and plowed (as Adam Smith said the rich always do) into non-productive “rentier” investments that have zero money multipliers. Any remaining Supply Siders should be put in straitjackets and given 20 meter social distancing. Or a padded cell. Their meme plague has hurt us all.
== Bailouts? Demand equity! ==
Back in 2009, Republicans were furious when Obama and democrats ‘bailed out” US automakers to keep them out of bankruptcy and saving tens of thousands of jobs. Those “Obama bailouts” were in a few tens of billions and they were LOANS, with real ownership collateral. And all got paid back.
Goppers had much less negative to say about the TARP programs of Obama era take-up of toxic banking assets… well, bankers and goppers overlap a lot. But even so, the US government made a lot of that money back from later sale of those assets. In other words, we had relatively sane leadership, then.
Now compare that to the screeching hypocrisy of Republicans - who are never, ever more fiscally responsible than Democrats, (and that’s never) - rushing to support TRILLIONS in wholly created “funds” to firehose at both citizens and (much more) to bail out corporate friends.
See 'No, the airlines do not need a bailout.' Airlines who wasted almost all their profits and the 2017 tax gusher on stock buy backs that only wound up benefitting the CEO caste. Boeing wasted 43 BILLION dollars this way, that could have cushioned their current problems. (The Greatest Generation under FDR banned such buybacks, for excellent reasons that the Reaganites and worse Bushites and even worse MConnell-Putinites railed against and “reformed” away.)
In fact, okay, we must for the sake of jobs. But use the Obama pattern. Demand collateral! If they fail to pay it all back, then shareholders take the fall -- which they deserve for voting in CEOs who did those massive buybacks. If we bail out these companies to save the workers and engineers, we owe nothing to the CEO castes and greedy corporate raider types who squandered these corporate crown jewels to enrich themselves. If we must wind up co-owning Boeing and Delta, as citizens, is that such a bad thing?
See how now they are promising to stop doing the evil-stupid things, in exchange for billions of bailout… but no mention of equity shares.
Aaaaand… Nikki Haley quits Boeing board, citing disagreement with company’s bailout request. Positioning herself to say “that train-plane wreck? No, I had nothing to do with that! Make me veep!
... and finally...
== Ways to pass the time ==
Virtual Tour of Ten Museums:
and many more museums
But there's no better way than this. ;-)
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