Ground Hog Day Again

Who Gets Bailed Out?  Who Gets Buried?

The financial ‘fix’ being implemented or discussed due to the pandemic is similar to 2008.  As the chant went then, “Wall Street Bailed Out, Main Street Shut Out.”  On March 12^th the Federal Reserve said it will inject $1.5T free loans into the banking market through the over-night ‘repo’ window, which allows banks short-term over-night loans.  The week before the Fed cut interest rates down to .25% and .00% for loans to banks.  Another $700B in asset purchases involving Treasury bonds and mortgage-backed securities was also initiated, called ‘quantitative easing.’  Discount loans to banks up to 90 days went down to .25% from the Fed’s discount window.  Money market funds are also being propped up, as they are not actually cash.  There will probably be more to come for corporations and the banking industry.  Again, the capitalist state rides to the rescue of the 'private' and 'free' market.

Round II?  Now it is the 90%...

On deck are direct corporate handouts for the airline, hotel, cruise ship and oil/gas/fracking industries, with auto, drug chains and health insurance waiting in the wings.  By the way, the Trump family owns – hotels!  The top 5 U.S. airlines have given $45B to shareholders and executives in dividends and buybacks in the last 5 years and are now asking former Goldman Sachs alum, Foreclosure King and now Treasury Secretary Steve Mnuchin for a $54B bailout.  The 2017 tax bill was a huge gift to them.  They will get their bailout in the panic.  And why should anyone bail-out the environmentally toxic cruise ship industry or an oil industry that is destroying the planet?  As has been said many times, capitalist corporations and their governments socialize their losses and privatize their gains.  Nothing essentially changes no matter what administration is in power.

Estimates are that nearly 1 in 5 households have already had layoffs or reduced hours due to the virus - 14 million so far. Millions of gig, restaurant and service workers in the U.S. are short pay or short hours - 1 in 4. Unemployment insurance for workers with already low pay is only a percentage of that low pay.  So for ordinary citizens, the government may provide a one-time check of $1,200 per adult and $500 per child, with later aid to be determined.  Crumby sucker checks... but even that semi-popular move was opposed by Nancy Pelosi initially.  Then there is the invisible hero, Biden.  It is not sure what database they will use to provide that check, with many poor people not in the IRS database.  Look for the checks to dribble out for a long time.  Small businesses are also on the docket, but nothing concrete has been finalized through the SBA.   Nor is a dime promised to municipalities or states yet.

The class and inequality contrast is dramatic.  The Senate bill had $4T to the banks, $500B to individuals and small businesses.

Unpaid mortgages, credit card, student loan and rents will not get $0% loans because the U.S. does not have a state bank, which could lend to working-class people at low to zero interest rates.  While they halted evictions in public housing, no such plan is being implemented for private housing.  Nor will a planned, organized, socialized single-payer medical plan allow every person to get the required health care for a low or no cost.  Instead the health ‘patchwork’ in the U.S. is like a disorganized, well-dressed drunk trying to fight off a flight of bees.   Nor will student loan payments be put on hiatus, as higher education has become privatized, not socialized.  Those unable to stockpile food or essentials will be the most vulnerable – the poorer working class, the homeless, those in jail or in detention facilities on the border, those in the military, those in nursing homes and assisted living facilities. Grocery, delivery, factory and health workers are the most vulnerable to the virus, not their executives.  Trump even rejected the WHO’s testing kits, which has led to the massive testing shortage in the U.S.  He probably did this to send the work to one of his Big Pharma allies. 

What this pandemic has revealed in the U.S. is that a fragile private banking and market system cannot handle large events.  It is truly a house of cards no matter how many CEOs flutter around the White House.  It will lead to many bankruptcies among individuals, small companies and even some large corporate entities.  A recession is probably already occurring. On top of that it is ridiculous that a good chunk of the retirement system is privatized and put in the hands of Wall Street through 401Ks and IRAs.  Once again many higher-end workers have to watch their savings tank, as between 30 and 40% of workers have a 401K/403B and/or IRA.  The modest CD / savings account methods were trashed years ago.

As social-democrat Naomi Klein has once again pointed out on The Intercept, ‘disaster capitalism’ will be in full swing.  The disoriented and fearful public will usually fall in line with the thugs, perhaps the reason behind Joe Biden’s comfortable, ratty-sweater politics of ‘no change.’  They may even try to postpone the election.   All while things degenerate systemically even more.  Trump is not the main problem – capital is.  Without a rational, planned, stable economy disasters become worse … and disasters are not flukes.  They are built into life on this planet.

So the question is, what large progressive wins can be gained in the present situation?  Will we nationalize the health care industry?  Will we get a state bank working through the post offices?  Will we see national sick time decreed?  Will we ever improve unemployment insurance, especially to include wrongly-classified 'independent contractors'? I see none given the absence of a true mass alternative to the two parties of different wings of capital. 

P.S. - Why Single-Payer Socialized Medicine handles massive health problems better - Guardian:
https://www.theguardian.com/commentisfree/2020/mar/21/medicare-for-all-coronavirus-covid-19-single-payer

Note:  The Final tally for the 2008-2011 bailout of the banking system is $29 trillion, according to the Levy Economics Institute and a GAO audit. It was all ultimately handled by the private banking system itself, not the government. So watch this one go up too.  (CP, 4/2/2020)

Other prior reviews on this subject, use blog search box, upper left:  “The Shock Doctrine,” “No Is Not Enough,” “This Changes Everything” (all by Klein and books on Wall Street:  "Griftopia," "The Divide" (both by Taibbi) "House of Cards,"  "Retirement and Wall Street," "Debt & Capital," "Liquidated," "The Big Short," "Flash Boys," (both by Lewis) "The Wolf of Wall Street," "The Ponzi Factor," "Ponzi Unicorns!" 

Red Frog

March 20, 2020

Happy Spring Equinox!