As he valiantly tried to get a recorded vote on House passage of the $2.2 trillion coronavirus bill (the CARE Act), Rep. Thomas Massie learned once again last month the chief difference between the members of Congress and the inmates of a maximum security prison: Supermax prison inmates have better character than members of Congress.
He should have known this already, since few inmates of a maximum security prisons would say that the ongoing drone-killing of children and warring on al-Qaida’s behalf is morally necessary, as the majority of congressmen did.
In this instance, however, the congressional moral turpitude was financial. It’s unimaginable to think of prisoners bragging about how their actions just swindled a gaggle of plumbers, waitresses and department store clerks out of their homes, but if you listened to the speeches of congressmen passing the bill, you’d think those clerks who will lose their homes should be grateful.
Sure, lots of prisoners have been incarcerated for robbery, but they almost always rob from the rich. Congress used this bill to rob from the poor and working people in order to subsidize mega-corporations and banks from the tips of waitresses. “Some will rob you with a six-gun, and some with a fountain pen,” Woodie Guthrie once sang, but “as through your life you roam, you will never see an outlaw drive a family from their home.”
The bill admittedly contained $300 billion in cash payments to citizens, but – thanks in part to a $454 billion accordion program through the Federal Reserve Bank – more than ten times that amount will go in the form of cash subsidies and discount loans to big banks and giant corporations. The bill is not really a $2.2 trillion bill, but is instead a $6 trillion bill, the overwhelming majority of which will go to politically-connected corporations and banks.
$454 billion into $4 trillion
The New York Times explained how the Fed can get $454 billion and turn it into $4 trillion: “Legally, the Fed is not allowed to buy debt that is not backed by the government. To achieve a degree of separation, it sets up a special purpose vehicle and then lends into it — which is why all of these programs are called ’emergency lending.’ The vehicle then snaps up bonds or makes loans to the private sector.”
This, of course, is pretty much the definition of how money-laundering works.
The $1,200 “bailout” payment amounts to food money for the working stiffs about to lose their houses to the taxpayer-funded top 1% and bankers (but I repeat myself), who will take working people’s homes when assets are most depreciated and at fire-sale prices. It is, as Thomas Massie has repeatedly said, “the cheese in the trap.”
But the food money is necessary. Why? Because, as any shepherd knows, you can’t kill a sheep you want to keep fleecing.
The few leftists who comprehend economics understand how this will work. “It’s an abomination beyond all comprehension,” Dylan Ratigan explained on the March 26 Jimmy Dore podcast. “This is a further consolidation of wealth among the super-rich by giving only the super-rich money at a time when asset prices are down and everything is depressed so that the super-rich can take the taxpayer’s money and buy more of all the assets to increase their stranglehold and hammerlock on America.”
Ratigan is a leftist, at odds with free market principles. But he’s not wrong.
Ratigan even offered an interesting thought-experiment as an analogy: “Imagine, again, if I bankrupt everybody in Los Angeles, but only give a small group of people that are politically connected a bunch of money to go buy all the assets afterwards, who do you think is going to own all the businesses in Los Angeles a year from now?”
If you don’t think the financial sector is really psyched about the shutdown and their upcoming subsidies, you haven’t been paying attention. They’re laughing at the plebes over on K Street and Wall Street. And this has happened before.
The amount of crony-capitalism in this bill dwarfs the 2008 TARP bailout program, but even government’s actions during the 2008-09 crisis turned many major cities from home-owning cities to renting cities. It also turned the American people from, on average, employees of small businesses to employees of big businesses.
Matt Taibbi of Rolling Stone magazine noted in his podcast “Useful Idiots” April 3 that:
“The main thing that people will have to understand that what happened with this rescue package is that it commits the government to an unprecedented amount of support of Wall Street in particular. In the same way we saw in post-2008 all sorts of crazy profiteering and opportunities for banks and financial companies to make basically risk-free money, that stuff is completely baked into this rescue package that passed unanimously.
“And just to take one small example for people to think about: One of the new forms of assistance that was different in this bill from 2008 is that the Fed and the Treasury are now going to be buying corporate bonds. So last time around the government basically spent a lot to prop up the mortgage markets. They bought mortgage-backed securities; they took bad mortgage assets off the books of the banks. That was one of the big things they did. This time they are expanding that activity to buying the debt of companies and supporting the bond market, which is a whole new galaxy of support.”
Taibbi noted that financial giant Blackrock has been hired to disperse the loans, in many cases it’s likely the loans will go to companies whose debts they already manage. “It’s hard for people to even wrap their heads around the opportunities for profiteering and manipulation,” the exasperated Taibbi explained.
And that’s only one part of the bailout bill. There are other programs the Federal Reserve Bank has initiated to support banks that aren’t even part of the bill. The Fed has announced the availability of $1 trillion for overnight loans to banks, in addition to $1 trillion in 14-day loans it already announced, and at near-zero interest rates. Plus, they’ve eliminated the requirement for banks to have any reserves in their vaults to cover consumer and business deposits, an historical first. Because the Fed has lowered banks’ reserve requirements to zero, banks can loan out unlimited amounts of money to their wealthy friends, regardless of the amount of deposits in their vaults. So banks can issue debt out of thin air for nothing and with nothing. In effect, every member bank has become an inflationary Federal Reserve Bank, buying up depreciated assets the unemployed plebes can’t afford to keep any more.
And just in case you think the corporate media will tell the American people the truth about what’s going on, when the Federal Reserve announced an additional $2.5 trillion corporate bailout program, CNBC went to a Blackrock official to get its “unbiased” opinion for its story. The corporate press “watchdog” is an obedient and highly trained lapdog of the establishment.
The establishment does this kind of bailout and corporate media cover-up every time there’s a recession. Whenever a certain set of rich, politically-connected cronies seem to be at risk of losing some of their money, the American public is informed “the whole economy” is going to collapse, and the taxpayer – particularly working people – need to pony up billions or trillions to the rich to buy up devalued assets during a recession. It has almost become an American tradition, like road rage, morbid obesity and undeclared wars against countries citizens can’t find on a map.
At least in the wake of the 2008 financial crisis, when nearly 10 million people were thrown out of their homes, a significant proportion of the homeowners bore the blame. With the NINA loans (no income, no assets), there were a lot of people buying houses who should never have expected to keep them. In the wake of the coronavirus shutdown, the majority of homeowners who lose their homes had stable incomes, if not for the panic-induced government-mandated economic shutdown.
Nobody can blame homeowners today for buying homes just before the government tells them they aren’t allowed earn a living any more. But now the heavily taxed tips of waitresses will fund mega-banks to buy up the houses of those same waitresses who have recently become unemployed. Even if the waitresses are not actively paying taxes any more, the newly created money – through the mechanism of currency inflation – will crowd out the value of what remains of the working class’ homes and other hard assets.
And congressmen will no doubt expect a thank-you for the food money they’ll give the proles back so they can survive … until the next fleecing. It’s important to stress that the CARE Act passed the Senate unanimously, with only Rand Paul (who was sick with coronavirus) and three other Republicans not voting. Sen. Bernie Sanders, that great class warrior and supposed enemy of the 1%, voted in favor of it, as did Sen. Elizabeth “Billionaire Tears” Warren. And even though he railed against the pork in the bill earlier in the week, Sen. Ted “Grandstand” Cruz voted in favor of the bill.
There are some bright spots of good news, however miniscule. I suppose I should be grateful to appreciate small favors, to wit, that the Commonwealth of Massachusetts where I live views liquor store clerks as “essential workers.” But I’m also just cynical enough to think that it’s only because the government wants to keep us fat, drunk and stupid enough to accept unquestioningly the zombie quaranqueen shutdown propaganda.
It’s also good news that not all of the job losses will be permanent. As soon as the government-mandated shutdown ends, there will be a jobs “snap-back” and a lot of people will be re-hired to their old jobs, along with the reopening of a lot of shuttered businesses.
The bad news is that the end of the shutdown will be too late, economically speaking, for many. And so long as the shutdown continues, the economic crisis will worsen. We know that of the average five million people who are losing their jobs per week during the shutdown, a proportion of them won’t be re-hired. We know it won’t be 100%, but it’s also not 0%. Nor is it a static number; it’s a rising percentage. The longer shuttered businesses accumulate fixed costs with no revenue, the more likely they are to close permanently.
Moreover, huge downstream job losses are being created by this shutdown. The shutdown will kill the domestic economy of tens of millions of Americans, who will not be buying products they otherwise would have purchased later this year, leading to layoffs in every manufacturing and raw material industry from automobiles to zinc mines. And because the shutdown contagion is not only an American affliction, businesses relying on global trade will also find themselves during the global recession cutting back on both production and employment.
Some free market economists like David Stockman and Gene Epstein are convinced that our private sector is dynamic and will snap back from the shutdown insanity. A few others (notably Peter Schiff) are more bearish because they are convinced that coronavirus simply pricked the bubble that had been forming anyway, and there’s no putting Humpty Dumpty back together again.
They both have a point. Schiff is right that we were due for a recession anyway, though I doubt it would have been as severe as he was predicting, and this is largely because Stockman and Epstein are right about the market economy being dynamic. However, just because the private sector is dynamic doesn’t mean we’ll snap back to anything like full employment for many years. The market is dynamic but the government is not; look to the 2008-09 recovery as an example. Government “stimulus” intervention kept the recovery from snapping back a decade ago, as it had during the Great Depression of the 1930s. It took almost 10 years to recover from the 2008-09 financial crisis. It’s wishful thinking the markets will not have to navigate a minefield of government “assistance” once the recovery begins.
Fiscally speaking, the $2.2 trillion COVID-19 bailout bill, combined with massive government shutdowns that will result in a sharp reduction in tax revenue, is more evidence that Trump is running the federal government like his casino – which filed for bankruptcy four times. The federal government will probably run a deficit close to $3 trillion for fiscal 2020.
In the past, America had politicians who only thought ahead to the next election. The coronavirus shutdown shows that today politicians only think as far in advance as the daily press conference.
Of course, it’s the perfect storm for the politicians, since nobody can protest within our national leper colony right now because most of the nation under the equivalent of house arrest. It’s hard to gather in groups to protest the robbery of the working poor and middle classes when healthy people are supposed to be ringing a bell and yelling out “Unclean, unclean!” anytime we leave the house.
If you want a specimen of how corporate media is definitely not on the side of liberty, consider this story from CNN on April 10, with the headline “Sweden challenges Trump – and scientific mainstream – by refusing to lock down.” The claim that the whole “scientific mainstream” is behind the economic shutdown is not based upon any real scientific experiments – you know, using the scientific method. No nation has ever in history even attempted a complete economic shutdown; there’s nothing they could study. Nor is it based upon polling actual scientists about their views. The whole “scientific mainstream” referred to in the article is about the “establishment political mainstream” supported by corporate media satraps.
Sweden is not engaging in a reckless experiment; it’s doing what nations have always done in the face of pandemics: isolating the sick and those exposed to the sick and taking prudent measures to limit large crowds and protect the vulnerable. It’s the US, which copied Italy (run by “Stupid Mussolini,” who made the trains not run), China and most of Europe that are running the reckless experiment that’s trying to – economically speaking – turn the globe into a Thanos-post-snap world.
Indeed, nations that tracked both those with the disease and those exposed to the sick and didn’t shut down their whole economy – for example, South Korea, Taiwan and Singapore – have had better results controlling COVID-19 than the advanced nations which committed economic hari-kari by turning themselves into a leper colony archipelago.
The reality is that panicked Karen government officials engaged in an insane experiment of national economic shutdown without any understanding of the science of what would happen. The government officials were never asked by the corporate media any of the following questions:
1. If the “flatten the curve” strategy isn’t part of the federal government’s official strategy (and it’s NOT even mentioned in official documents), how can it work nationally?
2. How long do you think you can keep the shutdown going before food riots begin? How much of a new Great Depression are you willing to create in order to keep this shutdown going?
3. Do you expect your shutdown/“social distancing” campaign to abolish the virus completely?
4. At what point do you return to people working? How many infections – domestically and internationally – is the minimum number that keeps the shutdown going?
5. Do you really think Bangladesh, South Sudan and Haiti will “flatten the curve” by shutting down their economies to fight coronavirus? What do you do when poor countries understandably don’t follow our lead because they don’t want famine?
6. What do you do after the shutdown ends and that virus comes back out of control, either in the US domestically or internationally? If internationally, do you impose a blockade and create a famine in poor nations with tens of millions of dead? Bomb them into submission?
7. Do you think the disease will become less contagious once the shutdowns end? How can you guarantee we won’t have to re-impose a shutdown?
8. How do you re-impose a shutdown while we’re already in a depression with 20% unemployment and a bankrupt government? How do you think workers will take a new shutdown when Washington has no more money to dole out?
But government officials still need to be made to answer these questions, and should have before they imposed the shutdown. Americans need to grab a pair of Rowdy “Roddy” Piper’s glasses from “Them,” wake up the zombie quaranqueens, and demand answers to these questions along with an end to the economic shutdown to limit the accumulating damage.
Then, they need to put a stop to the greatest heist in the history of the world. The $2 trillion in bailouts for Wall Street is only the beginning. Unfortunately, more is coming unless the people demand it stop.