Written by rjs, MarketWatch 666
The news posted last week about economic affects related to the Wuhan coronavirus 2019-nCoV, which produces COVID-19 disease, has been surveyed and some articles are summarized here. This includes both monetary policy and fiscal measures enacted this week in the face of the virus, the politics surrounding that, plus financial regulations that were eased to grease the economic skids. The second part of this article reviews some economic impacts of businesses closing and jobs lost, both US and overseas. (Picture below is an empty street in Beijing from The South China Morning Post 19 February.) Articles are primarily related to the U.S. political and economic impacts. News items about epidemiology and other medical news for the virus are reported in a companion article.
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Federal Reserve Unveils ‘Extensive New Measures’ To Bolster U.S. Economy – The Federal Reserve says it will buy bonds and mortgage-backed securities “in the amounts needed” to keep markets working smoothly, unveiling a plan that also includes measures to make sure credit is available to businesses and consumers. “While great uncertainty remains, it has become clear that our economy will face severe disruptions,” the Federal Reserve said as it revealed the plans. “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.”The open-ended plans escalate an earlier emergency move that called for the Federal Open Market Committee to buy at least $500 billion in Treasury securities and at least $200 billion in mortgage-backed securities.The move by the central banking system lifted Dow Jones Industrial Average futures, but the index still stumbled by roughly 3% in early trading, sinking below the 19,000 mark within the first 10 minutes. The Federal Reserve also said it “expects to announce soon the establishment of a Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses, complementing efforts by the [Small Business Administration].The Fed is taking action as the Senate struggles to reach an agreement on a massive aid package for U.S. businesses and taxpayers. That trillion-dollar legislation failed a procedural vote on Sunday. A new vote is scheduled for noon ET on Monday.Seven U.S. states are now reporting 1,000 or more cases of COVID-19, and experts believe the number of infected people will rise further as testing becomes more available and efficient.The coronavirus pandemic has also directly affected how the New York Stock Exchange operates: For the first time in its history, the market shifted to all-electronic trading on Monday, closing its floor to protect people who work there.
Fed announces vast new emergency effort to boost economy – The Federal Reserve on Monday announced aggressive new emergency measures to support the economy and ensure that credit flows to households and businesses as the country faces the prospect of a deep downturn from the coronavirus pandemic.The central bank is committing to buying as many U.S. government bonds and mortgage-backed securities as needed “to support smooth market functioning.” The announcement comes after Congress failed to reach agreement Sunday night on a massive stimulus package to provide direct support to consumers and small businesses, as well as to set aside funds to bail out larger companies. The stock market seemed poised to plunge when it opened Monday in reaction to the gridlock in Washington, but futures pared their losses after the central bank’s move. The Fed’s actions – along with other lending programs, significant cash injections into funding markets and zero percent interest rates – make up the most extreme intervention in the economy by the central bank in its history of more than 100 years. The Fed is launching three emergency lending facilities, including two that will buy corporate debt. The third is a revival of an emergency program the central bank created during the 2008 financial crisis that will lend to banks against collateral that includes bundled student loans, auto loans, credit card loans and small-business loans. These facilities are designed to support $300 billion in new credit, and the Treasury Department will kick in $30 billion to help offset losses. The Fed also said it will soon start a program designed “to support lending to eligible small and medium-sized businesses, complementing efforts” by the Small Business Administration.
For First Time in History, Fed to Make Billions in Loans to Big and Small Businesses – Pam Martens – Without one vote by an elected official, the Federal Reserve just became a brand new national legislative body. It will, without any oversight in Congress, decide what corporations and businesses to save and which to let fail.While the corporations and small businesses will receive “billions,” Wall Street’s mega banks and trading houses will, once again, have trillions of dollars of toxic securities removed from their balance sheets, including plunging stocks through the Fed’s Primary Dealer Credit Facility. The Fed also announced that its purchases of Treasury and Mortgage-Backed Securities (MBS) will now be limitless, rather than capped at a total of $500 billion. The reason for that change is that the Fed blew through $272 billion in Treasury purchases and $68 billion in MBS purchases just last week alone, already using up $340 billion of its $500 billion allotment – which did little to stem the markets from plunging.The Fed has effectively created its own limitless slush fund with no accountability to anyone and no Congressional oversight. During the financial crisis, the Fed secretly funneled over $29 trillion to Wall Street banks and trading houses, hedge funds, foreign global banks and central banks while fighting a multi-year court battle to keep secret just who got the money. It took two federal courts and a rejected appeal by the U.S. Supreme Court, along with a Congressionally-mandated audit by the Government Accountability Office to pry that information from the grip of the Fed.The Fed’s slush fund comes on the heels of news last evening that U.S. Treasury Secretary Steve Mnuchin attempted to stuff his own $500 billion slush fund, with no oversight, into the fiscal stimulus bill being deliberated by Congress. Multiple Congressional Democrats went on CNN to decry the attempt and explain why they had rejected the proposed bill. The Fed announced its new plans at 8 a.m. this morning, while stock futures were limit down with the S&P 500 futures having fallen by 5 percent. The stock futures moved into the green but looked somewhat tentative due to the paucity of details in the Fed’s statement. You can read the full statement below:
Fed Unveils Major Expansion of Market Intervention – Federal Reserve Chairman Jerome Powell’s whatever-it-takes moment arrived Monday. The central bank signaled it would do practically anything – extending loans to big and small businesses and purchasing unlimited amounts of government debt – to help an American economy in a race against time. After firing its arsenal at funding markets last week to prevent a public health crisis from morphing into a financial crisis, the Fed said it would throw another kitchen sink this week at credit markets that have broken down. The central bank unveiled a new generation of lending facilities to prevent a liquidity crunch from turning into a solvency crisis for American businesses. “This is the first time they’ve really basically turned into a commercial bank instead of a central bank,” said Michael Feroli, chief U.S. economist at JPMorgan. The central bank’s announcement came as lawmakers on Capitol Hill debated a plan to help reload the Fed’s weaponry. The Trump administration and Senate Republicans proposed Sunday providing $425 billion to the U.S. Treasury that could be used to expand the kind of lending programs the Fed unveiled Monday. The bill hit a procedural roadblock after Democrats said it needed to do more to aid individuals facing unemployment or lack of income. Federal Reserve Chairman Jerome Powell has moved quickly to throw at last week’s market carnage a series of tools the central bank developed during the 2008 crisis. Monday’s announcement was “really encouraging because the Fed didn’t wait for Congress to pass this bill,” The central bank punctuated its moves, announced 90 minutes before markets in the U.S. opened Monday, with an unusually explicit warning about the perils ahead. “It has become clear that our economy will face severe disruptions,” the Fed said in its statement Monday morning. “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.” Stock futures briefly rallied after the Fed announced its latest steps, but stocks traded lower after markets opened. The benchmark 10-year Treasury yield fell from 0.805% just before the announcement to less than 0.69% afterward. Yields closed at 0.763%. The latest actions show how Mr. Powell has rapidly adopted the crisis-fighting posture that his predecessor, Ben Bernanke, employed in the fall of 2008, during the financial crisis, and that then-European Central Bank President Mario Draghi deployed in 2012, as strains in Europe’s sovereign-debt markets threatened the continent’s common currency.
US Fed unveils further massive financial intervention – The US Federal Reserve yesterday announced new measures to prop up financial markets and backstop corporations going far beyond the actions it took in response to the meltdown of 2008. Before Wall Street opened, the central bank unveiled a massive intervention in government and corporate bond markets and the further expansion of credit. Last week, the Fed announced it would purchase $500 billion worth of US government bonds and $200 billion of mortgage-backed securities. The latest announcement, followed by major purchases when markets opened, made it clear this action is now unlimited. The bank established two new facilities for the purchase of corporate bonds, including new issues, going well beyond its actions in 2008, when it did not buy corporate debt. The first facility allows for the financing of major investment-grade companies for up to four years, during which the Fed would purchase new issues of corporate debt. Businesses can defer payments on interest and principal for up to six months, provided they do not engage in share buy backs or pay dividends. The second measure enables the Fed to enter the secondary market for existing corporate debt, allowing it to buy bonds issued by highly-rated companies. In addition, the Fed revived its Term Asset-backed Loan Facility (TALF) program, first developed during the 2008 crisis, enabling it to buy securities supported by student, car and credit card loans. It said TALF would supply up to $300 billion in loans, backed by the US Treasury department. The Fed is also expanding its intervention in the market for municipal debt as local governments face increasing liquidity problems. The bank is now a major player in the market for commercial paper, consisting of short-terms loans of up to 270 days. Announcing the measures, the Fed said “it has become clear that our economy will face severe disruptions” and “aggressive efforts must be taken across the public and private sectors.” The term “severe disruption” is something of an understatement as the US economy plunges into conditions akin to those of the Great Depression of the 1930s. On Sunday, in an interview with Bloomberg, the president of the St Louis Federal Reserve, James Bullard, said the US unemployment rate could reach 30 percent in the second quarter.
Unprecedented Intervention- The Fed Will Purchase $125 Billion In Securities Every Day – At the same time as the Federal Reserve announced open-ended QE, which also included purchases of corporate bonds and loans in both the primary (as the ECB does now) and directly in the secondary market (a new twist), as well as expanding its municipal bond purchases while also reactivating the old Lehman-era favorite, TALF facility, the NY Fed announced the specific details of what the Fed’s unprecedented QEternity would look like, and they were a doozy.In short, every single day, the Fed will purchase $75BN in Treasurys and an additional $50BN in BMS, for a total of $125BN every day, or an unprecedented $625BN for the week, or more than the Fed’s entire QE2 which was just over $500BN in purchases over 7 months. Here is the announcement from the NY Fed: Effective March 23, 2020, the Federal Open Market Committee (FOMC) directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to increase the System Open Market Account (SOMA) holdings of Treasury securities and agency mortgage-backed securities (MBS) in the amounts needed to support the smooth functioning of markets for Treasury securities and agency MBS. The FOMC also directed the Desk to purchase agency commercial mortgage-backed securities (CMBS).Consistent with this directive, the Desk has updated its plans regarding purchases of Treasury securities and agency MBS during the week of March 23, 2020. Specifically, the Desk plans to conduct operations totaling approximately $75 billion of Treasury securities and approximately $50 billion of agency MBS each business day this week, subject to reasonable prices. The Desk will begin agency CMBS purchases this week.The Desk stands ready to adjust the size and composition of its purchase operations as appropriate to support the smooth functioning of the Treasury, agency MBS, and agency CMBS markets.And since the Fed is purchasing securities across the entire curve, it will take no less than 7 separate operations every single day to purchase the full amount every day as per the following schedule.
The Fed Is Now Buying Investment Grade Bond ETFs Like LQD – Over the weekend, we reported that virtually all of Wall Street was praying for nothing short of divine intervention from the Fed, but would be content with the announcement of corporate bond buying, with banks such as BofA… … and Deutsche Bank… … pushing hard for the Fed to launch corporate bond purchases. On Monday morning, that’s precisely what they got when the Fed announced that it would indeed start purchasing corporate bonds. And in a way, the Fed exceeded expectations, because unlike the ECB which only buys bonds in the primary market, the Fed announced that in addition to a Primary Market Corporate Credit Facility, it would also buy Investment Grade bonds in the secondary market. Here are some details: as was widely expected, the Fed created a SPV that will purchase in the secondary market corporate debt issued by eligible issuers. What is more interesting is that the SPV will purchase eligible individual corporate bonds as well as eligible corporate bond portfolios in the form of exchange traded funds (“ETFs”) in the secondary market. In other words, the Fed is now active in the equity market via ETFs, even if focusing only on securities collateralized by IG bonds (for now).Which also was to be expected: after all one of the biggest laments about the breakdown in the market has been the blow out in the basis between ETF prices and NAV values, which in the case of the investment grade ETF, the LQD, has soared to a record high 5% as a result of crippling illiquidity in the underlying bond market. It is this gap that the Fed is hoping to close.
Record Numbers Are Frontrunning The Fed’s Purchases Of Corporate Bonds – As part of the Fed’s ongoing nationalization bailout of the entire market, yesterday we pointed out that in a dramatic reversal away from years in which the Fed would not intervene in the corporate market, the US central bank would now buy Investment Grade corporate bonds, and would even intervene in equities, by purchasing the LQD investment grade debt ETF. Commenting on this stunning departure, this morning Nomura’s Charlie McElligott said that “we actually see the Fed in the game of not simply suppressing the risk-free rate, and thus term-premium, as they did last time – but now buying spread-product (beyond MBS alone) with risk-assets outright / through the new SPV – it is reasonable to believe that investors will “reverse engineer” the Jay Powell playbook noted above, and go with their muscle-memory from this Fed “short volatility positioning” prior conditioning.” Judging by the market’s surge today, the answer is yes. But even before that, savvy investors realized that the most bang for the risk-free buck comes by purchasing the one ETF that the Fed is now explicitly backstopping, and as Bloomberg notes, “the rush into investment-grade bonds picked up after the Federal Reserve said it will step into the market, with the world’s largest credit ETF seeing the second-biggest inflows in its 18-year history.” To wit: the $30.3 billion Investment Grade Corporate Bond ETF, the LQD, posted its second-biggest ever inflow of $1.06 billion on Monday, as traders piled into LQD ahead of the Fed. Monday’s one-day inflow was just shy of its record one-day intake of $1.09 billion in 2016.
After Bernanke & Yellen Demand ‘Monetize Everything’, Congress Set To Allow Fed To Buy Corporate Bonds – So far in this ‘everything bubble’-burst crisis, the Fed has:
- Cut interest rates from 1.25% to 0.15%.
- Launched over $700 billion in Quarantitative Easing (QE).
- Launched a $1.5 trillion repo program.
- Launched another $1 trillion repo program…. daily!
- Announced it will begin buying commercial paper (short-term corporate debt).
- Allowed primary dealers to start parking assets, including stocks, as collateral in exchange for short-term credit.
- Announced it will begin buying muni debt.
- Opened unlimited dollar-swap-lines to the world.
And the result of all this record amount of liquidity provision – almost $30 trillion of global wealth destruction (bonds and stocks)… And not a glimpse of deleveraging/selling pressure reduce in stocks or bonds… And every aspect of the credit markets – from short-term munis to long-term commercial mortgage-backeds – is completely frozen. “It’s brutal. We have never seen such a big move in such a short amount of time… This is the quickest and most severe I have ever experienced, and I was around for 2008.” Enter former Fed Chairs Ben Bernanke and Janet Yellen, who, as we detailed earlier this week, urged the Fed to begin buying corporate debt and stocks in an op-ed piece in the Financial Times this morning the two former Fed Chairs: The Fed could ask Congress for the authority to buy limited amounts of investment-grade corporate debt. Most central banks already have this power, and the European Central Bank and the Bank of England regularly use it. The Fed’s intervention could help restart that part of the corporate debt market, which is under significant stress. Such a programme would have to be carefully calibrated to minimise the credit risk taken by the Fed while still providing needed liquidity to an essential market. Currently the Fed is forbidden from doing either as per the Federal Reserve Act. Put another way, congress would need to authorize the Fed to start buying these assets, and the two former Fed Chairs are providing the political cover to do this. So, it should come as no surprise to anyone that Bloomberg is reporting that Congress is likely to pass legislation Monday clearing the way for more emergency action from the Fed, with lawmakers and Trump adminstration officials on Sunday signaling the package would give the Fed approval to expand its purchases of corporate bonds.“There’s a very, very large credit facility that we’re standing up,” Pennsylvania Republican Senator Patrick Toomey said about the legislation on NBC’s ‘Meet the Press’.“It will be done jointly with the Treasury and the Fed.” Emergency facilities with the Fed would mobilize “up to $4 trillion of liquidity,” Mnuchin said, though it was unclear whether that included programs already announced by the central bank.According to subsequent reports from the WSJ, the current iteration of the massive bailout Bill being mulled in Congress, has the following provisions:
Fed is ‘not going to run out of ammunition,’ Powell vows – Federal Reserve Chairman Jerome Powell said the central bank will maintain its muscular efforts to support the flow of credit in the U.S. economy as Americans hunker down from the coronavirus pandemic. “We will keep doing that aggressively and forthrightly, as we have been,” Powell said in a rare interview on NBC’s “Today” show Thursday. “When it comes to this lending we’re not going to run out of ammunition. That doesn’t happen.” Over the past three weeks, the U.S. central bank has introduced an unprecedented series of measures, pushing it deep into uncharted territory as it seeks to cushion the blow of the coronavirus on financial markets and the U.S. economy. The steps include massive bond purchases, emergency facilities to bolster credit markets, actions with foreign central banks to ease the supply of dollars worldwide, and programs for lending directly to American businesses. “We know that economic activity will decline probably substantially in the second quarter,” Powell said, adding that people were intentionally withdrawing from normal life to protect their health. That might mean the U.S. entering a recession, the Fed chief conceded, but argued it would be temporary. “At a certain point we will get the spread of the virus under control and at that time confidence will return,” Powell said, predicting “a good rebound” once the health emergency is over. The appearance on the popular morning show as many Americans are stuck in their homes marks the Fed chief’s first public remarks since he held an unusual Sunday evening press briefing by teleconference on March 15 to announce the central bank had slashed interest rates to almost zero. Public communication for Fed chairs has for decades been carefully choreographed, given the weight that even subtle signals can carry for investors.
Kashkari Says Fed Has “Infinite” Amount Of Cash: “We Create It Electronically” – Neel Kashkari, who is part of a growing group of Monday morning quarterbacks who didn’t predict the financial impact of coronavirus until about 10 minutes ago, and who is best known for coming up with the TARP bailout amount during the first bailout yet has somehow managed to fail up all the way to being mentioned as Powell’s imminent replacement, added the certainty that only a Fed governor could add to the situation on 60 Minutes Sunday night. “Are we in a recession?” he’s asked to start the interview. “If we’re not right now, we will be soon. My base case scenario is we’ll at least have a mild recession like after 9/11. The worst case would be we’d have a deep recession like the 2008 financial crisis, we just don’t know right now.” Kashkari says. “Nobody knows how the virus is going to progress,” he continued, scapegoating the medical community and laying the blame on the bursting of the biggest asset bubble on a virus. Then, the peculiar topic of cash came up, at which point Kashkari shared an interesting anecdote. “I heard from a bank in our region, a well-to-do customer came in and said ‘I want to withdraw $600,000 in cash.’ Now, we can supply all the cash that the banks need to meet their customer’s concerns. But it just speaks to the fear and the uncertainty that’s rippling through the economy,” he says. When asked further about whether or not banks will have cash, he responded: “This is literally why Central Banks exist. We’re the lender of last resort. This is literally why Central Banks exist. If everybody gets scared at the same time and they demand their money back, that’s why the Federal Reserve is here. We will absolutely meet those demands.”
Fed Buys $587 Billion In Bonds In Past Week, 2.7% Of GDP, Just As Foreign Central Banks Start To Liquidate –Having moved from “Not QE” (or QE4 as it was correctly called), to the $750BN QE5 which came and went with the blink of an eye, to the Fed’s open-ended and unlimited QEnfinity in the span of one week, the full “shock and awe” of the Fed’s money printer is now on full display, and in just the past week, from March 19 to March 25, the Fed has purchased $587BN in securities ($375BN in TSYs, $212BN in MBS), or roughly 2.7% of the $21.4TN in US GDP. This means that as of Wednesday close, when accounting for last week’s repo operations, the Fed’s balance sheet has increased by roughly $650BN, bringing it to just over $5.3 trillion, an increase of $1.2 trillion in the past two week, or roughly 5.6% of US GDP.Some more scary statistics: if the Fed continues QE at the current pace of $625 billion per week, the Fed’s balance sheet will hit $10 trillion by June, or just below 50% of US GDP. Even assuming the Fed eases back of the gas pedal, its balance sheet is almost certain to hit $7 trillion by June.Which is hardly an accident: one look at the Treasury securities held in custody at the Fed shows that the past two weeks have seen a whopping $50BN in foreign central bank sales, a 1.7% drop which was the highest in six years since Russia pulled over $100BN in TSYs from the Fed in response to US sanctions imposed over the Ukraine conflict in 2014 which was precipitated by the US state department. As Bloomberg observes, the selling may have contributed to record volatility in the Treasury market and prompted the Fed’s intervention. More importantly, it also means that the biggest buyer of US Treasurys in the past decade, foreign official institutions (i.e., central banks and reserve managers) are now sellers, so now the U.S. government needs private investors to soak up the ever increasing debt issuance.And since those are busy avoiding a deadly virus, it means that only the Fed now can fund the exploding US budget deficit… which is precisely what it is doing.
Fed Balance Sheet Hits $5.5 Trillion As Discount Window Usage Soars – As previewed last night when we showed that in the past week the Fed has bought a staggering $587BN in Treasuries and MBS, we calculated that as of March 25, the Fed’s balance sheet would rise to a record $5.3 trillion, a phenomenal increase of $1.2 trillion in just the past two weeks, equivalent to roughly 5.6% of US GDP. Today, the release of the latest weekly H.4.1 statement from the Fed confirmed our math, and that as of close on Wednesday, March 25, the Fed’s total asset were indeed $5.3 trillion. Which, sadly, is now a stale number because we now live in a world where the Fed buys a record $125 billion in bonds (and who knows what else either directly or via Blackrock) every single day, which means that as of the Friday’s close, the Fed will have added a record $625 billion to its balance sheet… … and more specifically, $250 billion to the total as of March 25. In other words, in just a few short hours, the Fed’s balance sheet will be $5.5 trillion… … an increase of $1.3 trillion in two weeks (6% of GDP), which was the amount the Fed monetized during all of QE1 in response to the financial crisis, but which took place over a period of almost 2 years.And as an aside, the Fed’s push to get banks to use the discount window appears to have worked: after more than a decade of stigma associated with any bank caught within 100 feet of the Primary Credit Facility, also known as the Discount Window, and with zero usage since mid-2010, last week borrowings under the Discount Window surge to $40 billion.
Fed Considering Additional Support for State, Local Government Finance – Federal Reserve officials are reviewing new ways to support financing for state and local governments, many of which are on the front lines of the coronavirus pandemic and will face huge borrowing needs as revenues plunge, according to people familiar with the matter.The economic-rescue legislation Congress approved this week asks the Fed to charge headlong into areas it has long considered taboo – supporting lending to businesses, cities and states. The Fed traditionally avoided intervening directly in credit and fiscal policy, preferring to leave such matters to Congress and the White House. That is changing now because of the fast-moving economic crisis – and because Congress has essentially directed the Fed to get more involved by providing $454 billion to the Treasury to cover any losses in new Fed lending programs. The Fed has dramatically expanded its balance sheet over the past two weeks, by nearly $942 billion to $5.25 trillion as of Wednesday. The central bank has lent freely to help firms avoid a wave of defaults that could turn a recession into something much worse. Over two weeks, the Fed has unveiled six lending facilities, five of them enjoying a total of $50 billion in support from the Treasury. Those programs have freed up cash for major Wall Street institutions and will backstop money-market funds and markets for commercial debt.Democratic lawmakers have made support for city and state borrowing a priority in recent legislative talks, and the latest bill directs the Treasury secretary to seek a Fed lending program for municipal finance.State and local governments are confronting skyrocketing borrowing costs even as they are straining to pay expenses associated with the spread of the virus. House Speaker Nancy Pelosi told Fed Chairman Jerome Powell last week “to think big and help our states,” she said in an interview on PBS this week. “They are taking a big bite of this wormy apple and they need much more in terms of resources.”Under its governing law, the Fed can’t directly buy corporate debt, and it is limited to purchasing municipal debt of six months or less. But it can work around these restrictions by creating lending facilities that lend or purchase debt, subject to approval of the Treasury secretary. The Fed has already dipped a toe into muni-debt markets by expanding a money-market lending backstop to include certain types of municipal debt – and by purchasing some highly rated municipal debt in a facility backing the market for very short-term commercial debt.
Rabobank- Many Are Questioning The Point Of Having A Market If The Fed Is Backstopping Everything –Although Powell was still reluctant to call the Fed’s bond purchases quantitative easing last week, the FOMC has now confirmed that they will have no limits when purchasing US Treasuries. An increase of the initial ‘minimum USD 500bn’ target was widely expected, since the Fed already bought over USD 300bn in just the first week after the relaunch of large scale asset purchases. However, the FOMC did not bother to set a new target. Instead, they will purchase bonds “in the amounts needed to support smooth market functioning and effective transmission of monetary policy.” Cynics may question the aim of market functioning, if it means that the Fed once again has to become a major player in the market to keep it operational. However, by increasing its presence, it does pave the way for additional issuance by the Treasury required to fund the government’s crisis response.And that wasn’t all. Only last Thursday, my colleague Philip Marey wrote that there were still a few acronyms missing and that the FOMC could also add completely new programmes targeting corporate debt and SME loans to the alphabet soup. The Fed apparently agreed. The central bank restarted TALF, which provides loans in exchange for ABS, and set up two entirely new facilities aimed at the corporate credit markets: PMCCF and SMCCF. Finally, the FOMC also expects to unveil another programme to support SMEs shortly. Meanwhile, the PMCCF allows purchases of corporate bonds in the primary market. Moreover, it will provide bridge financing of up to four years directly to eligible corporates. Despite a relatively modest size to begin with, that is arguably the ECB’s TLTRO programme (without collateral?) on steroids: by bypassing the banking sector, banks’ balance sheet and regulatory requirements are no longer constraints. Again, it does raise the question whether the Fed is repairing the functioning of markets, or whether it is really substituting the market.And, as Philip concludes, the FOMC used the words “initial equity investment” to describe the USD 10bn that the Treasury Department will make available to the SPV that will be set up for these purchases. This suggests that more can follow once Congress approves more fiscal stimulus.Whilst this will undoubtedly ease the stress in the market in the near term, it remains to be seen what the longer-term implications of these programmes will be. The reality is that the Fed is now providing backstops for pretty much everything save for President Trump’s beloved Dow Jones index. The risk is that these policy measures are as addictive as opioids, and that the cure turns out to be worse than the disease.
Fed moves telegraph fears of prolonged liquidity crisis – – Taken together, the Federal Reserve’s aggressive actions over the last week to shore up liquidity as the coronavirus rocks the global economy are an unprecedented commitment from the nation’s central bank to ensure the smooth flow of credit.The Fed has slashed interest rates to nearly zero, has established a number of credit facilities in order to lend to businesses and consumers, has encouraged banks to dip into their capital liquidity buffers and has pledged an unlimited amount of bond purchases – all to boost the economy and ultimately guarantee that businesses and banks have enough cash on hand. But despite the Fed’s moves, there are concerns that a shortage of corporate debt and other types of liquidity could develop into a deeper crisis, especially if the COVID-19 pandemic shows no signs of abating.“The Fed has the same challenges the grocery stores have with dealing with people who are buying toilet paper,” said Thomas Vartanian, the founder and executive director of the Financial Regulation & Technology Institute at George Mason University’s Law School. “Hysteria and lack of confidence is a psychological factor that changes dynamics, and it has [in] every financial crisis over the last 200 years.” Fortunately, banks were armed with more capital and liquidity buffers after the 2008 crisis thanks to the Dodd-Frank Act, and experts largely agree that financial institutions are well equipped to handle periods of financial stress. Yet other sectors lack the same protections, and a liquidity crisis at those businesses could result in a domino effect that would end up hurting banks all the same. “Banks entered this crisis with strong levels of capital, thanks in large part to the restrictions Dodd-Frank put in place. Other corporations … enter this with often little cash on hand to weather a crisis and significant amounts of leverage,” said Aaron Klein, a fellow at the Brookings Institution. “So the banking industry is better poised to weather some of this storm than many of the large corporate players who weren’t required to save money for a rainy day.”Although banks may be prepared for a downturn, it is hard to know at what point economic stress would reach financial institutions, said Kathryn Judge, a professor at Columbia Law School. “With things like the liquidity coverage ratio, [banks] have more liquidity on hand,” she said. “But things are moving so quickly and in such big ways that I think it’s almost impossible to rule out the possibility of a lack of liquidity proving problematic for some set of institutions.”Businesses have also been incentivized to pile on more debt because of the historically low interest rates since the financial crisis, which has led to record-high levels of corporate debt. Much of that debt is held by nonbanks, which – unlike regulated financial institutions – are not held to capital and liquidity standards.
Foreign Buyers Flood 2Y TSY Auction Which Prices At Lowest Yield Since Feb 2014 – In what may be one of the last normal Treasury auctions before the US has to prefund trillions and trillions in stimulus funds, moments ago the Treasury sold $40BN in 2 year paper, at a yield of just 0.398%, far below the 1.189% last month and the lowest since Feb 2014 when the US was back at ZIRP, and ahead of the Fed’s failed experiment at renormalizing. The high yield of 0.398% tailed the When Issued 0.39% by 0.8bps, the third consecutive tail, and was a whopping 80bps below the February 2020 auction. The Bid to Cover dropped to 2.362 from 2.454, the lowest since Dec but generally in line with the recent range. Meanwhile, the internals were stellar with Indirects suring, and taking down 55.20%, up sharply from 46.2% and the highest since September, and as Directs dipped modestly from 9.31% to 8.55%, Dealers ended up taking down 36.3%, down from 44.5%. Like we said, this is one of the last “normal” auctions as the next few months will see an unprecedented ramp up in new Treasury issuance as all those trillions in bailout funds have to paid somehow, and very soon it will not only be the Fed printer that does “brr”, but so will the US Treasury which will be printing debt just as fast.
5Y Auction Treasury Prices At Lowest Yield Ever Despite Sharp Foreign Buyer Pullback – If yesterday’s tailing 2Y auction was more of a shot in the dark, with an avalanche of new issuance coming down the pipe and was hardly indicative of what future demand will look like, the same can be said for today’s 5Y auction, even though unlike the 2Y, there was little one can say to criticize today’s sale of $41 billion in 5Y paper. Let’s start at the top: the yield on today’s auction, which was 0.535%, was not only sharply below the February 1.15%, but was also below the lowest on record, which was recorded in July 2012 when it hit 0.58%. The auction also stopped through the When Issued by 1.5bps, showing demand coming into the auction was quite high despite today’s torrid risk rally. The bid to cover was also impressive, jumping from 2.46 to 2.53, the highest since July 2018. That said, the internals left a bit to be desired, with the Indirect takedown down from 61.5% to 52.1%, which was the lowest since August of 2015. And with foreign buyers stepping away, and Directs taking down 12.6%, slightly above last month’s 9.8% if below the 6-auction average of 13.2%, it meant that Primary Dealers had to jump, and took down 35.3%, the most since Dec 2018. Yet even despite the reshuffling in the buyer composition, the auction was clearly very strong and helped push the yield curve in parallel notably lower even as today’s risk rally continues without missing a beat.
In Stunning Development, Dealers Run Out Of Securities To Use In Fed Repo Operations – Two weeks ago, just after the Fed first announced its massive overnight and term repo operation expansion which now amounts to some $1 trillion in daily repo capacity (and before Powell expanded this bazooka to included ZIRP and unlimited QE), we said that this is a big mistake as the Fed was targeting the wrong liquidity conduit.Then, after the Fed launched QE across the entire curve and expanded it to include MBS, the Fed’s monetary police became outright bizarre: on one hand the Fed was offering to buy Treasurys and MBS held by Dealers (at a hefty, unknown premium to market), on the other it was offering Dealers to park those securities at the Fed either overnight or on a term basis in exchange for cash while incurring modest capital charges.After all, why would anyone pick repo over QE in the current market was a total mystery. Why indeed, and as we expected, after several repo operations that saw zero Treasury submissions in the Fed’s overnight and term repo operations at the start of this week… … we finally got a failing repo operation, when this morning the Fed saw no bids (i.e., submissions) in either Treasurys, MBS and Agency securities in its $500BN 3-month repo operation! Today’s other repo operation, the $500BN overnight repo saw just $1.5BN in TSYs submitted (the remaining $5.25BN were MBS) into the $500BN operation. For those who haven’t been following the Fed’s repo operations, this was the first time since the bank restarted its repo operations that it received no bids on its term offerings. But it’s not just term: as the charts below show, ever since the Fed announced unlimited QE concurrently with massive repos, the amount of securities submitted into repos has collapsed and for Treasurys has been $0 on most of this week’s operations…. with MBS catching up fast.
There Is Now A Treasury Shortage – Earlier this morning we showed something remarkable in the Fed’s ongoing attempt to inject a record amount of liquidity into the financial system: on Friday morning, the Fed held a $500 billion term repo operation and nobody showed up. There were zero submissions of either Treasury, Agency of MBS securities by Dealers who appear to have run out of securities, or are unwilling to pledge to the Fed.Today’s “zero bid” auction was merely the logical endgame of a recent collapse in Treasury submissions into the Fed’s massive daily term and overnight repo operations, which climaxed two weeks ago, only to plunge as soon as the Fed announced the start of unlimited QE. With dealers now able to sell unlimited amounts directly to the Fed, and at a premium to carrying values, most of them appear to have picked that option instead of holding on to paper that may be worthless especially with an avalanche of debt coming down the pipeline as the Treasury has to fund its $2 trillion corporate handout package.”Why on Earth you would tie something up for three months in repo with the Fed buying,” said Ian Burdette, managing director at Academy Securities, who followed up with a very apt observation: “I think people are getting wise to the fact that an absolute tsunami of global sovereign debt issuance is on its way. Best to sell it all to the fed now probably.”Another hint that the Fed may have overliquified the market, soaking up too much “safe, money-like collateral” such as Treasuries and MBS, and injecting too many reserves (i.e., cash) came from the Fed itself which 30 minutes before the close today announced it would taper “QE-unlimited” and cut the amount of TSY purchases starting April 1 from $75BN to $60BN, while also trimming its MBS QE from $50BN to $40BN. But the clearest hint yet that there has been a sea change in the US financial system, which has gone from reserve scarce to collateral(Treasury) scarce was in today’s fixed-rate reverse repo operation. As the name suggests, this is the opposite of repo, where instead of borrowing cash from the Fed in exchange for Treasury collateral, while paying a modest borrowing fee, Dealers borrow Treasurys in exchange for cash collateral.If the presence of a reverse repo is news to some, there’s a reason for that: for much of the past 3 years, when the Fed was draining reserves as part of QT and banks were cash strained, there was an abundance of Treasurys. Until today, because today’s reverse repo operation exploded to a record $210BN from $138.4BN yesterday, after virtually no usages for years.
Fed’s Bullard Warns Unemployment May Soar To 30%, GDP Crash 50% In Q2 – Last Friday, when Goldman predicted a 24% drop in Q2 GDP ostensibly in response to JPM’s own -14% downgrade to Q2, we were frankly shocked, and wondered who would have the guts to come out with an even more apocalyptic prediction. Well, just 48 hours later, none other than the Fed’s James Bullard has literally swept the analyst field with a forecast that – if accurate – could mean nothing short of civil war for the US. In an interview with Bloomberg, the president of the St. Louis Fed, predicted that U.S. unemployment rate may hit 30% in the second quarter because of shutdowns to combat the coronavirus, coupled with an unprecedented 50% drop in US GDP. That would be an outcome worse not only than every prior war the US has (officially) waged, but more than twice as dire as the worst days of the Great Depression. So what should happen for this catastrophic outcome to be avoided? While Bullard, one of the biggest Fed doves, said that the Fed is ready to do anthing, he appeared to punt to the US government, hinting that it is now up to Congress to offset the nearly $3 trillion in loast income. Bullard called for a powerful fiscal response to replace the $2.5 trillion in lost income that quarter to ensure a strong eventual U.S. recovery, adding the Fed would be poised to do more to ensure markets function during a period of high volatility. As Bloomberg notes, Bullard’s grave assessment “underscores the critical need for Congress and the White House to quickly find agreement on a massive aid program” especially after the Fed restarted financial crisis-era programs to help the commercial paper and money markets, after cutting interest rates to near zero and pledging to boost its holdings of Treasuries by at least $500 billion and of mortgage securities by at least $200 billion.“This is a planned, organized partial shutdown of the U.S. economy in the second quarter,” Bullard said. “The overall goal is to keep everyone, households and businesses, whole” with government support. “It is a huge shock and we are trying to cope with it and keep it under control.” While this hardly needs to be spelled out, but 30% unemployment – or 50 million Americans out of a job – basically means society begins to disintegrate as this would be a world that nobody can possibly fathom. Besides the obvious, there are two additional problems here: first, the Fed’s massive response has failed to stimulate risk appetite or to ease the massive dollar short squeeze which has sent the Bloomberg Dollar index to all time highs, sparking debate whether the Fed’s credibility is now gone as the world awaits helicopter money, and two, and perhaps far more ominous, is that as of this moment the US is reliving the darkest moment of the financial crisis – when Congress failed to pass the first TARP iteration, sending the market crashing. Indeed, as we reported earlier and as Bloomberg just confirmed…
Coronavirus Measures Could Cut Economic Activity by a Quarter, Report Says – Measures taken to curb the spread of the new coronavirus could lower economic activity in the U.S. and other developed countries by a quarter, the Organization for Economic Cooperation and Development said Friday. In a report made available to leaders of the Group of 20 leading economies for a video conference they held Thursday, OECD economists estimated the likely impact on the sectors most affected by widespread business closures and orders for people to remain at home, and the size of those sectors in each national economy. The OECD calculated that the activities most directly affected by the shutdowns – ranging from restaurants to automobile makers – account for between 30% and 40% of total output in most of the developed economies. With activity in many of those sectors curtailed, it calculated that output was likely to be between 20% and 25% lower than is usual in large, developed economies. If the measures are sustained for three months, the OECD forecast total annual output would be 6% lower in the developed economies. Under this scenario for the U.S., where the economy was forecast to grow 2% this year before the virus struck, the OECD estimates output would fall 4% in 2020. “Our analysis further underpins the need for sharper action to absorb the shock, and a more coordinated response by governments to maintain a lifeline to people and a private sector that will emerge in a very fragile state when the health crisis is past,” OECD Secretary-General Angel Gurr’a said in the report.
Powell Says Economy May Be in Recession, Virus Will Dictate Timetable –Federal Reserve Chairman Jerome Powell said the U.S. economy “may well be in a recession,” but that the central bank is taking unprecedented action to help ensure economic activity can resume as soon as the coronavirus pandemic is under control.“The virus is going to dictate the timetable here,” Mr. Powell said in a rare television interview, on NBC’s “Today” show Thursday morning. “The first order of business will be to get the spread of the virus under control, and then resume economic activity.” Mr. Powell said he expected economic activity to decline “pretty substantially” in the second quarter. The Fed’s job now, he added, is to make sure businesses of all sizes can have a “bridge” of support, including through emergency lending programs the Fed has been rolling out, so that the economy can recover faster.Fed officials are trying to prevent firms from losing access to funding, which could then snowball, turning what is shaping up to be a severe, synchronized global recession into a full-bore depression.The Fed has slashed its benchmark rate to zero and unveiled a series of programs to boost lending. By Friday, it will have also purchased nearly $1 trillion in Treasury and mortgage securities over the past two weeks.“Where credit is not flowing, we have the ability in this unique circumstance to temporarily step in and provide those loans, and we will keep doing that aggressively and forthrightly as we have been,” said Mr. Powell.The Trump administration and Congress agreed Wednesday to provide $454 billion in additional funds for the Treasury to bulk up existing or new Fed lending facilities, including programs to support small-business lending and shore up financing markets for state and local governments. “When it comes to this lending, we’re not going to run out of ammunition. That doesn’t happen,” Mr. Powell said.
Senate fails to move forward with coronavirus stimulus bill – A procedural vote to move forward with the nearly $2 trillion economic stimulus package failed in the Senate on Sunday, sending lawmakers back to the negotiating table as they rush to support American families and businesses reeling from the coronavirus pandemic. Democrats blocked Republicans from reaching the 60 votes needed to clear the procedural hurdle, and the absence of several senators self-quarantining due to the coronavirus sidelined several Republicans. Futures for the S&P 500 fell by 5%, the AP reported, triggering a halt in trading. Late Sunday night, the Senate adjourned until noon Monday, but there was a chance it would resume proceedings earlier in the day. The failed vote drew an angry rebuke from Senate Majority Leader Mitch McConnell, who placed the blame squarely on House Speaker Nancy Pelosi. “We’re fiddling here – fiddling with the emotions of the American people, fiddling with the markets, fiddling with our healthcare,” he said. “The American people expect us to act tomorrow and I want everybody to fully understand if we aren’t able to act tomorrow it will be because of our colleagues on the other side continuing to dither when the country expects us to come together and address this problem.” Soon after, Senate Minority Leader Chuck Schumer said the current proposal is a “corporate bailout with no protections for workers and virtually no oversight” and lacks adequate money for hospitals and health care workers. “Can we overcome the remaining disagreements in the next 24 hours?” the New York Democrat said. “Yes, we can and we should. The nation demands it.” While there is broad agreement on the need for an immediate response, Democrats want stronger legislative language that prevents companies that receive bailout money from firing workers or using it to buy back shares. They also want restrictions on which businesses can receive bailout money and on executive compensation.
Coronavirus stimulus bill fails in key Senate procedural vote -A massive funding package to combat the impact of coronavirus did not get enough votes in a key Senate procedural vote Sunday evening.The stalemate came hours after Democratic leaders warned that the bill was not to their liking because they said it did too much to bail out companies and not enough to help workers. Stock futures cratered as the two parties failed to agree on the terms of the package.Senate Majority Leader Mitch McConnell lambasted Democrats, who voted against the bill.“We’re fiddling with the emotions of the American people, fiddling with the markets, fiddling with our health care,” he said.“Step up,” he added. “Help us reach an agreement so we can do what needs to be done for the American people no later than tomorrow.” The final vote tally was 47-47, well short of the 60 votes needed to advance the bill. Republicans hold a 53-47 edge in the chamber, although several GOP senators, including Rand Paul, who had tested positive for the coronavirus, were not present to vote. Others, such as Sen. Mitt Romney of Utah, were in quarantine as a precaution.President Donald Trump, however, was decidedly optimistic in a coronavirus task force press briefing that was unfolding as senators voted. “I think you’ll get there,” he said.Senate Republicans last week rolled out a roughly $1 trillion proposal after working closely with the administration, in a bid to slow the potentially catastrophic impact of the coronavirus on the economy. More than 26,000 have tested positive for the illness in the United States, a number that is expected to surge as more tests are distributed. The bill included small business loans, direct payments for individuals and billions in aid for industries like airlines whose businesses have been hit hard by the virus and efforts to stop its spread.Republicans had hoped to come to a deal with Democrats by Monday. Hospitals, workers, companies and states have all warned they need more resources. The airline industry, which is expecting financial relief from the bill, has raised continued alarm that without getting money fast, it could face dire outcomes. The pressure to forge a deal and pass the bill took on added urgency as several members of Congress have tested positive for the coronavirus.
Senate Democrats block mammoth coronavirus stimulus package – Senate Democrats on Sunday blocked a coronavirus stimulus package from moving forward as talks on several key provisions remain stalled. Senators voted 47-47 on advancing a “shell” bill, a placeholder that the text of the stimulus legislation would have been swapped into, falling short of the three-fifths threshold needed to advance the proposal. Hopes of a quick stimulus deal quickly unraveled on Sunday as the four congressional leaders and Treasury Secretary Steven Mnuchin failed to break the impasse. Senate Majority Leader Mitch McConnell (R-Ky.) also delayed the procedural vote for three hours as they tried to get a deal. Democratic senators argue that the GOP bill includes several “non-starters” and walks back areas of agreement, such as expanding unemployment insurance, they thought they had reached with Republicans. They emerged from a closed-door lunch fuming over the bill circulated by Republicans and called for McConnell to hold off on the 3 p.m. cloture vote. “We are pleading with McConnell not to call this vote,” Sen. Dick Durbin (Ill.), the No. 2 Senate Democrat, said after the lunch. “It’s a serious mistake. We have not negotiated this to the point of agreement yet.” Sen. Doug Jones (D-Ala.), who is up for reelection in a deeply red state, said that the Senate needed to be “as unified as possible.” “We don’t need split votes,” he said. Sen. Ed Markey (D-Mass.) added that the proposal put forward by Republicans was “totally inadequate.” That resulted in McConnell delaying the vote to 6 p.m. The vote eventually moved forward with five GOP senators absent. Sen. Rand Paul (Ky.) announced Sunday morning he had tested positive for the coronavirus and would self-quarantine. That led to two Republican colleagues he had interacted with, Utah Sens. Mitt Romney and Mike Lee, announcing they would also self-quarantine and miss the vote. Republican Sens. Cory Gardner (Colo.) and Rick Scott (Fla.) had previously said they would self-quarantine as a precaution that was unrelated to Paul’s announcement. Senate Minority Leader Charles Schumer (D-N.Y.) said the bill includes “problematic” provisions and that McConnell should have made the negotiations include both chambers and the White House from the beginning. “Unfortunately, the legislation has not improved enough in the past three hours,” he said. McConnell appeared visibly angry as he spoke from the Senate floor after the bill failed, pledging to force the vote again. “The American people are watching this spectacle. I’m told the futures market is down 5 percent. I’m also told that’s when trading stops. So the notion that we have time to play games here with the American economy and the American people is utterly absurd,” McConnell said. “The American people expect us to act tomorrow, and I want everybody to fully understand if we aren’t able to act tomorrow, it will be because of our colleagues on the other side continuing to dither when the country expects us to come together and address this problem,” McConnell added.
Summary of the McConnell Bailout Bill – Adam Levitin – The McConnell Bailout Bill (a/k/a HR 748 or the CARES Act), weighs in at just shy of 600 pages. I’ve taken the liberty of summarizing it in a powerpoint deck for teaching (syllabus be damned) and thought it might be helpful to make generally available. Here it is. (11:00 3/23 updated/corrected version).I only warrant it as best efforts (meaning I might have misread or just missed something in this monster bill) and I have made no attempt to summarize the details of the social insurance program (UI, Medicare, Medicaid) interventions because they are outside my expertise. You’ll have to read the bill itself (Part I and Part II) for that. I’ll note quickly two things for Slips aficionados: there’s no bankruptcy piece anywhere within the bill. There might end up being some very minor bankruptcy changes, but bankruptcy really isn’t where the action is right now. You might consider how the airline bailout package in the bill compared with GM/Chrysler. That ought to be the benchmark for direct government rescue lending to real economy firms.
Bailout Shenanigans: Making 2008 Look Good? —Yves Smith -Because the legislative sausage-making is still underway, it might seem premature to declare the bailout bill underway a massive exercise in corporate welfare, but it sure has all the hallmarks.As Public Citizen warned by e-mail early Sunday evening (emphasis theirs): Senate Republicans just announced their long-awaited plan to help people and businesses weather the impending economic storm.Their scheme – burped up by Mitch McConnell in league with Donald Trump’s sycophantic Treasury Secretary, Steve Mnuchin – would be a dream come true for Big Business but a nightmare for everyday Americans.Here’s just some of what’s in the Republicans’ disastrous proposal:
- • Mnuchin gets to dole out hundreds of billions to Corporate America – without revealing which companies got bailed out for half a year.
- • Businesses are not required to keep workers on their payrolls
- • There are NO meaningful oversight mechanisms to prevent fraud and waste by the companies that get bailed out.
And on and on. Thankfully, Senate Democrats have – for the moment – forced Republicans back to the drawing board. But a new plan, which may well be no better, could come Associated Press has a later account, depicting the talks over the $2 trillion bill as “churning”. Maybe “circling the drain” would be more accurate: Democrats won a concession – to provide four months of expanded unemployment benefits, rather than just three as proposed, according to an official granted anonymity to discuss the private talks. The jobless pay also extends to self-employed and so-called “gig” workers.
Yes, this is an emergency. No, that doesn’t justify a $500 billion Trump/Mnuchin slush fund. -Jared Bernstein and Dean Baker – While the indicators are lagging, the U.S. economy is in a recession that will very likely be extremely deep. It’s likely that real GDP falls at double-digit pace in the quarter that begins next month and the unemployment rate more than doubles. If that sounds implausible, history shows that in sharp downturns, the unemployment rate takes the elevator up and the stairs down. To their credit, after a slow start Congress appears to have grasped this urgency and is working around the clock on what may turn out to be the largest stimulus package in our history, with a price tag of $1-2 trillion, or 5-10 percent of GDP (the Recovery Act was $800 billion over two years, roughly 2.0 percent of GDP). Given that fighting the virus essentially calls for putting the U.S. economy in deep freeze for an unknown period, we vigorously support going big. But even as Congress must speed toward completion and passage of this legislation, there is time to avoid wasting resources, and there is one, large part of the bill – $500 billion, according to the Washington Post – that threatens to create a “slush fund” for businesses with virtually no oversight, no benefits for workers, and far too much discretion for President Trump to dole out goodies to himself and his cronies. The lending mechanism in question allocates $500 billion to backstop (i.e., repayment is guaranteed by the government) private-sector loans to the tune of $50 billion to airlines, $8 billion for cargo carriers, $17 billion for businesses “critical to national security,” and $425 billion for businesses, states, and cities. To be clear, there’s nothing wrong and a lot right with providing resources of these magnitudes for businesses. The bill also proposes $350 billion for small business with a smart, built-in incentive to help workers: if employers use a portion of the loan to maintain their payrolls, that portion is forgiven. But the $500 billion carries no such incentives. Nor does there appear to be adequate oversight or “underwriting,” the process by which banks determine credit worthiness, leading Sen. Warren to tweet that it “sounds like Trump hotel properties like Mar-a-Largo could receive huge bags of cash – and then fire their workers – if Steve Mnuchin decides to do a solid for his boss with taxpayer dollars.” Democrats must use their leverage to remove this Trump/Mnuchin slush fund while they quickly negotiate the attaching of pro-worker conditionality to it. The main thing for this moment is to get the help to families (direct cash) and small businesses out the door. But let’s train our water hoses on where the immediate fire is – low, moderate income households and small businesses with a week or two of cash reserves and little access to credit markets. No question, this is an emergency, but that doesn’t excuse opportunistic, potentially wasteful spending with no oversight. We have important work to do, none of which includes setting up a half-a-trillion-dollar slush fund.
Boeing, Which Demands A $60BN Taxpayer Bailout, Refuses To Give US An Equity Stake – With populist anger growing in response to Boeing’s demands for a taxpayer-funded bailout (or the employees get it) after it spent over $40BN on buybacks making its shareholders and management richer while burying the company and rank and file employees under a record $25BN in debt, many have asked what form the Boeing bailout will take, and whether the US taxpayers will also be entitled to some or all of the upside in the company they will soon be asked to bailout. In other words, will the US get an equity stake?We got the answer moments ago, when the company’s new CEO Dave Calhoun confirmed that the disgraced airplane maker – which until recently was best known for making airplanes that were “designed by clowns, who in turn are supervised by monkeys”, at least until it came crawling and demanding a non-recourse bailout -said Boeing does not want the U.S. government to take a stake even as the planemaker seeks assistance to grapple with effects from the new coronavirus.”I don’t have a need for an equity stake,” Calhoun said in an interviewTuesday with Fox Business. “I want them to support the credit markets, provide liquidity. Allow us to borrow against our future.”And just in case it wasn’t clear that Boeing is confident it has all the leverage, he added “If they force it, we just look at all the other options and we’ve got plenty of them.”Well of course he doesn’t want to give equity to those who bail Boeing out: that would cripple his comp for years which would be determine by some Treasury clerk. Instead, what Boeing really wants is to repackage a bailout with no loans and lots of grants (i.e., direct investments) as merely “providing liquidity.” Note, again, this is the same company that blew $50 billion in “liquidity” repurchasing its stock so that management, which includes Mr. Calhoun, could cash out of their options at record high prices, and pocket millions. And now that the pillage is over, it’s time for a bailout, one where taxpayers inexplicably end up with… nothing?
House panel warns coronavirus could destroy Postal Service by June -The U.S. Postal Service could be gone by June unless Congress immediately delivers billions of dollars to counteract the impact of the coronavirus crisis, a House committee chairwoman warned Monday night. “Based on a number of briefings and warnings this week about a critical fall-off in mail across the country, it has become clear that the Postal Service will not survive the summer without immediate help from Congress and the White House,” Oversight Chairwoman Carolyn Maloney (D-N.Y.) said in a statement. Maloney, who was joined in the statement by Rep. Gerry Connolly (D-Va.), indicated the Postal service has seen a “drastic” reduction in mail volume and could shutter by the summer without intervention, a collapse that could, among other things, jeopardize access to mail-order prescription drugs for millions of Americans, especially in rural communities. A Postal Service shutdown would also affect the ability of voters to cast ballots by mail. Maloney and Connolly noted the House’s $2.5 trillion coronavirus relief package would send $25 billion to the Postal Service in emergency funding and eliminate the Postal Service’s $11 billion debt. The measure would reset the Postal Service’s borrowing limit to $15 billion and eliminate an annual $3 billion borrowing cap. The measure would also require the agency to prioritize medical deliveries. The House bill would also allow the Postal Service to create “temporary delivery points” and establish flexible staffing procedures if the novel coronavirus affects its operations. The Postal Reorganization Act of 1970 turned the Postal Service into an independent agency within the U.S. government that was primarily responsible for funding itself, something that has become harder since the internet era led to a dramatic drop in the volume of mail. Beyond that, the Postal Service has been required since 2006 to pay at least $5.5 billion annually to pre-fund retiree benefits.
Congress Allocates $2 Trillion To Bail Out Struggling Bailout Industry – In order to alleviate the heavy damage the crucial financial sector is facing in the midst of the ongoing Covid-19 outbreak, the United States Congress announced Tuesday that they would be allocating $2 trillion in order to bail out the struggling bailout industry. “The bailout industry is on the brink of failure, so in order to prevent a full-on catastrophe, we are setting aside $2 trillion in order to bail it out,” said Senate Majority Leader Mitch McConnell (R-KY), adding that the business of giving of massive sums of money to corporations so they can cover their losses is at the very bedrock of the U.S. economic system, and without assistance, the entire bailout industry as we know it could collapse, which could lead to another Great Depression. “During a crisis like this, the bailout industry is often hit the hardest, so we are taking immediate action, as our economy is deeply dependent on the bailout system; if bailouts can’t function, then America can’t function. A cash injection is absolutely necessary to make sure these failing businesses can inject cash into failing businesses.” At press time, Congress had signed a bill to allocate funds to bail out their bailout of the bailout industry.
Pelosi previews House coronavirus stimulus as Senate hits roadblocks | TheHill – Speaker Nancy Pelosi (D-Calif.) on Monday offered an early glimpse of House Democrats’ sweeping proposal to boost the crippled economy amid the coronavirus crisis, presenting it as a family-focused alternative to the Republicans’ package, which Democrats deem too corporate-friendly. The Speaker said she still intends to have the House return to Washington to vote on the package but suggested such a step might not be necessary if Senate negotiators can seal a deal that wins the support of her House caucus. “That’s our hope, yes, but we’ll see what the Senate does,” Pelosi said from the Speaker’s balcony in the Capitol. House Democrats want to expand funding for unemployment insurance, offer student loan relief, extend the reach of food stamps and bar corporations that receive federal help from buying back stocks or firing employees, among other provisions. The bill would also expand worker safety protections – like those governing the front-line medical workers dealing with infected patients – and require the Trump administration to enforce them. The House bill, which is expected to be unveiled later Monday, arrives as Senate lawmakers are scrambling to break an impasse over a massive package designed to shore up the economy against the fallout caused by the novel coronavirus outbreak, which has crashed markets, shuttered businesses and sparked mass layoffs across the country. Senate leaders and White House economic officials had huddled all weekend in search of an agreement, but the sides remained far apart on Sunday, when Democrats united to prevent a GOP bill from advancing toward a final vote. Despite another round of talks Monday morning, Democrats blocked the measure a second time on Monday afternoon. Democrats in both chambers have raised numerous objections with the Republican bill, saying it leans too heavily in favor of corporations while neglecting more vulnerable populations – including seniors, students and low- and middle-income workers – hit hardest by the crisis.
House Democrats propose cash payments of $1,500 per person – House Democrats on Monday evening released a coronavirus stimulus proposal that includes direct payments to Americans that are more generous than the rebate checks proposed by Senate Republicans. The proposal would provide payments of $1,500 per adult and $1,500 per child in a household, up to three children. The maximum a family could receive is $7,500. Individuals with income of more than $75,000 and married couples with income of more than $150,000 would have to repay some or all of the payment amount when they file their tax returns but could chose to repay the amount over the course of three years. The IRS and Social Security Administration would work together to get the payments to households, and when possible, the payments would be delivered to people via direct deposit, according to a fact sheet from the House Ways and Means Committee. Draft versions of House Democrats’ bill that circulated in Washington on Monday included a provision that would provide significantly bigger checks to low-income households, but that was not included in the version of the bill lawmakers formally introduced. The release of House Democrats’ bill comes as Democrats and Republicans have been working to reach a bipartisan deal on a stimulus package. Senate Republicans did not expect an agreement to be reached on Monday. House Speaker Nancy Pelosi (D-Calif.) on Monday urged the Senate “to move closer to the values” in the House bill. Senate Republicans have also proposed cash payments for Americans, but their proposed checks are smaller, particularly for children. They have proposed checks of $1,200 for single filers, $2,400 for married couples and $500 per child. Senate Republicans are proposing that their payment amounts would start phasing out at the same income levels Democrats have proposed. Legislative text Senate Republicans released last week also included a phase-in of the rebate amount, but a draft that had circulated over the weekend dropped the phase-in. The cash payments are not the only tax-related provision in House Democrats’ bill. The bill would also provide for short-term expansions of the earned income tax credit and the child tax credit – two tax credits benefiting low- and middle-income households that Democrats have long wanted to boost. House Democrats are also proposing tax credits for employers who retain their workers and tax credits for paid sick and family leave. Both House Democrats and Senate Republicans have proposed allowing businesses to carry back net operating losses from 2018, 2019 and 2020, but the Democratic bill puts restrictions on what businesses can qualify. In addition to the tax-related provisions, House Democrats’ bill would provide financial resources for the health care system, boost unemployment compensation, provide grants and loans to small businesses, provide funds to state and local governments, and require states to develop voting contingency plans during a public health emergency.
Senate on cusp of coronavirus stimulus deal after agreements in key areas -Senate Minority Leader Charles Schumer (D-N.Y.) and Treasury Secretary Steven Mnuchin are on the cusp of a deal for a massive coronavirus stimulus package after settling disagreements over relief for the airline industry, beefed-up unemployment benefits and money for hospitals. Democratic senators participated in a briefing call Monday night on the latest developments in the negotiations, and a vote is expected as soon as Tuesday. Schumer provided an optimistic update on the Senate floor after his fourth meeting of the day with Mnuchin, which ended shortly before 9 p.m. “Secretary Mnuchin just left my office. We have had some very good discussions, and in fact the list of outstanding issues has narrowed significantly,” he said, promising to “work on into the night.” In a key concession to the administration, Democrats have agreed to $25 billion in grants to U.S. airlines and $4 billion for cargo air carriers, according to text excerpt of the emerging deal. Schumer is still waiting on written language from Mnuchin limiting stock buybacks and executive compensation for companies that accept billions of dollars in assistance from U.S. taxpayers. Republicans want to limit executive compensation based on 2019 earnings, a lucrative year for corporate America, while Democrats want the limit based on a multiple of median worker salaries. In a significant concession to Democrats, the emerging deal would provide bumped-up unemployment benefits for four months, a substantial increase over the three months of augmented unemployment benefits proposed by Republican negotiators, according to a person familiar with the briefing call. Republicans have also agreed to provide $100 billion in funding for hospitals, $25 billion more than the proposal drafted in recent days by Republicans on an emergency supplemental spending package, according to the source familiar with the call. The emerging deal would also provide $30 billion for care of people who fall ill from COVID-19. The bill is also expected to provide $200 billion for various “domestic priorities.” Republican scored a major victory by securing at least $500 billion for the Treasury Department to authorize more than $4 trillion in liquidity to distressed industries, which could provide a major boost to corporate balance sheets and financial markets. The money will be leveraged at a ratio of 10 to 1, giving the Fed broad ability to make loans.
Pelosi says there is ‘real optimism’ Congress can reach a stimulus deal in the next few hours – House Speaker Nancy Pelosi sounded a hopeful tone Tuesday about Republicans and Democrats striking an agreement on a staggering stimulus package to blunt the economic damage from the coronavirus pandemic. “I think there is real optimism that we could get something done in the next few hours,” Pelosi told CNBC’s Jim Cramer in a phone interview on “Squawk on the Street” as Senate Republicans and Democrats moved closer to a deal. The California Democrat later added that the bill is “getting to a good place … if they stay there.” Pelosi has criticized versions of the GOP’s developing legislation, saying it goes too far to help corporations damaged by the outbreak without doing enough to aid workers ravaged by it. House Democrats released their own $2.5 trillion relief plan on Monday – though it is unlikely to go anywhere as long as the Senate makes progress. Major U.S. stock indexes climbed more than 5% on Tuesday as optimism about a deal rose. Democrats had taken particular issue with the potential conditions imposed on ailing corporations that receive aid from a pool of $500 billion in taxpayer money. Pelosi said Tuesday “things like a $500 billion slush fund are really insulting.” But the speaker said she was encouraged by the Trump administration agreeing to add more oversight to how it doles out the funding pool, which she called a “big change.” Pelosi noted that the proposal would include an inspector general and a congressional panel of five people to oversee the aid.
Negotiators Nearing Accord on U.S. Stimulus Package to Combat Coronavirus – Senate negotiators and the Trump administration worked to clear remaining hurdles for a deal on an estimated $2 trillion stimulus package, a massive bill designed to shield the U.S. economy from the most drastic consequences of the coronavirus pandemic. Stocks rallied on the news that a deal was near, with the Dow Jones Industrial Average surging more than 11%, its best day since 1933. Lawmakers, administration officials, and aides said issues surrounding $500 billion in industry assistance loans and expanded unemployment insurance had largely been resolved, leaving a narrow set of unresolved items left to agree to. Early in the day, some lawmakers predicted a deal was just hours away. But Republican senators left an afternoon meeting with administration officials saying the process had been bogged down as both sides put agreed-upon concepts into writing. No deal emerged as negotiations continued past midnight. Eric Ueland, the White House legislative affairs director, said that government aid to the airline industry was among the final issues. “Some people have discussed loans, others have discussed grants. We continue to kind of work through that,” Mr. Ueland said of aid for airlines. The Senate could move to quickly vote on the package later in the day, if an agreement is reached. “I believe we’re on the 5-yard line,” Senate Majority Leader Mitch McConnell (R., Ky.) said on the Senate floor. “I hope today is the day this body will get it done.” Senate Minority Leader Chuck Schumer (D., N.Y.) said he didn’t see any remaining issues that can’t be resolved. “Last night I thought we were on the 5-yard line. Right now we’re on the 2,” he said. Treasury Secretary Steven Mnuchin, who has led the negotiations for Republicans, said Tuesday morning that he expected a deal. He and Mr. Schumer completed a round of late-night talks Monday predicting they could soon finalize an agreement, which Mr. Schumer said could run to $2 trillion. “I feel very confident they’re getting close to a deal for the people of our country,” President Trump said in remarks at the daily White House coronavirus briefing.
Senate eyes quick exit after vote on coronavirus stimulus package – Senators are floating a quick exit from Washington, D.C., after they pass a massive coronavirus stimulus bill that is being finalized Tuesday. The expectation among senators is that once the chamber passes the legislation, likely on Wednesday, they will not be in session for at least three weeks. Sen. Roy Blunt (R-Mo.), a member of GOP leadership, stressed that the decision is up to Senate Majority Leader Mitch McConnell (R-Ky.) but said it was his expectation that the chamber would recess after this week. “My guess is we probably don’t come in next week and then don’t come in the two weeks we’re scheduled” to be on recess, Blunt said, adding that they would “use those three weeks to get ready for whatever is phase four.” Blunt said some senators could stay in town to work on additional coronavirus legislation but that “likely we’re not in an active daily session.” A source familiar with briefings being given to Democratic senators and top staffers added that “once the Senate is done, they plan to be gone for a while.” The Senate is currently scheduled to be in session through next Friday, April 3. After that, the Senate is scheduled for a two-week recess. The chamber was supposed to be out of session last week but changed its plans to remain in Washington to pass a second coronavirus response bill and start crafting a third. The House left last week without a fixed return date. House leadership is debating clearing the massive stimulus package, which is expected to have a top-line price tag of at least $2 trillion, by unanimous consent, though it’s unclear if all 435 members will sign off.
U.S. Senate bill to grant airlines bailout to weather coronavirus – (Reuters) – The U.S. Senate will vote on Wednesday to give the U.S. aviation industry $58 billion in aid, half in the form of grants to cover some 750,000 employees’ paychecks, in a badly needed lifeline for an industry facing the worst travel downturn in history. A draft text for a $2 trillion economic rescue deal seen by Reuters would offer passenger airlines $25 billion in grants and $25 billion in loans, cargo carriers another $8 billion in loans and grants, and contractors like caterers up to $3 billion in grants. Republicans had fought what they called a give away to airlines, while unions said the cash was crucial to keep workers on the job. “This is not a corporate bailout; it’s a rescue package for workers,” said Association of Flight Attendants Sara Nelson, who spearheaded the idea of direct payroll grants for employees ranging from janitorial staff and gate agents to mechanics and pilots. Reuters reported Chao worked the phones late into the night talking to air carriers about what they needed to ensure they could maintain payrolls, a person briefed on call on Tuesday that lawmakers were nearing agreement on a deal for cash grants for payroll and other employee costs, after airlines made a last-minute effort to convince lawmakers they needed the cash to prevent furloughing tens of thousands of workers. U.S. airline shares extended a Tuesday rally on hopes for cash relief and airlines could get cash assistance in as little as two weeks from passage. Republican Senator Pat Toomey, whose party had proposed $58 billion in loans, said on Wednesday the grants were a key sticking point. He said Democrats insisted “we give away money to airlines and never get it back.” In a win for labor, companies receiving funds cannot lay off employees before Sept. 30 or change collective bargaining agreements. The draft bill has restrictions on stock buybacks, dividends and executive compensation, and allows the government to take equity, warrants or other compensation as part of the rescue package. Airlines would also receive tax relief on fuel purchases and, in a move that will bring down passenger fares, a temporary suspension on ticket taxes.
White House, Lawmakers Strike Stimulus-Bill Deal – Lawmakers and the Trump administration reached an agreement on an estimated $2 trillion stimulus package aimed at shielding the U.S. economy from the worst consequences of the coronavirus pandemic. The legislation, which congressional officials were set to continue to write throughout the early morning Wednesday, will provide direct financial checks to many Americans, drastically expand unemployment insurance, offer hundreds in billions in loans to both small and large businesses, and provide health care providers with additional resources as the virus spreads. “This is a wartime level of investment into our nation,” said Senate Majority Leader Mitch McConnell (R., Ky.) in the early hours of Wednesday after the two sides had reached a deal. “The men and women of the greatest country on Earth are going to defeat this coronavirus and reclaim our future. And the Senate is going to make sure they have the ammunition they need to do it.”Mr. McConnell said the Senate would move to vote on the massive bill later on Wednesday, setting up a rapid approval of legislation that dwarfs the annual discretionary budget Congress spends much of the year crafting and approving. House Speaker Nancy Pelosi (D., Calif.) said Tuesday she hoped to quickly approve the eventual Senate agreement, though objections from lawmakers could slow the process in that chamber. Treasury Secretary Steven Mnuchin said that he had spoken to President Trump about the agreement and that Mr. Trump would “absolutely” sign it as it is written today. “He’s very pleased with this legislation, and the impact that this is going to have,” Mr. Mnuchin said.Senate Minority Leader Chuck Schumer (D., N.Y.) said the bill had been “improved substantially” since Democrats joined the negotiations. “To all Americans I say: Help is on the way, big help and quick help,” Mr. Schumer said.The deal was announced several hours – and into the wee hours of the next day – after a stock market rally for the ages. The Dow Jones Industrial Average posted its largest single-day gain since 1933 on news Tuesday that a deal was coming together. Signs of a major injection of cash into the economy appeared to give investors some solace as the U.S. reported an uptick in confirmed Covid-19 cases and braced for unemployment claims, which are reported this week, that are expected to have soared.
Tempers rise as U.S. Senate awaits vote on $2 trillion coronavirus bill – (Reuters) – Republican and Democratic leaders of the U.S. Senate hoped to vote on Wednesday on a $2 trillion emergency package to alleviate the devastating economic impact of the coronavirus pandemic, but found themselves fending off critics from the right and left who threatened to hold up the bill.Top aides to Republican President Donald Trump and senior senators from both parties said they had agreed on the unprecedented stimulus bill in the early hours of Wednesday morning after five days of talks.The massive bill includes a $500 billion fund to help hard-hit industries and a comparable amount for direct payments of up to $3,000 apiece to millions of U.S. families. It is intended to flood the economy with cash in a bid to stem the impact of a pandemic that has killed more than 900 people in the United States and infected at least 60,000. Several Republican senators said the bill needed to be changed to ensure that laid-off workers would not be paid more than they earned on the job.“This bill pays you more not to work than if you were working,” Republican Senator Lindsey Graham, a close Trump ally, told a news conference. Democrats scoffed in response, noting that employees cannot collect unemployment if they leave their jobs voluntarily.“Why would the senators hold up this really important bill … because they resent people at the low end of the spectrum who have lost their jobs, from getting $600?” House of Representatives Speaker Nancy Pelosi asked on CNN.Independent Senator Bernie Sanders, who is running for the Democratic presidential nomination, said he was prepared to block the bill if Republicans did not drop those objections. The disputes clouded optimism that the bill could become law quickly. Administration officials said Trump would definitely sign it into law if it passed both the Republican-led Senate and Democratic-majority House.
Senate rejects GOP attempt to change unemployment benefits in coronavirus stimulus bill – The Senate rejected an attempt by four Republican senators to change boosted unemployment benefits included in a mammoth coronavirus stimulus package. Senators voted 48-48 on an amendment that would cap unemployment benefits at 100 percent of an individual’s salary before they were laid off. Sixty votes were required for the amendment to pass. GOP Sens. Ben Sasse (Neb.), Rick Scott (Fla.), Tim Scott (S.C.) and Lindsey Graham (S.C.) pushed for the changes to the coronavirus aid bill over concerns that the agreement struck by Senate Majority Leader Mitch McConnell (R-Ky.), Senate Minority Leader Charles Schumer (D-N.Y.) and Treasury Secretary Steven Mnuchin would “incentivize” individuals not to return to work. “I plan to support this legislation tonight, but I do want to fix it first,” said Scott (S.C.). “The goal is simply to keep you whole while you’re unemployed because of COVID-19.” Sasse added that Congress should be “generous [but] we don’t want this piece of the bill to create an incentive for folks to stop working.” The GOP senators first raised concerns about the provision earlier Wednesday after they reportedly learned about the details of the increased unemployment benefits during a 92-minute conference call about the forthcoming bill. The unemployment provision includes four months of bolstered unemployment benefits, including increasing the maximum unemployment benefit by $600 for four months. But the GOP senators argued that the agreement, which they’ve called a “drafting error,” could prompt individuals who earn less while working compared to the unemployment benefits to quit their jobs or not return to work. “Something hit me like a ton of bricks … Under this bill you get $23.15 an hour based on a 40-hour work week not to work,” Graham said from the Senate floor on Wednesday night. “We’ve created Pandora’s box for our economy.” They warned that they would slow down the stimulus package unless they got their amendment vote. Under the Senate’s rules, McConnell would need cooperation from every senator to speed up the stimulus package and pass it on Wednesday. But the group’s amendment got bipartisan pushback, making it unlikely to get it added to the bill. Sen. Dick Durbin (D-Ill.) warned that they were told by the Department of Labor that implementing a state-by-state cap that met previous wages was not feasible given the different unemployment systems used across the country. “The way you want to calculate it, we’re told cannot be done,” Durbin said. Sen. Chris Murphy (D-Conn.) tweeted: “Let’s not over-complicate this. Several Republican Senators are holding up the bipartisan Coronavirus emergency bill because they think the bill is too good for laid off Americans.”
GOP senators strike deal to allow stimulus to pass Wednesday night – A group of Republican senators has struck a deal with leaders to allow the $2 trillion economic relief package to pass the Senate on Wednesday evening. Sens. Lindsey Graham (R-S.C.), Tim Scott (R-S.C.), Rick Scott (R-Fla.) and Ben Sasse (R-Neb.) have agreed to drop procedural objections and let the bill move on a fast track in exchange for a vote on an amendment to the package to cap beefed-up unemployment benefits at 100 percent of workers’ salaries. Their amendment will need 60 votes to pass, and it’s expected to fail, setting the stage for final passage of the mammoth coronavirus stimulus package later Wednesday evening. Graham argued that for South Carolina and other states with low per capita income, a federal plus-up of $600 per week in unemployment benefits will make it tough for employers to hire workers. “Under this bill, you get $23.15 an hour based on a 40-hour workweek not to work. And if you’re trying to hire somebody in South Carolina the next four months, you got to compete with that wage,” Graham said on the floor. Graham later told reporters that he will allow the massive economic relief bill to pass Wednesday if he gets a vote on his amendment. He said he plans to support the 800-page package and predicted votes before midnight. “We’re going to vote,” he said. “My amendment along with the two Scotts and Sen. Sasse says you can get 100 percent of your salary and not more than that.” “If you make $15 dollars an hour working in South Carolina – a lot of people do – this bill will pay $23 an hour not to work, and I think that’s perverse incentive. It’s going to keep people from being hired,” he added. “To hire somebody in South Carolina, you’re going to have to compete with a $23.15 rate.” Graham dismissed critics who’ve said his concerns are unfounded because unemployment benefits only go to people who are laid off and that workers who quit wouldn’t be eligible. The South Carolina senator said it’s almost impossible to dispute an unemployment claim on suspicion that a worker quit instead of being laid off.
Senate unanimously passes $2T coronavirus stimulus package – The Senate unanimously passed a massive stimulus package late Wednesday night in an effort to jumpstart an economy decimated by the coronavirus pandemic. The bill provides more than $2 trillion for workers, small business and industries impacted in recent weeks by the virus. Senate Majority Leader Mitch McConnell (R-Ky.) compared the efforts by Congress to combat the coronavirus to being on a “war-time footing.” “This is not even a stimulus package. It is emergency relief. Emergency relief. That’s what this is,” McConnell said Wednesday afternoon ahead of the vote. But the bill marks an unprecedented attempt by the federal government to revive the economy and prevent a deep recession. The 2008 Troubled Asset Relief Program (TARP), by comparison, was $700 billion. Congress has been under intense pressure to pass a third round of coronavirus relief funding as the United States saw a steady uptick of cases, which has rattled the markets and upended day-to-day American life. The Senate’s vote comes one week after they passed a $104 billion “phase two” coronavirus package. The 96-0 vote came only 20 hours after congressional leaders and Treasury Secretary Steven Mnuchin announced that they had clinched an agreement after more than four days of around-the-clock negotiations that kept lawmakers in the Capitol late into the night every day since Friday. Senate Minority Leader Charles Schumer (D-N.Y.), who spearheaded the final days of talks with Mnuchin, characterized the agreement as a compromise for both parties and urged his colleagues to move quickly. “We all know that not everyone is going to want every provision. We all know that so many things so many of us want are left out. But we all know we must do these things,” Schumer said. The wide-reaching bill includes a $1,200 one-time check for individuals who make up to $75,000. That amount would scale down until it reached an annual income threshold of $99,000, where it would phase out altogether. It also provides $377 billion in small business aid, would defer federal student loan payments through Sept. 30, 2020, and would prevent money given under the bill to the Pentagon to be transferred to the border wall.
READ: Senate’s $2 trillion coronavirus relief package – The Senate is gearing up for a final vote on a $2 trillion coronavirus relief package. The wide-reaching bill provides money for workers, small business and industries impacted in recent weeks by the virus outbreak. “This is not even a stimulus package. It is emergency relief. Emergency relief. That’s what this is,” Senate Majority Leader Mitch McConnell (R-Ky.) said Wednesday afternoon ahead of the vote. Read the 880-page bill below.
Senate leaving D.C. until April 20 after coronavirus stimulus vote – The Senate will leave town after passing a coronavirus stimulus package and not return until April 20, Majority Leader Mitch McConnell (R-Ky.) announced late Wednesday night. The Senate unanimously passed a massive stimulus bill that costs approximately $2.2 trillion. McConnell announced shortly before it started that the Senate will not have its next roll call vote until April 20. That means the Senate will cut next week’s scheduled session. After that, the senators were already scheduled to go on a two-week recess starting on March 31. That will keep the Senate out of town for a total of three weeks. “When the Senate adjourns this evening, our next scheduled vote will be the afternoon of Monday, April 20,” McConnell said. “Of course, during this unprecedented time for our country, the Senate is going to stay nimble.” Senators had indicated that they expected the Senate to leave after they passed the massive stimulus bill amid growing concerns about the spread of the coronavirus on Capitol Hill. Sen. Rand Paul (R-Ky.) on Sunday became the first known case of a senator having the coronavirus, and several senators have self-quarantined because of exposure to an individual who tested positive. “My guess is we probably don’t come in next week and then don’t come in the two weeks we’re scheduled” to be on recess, Blunt said, adding that they would “use those three weeks to get ready for whatever is phase four.”
Hoyer says House expects to pass Coronavirus bill on Friday – House Majority Leader Steny Hoyer (D-Md.) announced late Wednesday night that he expects the chamber will pass an economic relief bill in response to the coronavirus later in the week in a way that won’t require all members to travel back to Washington. Hoyer wrote in a letter to colleagues that he expects the House will pass the legislation on Friday morning by voice vote. Many lawmakers are fearful of having to travel back and forth between Washington and their communities, as well as congregate with each other in the Capitol. But they are also under pressure to quickly act on the $2 trillion legislation that the Senate unanimously passed late Wednesday that provides individual checks to Americans, boosts unemployment insurance payments and provides financial assistance to businesses. Hoyer said that the passage by voice vote would still allow members who want to show up to the House floor in person on Friday morning to express their positions on the legislation. “In order to protect the safety of Members and staff and prevent further spread of COVID-19 through Members’ travel, the Republican Leader and I expect that the House vote on final passage will be done by voice vote,” Hoyer wrote. “Members who want to come to the House Floor to debate this bill will be able to do so.” Hoyer said that he and House Minority Leader Kevin McCarthy (R-Calif.) are figuring out a way for members unable to travel to still express their positions from afar. “In addition, we are working to ensure that those who are unable to return to Washington may express their views on this legislation remotely. My office will send out information tomorrow with those details,” Hoyer said. Two House members – Reps. Mario Diaz-Balart (R-Fla.) and Ben McAdams (D-Utah) – have tested positive for the novel coronavirus. More than a dozen other House members are self-quarantining after exposure to those members and other people who later tested positive. Sen. Rand Paul (R-Ky.) has also tested positive for the coronavirus. Two other lawmakers, Democratic Reps. Seth Moulton (Mass.) and Katie Porter (Calif.), both announced Wednesday that they are ill but are not confirmed to have the virus. Moulton said that he did not qualify for a coronavirus test, while Porter is awaiting her test results.
House leadership advises members to return to DC as Massie weighs roll call vote on stimulus package -House leadership advised members on Thursday evening to come back to Washington, D.C., on Friday morning if possible, as top lawmakers told The Hill that they anticipate Rep. Thomas Massie (R-Ky.) could call for a roll call vote on the $2 trillion stimulus package passed in the Senate earlier this week. House Majority Leader Steny Hoyer (D-Md.) and House Minority Leader Kevin McCarthy (R-Calif.) aimed to pass the bipartisan measure via voice vote in the lower chamber in an attempt to minimize the health risk for members who have to travel long distances amid the pandemic. But, according to multiple House members, Massie is threatening to derail leaders’ plans, taking issue with its cost and the process used to pass it through the upper chamber. “Mr. Hoyer and Mr. McCarthy previously expected that the vote on H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act, would be done by voice vote, but there is now a possibility that a House Republican may suggest a quorum is not present and attempt to call for a recorded vote on final passage,” sources in Hoyer’s press shop said. “We have notified our Members of the possibility that the bill may not pass by voice vote. The Majority Leader’s Office has sent a notice to Members that if they are able and willing to be in Washington, DC by 10:00 a.m. tomorrow, they are encouraged to do so, while exercising all due caution.” While McCarthy urged members not to call for a roll call vote on a House GOP conference call on Thursday, Massie has railed against the bill, tweeting out his grievances with the measure. “The senate did some voodoo just like with Obamacare. It’s the House’s job to reject the process,” Massie tweeted. The congressman’s comments have sparked frustration from his colleagues. “If he does – his primary opponent will raise serious money over the weekend,” one GOP member told The Hill. “Despite the fact that members are quarantined, have the virus and some don’t have flights to get here … He’s just trying to jeopardize it,” another GOP member said.
Coronavirus stimulus checks will come within three weeks, Mnuchin says – Treasury Secretary Steven Mnuchin said Thursday that people will start getting relief checks within three weeks, as the country reels from the coronavirus pandemic.Mnuchin spoke to CNBC the morning after the Senate passed a $2 trillion stimulus package intended to blunt economic damage from the spread of the coronavirus. The House is expected to vote on the legislation Friday.The massive relief bill offers direct cash payments of up to $1,200 for individuals and $2,400 for couples, with $500 added for every child, based on 2019 tax returns for those who filed them and 2018 information if they have not. The benefit begins to phase out for individuals making $75,000 in income and ends completely for those making $99,000 or more.“Most of these will be direct deposit,” Mnuchin said. “It will be within three weeks.”“We’re determined to get money in people’s pockets immediately,” he said.The payments would come amid a historic spike in jobless claims: Weekly initial unemployment claims totaled nearly 3.3 million, by far a record, according to data released Thursday.“I just think these numbers right now are not relevant,” Mnuchin said when asked about that staggering figure. “Whether they’re bigger or smaller in the short term … the good thing about this bill is, the president is protecting these people.”Market futures turned positive shortly after the jobless numbers were announced. After shedding trillions of dollars in value for weeks, stocks rose Thursday for the third straight session, as lawmakers rushed to provide relief for ailing industries and individuals.President Donald Trump has also strongly signaled that he wants the economy “reopened” as soon as possible. Trump suggested repeatedly this week that areas of the country with comparatively low numbers of confirmed COVID-19 cases could allow businesses to reopen in just a few weeks, if not sooner.But it’s far from clear which states, if any, would agree to quickly loosen the extreme measures they have imposed to slow the spread of the disease. Nearly every state in the country has declared a state of emergency amid the pandemic as confirmed cases continue to rise rapidly throughout the country – especially in “hot spots” such as New York and Washington. New states were ordering all residents to stay home as recently as Wednesday.
Ocasio-Cortez blasts coronavirus stimulus package as ‘shameful’ on House floor – Freshman Rep. Alexandria Ocasio-Cortez (D-N.Y.) on Friday slammed the $2.2 trillion coronavirus stimulus passage passed in the Senate earlier in the week as “shameful” and argued that the bill was one of “the largest corporate bailouts” in “American history.” During a debate on the Senate’s hefty stimulus package, the congresswoman took to the House floor to underscore the need for protective gear for medical workers in her district in Queens, N.Y., one of the areas hardest hit by the coronavirus outbreak. Ocasio-Cortez then urged her fellow lawmakers to look at this bill that has been sent over to the lower chamber with “eyes wide open.” “What did the Senate majority fight for?!” Ocasio-Cortez asked. “One of the largest corporate bailouts with as few strings as possible in American history. Shameful! The greed of that fight is wrong for crumbs for our families.” The $2.2 trillion coronavirus stimulus package, passed unanimously in the Senate during a late-night vote Wednesday, will provide a $500 billion corporate fund, $377 billion in aid to small businesses, and $1,200 one-time checks to individuals who make up to $75,000. The package was passed after both Democratic and Republican lawmakers worked tirelessly through several sticking points, one of them being the terms by which affected industries would be able to receive aid from the government. Sen. Bernie Sanders (I-Vt.), a fellow progressive and an ally of Ocasio-Cortez, took particular issue with the corporate fund. The Vermont senator fought for language in the bill that prohibited corporations from laying off workers or cutting wages, should they receive the aid. The New York lawmaker continued during her speech on the House floor saying that this stimulus bill would further intensify the wealth gap between the richest and poorest people in the country. “The option that we have is to either let them suffer with nothing, or to allow this greed and billions of dollars which will be leveraged into trillions of dollars to contribute to the largest income inequality gap in our future.” “There should be shame for what was fought for in this bill, and the choices we have to make,” she continued.
House passes coronavirus stimulus bill with payments, business aid – The House of Representatives passed the $2 trillion coronavirus stimulus bill on Friday afternoon after more than three hours of debate, moving the measure to the White House for President Donald Trump to sign. Relief set out in the bill includes direct payments of $1,200 to millions of Americans, strengthened unemployment benefits, and hundreds of billions of dollars in loans for struggling businesses. About one-quarter of the bill’s sum is set aside for larger companies. Firms borrowing from the pool would be barred from paying dividends to shareholders or issuing stock buybacks until one year after they pay back their loans. The companies would also be forced to limit executive compensation. The bill allocates about $50 billion for passenger airlines. The industry was one of the first to face the coronavirus outbreak’s economic toll as containment measures slowed domestic travel and limited international flights. Carriers have since called for aid from the federal government to avoid near-term defaults. Small businesses – those with 500 employees or fewer – would receive $367 billion in emergency funding. Firms would be encouraged to maintain payroll, and operating costs could be forgiven if participating companies met specific requirements. Roughly $100 billion is allocated for hospitals and healthcare facilities to better address the coronavirus pandemic. Billions more would be set aside for testing supplies, equipment, and additional payroll. The legislation would also expand jobless benefits, offering an additional $600 a week for four months. Jobless claims spiked to a record 3.3 million last week, the Labor Department announced Thursday, trouncing the consensus estimate of 1.5 million. The bill – officially called the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act – was stuck in limbo at the start of the week as Senate Democrats demanded stronger worker protections and greater transparency around how corporations would receive loans. The chamber passed the bill unanimously late Wednesday after days of negotiation between the White House and Senate leadership.
Trump signs historic $2 trillion stimulus after Congress passes it Friday – President Donald Trump signed into law Friday afternoon a historic $2 trillion stimulus package as the American public and the US economy fight the devastating spread of Covid-19. The far-reaching legislation stands as the largest emergency aid package in US history. It represents a massive financial injection into a struggling economy with provisions aimed at helping American workers, small businesses and industries grappling with the economic disruption. The House of Representatives earlier in the day approved the bill that passed the Senate earlier this week, overcoming last-minute drama by using an unusual procedural move to thwart a demand by a conservative Republican to force members to vote in person. The Republican, Rep. Thomas Massie of Kentucky, infuriated members in both parties by bringing them back to Washington amid uncertainty over whether he would request a full roll call vote. That uncertainty forced many to travel during the public health emergency simply to deny his demand in order to ensure swift passage of the measure on Friday. Ultimately, however House leadership was able to deny Massie a sufficient second in support of a roll call vote when he made a request for it, shutting down the demand and allowing the House to approve the package by voice vote instead. But members still had to return to Washington in order to establish a quorum and deny the attempt. Key elements of the package include sending checks directly to individuals and families, a major expansion of unemployment benefits, money for hard-hit hospitals and health care providers, financial assistance for small businesses and $500 billion in loans for distressed companies.
The corporate bailout – The Senate economic rescue package contains $500 billion for bailouts of large corporations. Much commentary has focused on the lack of accountability, but the bigger issue is simply the massive waste of taxpayer dollars. From the WAPO: In a Tuesday interview on Fox, Boeing chief executive Dave Calhoun said he would not be willing to give the government an equity stake in the company in exchange for a bailout, implying the company would only accept assistance on its own terms. President Trump has said he would support the idea, suggested by his economic adviser, of taking an equity stake in companies that receive assistance in the package. “If they force it, we just look at all the other options, and we’ve got plenty of them,” Calhoun said. Why are we giving them money? It’s not clear how the bailout provisions will work, at least to me. There will be loans and perhaps some equity investments. But Delta stock is up 50% over two days; Boeing is as well. Between the two of them this represents roughly $35 billion in market capitalization, a gift to their shareholders. Maybe some of this is based on optimism about the general economic benefit of the stimulus, but the $35 billion number may also be an understatement of the true give-away, because part of the Senate bailout package was priced in more than two days ago, and some of it may not be fully priced in yet. Much will depend on the terms and conditions attached to loans and investments; it is not clear to me that the law will require the government to drive a hard bargain or even has enforceable provisions regarding disclosure. And let’s be clear that there are no benefits at all for taxpayers from these bailouts. We have a well-functioning bankruptcy system in this country that would prevent a failure of either company from harming the broader economy. If we don’t trust the bankruptcy system, or want to protect unionized workers, we could allow existing shareholders to keep a small fraction of the value of the companies and let the government own the rest, in exchange for an equity investment in these companies. These bailouts represent a giveaway to powerful constituents, pure and simple.
The Coronavirus Stimulus Bill Is a $2 Trillion Slush Fund for Washington Cronies – Marshall Auerback – It may seem impressive that Congress has approved legislation worth $2 trillion to help sustain the American economy, but it’s no New Deal. Rather it’s a massive economic slush fund that does its utmost to preserve the old ways of doing things under the guise of masquerading as a response to a public health emergency. In reality, the relief provisions are barely adequate. Had this been another financial crisis like 2008, it is doubtful that America’s oligarch class would be able to secure such huge provision for themselves again. Under the guise of a public health emergency, though, serial corporate predators are being given dollops from this massive public trough with no means of engendering the kind of economic reconstruction that is truly needed right now, or even preventing a sufficiently robust response if this virus comes back in a second or third wave. As one might expect in a massive bill (representing around 10 percent of U.S. GDP), there are some decent scraps in this dog’s breakfast, but overall the Coronavirus Aid, Relief, and Economic Security Act represents yet another sad indictment of the American polity, even as it provides an excellent civics lesson in teaching us where power truly lies. There’s $150 billion allocated to hospitals, many of which are already stretched to capacity, but that’s nothing compared to the trillions directed to corporations with minimal disclosure on how those sums are to be allocated, or any conditionality attached. In fact, we appear not to have learned some lessons from 2008, when at least some members of Congress made efforts to scrutinize how we were spending the money. Pam and Russ Martens’s superbly informative digging into the more than 800-page-long bill reveals that:
- a) The Fed will leverage the bill’s $454 million bailout slush fund into $4.5 trillion, and will hand it out through the New York Fed.
- b) To ensure that they don’t have to answer embarrassing questions about which of their cronies got the money, the bill suspends the Freedom of Information Act for the Fed.
Bloomberg has also confirmed that the NY Fed has outsourced picking the lucky recipients for this slushy cornucopia to a private contractor, BlackRock, the world’s largest asset manager (Goldman Sachs apparently has done enough of “God’s work” this time). The more things change in Washington, the more they stay the same. By contrast, the relief provisions are barely adequate. They expand unemployment insurance (an additional $600 per week for up to four months), feature one-time direct payments to Americans of $1,200 per adult making up to $75,000 a year, and $2,400 to a married couple making up to $150,000, with $500 payments per child. However, the bill neither addresses the chronic inequality that now characterizes the U.S. economy, nor is there provision for the self-employed or the millions of independent contractor workers who have no employee benefits. As for conditionality, a case has been made that a force majeure “Act of God” is not the time to play a “game of chicken” and impose major conditions for aid, especially as it is government policy itself that has precipitated the crisis. On the other hand, political realities and historic precedent suggest that crisis conditions are the only time one gets dramatic reforms; otherwise the elites regain their balance and suppress them (as occurred after 2008). Plus, there are corporate bailout recipients in this bill, such as Boeing, that were heading toward a death spiral, even before the epidemic.
Stimulus Bill: The Fed and Treasury’s Slush Fund Is Actually $4 Trillion – Pam Martens – Senate Majority Leader Mitch McConnell and New York State Senator and Minority Leader Chuck Schumer trotted out to the Senate floor after midnight last night to announce that they had reached a deal on the government stimulus package – the text of which the American public has not seen and only snippets of which have been seen by the members of Congress. Americans got their first whiff that this was going to be another massive giveaway to Wall Street banks, just as happened from 2007 to 2010, when White House economic adviser Larry Kudlow appeared at the White House briefing yesterday evening. Kudlow revealed that the stimulus plan is actually a $6 trillion package – $2 trillion to struggling Americans and $4 trillion to dispense as Treasury Secretary Steve Mnuchin and the Federal Reserve see fit. Since the Federal Reserve has seen fit since September 17 of last year to flood the trading houses of Wall Street with $9 trillion cumulatively in revolving loans, one can reasonably expect that this is where the new $4 trillion will be going. This is what Kudlow said at the press conference: “I just wanna walk through a couple of key points. This legislation is urgently needed to bolster the economy, provide cash injections, liquidity and stabilize financial markets; to get us through a difficult period, a difficult and challenging period in the economy facing us right now. But also to position us for what I think can be an economic rebound later this year. This package will be the single largest Main Street assistance program in the history of the United States…“And finally, I want to mention the Treasury’s Exchange Stabilization Fund. That will be replenished. It’s important because that fund opens the door for Federal Reserve fire power to deal in a broad-based way through the economy for distressed industries, for small businesses, for financial turbulence. You’ve already seen the Fed take action. They intend to take more action. And in order to get this we have to replenish the Treasury’s emergency fund. It’s very, very important. Not everybody understands that. That fund, by the way, will be overseen by an oversight board and an Inspector General. It will be completely transparent. So, the total package here comes to roughly $6 trillion – $2 trillion direct assistance, roughly $4 trillion in Federal Reserve lending power.” The first thing to understand is that we are the only “democracy” in the world that has turned the actual creation of unlimited amounts of our money over to a private entity owned by mega Wall Street banks. We’re talking about the New York Fed. (See related articles below.) If this legislation passes as drafted, U.S. Treasury Secretary Steve Mnuchin will gain enormous powers. Is he someone whom the American people can trust?
Relief Package Would Limit Coronavirus Damage, Not Restore Economy – – The $2 trillion emergency relief package approved by the Senate would help stabilize the coronavirus-battered economy – but likely isn’t enough to bring it back to health. Preliminary data suggest that the U.S. economy is already shrinking, as businesses close and unemployment soars. The depth of the economic decline in the coming months will depend on how quickly Washington can deliver checks to cash-strapped households and businesses, as well as whether a treatment is found and how soon shutdowns are lifted, economists said. If passed, the new law would provide loans and other disbursements to a wide swath of the economy, including direct payments to Americans and loans to large and small companies. Rep. Steny Hoyer (D., Md.), the House majority leader, said late Wednesday that the House would consider the stimulus bill on Friday. President Trump has said he would sign it immediately. “As big as this is, you’ll never look back on this and say, ‘We went too big.’ You’ll look back and say, ‘What did we miss?’” said Diane Swonk, chief economist at Grant Thornton. At more than 9% of gross domestic product, the measure is larger than the three major packages enacted to counter the 2007-09 recession, said Ernie Tedeschi, an economist at Evercore ISI. Even so, more will be needed, he said.“The scale of the problem is accelerating, and it’s moving faster than fiscal policy makers are acting,” Mr. Tedeschi said.Economists at Moody’s Analytics predict the bill would limit the drop in second-quarter GDP to 17% at an annual rate. Without the legislation, it would have fallen at a nearly 30% rate, they estimate. For the year as a whole, Moody’s expects output to decline by 2%. The measure provides for one-time payments of $1,200 each to many Americans, plus $500 per child, with assistance limited to certain income levels. It expands unemployment insurance and includes $349 billion in loans to small businesses to help them pay workers and cover expenses.Another $500 billion would be available to the Treasury Department to make or guarantee loans to larger corporations, including airlines, either directly or through lending facilities established by the Federal Reserve.“All of these different measures are meant to plug the holes in the boat, if you will, as opposed to trying to speed things up,” said Wells Fargo economist Michael Pugliese. Plugging the boat will take time. Trump administration officials said they hope to begin making the first payments to households within a few weeks. During the last downturn, it took more than two months.
US Officials Admit Killing Soleimani Backfired & Might Have Distracted From Covid-19 Response – In an article released on Saturday, the New York Times reported that the Trump administration is experiencing a rift regarding their actions against Iran on January 3rd.“President Trump was getting ready to declare the coronavirus a ‘national emergency’, but inside the White House last Thursday, a tense debate erupted among the president and his top advisers on a far different subject: whether the United States should escalate military action against Iran, a longtime American rival that has been devastated by the epidemic,” the NYT reported. According to the NYT report, the U.S. Defense Secretary Mark T. Esper and General Mark A. Milley, the chairman of the Joint Chiefs of Staff, pushed back against U.S. Secretary of State Mike Pompeo and National Security Adviser Robert C. O’Brien over the latter’s attempts to increase their aggressiveness towards Iran.Esper and Milley reportedly warned that a large-scale response could draw the United States into a wider war with Iran and further strain the complicated relationship between the two nations.Despite the aggressiveness of the U.S. administration towards Iran, it appears that not all American officials are on board for these confrontations.Citing U.S. officials, the NYT said:“Some American officials now admit that the killing of General Suleimani has not – as some had hoped – led Iran and its proxies to think twice about fomenting violence inside Iraq and elsewhere.”In fact, the United States’ assassination of the Quds Force commander Major-General Qassem Soleimani has further driven Iran from the negotiating table, as they have increased their hostility towards Washington.The U.S. military, which was previously deployed across Iraq, has since withdrawn from several installations across the country and moved to three main bases. Furthermore, the Iranian-backed groups have increased their attacks in Iraq, prompting the U.S. to increase their own security measures to protect their troops.
Trump activates National Guard in California, New York and Washington state: ‘This is a war’ – President Donald Trump on Sunday announced that he has activated the National Guard in California, New York and Washington state in order to combat the spread of the coronavirus. The administration emphasized that the deployment of guard members is not martial law. The state governors will retain command of the National Guard, but the Federal Emergency Management Agency will cover all costs of the missions to respond to the virus outbreak. “We’re dealing also with other states. These states have been hit the hardest,” the president said during a White House press briefing. Trump used martial language during the briefing, echoing the governor of New York state and the mayor of New York City, who have criticized the president for not acting more forcefully. New York has the most confirmed cases and deaths in the United States. “I’m a wartime president,” Trump said. “This is a war – a different kind of war than we’ve ever had.” As of Sunday morning, at least 7,300 National Guard members have been deployed to fight the virus in all 50 states, Washington D.C. and Puerto Rico. “The federal government has deployed hundreds of tons of supplies from our national stocks pile to locations with the greatest need in order to assist in those areas,” Trump said. Supplies include gloves, hospital beds, N95 masks and gowns that will be delivered in the next couple days, the president said. California, New York and Washington state have been the most affected states amid the pandemic, which has escalated significantly in U.S. over the past week. New York has more than 15,000 confirmed cases, up more than 4,000 since Saturday, followed by Washington state at roughly 1,700 and California at about 1,500. Earlier in the month, New York Governor Andrew Cuomo deployed the National Guard to New Rochelle, the suburb outside of New York City that has a large cluster of virus cases. Cuomo has urged the federal government to mobilize the military to fight the pandemic. The number of global cases surged past 300,000 on Sunday, with over 13,000 deaths across the world, according to data from Johns Hopkins University.
COVID-19: Prepared for the Wrong War — In Orson Welles’ radio broadcast of H.G. Wells’ science fiction fantasy, War of the Worlds, all the military spending and preparedness by the United States could not defend the American people from the invaders from Mars. In the end what killed the superior intruders was not arms, but a microscopic organism against which the Martians’ immune system had no defense. “it was found that they were killed by the putrefactive and disease bacteria against which their systems were unprepared. . . slain, after all man’s defenses had failed, by the humblest thing that God in His wisdom put upon this earth.” In an eerily similar way, the greatest military ever assembled on earth has been useless to defend America from the potential collapse of its society, and its empire.Donald Trump, at his daily press conferences, repeatedly says no one would expect such a thing could ever occur. Except that government studies predicted just such a thing. “Nobody in their wildest dreams would have thought we would need tens of thousands of ventilators,” Trump said. But the Pentagon’s wildest dreams of 11 aircraft carriers, 65 attack submarines, 65 destroyers, 104 B-1 bombers, 744 B-52 bombers, 8,848 M1 Abrams tanks, 6,724 Bradley Fighting Vehicles and 1,018 F-16 fighter jets have for years come true. The U.S. can afford to build the greatest arsenal ever known to fight two major wars at once while scrambling to produce hospital gowns, surgical masks and hand sanitizer. All of America’s mighty “defenses” could not defend the nation against the humblest of things put upon the earth. The United States prepared for the wrong war.
Hollywood Celebrities Are Psyops Wrapped In Human Skin – Caitlin Johnstone – CNN recently trotted out Hollywood actor Sean Penn to give the nation expert advice on how to deal with a novel virus pandemic.Did they do this because we live in a meaningless, godless universe where madness reigns and everything is chaos? Close, but no. They wanted Penn to explain to the public that it would be wonderful if the US military were deployed inside US borders to deal with the pandemic, because the US military is the greatest humanitarian force on planet Earth.“There is no greater humanitarian force on the planet than the United States military,” Penn said. “The logistical skills, commitment to service, their care for the people. It’s really time to give the military the full breadth command and control of this operation. I wouldn’t blink, I would have put command and control in their hands a month ago, certainly today.” The US military is in fact one of the least humanitarian forces on this planet, second only to malaria-laden mosquitos (and even that’s debatable). No other force is circling the globe murdering people in countless undeclared military entanglements and bullying the world into complying with the interests of a nationless alliance of plutocrats and opaque government agencies at the expense of ordinary humans everywhere. They are the exact opposite of a humanitarian force on this planet. The malfunction in Penn’s mind is the result of many malignant factors, but among them is the fact that people who rise to fame and fortune naturally experience a gravitational pull toward elitist echo chambers which cultivate narratives that favor the status quo which gave rise to their fame and fortune. You have a hard time hanging out with normal people because most of them don’t treat you normally anymore, so you find yourself spending time with other rich and famous people, and with people who have a vested interest in the rich and famous. This dynamic naturally fosters an environment where celebrities are eager to believe positive stories about the system which favors them, and where narrative managers are eager to circulate those stories among influential voices. This is why, with very few exceptions, the closest you’ll ever get to seeing a Hollywood celebrity express an anti-establishment opinion is one of them saying “Fuck Trump” at the Tony Awards.
Nurses in garbage bags?: Why the Trump administration must use the Defense Production Act to mobilize production of critically needed hospital protective equipment immediately – On Tuesday, New York Governor Andrew Cuomo spent much of his coronavirus press conference imploring President Trump to use the Defense Production Act (DPA) now to force factories to manufacture essential medical equipment such as masks, gloves, gowns, and ventilators. Trump has continually refused to do so, saying that the acquisition of medical supplies is a job for governors: “You know, we’re not a shipping clerk.” Yet, on a conference call last week, Republican governor Charlie Baker (Mass.) told Trump that his state had been denied three major orders for medical equipment because the federal government had outbid him. Health care workers are at the front lines of the COVID-19 crisis. In Italy, 9% of “total COVID-19 cases are health care workers, contributing to the breakdown of the hospital system in the north of the country.” U.S. health care workers are also especially hard hit. While both Democratic and Republican governors are pleading for help, staff in at least one nursing home have already resorted to using plastic garbage bags to make gowns, as have nurses and doctors in Spain and England. The Act is a Korean-war-era law that has been used many times to help the federal government respond to emergencies ranging from war and national disaster to terrorism prevention. Prior to the coronavirus crisis,Trump invoked the law in 2017 to mobilize the industrial base for his latest fantasy, the Space Force. The act allows the president to require companies to prioritize government contracts and orders needed for national defense, including national emergencies. Rep. Ro Khanna (D-Calif.) has called for a massive $75 billion appropriation for funding under the DPA. The economics of the DPA are straightforward – volume buying is cheaper and more efficient. Moreover, a mandated order from the government can displace other less essential production. Rather than having 50 state governors, plus thousands of mayors and hospitals, competing with each other for scarce resources, the purchasing power of the federal government can and should be used to maximize production, minimize costs, and allocate supplies to areas of greatest need, just as in wartime.
Trump questions need for 30,000 ventilators in New York – President Trump on Thursday questioned whether New York will actually need the tens of thousands of ventilators the state’s leaders have said will be required to handle the expected number of coronavirus cases there. The president phoned into Sean Hannity’s show on Fox News, where he swiped at the governors of Michigan and Washington state and cast doubt on the need for mass ventilator production to meet the demand of certain states. “I have a feeling that a lot of the numbers that are being said in some areas are just bigger than they’re going to be,” Trump said on “Hannity.” “I don’t believe you need 40,000 or 30,000 ventilators. You know, you go into major hospitals, sometimes they’ll have two ventilators. And now all of a sudden they’re saying, ‘can we order 30,000 ventilators?'” “Look, it’s a bad situation,” he added. “We haven’t seen anything like it. But the end result is we have to get back to work and I think we can start by opening up certain parts of the country.” The president compared purchasing a ventilator to purchasing a car, calling the machines “very expensive” and “very intricate.” “And you know they’d say, like Gov. Cuomo and others, they’d say we want 30,000 of them. Thirty thousand?” Trump said. “Think of this, you know you go to hospitals that have one in a hospital and now all of a sudden everyone’s asking for these vast numbers.” The comments come as governors across the country are pleading with the federal government to provide critical medical supplies to meet the increasing need of resources as coronavirus cases continue to climb.
White House balks at $1 billion price tag for General Motors, Ventec to produce ventilators: reports – The White House hesitated to follow through on a deal with General Motors and Ventec Life Systems to produce much-needed ventilators after government officials decided there was a need for cost assessment, according to two media reports. The deal, slated to be announced Wednesday, was projected to produce up to 80,000 ventilators for distribution to health facilities in dire need of critical resources amid the coronavirus pandemic. However, the Trump administration reportedly hesitated after the manufacturers said that the production would cost $1 billion, and asked for Federal Emergency Management Agency (FEMA) to assess whether or not the price tag was too expensive. According to The New York Times, the deal could still be possible, but government officials are currently looking at “at least another dozen” proposals.The deal asked for several hundred million dollars to be paid upfront to General Motors to repurpose a car parts plant in Kokomo, Ind., where the ventilators would be made using Ventec’s technology.By Thursday evening, when the administration’s coronavirus task force held one of their now-regular briefings, there was still no deal to report.A General Motors spokesman said that there was no problem with the deal on the company’s end. The spokesman told the Times that “Project V,” as the ventilator deal is called, was moving very fast, and a company official said “there’s no issue with retooling” the car parts plant. As hospitals scramble to obtain ventilators, several major car manufacturers have said they are willing to focus their resources on producing the breathing machines.
Defense Production Act: Trump signs memorandum requiring GM to make ventilators – President Donald Trump invoked the Defense Production Act on Friday to require General Motors to produce more ventilators to deal with increased hospitalizations due to the spread of the novel coronavirus in the United States. But it’s unclear what practical, immediate effect the order will have. The White House said in a statement on Friday afternoon that the order was put in place in order to stop the auto giant from delaying negotiations any further. “Our negotiations with GM regarding its ability to supply ventilators have been productive, but our fight against the virus is too urgent to allow the give-and-take of the contracting process to continue to run its normal course,” said a statement from the White House. “GM was wasting time. Today’s action will help ensure the quick production of ventilators that will save American lives.” But people familiar with the discussions between General Motors, Ventec Life Systems and the federal government say they were not told about Trump invoking the Defense Production Act. “We announced our partnership ahead of the DPA announcement. We still have not received anything official from the (White House about the order),” the sources tell CNN. A separate source at General Motors told CNN’s Erin Burnett that invoking the Defense Production Act does not change plans that were already in the works to produce ventilators. The source insisted that GM was offering to produce the ventilators at cost. At least 402 coronavirus-related fatalities were reported on Friday. Only four states — Hawaii, Rhode Island, West Virginia and Wyoming — have not reported any deaths. Thousands released from jail: Authorities in New York City began freeing inmates earlier in the week and more than 800 people would leave the city’s jails by Friday night. Many others have been released from New Jersey, California and Tennessee jails.
Gov. Gretchen Whitmer Says Medical Vendors Told Not To ‘Send Stuff’ To Michigan | HuffPost – President Donald Trump’s latest target, Michigan Gov. Gretchen Whitmer, told a radio station Friday that medical supply vendors informed her they’ve been told “not to send stuff” to her state amid the battle against COVID-19.Whitmer, a Democrat, didn’t say if the orders were coming from the White House or if vendors may have been intimidated by Trump’s feud with the governor. But she did appear to link the problem to the president because she told WWJ-AM in Detroit that she tried Thursday night to call the White House to discuss the issue.She couldn’t get through to Trump, who was at the time trashing Whitmer – whom he referred to as “that young … woman governor from Michigan” – to Sean Hannity on Fox News. “We don’t like to see the complaints,” Trump said in a phone interview.Whitmer told WWJ: “When the federal government told us that we needed to go it ourselves [on medical supplies], we started procuring every item we could get our hands on. But what I’ve gotten back is that vendors with whom we had contracts are now being told not to send stuff here to Michigan.”She added: “It’s really concerning. I reached out to the White House last night, asked for a phone call with the president, ironically at the time that all this other stuff was going on.”Whitmer told CNN later in the day that the state’s shipments of personal protective equipment are being “canceled” or “delayed” – and sent instead to the federal government. She said it’s happening to other states as well. Trump’s willingness to punish a state’s residents amid a pandemic over a feud with a governor appeared evident in a statement at his press briefing Friday. The president said he had instructed Vice President Mike Pence, who heads up the president’s coronavirus task force, not to call the governors of Washington or Michigan. The two states have among the highest number of coronavirus cases in the nation, and Michigan is experiencing a dramatic spike in cases from 350 a week ago to nearly 3,000 Friday.
Intelligence reports warned about a coronavirus pandemic in January. Trump reportedly ignored them. – US intelligence officials reportedly warned President Donald Trump and Congress about the threats posed by the novel coronavirus beginning in early January – weeks before the White House and lawmakers began implementing stringent public health measures and as the president minimized the threat posed by the virus in his tweets and public statements.The fact those warnings were largely disregarded – something first reported by the Washington Post’s Shane Harris, Greg Miller, Josh Dawsey, and Ellen Nakashima – suggests Trump administration officials failed to take action that could have prepared the health care system to handle an influx of patients, helped Americans avoid mass social distancing, and saved lives.Top health officials first learned of the virus’s spread in China on January 3, US Health and Human Services Secretary Alex Azar said Friday. Throughout January and February, intelligence officials’ warnings became more and more urgent, according to the Post – and by early February, much of the Office of the Director of National Intelligence and the CIA’s intelligence reports were dedicated to warnings about Covid-19. All the while, Trump downplayed the virus publicly, telling the public the coronavirus “is very well under control in our country,” and suggesting warm weather would neutralize the threat the virus poses.
Exclusive: U.S. axed CDC expert job in China months before virus outbreak – (Reuters) – Several months before the coronavirus pandemic began, the Trump administration eliminated a key American public health position in Beijing intended to help detect disease outbreaks in China, Reuters has learned. The American disease expert, a medical epidemiologist embedded in China’s disease control agency, left her post in July, according to four sources with knowledge of the issue. The first cases of the new coronavirus may have emerged as early as November, and as cases exploded, the Trump administration in February chastised China for censoring information about the outbreak and keeping U.S. experts from entering the country to help. “If someone had been there, public health officials and governments across the world could have moved much faster.” Zhu and the other sources said the American expert, Dr. Linda Quick, was a trainer of Chinese field epidemiologists who were deployed to the epicenter of outbreaks to help track, investigate and contain diseases. As an American CDC employee, they said, Quick was in an ideal position to be the eyes and ears on the ground for the United States and other countries on the coronavirus outbreak, and might have alerted them to the growing threat weeks earlier. No other foreign disease experts were embedded to lead the program after Quick left in July, according to the sources. Zhu said an embedded expert can often get word of outbreaks early, after forming close relationships with Chinese counterparts.
Surgeon general issues coronavirus warning: ‘This week, it’s going to get bad’ – Surgeon General Jerome Adams on Monday reiterated an urgent call for Americans to follow recommendations to stay at home in order to mitigate the spread of the coronavirus. “I want America to understand this week it’s going to get bad,” Adams said Monday in an appearance on NBC’s “Today.” Adams said people who are still not following recommendations and going outside for unnecessary reasons are leading to the spread of the virus. He called out people going to beaches and the crowds looking at the cherry blossoms in Washington, D.C. “I think there are a lot of people that are doing the right things. I think unfortunately we’re finding out a lot of people think this can’t happen to them,” he said. Adams said officials don’t want Dallas, New Orleans or Chicago to “turn into the next New York.” New York has become a hot spot for the virus in the nation.“Everyone needs to act as if they have the virus right now, test or no test, we need you to understand you could be spreading it to someone else or you could be getting it from someone else. Stay at home,” Adams said. The surgeon general’s call for Americans to remain at home comes as President Trump suggested he may lift restrictions intended to mitigate the spread of the virus.
Trump Weighs Easing Stay-At-Home Restrictions To Curb Economic Chaos – President Trump is weighing whether or not to ease restrictions on self-quarantine in order to avoid economic chaos – tweeting on Sunday about reassessing the nation’s course on a lockdown to halt the spread of coronavirus. According to Bloomberg, Trump began talking privately late last week about reopening the nation after a 15-day waiting period, as coronavirus cases continue to rise – going against the advice of health professionals such as Dr. Anthony S. Fauci, who says we need to continue the lockdown for a ‘few more weeks.’Trump and a contingent of his aides, including Treasury Secretary Steven Mnuchin, want to ensure that the economic damage from a nationwide “social distancing” campaign doesn’t outweigh the potential toll from the virus itself, the people said. -BloombergOnce the 15-day period ends, discussions have centered around isolating everyone who’s sick or at high risk so that healthy people can return to work. Bloomberg says that the CDC guidelines would be ‘relaxed’ and not scrapped altogether. According to the report, the government’s top health officials say that sustained and economically detrimental restrictions on daily life are the only way to beat the virus in lieu of a successful treatment or a vaccine.
Trump wants an economic reboot, ‘packed churches’ for Easter – President Donald Trump has set a goal of April 12 for getting the economy revved up, and he’d like to see “packed churches all over our country” on that date, Easter Sunday. The notion that social distancing guidelines and other coronavirus-fighting shutdown measures could be in the rearview mirror that soon was met with skepticism and alarm. So, too, was Trump’s seeming openness – reiterated Tuesday in Fox News appearances and the daily White House pandemic briefing – to accept a higher toll of death and serious sickness to reboot the economy faster.Though the number of cases is still exploding, worst of all in New York City and on Long Island, Trump said the nation is “near the end of our historic battle” with “light at the end of the tunnel.” Why Easter, just 19 days away? “I think it would be a beautiful time. And it’s just about the timeline I think is right,” he said.Dr. Anthony Fauci, the government’s top expert on infectious diseases who often has contradicted Trump, said diplomatically at Tuesday’s briefing that he’s advised Trump to be “very flexible” on the date. Trump also gave himself wiggle room, saying, “We’ll only do it if it’s good and maybe we do sections of the country” where the outbreaks are less severe. “New York City definitely is a very hot spot,” Trump said. The White House response coordinator, Dr. Deborah Birx, said the metropolitan area is the source of 60% of the newest cases.States and localities didn’t wait on the federal government for stay-home guidelines and can continue to set their own. Other health experts have warned that a patchwork state-by-state approach alone could not contain a virus that ignores borders. On Capitol Hill, some Trump allies warned against a policy pivot that would tilt the balance of interests more toward the economy at the expense of public health.”There will be no normally functioning economy if our hospitals are overwhelmed and thousands of Americans of all ages, including our doctors and nurses, lay dying because we have failed to do what’s necessary to stop the virus,” said the third-ranking House Republican, Rep. Liz Cheney of Wyoming. “I think we do need to follow CDC guidelines and watch what our experts are saying,” said Sen. Joni Ernst (R-Iowa). “I would love to see the economy up and going as soon as possible, but let’s make sure we’re taking care of people first.”
Trump says US will make decision on further coronavirus action after 15 days – President Trump said Sunday night the US will decide as soon as next week on what the next move will be in the country’s fight against the coronavirus. “WE CANNOT LET THE CURE BE WORSE THAN THE PROBLEM ITSELF,” Trump tweeted. “AT THE END OF THE 15 DAY PERIOD, WE WILL MAKE A DECISION AS TO WHICH WAY WE WANT TO GO!” The president last Monday issued new guidance urging a 15-day period of collective action by Americans to help curb the spread of the coronavirus. The 15-day period concludes next Tuesday. “We’re asking everyone to work at home, if possible, postpone unnecessary travel, and limit social gatherings to no more than 10 people,” Trump had said at a press briefing last Tuesday describing some of the guidelines. “If we do this right, our country – and the world, frankly – but our country can be rolling again pretty quickly,” Trump said. On Sunday, Trump also said that major disaster declarations were in process for New York, California and Washington state. In New York City, the death toll from the virus reached 99 on Sunday night, with the number of infected topping 10,000.
More support for several weeks of China policy followed by a few months of South Korea –Yesterday the Buffoon in Chief all but demanded that mitigation efforts be stopped, and that the pandemic be allowed to run its course except for the aged and infirm, on the theory that the economy would be better off, and really, what’s a few million lives in comparison to the loss of profits he is suffering by the closure of six of his properties? I’ve crunched some numbers to show why that wouldn’t work, but since part of the response is that there is a far more effective way to confront the pandemic that actually would accomplish a relatively quick economic rebound, I wanted to present that first. First, Yaneer Bar-Yam, an MIT-trained physicist and complexity scientist who studies pandemics a physicist at the New England Complex Systems Institute, wrote an editorial in USA Today opining that “We need an immediate five-week national lockdown to defeat coronavirus in America, and saying that: Locking down the country would reduce infections and allow time for massive testing. There will be staggering human and economic costs if we delay He explained his alternative as follows: During a five-week national lockdown, federal, state and local authorities would ensure that all Americans stay home except to obtain food and other essentials, access medical care or do work essential to the functioning of society. Travel would cease: We would close our borders and airports and prohibit all unnecessary travel across state and county (or town) lines within the United States. During the first two weeks of a lockdown, infected individuals will either recover from mild cases of COVID-19 at home or seek medical attention for the 14% of cases that are severe. During the third, fourth and fifth weeks, any newly infected family or cohabitants of infected individuals will recover or seek medical attention, and their isolation will prevent further spreading. By the end of the lockdown, the number of infections will be a small fraction of what they are now. The lockdown will give us time to dramatically scale up our supply of COVID-19 test kits and capacity to process them. If we reduce the number of infections using the lockdown and start a massive testing regime in the United States, we can control COVID-19 after five weeks without such extreme social distancing measures. Isolating sick individuals and their immediate contacts will be enough. The same strategy – an initial period of Suppression followed by an extended period of thoroughgoing testing and quarantining – was suggested by Tomas Pueyo, in an article entitled “The Hammer and the Dance” at Medium.com This would be followed by a period of aggressive testing. As Pueyo notes: For several weeks, South Korea had the worst epidemic outside of China. Now, it’s largely under control. And they did it without asking people to stay home. They achieved it mostly with very aggressive testing, contact tracing, and enforced quarantines and isolations. Here’s what the time spent in sledgehammer suppression does for us:
- With a few more weeks, we could get our testing situation in order, and start testing everybody. With that information, we would finally know the true extent of the problem, where we need to be more aggressive, and what communities are safe to be released from a lockdown.
- New testing methods could speed up testing and drive costs down substantially.
- We could also set up a tracing operation like the ones they have in China or other East Asia countries, where they can identify all the people that every sick person met, and can put them in quarantine.
- We can quickly build up our production of masks, PPEs, ventilators, ECMOs, and any other critical device to reduce fatality rate.
In coronavirus pandemic, Trump allies say they’re ready to die for the economy – The push for Americans to get back to work in the face of an unprecedented economic downturn began last week but accelerated on Sunday evening, after the president began pushing the message that “we cannot let the cure be worse than the problem itself.” On Wednesday, Trump said he “would love to have the country opened up by Easter,” which falls on April 12. Public health experts say it is impossible to predict now when it will be safe to end social-distancing measures but are virtually unanimous in believing they will be needed beyond then. On Monday evening, Texas Lt. Gov. Dan Patrick explained how the trade-off of saving lives versus spurring the economy worked in his mind. “I just think there are lots of grandparents out there in this country like me … that what we all care about and what we all love more than anything are those children,” said Patrick, who turns 70 next week, on Tucker Carlson’s primetime Fox News show. “My message is that: Let’s get back to work. Let’s get back to living. Let’s be smart about it, and those of us who are 70-plus, we’ll take care of ourselves, but don’t sacrifice the country. Don’t do that. Don’t ruin this great American dream.” He then said he would be willing to risk his life to keep the economy going. “No one reached out to me and said, ‘As a senior citizen, are you willing to take a chance on your survival in exchange for keeping the America that all America loves for your children and grandchildren?’” said Patrick. “And if that’s the exchange, I’m all in.” Fox News commentator Brit Hume supported Patrick on Carlson’s show the following night. “The utter collapse of the country’s economy – which many think will happen if this goes on much longer – is an intolerable result,” the 76-year-old said. “[Patrick] is saying, for his own part, that he would be willing to take a risk of getting the disease if that’s what it took to allow the economy to move forward. He said that because he is late in life, that he would be perhaps more willing than he might have been at a younger age, which seems to me to be an entirely reasonable viewpoint.” Texas Lt. Governor Dan Patrick, Brit Hume and Glenn Beck. (Loren Elliott/Getty Images, Fox News, Stefani Reynolds/Bloomberg via Getty Images))Getty Images On the Tuesday airing of his program on BlazeTV, right-wing commentator Glenn Beck said that at age 56 he was in the “danger zone” for the virus and would also make the sacrifice. “I would rather have my children stay home and all of us who are over 50 go in and keep this economy going and working,” Beck said. “Even if we all get sick, I would rather die than kill the country. Because it’s not the economy that’s dying, it’s the country.” A corollary argument is that the loss of jobs and incomes from prolonged social isolation would eventually lead to more deaths – from poverty and psychological distress – than might result from COVID-19. In the video, Beck is alone in a room, socially distant from anyone who could give him the virus and not apparently facing the same risks as people without TV shows, such as health care workers, police and grocery store workers. Sacrificing the elderly for the good of the economy runs counter to Beck’s position a decade ago, when he rose to prominence during President Barack Obama’s tenure by railing against so-called death panels that he said would be created under the Affordable Care Act to ration health care.
Loosening Restrictions Now Would Be Disastrous – American Conservative – All the talk of loosening restrictions to “restart” the economy is extremely dangerous:“We haven’t yet even seen signs that the growth is slowing, much less reversing. Now is the time to tighten restrictions on contacts that could transmit the virus, not loosen them [bold mine-DL],” Lipsitch said. “If we let up now we can be virtually certain that health care will be overwhelmed in many if not all parts of the country. This is the view of every well-informed infectious epidemiologist I know of.” Reversing course and backtracking on the restrictions that have already been put in place would be as foolish as can be. If we think of the virus as a raging fire, social isolation and closing non-essential businesses serve as the suppressants that deprive the fire of fuel and smother it. To ease up on those suppressants at a time when the fire is still raging out of control is to give up on trying to stop it from spreading. Attempting to go back to business as usual in the middle of this amounts to fanning the flames and ensuring that the conflagration consumes more lives. It would be exceptionally short-sighted and irresponsible to lessen restrictions after just a few weeks. The U.S. is just beginning to take the measures that we should have started taking months ago, and stopping them now would put us even deeper in the hole that we find ourselves in. There can be no going back to a relatively normal way of life until the spread of the virus is put in check and the rate of infection has been slowed to a point where our hospitals are not overwhelmed. It is lunacy that this is even being debated in the White House when the effort to bring this outbreak under control has barely begun.
Fauci: ‘You don’t make the timeline, the virus makes the timeline’ on relaxing public health measures – Dr. Anthony Fauci, the nation’s top infectious disease expert, had a straightforward message Wednesday night about how long the novel coronavirus could affect daily life in the US: “You don’t make the timeline, the virus makes the timeline.””You’ve got to be realistic,” Fauci told CNN’s Chris Cuomo on “Prime Time.””And you’ve got to understand that you don’t make the timeline, the virus makes the timeline. So you’ve got to respond, in what you see happen. And if you keep seeing this acceleration, it doesn’t matter what you say. One week, two weeks, three weeks — you’ve got to go with what the situation on the ground is.”His comments appear at odds with President Donald Trump’s growing desire to ease the public health guidelines that have shuttered businesses and kept workers at home as the virus has spread. The President has even said he wants the nation “opened up and just raring to go by Easter” — a date just weeks away that few health experts believe will be sufficient in containing the outbreak.”You may see in a relatively shorter period of time, when you’re seeing the inkling of the flattening and coming down,” Fauci said in reference to slowing the speed of the outbreak. “But you know, you can’t make an arbitrary decision until you see what you’re dealing with. You need the data.”Fauci, a veteran doctor, also hasn’t been afraid to refute Trump to the President’s face.
Trump says ‘no way’ he’ll cancel GOP convention in August -President Trump said there is “no way” he’ll cancel the GOP convention in August, despite the uncertainty surrounding planned events due to the coronavirus pandemic. “We’re going to have our convention. You know, we have our convention in North Carolina, in Charlotte,” he said to Fox News host Sean Hannity on Thursday evening. The GOP convention is scheduled for Aug. 24-27, about two months before the general election in November. “We are definitely planning – it’s toward the end of August. Somebody was asking today, ‘Will you cancel your convention?’ I said no way I’m going to cancel the convention. We’re going to have the convention, it’s going to be incredible,” Trump added. Earlier this week, reports circulated that the coronavirus pandemic has forced the committee tasked with planning the Democratic National Convention to consider emergency “contingency options” for the event, scheduled July 13-16 in Milwaukee. Since the virus reached the U.S., dozens of large events and conferences have been canceled or postponed. It remains unclear when public health officials will stop recommending against travel and large gatherings.
As coronavirus spreads, thousands of foreign doctors could be blocked from U.S. entry, group warns – The status of more than 4,200 foreign doctors who were chosen to do medical residencies in American teaching hospitals – hospitals that will desperately need their help to cope with Covid-19 – is in doubt because the State Department has temporarily stopped issuing the visas most of them would need to enter the country, according to a group that sponsors international medical graduates.The Educational Commission for Foreign Medical Graduates said Monday that most of the international doctors would be relying on getting a J-1 visa to work in the United States, but processing of those visas has been put on hold by the State Department amid the coronavirus pandemic.The doctors are scheduled to start working in the hospitals at the beginning of July. During a medical residency, medical school graduates actively work in hospitals under the supervision of senior staff. “If these new residents are unable to get their visas, it’s going to really hamper the ability of the teaching hospitals to respond to the virus,” William Pinsky, president and CEO of the Educational Commission for Foreign Medical Graduates, told STAT. The doctors learned of their assignments last Friday – so-called Match Day for medical residents. Dr. Sandro Galea, dean of Boston University’s School of Public Health, suggested a work-around needs to be found.“With the Covid-19 pandemic unfolding, this is not the moment to risk creating a physician shortage,” Galea said via email. “We should take steps in the US to facilitate the training and retention of medical professionals at all times, but especially now.” Pinsky said it would not be easy to replace these 4,222 medical school graduates if they cannot make it to the United States to do their residencies. While every year some U.S. medical school graduates or U.S. citizens who graduate from medical schools outside the country are not selected for a residency program, going back to that pool is not necessarily the answer, he said. “Technically they’re eligible … but there’s probably a reason why they didn’t match,” Pinsky said. “We do have to be careful from a quality perspective.” The ECFMG handles the process of getting visas for foreign medical graduates who apply to do their residencies in the U.S. The organization vets them thoroughly, including by checking their credentials and ensuring there are no incidents in their history that would preclude them from getting a visa. It also registers all applicants – it typically gets about 16,000 a year – to take the same medical exams U.S. trained doctors take, only entering them into the residency match once they have passed those exams. Most come to the United States on a J-1 visa, a cultural exchange visa program also used by entertainers and researchers. But embassies and consulates around the world have stopped processing the visas. And last week the State Department sent out advice to program sponsors – such as ECFMG – urging them to either cancel the programs or defer the start dates.
U.S. Income Tax Delay to Strain States – The Trump administration’s decision to move the deadline for filing income taxes to July 15 because of the new coronavirus crisis is creating a cash crunch for state governments that were counting on an infusion of state income-tax revenue next month to pay bills.Many state budgets run from July 1 through June 30, so the new filing date – instead of April 15 – means state officials can’t count on that tax money for the current fiscal year. States could have to borrow in volatile financial markets or cut into their budgets between now and the end of June. The agreement reached early Wednesday between lawmakers and the Trump administration could also help if it includes general aid for state governments. Unlike the federal government, states must balance their budgets.So far this week, states including Delaware, Colorado and Alabama have announced they would extend their filing deadline in line with the federal shift. “You can have unintended consequences with the best of intentions,” said Verenda Smith, deputy director of the Federation of Tax Administrators. “The choices that it left the state officials are all so gruesome,” she said.The Treasury Department’s decision caught states by surprise. Although the move was intended to help struggling households and businesses, it left state officials in a bind, she said. In most cases, taxpayers need to know how much they will pay in federal income tax before filing their state income taxes – and many states tie their deadlines to the federal government calendar. So postponing the federal filing deadline effectively postpones the filing deadline for state income taxes as well. That means states can no longer count on that tax revenue coming in before the fiscal year ends on June 30. Last year, states collected $65 billion in income tax revenue in the month of April, almost 18% of the annual total. Income-tax dollars make up about a third of total state and local tax collections in California, New York and Massachusetts and even more in Oregon and Maryland, according to a Tax Foundation analysis. Overall, about 23.5% of total state and local tax dollars came from income taxes in 2016, the most recent year for which data was available. Roughly the same amount came from sales taxes, which analysts also expect will be hit hard amid the slowdown in consumption. A handful of states – including Florida, Texas and Nevada – don’t have a state income tax.
Without fast action from Congress, low-wage workers will be ineligible for unemployment benefits during the coronavirus crisis – EPI – Key takeaways
- Without immediate action from Congress, large numbers of low-wage workers won’t be eligible to get unemployment checks.
- Many workers don’t make enough money to qualify for unemployment because they work low hours or are in low-paying jobs (e.g., fast-food workers or retail clerks).
- Federal and state legislators can act to protect these most vulnerable workers.
- The Coronavirus Aid, Relief and Economic Security (CARES) Act – which has passed the Senate by unanimous consent and is moving to the House today – is a good first step to fill the hole low-wage workers fall into during this crisis.
- The CARES Act expands eligibility to workers who typically have been unable to get unemployment benefits, such as those who are self-employed, are seeking part-time work, or do not have sufficient work history to qualify for unemployment insurance.
About 3 million workers filed unemployment claims last week, and 14 million workers are expected to be out of work by June. Large numbers of those who lose their jobs will be low-wage workers, and unfortunately many will be ineligible for unemployment compensation under current overly restrictive eligibility rules. Federal and state legislators, however, have the power to act and come to the aid of these vulnerable workers. The Coronavirus Aid, Relief and Economic Security (CARES) Act – which has passed the Senate by unanimous consent and is moving to the House today – has notable limitations, but would greatly expand eligibility for unemployment insurance. The expansion is necessary and important because unemployment benefits are generally limited to those who had high enough earnings when they were working. But low-wage workers experience higher rates of joblessness, lowering their baseline earnings and making them less eligible to collect UI benefits.
Kentucky Sen. Rand Paul has tested positive for COVID-19. Here are all the members of Congress who have been infected with the novel coronavirus. – At least three congressional lawmakers have tested positive for COVID-19, the disease caused by the novel coronavirus, as of Sunday.Offices on Capitol Hill were closed and numerous congressional staffers have been sent back home as public areas and businesses in the US widely initiated a temporary lockdown to prevent the disease from spreading. As of Sunday evening, at least 33,400 confirmed cases were recorded in the US, with patients ranging from the contiguous states and US territories, including Guam, Puerto Rico, and the US Virgin Islands. There have also been upwards of 400 deaths.Lawmakers from both parties have self-quarantined after potentially coming in contact with someone who tested positive for COVID-19. Those lawmakers included Republican Sens. Rick Scott of Florida, Ted Cruz of Texas, and Lindsey Graham of South Carolina, among others. One person who tested positive interacted with several other Republicans at the Conservative Political Action Conference in late February, prompting additional tests for congressional leaders and White House officials.Republican Rep. Mario Diaz-Balart of Florida was the first congressional lawmaker to announce that he had tested positive for the coronavirus.In a statement from his office on March 18, the Republican lawmaker said he developed symptoms, including fever and a headache, on March 14. Instead of returning back to his home state, Diaz-Balart self-quarantined at his apartment in Washington, DC.Rep. Ben McAdams of Utah, the state’s only US House lawmaker in the Democratic Party, is the second lawmaker to test positive for the coronavirus.He said he experienced “mild cold-like symptoms” upon his return from Washington, DC, and got tested shortly thereafter. Republican Sen. Rand Paul of Kentucky tested positive for COVID-19, his office said in a tweet on Sunday. Paul is the first US senator to test positive.”He is feeling fine and is in quarantine,” Paul’s office said. “He is asymptomatic and was t ested out of an abundance of caution due to his extensive travel and events. He was not aware of any direct contact with any infected person.”
Sinema criticizes Paul for alleged behavior ahead of coronavirus test results: ‘Absolutely irresponsible’ – Sen. Kyrsten Sinema (D-Ariz.) blasted reports that Sen. Rand Paul (R-Ky.) attended the Senate gym and swam in the pool while awaiting his COVID-19 test results, which later came back positive. “I’ve never commented about a fellow Senator’s choices/actions. Never once. This, America, is absolutely irresponsible,” Sinema tweeted. “You cannot be near other people while waiting for coronavirus test results. It endangers others & likely increases the spread of the virus.” Sen. Jerry Moran (R-Kan.) reportedly told colleagues during a Senate Republican lunch Sunday that Paul had gone to the gym and swam Sunday morning, which was also when he received his COVID-19 test results. Paul became the first known senator to test positive for the virus Sunday morning. A spokesman said Paul was asymptomatic and did not know of any infected person with whom he had come in contact. He also said the Kentucky senator would self-quarantine. The Hill has reached out to Paul’s office for comment.
Exclusive: Inside The Military’s Top Secret Plans If Coronavirus Cripples the Government – Even as President Trump says he tested negative for coronavirus, the COVID-19 pandemic raises the fear that huge swaths of the executive branch or even Congress and the Supreme Court could also be disabled, forcing the implementation of “continuity of government” plans that include evacuating Washington and “devolving” leadership to second-tier officials in remote and quarantined locations.But Coronavirus is also new territory, where the military itself is vulnerable and the disaster scenarios being contemplated — including the possibility of widespread domestic violence as a result of food shortages — are forcing planners to look at what are called “extraordinary circumstances”.Above-Top Secret contingency plans already exist for what the military is supposed to do if all the Constitutional successors are incapacitated. Standby orders were issued more than three weeks ago to ready these plans, not just to protect Washington but also to prepare for the possibility of some form of martial law.According to new documents and interviews with military experts, the various plans – codenamed Octagon, Freejack and Zodiac – are the underground laws to ensure government continuity. They are so secret that under these extraordinary plans, “devolution” could circumvent the normal Constitutional provisions for government succession, and military commanders could be placed in control around America.
‘Trump Must Act Now’: Bernie Sanders, Others Call on President to Use Powers to Manufacture Equipment for Coronavirus Response –Though President Donald Trump promised at multiple points over the past week to invoke his authority under the Defense Production Act to ramp up manufacturing of needed protective gear for healthcare workers and ventilators for those affected by the coronavirus outbreak, he has yet to do so, drawing criticism from progressives and Democratic lawmakers. “Trump must act now,” tweeted Sen. Bernie Sanders (I-Vt.), a candidate for the 2020 Democratic Party presidential nomination. “Not only are the lives of the heroes and heroines providing medical care on the line, the lives of millions across the rest of the country are on the line as well. If our medical front line goes down, the whole country is at risk.”Sanders also published a video in which the Vermont senator demanded the president act to protect the American people.The powers in the DPA allow Trump to force manufacturers in the U.S. to turn their factories over to producing necessary equipment for a crisis. The president signed an executive order opening the door to using the DPA on Thursday. But the order stops short of actually using DPA authority, according to Lawfare:The new executive order does not so much directly invoke the DPA as it creates the conditions under which the administration can later employ its authorities. Essentially, it classifies health and medical resources needed to respond to the spread of COVID-19 in a way that authorizes the administration to later have private businesses prioritize government contracts over other contracts. On Saturday, the president told reporters that he had not used the DPA because companies were already stepping up voluntarily. “We have the Act to use in case we need it,” Trump told NBC News reporter Kelly O’Donnell on Saturday. “But we have so many things being made… They’ve just stepped up… We have never never seen anything like that. They are volunteering.”
Coronavirus Treatment’s “Rare Disease” Status Could Make It Unaffordable – ON MONDAY AFTERNOON, the Food and Drug Administration granted Gilead Sciences “orphan” drug status for its antiviral drug, remdesivir. The designation allows the pharmaceutical company to profit exclusively for seven years from the product, which is one of dozens being tested as a possible treatment for Covid-19, the disease caused by the new coronavirus. Experts warn that the designation, reserved for treating “rare diseases,” could block supplies of the antiviral medication from generic drug manufacturers and provide a lucrative windfall for Gilead Sciences, which maintains close ties with President Donald Trump’s task force for controlling the coronavirus crisis. Joe Grogan, who serves on the White House coronavirus task force, lobbied for Gilead from 2011 to 2017 on issues including the pricing of pharmaceuticals. “The Orphan Drug Act is for a rare disease, and this is about as an extreme opposite of a rare disease you can possibly dream up,” said James Love, director of Knowledge Ecology International, a watchdog on pharmaceutical patent abuse.“They’re talking about potentially half the population of the United States,” said Love, adding that “it’s absurd that this would happen in the middle of an epidemic when everything is in short supply.”The 1983 Orphan Drug Act gives special inducements to pharmaceutical companies to make products that treat rare diseases. In addition to the seven-year period of market exclusivity, “orphan” status can give companies grants and tax credits of 25 percent of the clinical drug testing cost. The law is reserved for drugs that treat illnesses that affect fewer than 200,000 people in the U.S. But a loophole allows drugs that treat more common illnesses to be classified as orphans if the designation is given before the disease reaches that threshold. As of press time, there were more than 40,000 confirmed cases of Covid-19 in the U.S, and some 366,000 worldwide. The distinction could severely limit supply of remdesivir by granting Gilead Sciences exclusive protection over the drug and complete control of its price. Other pharmaceutical firms, including India-based pharmaceutical firm Cipla, are reportedly working toward a generic form of remdesivir, but patients in the U.S. could be prevented from buying generics with lower prices now that Gilead Sciences’s drug has been designated an orphan.
‘This Is a Massive Scandal’: Trump FDA Grants Drug Company Exclusive Claim on Promising Coronavirus Drug -As healthcare providers across the U.S. desperately attempt to treat a rapidly growing number of patients with the coronavirus, a pharmaceutical company with ties to the Trump administration has been granted exclusive status for a drug it is developing to treat the illness – a potential windfall for the company that could put the medication out of reach for many Americans.As The Intercept reported Monday, the Food and Drug Administration granted Gilead Sciences “orphan” drug status for remdesivir, one of several drugs being tested as potential treatments for the coronavirus, officially known as COVID-19. The designation is generally reserved for drugs that treat rare illnesses affecting fewer than 200,000 Americans – but companies can be eligible if the designation, as in this case of a rapidly spreading virus, is made before a disease spreads beyond that limit.About 40,000 Americans had contracted COVID-19 when the orphan status was granted to remdesivir Monday, and the disease is spreading faster in the U.S. than in other countries. By Tuesday afternoon, more than 51,000 Americans had confirmed cases.Having secured orphan drug status, Gilead Sciences can now profit exclusively off the drug for seven years and could block manufacturers from developing generic versions of the drug which might be more accessible to many patients. The company can set price controls on the drug as well as benefiting from grants and tax credits. As The Intercept reported, the designation was given to a company where Joe Grogan, a member of President Donald Trump’s “coronavirus task force,” worked as a lobbyist from 2011 to 2017, often working on issues regarding drug pricing.
Trump continues to spend billions on border wall construction amid coronavirus pandemic – In yet another manifestation of its criminal response, the Trump administration is continuing to spend billions of dollars on border wall construction even as the coronavirus pandemic is overwhelming the United States’ health care system. Last week, Customs and Border Patrol (CBP) announced plans to build 150 miles of the 30-ft. wall across the US-Mexico border in Arizona, New Mexico and California. This is in addition to the border wall construction that is being carried out at 15 work sites in these three states as well as Texas. At a time when the US faces an unparalleled public health crisis, not to mention an economy in free fall that has left millions of Americans unemployed, this decision underscores the hostility of the Trump administration toward the entire working class, native born and immigrant. COVID-19 has spread rapidly across the country, with the official estimates of confirmed cases crossing 42,000 by Monday. As of this posting, more than a quarter of the American population is living under “shelter-in-place” orders in an attempt to mitigate the pandemic. However, this seems to have had no effect on the administration’s fixation with the border wall. In the words of a CBP spokesman, “Wall construction has not been affected.” What this means is that despite all medical advice insisting on the importance of isolation and social distancing, construction crews – comprised of welders, engineers, contractors etc., from states as far-flung as Montana, Maine, North Dakota and Kentucky to name but a few – are working, eating and living in shared, close quarters before returning home to their families. These interactions during the rapidly escalating pandemic makes these workers even more vulnerable to infection and to potentially transmit COVID-19 to others. As Myles Traphagen, an ecologist with Wildlands Network, who has urged the congressional appropriations committee to suspend the border wall construction during the pandemic, told The Guardian: “There is no sign of construction slowing down, hundreds of construction workers from all over the country and Mexico continue working on the wall, commuting back and forth on weekends, staying in hotels and eating at restaurants in our communities, before returning home and potentially transferring COVID-19. This is a public health hazard and it needs to be stopped.” However, there seems to be no sign of any such stoppage. As of last weekend construction was going full steam ahead in the San Bernardino Valley in Southeast Arizona, the location of a national wildlife refuge, and the habitat for several endangered species whose existence is further threatened by these activities. The Department of Homeland Security (DHS), in fact, published a notice in the Federal Register last Monday waiving 37 environmental and cultural laws to expedite construction of the 91.5 miles in Arizona, plus 86 miles along other parts of the US-Mexico border. The reason given by acting DHS secretary Chad Wolf for the expedited construction was the supposed “high levels of illegal entry of people and drugs” through Cochise, Santa Cruz, Pima and Yuma counties. Existing measures, the federal government argued, were insufficient because of “a complete absence of barrier or ineffective primary or secondary fencing.” The grotesque absurdity of these claims cannot be overstated.
In Sweeping Power Grab, DOJ Seeks Ability To Detain People Indefinitely Without Trial – In a sweeping power grab, the Department of Justice has asked Congress for the ability to go directly to chief judges in order to detain people indefinitely without trial during emergencies. The move is part of a recent push to expand government powers during the coronavirus pandemic, according to Politico, which has reviewed documents that detail the DOJ’s requests to lawmakers on this and a host of other topics – including state of limitations, asylum, and how court hearings are conducted.The move has tapped into a broader fear among civil liberties advocates and Donald Trump’s critics – that the president will use a moment of crisis to push for controversial policy changes. Already, he has cited the pandemic as a reason for heightening border restrictions and restricting asylum claims. He has also pushed for further tax cuts as the economy withers, arguing that it would soften the financial blow to Americans. And even without policy changes, Trump has vast emergency powers that he could legally deploy right now to try and slow the coronavirus outbreak. –PoliticoPolitico notes that the requests are unlikely to make it through the Democratic-controlled House.As part of the requests, the DOJ proposed that Congress grant the attorney general the ability to ask that any chief judge of any district court to pause court proceedings “whenever the district court is fully or partially closed by virtue of any natural disaster, civil disobedience, or other emergency situation.” Similarly, these top judges would have broad authority to pause court proceedings during emergencies. Additionally, the requested changes would explicitly say that people with COVID-19 cannot apply for asylum – a request that comes on the heels of a Friday announcement by the Trump administration that it would begin denying entry to all illegal immigrants at the southern border – including those seeking asylum. According to Politico, the changes would apply to “any statutes or rules of procedure otherwise affecting pre-arrest, post-arrest, pre-trial, trial, and post-trial procedures in criminal and juvenile proceedings and all civil process and proceedings.” The proposed changes have raised concerns over the implications for habeas corpus – the right to appear before a judge and seek release.
‘Oh Hell No’: DOJ Using Coronavirus Crisis to Push for Expansive Emergency Powers – The Department of Justice is using the coronavirus outbreak to ask Congress for sweeping emergency powers including suspending habeas corpus during an emergency, a power grab that was denounced by civil liberties advocates.”Oh hell no,” tweeted Fletcher School professor Daniel Drezner. The DOJ plans were reported on by Politico‘s Betsy Woodruff Swan, who reviewed the request documents. According to Swan: The proposal would also grant those top judges broad authority to pause court proceedings during emergencies. It would apply to “any statutes or rules of procedure otherwise affecting pre-arrest, post-arrest, pre-trial, trial, and post-trial procedures in criminal and juvenile proceedings and all civil process and proceedings,” according to draft legislative language the department shared with Congress. In making the case for the change, the DOJ document wrote that individual judges can currently pause proceedings during emergencies, but that their proposal would make sure all judges in any particular district could handle emergencies “in a consistent manner.”The request raised eyebrows because of its potential implications for habeas corpus – the constitutional right to appear before a judge after arrest and seek release.“You could be arrested and never brought before a judge until they decide that the emergency or the civil disobedience is over. I find it absolutely terrifying,” National Association of Criminal Defense Lawyers executive director Norman L. Reimer told Swan. “Especially in a time of emergency, we should be very careful about granting new powers to the government.” The documents also ask for the authority to conduct videoconference hearings even without the defendant’s permission, banning people with the coronavirus from applying for asylum, and pausing the statute of limitations during an emergency. The news sent shockwaves through the Beltway. “This is abhorrent (also: predictable),” tweeted Economist reporter John Fasman. Rep. Justin Amash (I-Mich.) signaled his opposition to the bill on Twitter Saturday afternoon. “Congress must loudly reply NO,” said Amash.
Liberty And The Coronavirus: Not An Either/Or Proposition – American Conservative –It’s always difficult during a crisis for the government to address problems effectively while guarding against potential collateral damage to the freedoms Americans take for granted. That dilemma has become acute with the current coronavirus outbreak and the measures being taken to stem it. No one should doubt that this pandemic is a worrisome problem. Not only is the virus highly contagious, the mortality rate (especially among elderly victims and those with underlying health problems) is substantially higher than with influenza or similar diseases. That gap shows signs of narrowing, but there is little question that coronavirus is a serious health menace. Nevertheless, the troubling reality is that governments have always exploited crises to expand their powers – often to a dangerous degree. That has certainly been the case throughout American history. Some of the precedents state and local officials are setting to address the corona virus outbreak are truly alarming. Both California Governor Gavin Newsom and New York Governor Andrew Cuomo have issuedexecutive orders essentially placing their entire states on lockdown. Abuses of power during earlier crises should alert us to the potential dangers of a repetition. Americans need to assess soberly the governmental response to the coronavirus crisis and guard against another casual expansion of arbitrary power that could set dangerous precedents. We are already witnessing edicts in other countries that amount to the regimentation of entire populations. Such measures have shuttered virtually all businesses, barred “nonessential” travel, prohibited most gatherings, imposed curfews, and established martial law in all but name. This has taken place not only in dictatorial China and North Korea, but in democratic countries such as Italy, Spain, and France. In some cases, additional restrictions have been imposed on those considered especially vulnerable to contracting the virus, such as people over the age of 70.
Bond majors rocked as record $109bn stampedes out of fixed income – Almost $109bn (£91.6bn) was pulled from bond mandates last week as record volumes of cash fled the sector for hard currency, with the $30.2bn (£26.1bn) pulled on Monday alone the largest ever one-day volume. After earlier dropping to record lows, benchmark yields last week experienced their biggest one-day move ever recorded, as investors ditched financial assets to buy the US dollar, sending the currency’s trade-weighted index up almost 5%.That in turn has left some of the world’s biggest bond mandates sitting on huge mark-to-market falls, as client exits, security selection, and currency exposure inflicted a series of blows.According to fund flow data provider EPFR, more than $55bn was redeemed from investment grade mandates, $18.8bn from emerging market debt, and $5.2bn from mortgage-backed securities. A total $95.7bn flowed into cash. John McClain, fund manager at US value boutique Diamond Hill Capital, told Reuters: ‘An unbelievably big outflow from investment grade.’ ‘Investment grade is catching up to high yield in terms of percentage outflows. To me, until this week, investment grade also looked rich relative to other risk assets.’ The Pimco GIS Capital fund is now down 20.4% this year, while the Aegon US High Yield Bond fund is off 35.4% on a 26.3% slide over the last month. Some of the world’s biggest bond mandates have also been hit hard with the $137bn Pimco Income Institutional down 6.6% in the year and 7% in the last four weeks. The same company’s $81.4bn GIS Income fund is off 8% and 7.7% over the same periods.
In Unprecedented Move, Fed Unveils Open-Ended QE Including Corporate Bonds — Coming into Monday, the Fed had a problem: it had already used up half of its entire emergency $700BN QE5 announced last weekend. Which, together with the plunge in stocks, is why at 8am on Monday, just as we expected – given the political cover they have been provided – The Fed unveiled an unprecedented expansion to its mandate, announcing open-ended QE which also gave it the mandate to buy corporates bonds (in the primary and secondary market) to unclog the frozen corporate bond market as we just one step away from a full Fed nationalization of the market (only Fed stock purchases remain now). As noted elsewhere, the Fed’s new credit facilities carry limits on paying dividends and making stock buybacks for firms that defer interest payments, but have no explicit restrictions preventing beneficiaries from laying off workers. Additionally, in addition to Treasuries, The Fed will buy Agency Commercial MBS all in unlimited size. The Fed will buy Treasuries and agency mortgage-backed securities “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy,” and will also buy agency commercial mortgage-backed securities, according to a statement. The Fed also said it will support “the flow of credit to employers, consumers and businesses by establishing new programs that, taken together, will provide up to $300 billion in new financing.” It will be backed by $30 billion from the Treasury’s Exchange Stabilization Fund. Coincidentally, this unprecedented action takes place just hours after real estate billionaire Tom Barrack (and friend of Trump) said the U.S. commercial-mortgage market is on the brink of collapse and predicted a “domino effect” of catastrophic economic consequences if banks and government don’t take prompt action to keep borrowers from defaulting.
Federal Reserve Taps BlackRock to Purchase Bonds for the Government – The Federal Reserve on Tuesday asked BlackRock Inc. to steer tens of billions of dollars in bond purchases, a reflection of the influence of the world’s largest money manager.BlackRock will purchase agency commercial mortgage-backed securities secured by multifamily-home mortgages on behalf of the New York Federal Reserve. The Fed will determine which securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are suitable for purchase. BlackRock will execute the trades.BlackRock also will manage two large bond-buying programs. It will be in charge of a Fed-backed facility to buy new investment-grade bonds from U.S. companies. The firm also will oversee another vehicle for buying already-issued investment-grade bonds. Bond purchases will be the focus of that effort. But the firm has latitude to buy U.S. investment grade bond ETFs – including exchange-traded funds of its own. BlackRock is the largest provider of bond ETFs.The mandate is expected to be significant. The Treasury Department is expected to inject $10 billion in initial equity funding in connection with each of the two facilities, according to a previous Fed statement. The tasks place BlackRock in a potentially controversial position of implementing the administration’s response to the spreading coronavirus pandemic. The firm’s roughly $7-trillion reach extends into everything from equities to bonds to private equity. The firm will face significant scrutiny on how it prevents conflicts of interests.
Buyback Backlash Begins- Fed Will Limit Buybacks & Dividends For Companies Using Its Credit Facility – Over the past week there has been a groundswell of populist anger aimed at companies that used roughly $4 trillion in cash over the past decade to repurchase shares instead of, say, putting the money away for a rainy day fund (one which would be quite useful now that most companies are begging for a taxpayer bailout as a result of plunging liquidity). And while Senate has yet to pass any fiscal stimulus that has explicit language limiting or prohibiting buybacks – this may change at today’s noon vote – moments ago the Fed made it clear that going forward both buybacks and dividends will be frowned upon. In the term sheet for its Primary Market Corporate Credit Facility which greenlighted the Fed to purchase investment grade bonds and issue loans directly to eligible issuers in the primary market (as opposed to the secondary market where the Fed will also buy IG ETFs such as the LQD), it had the following restrictive language: At the borrower’s election, all or a portion of the interest due and payable on each interest payment date may be payable in kind for 6 months, extendable at the discretion of the Board of Governors of the Federal Reserve System. Such interest amount will be added to, and made part of, the outstanding principal amount of the bond or loan. A borrower that makes this election may not pay dividends or make stock buybacks during the period it is not paying interest. Said otherwise any company that takes advantage of the Fed’s PMCCF and then elects to suspend payments on interest and/or principal by converting these to PIK payments, effectively adding them to the loan principal, will not be allowed to buyback stocks or issue dividends.Which is good. What is not good is that the inverse is also true: the Fed is not limiting buybacks or dividends for companies that borrow money directly from the Fed as long as they remain in compliance with paying their interest on time. In other words, while the Fed is trying to appear draconian in its “negative covenants”, it is also saying that companies that remain solvent and liquid can use any amount of proceeds sourced directly from the Fed, and use them to repurchase stock!
This Is the Fear Chart that the Smart Money on Wall Street Is Watching – Pam Martens – The chart that tells you how all of today’s economic troubles are going to end is not the bar graph of new deaths from coronavirus in Italy versus deaths in the U.S. It’s the chart that shows the number of potential deaths among the banks and insurance companies that have gorged themselves on risky derivatives and serve as counterparties to each other in a daisy chain of financial contagion.The chart above is why the Federal Reserve is throwing unprecedented sums of money in all directions on Wall Street. Because despite being a primary regulator to these massive bank holding companies, the Fed has no idea who is actually in trouble on derivative trades, other than looking at a chart like the one above.The chart above also justifies the Democrats refusing to sign off on the fiscal stimulus legislation that would have given U.S. Treasury Secretary Steve Mnuchin a $500 billion slush fund where the names of the recipients of bailouts could be withheld from the public. Citigroup is the poster child for everything that is wrong with the banking structure in the United States today. After blowing itself up with derivatives in 2008, in December 2014 it got the repeal of a key component of the Dodd-Frank financial reform legislation that would have forced derivatives out of federally-insured banks. Then in 2016, it went full speed into the very derivatives that were at the heart of the financial crisis in 2008, Credit Default Swaps. (See Bailed Out Citigroup Is Going Full Throttle into Derivatives that Blew Up AIG.)Citigroup is not alone in loading up on derivatives again. Together with JPMorgan Chase, Morgan Stanley, Goldman Sachs and Bank of America, these five bank holding companies now control a notional (face amount) of derivatives amounting to $230trillion, representing 85 percent of all derivatives held by U.S. banks.And their counterparties are just as questionable as they were at the peak of the crisis in 2008, which led to the biggest Wall Street bailout in U.S. history.
Stimulus Bill Allows Federal Reserve to Conduct Meetings in Secret; Gives Fed $454 Billion Slush Fund for Wall Street Bailouts – Pam Martens – The U.S. Senate voted 96-0 late yesterday on a massive bailout of Wall Street banks versus a short-term survival plan for American workers thrown out of their jobs – and potentially their homes. The text of thefinal bill was breathtaking in the breadth of new powers it bestowed on the Federal Reserve, including the Fed’s ability to conduct secret meetings with no minutes provided to the American people. The House of Representatives has yet to vote on the bill. The bill provides specific sums that can be made as loans or loan guarantees to passenger airlines ($25 billion), cargo airlines ($4 billion), and loans and loan guarantees to businesses necessary to national security ($17 billion). But when it comes to the money going to the Federal Reserve and then out the door to Wall Street, the legislation says only this: “Not more than the sum of $454,000,000,000…shall be available to make loans and loan guarantees to, and other investments in, programs or facilities established by the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system….” Why does the Federal Reserve need $454 billion from the U.S. taxpayer to bail out Wall Street when it has the power to create money out of thin air and has already dumped more than $9 trillion cumulatively in revolving loans to prop up Wall Street’s trading houses since September 17, 2019 – long before there was any diagnosis of coronavirus anywhere in the world. The Fed needs that money to create more Special Purpose Vehicles (SPVs) – the same device used by Enron to hide its toxic debt off its balance sheet before it went belly up. With the taxpayers’ money taking a 10 percent stake in the various Wall Street bailout programs offered by the Fed, structured as SPVs, the Fed can keep these dark pools off its balance sheet while levering them up 10-fold. White House Economic Adviser Larry Kudlow acknowledged plans by the Fed to leverage the money at a White House press briefing this week, stating that the money the Treasury is handing over to the Fed would result in “$4 trillion in Federal Reserve lending power.” The Fed has already created one of these SPVs. On March 17, the Fed said it was creating a Commercial Paper Funding Facility (CPFF) that would work like this: “The Treasury will provide $10 billion of credit protection to the Federal Reserve in connection with the CPFF from the Treasury’s Exchange Stabilization Fund (ESF). The Federal Reserve will then provide financing to the SPV under the CPFF. Its loans will be secured by all of the assets of the SPV.”
Fed to suspend exams for banks under $100B – – The Federal Reserve will temporarily stop all examination activity for banks with less than $100 billion of assets as it shifts supervisory priorities due to the coronavirus pandemic, the central bank said Tuesday.The Fed is shifting its supervisory focus to monitoring and outreach to “help financial institutions of all sizes understand the challenges and risks of the current environment.” The agency said it will be minimizing examination activities in order to do so, with the greatest reduction at smallest banks. For banks with more than $100 billion of assets, the Fed plans to defer a portion of planned examinations but will still conduct an exam when a financial stability or consumer protection issue has been flagged at a firm. “The Board recognizes that the current situation is significantly affecting areas of the country in different ways and will work with financial institutions to understand the specific issues they are facing,” the Fed said in a statement. Banks subject to the Comprehensive Capital Analysis and Review stress tests will still be required to submit capital plans to the Fed by April 6, but extra time will be granted for resolving non-critical existing supervisory findings in order to focus on “heightened risks in this current environment.” This year’s capital plans will “be used to monitor how firms are managing their capital in the current environment, planning for contingencies, and positioning themselves to continue lending to creditworthy households and businesses,” the Fed said.
Senate rescue plan aims to calm depositors, debt holders – – Senators have dusted off a financial crisis-era backstop for banks’ transaction deposits and senior unsecured debt in their coronavirus stimulus bill to try to calm potential fears about the pandemic’s effects on the financial sector.The massive aid package passed by the Senate late Wednesday would authorize the Federal Deposit Insurance Corp. to resurrect its 2008 Temporary Liquidity Guarantee Program. Nearly 12 years ago, the two-pronged guarantee was announced along with other financial stability measures to soothe market concerns as the nation’s credit system seemed on the verge of collapse. Observers said the current public health crisis is a different situation than the financial crisis and banks are now flush with liquidity. But some institutions have reported some angst among depositors about the safety of their money.”We’ve been hearing from our member banks about customer anxiety and being concerned about their money, wanting to pull it all out,” said Karen Thomas, senior executive vice president of public policy for the Independent Community Bankers of America. “We think this authority will calm and provide certainty to customers.” The two pieces of the 2008 guarantee were the Transaction Account Guarantee Program – covering all noninterest-bearing transaction deposits above the FDIC’s standard insurance limit – and the Debt Guarantee Program, which covered new senior unsecured debt. The debt guarantee expired in 2012, while the TAGP expired in 2010 but was effectively extended to the end of 2012 under a provision in the Dodd-Frank Act. Dodd-Frank also required Congress to approve the use of such a program in the future.Some say including the FDIC authority in the Senate bill may be intended to put depositors and bond holders at ease rather than address any dire liquidity concern. “The real value of the guarantee program will be to create a safe haven for funds and ensure some of the people who have been panicking and pulling cash out of the bank that they don’t have to,” said Karen Petrou, managing partner of Federal Financial Analytics. “The bulk of the people running to banks and pulling out cash have accounts well below $250,000 anyway. This is not a real problem. It’s just a reassurance.”
Banks get break they needed on loan workouts – Banks and credit unions are eager to take advantage of newfound flexibility for restructuring loans battered by the coronavirus outbreak.Federal regulators and the Financial Accounting Standards board gave lenders a helping hand Sunday, agreeing that short-term loan modifications tied to the pandemic do not have to immediately count as troubled-debt restructurings. Normally, any concession made to a borrower would trigger classification as a TDR. It’s a big boost for lenders because TDRs must be evaluated for impairment and a potential increase in the loan-loss allowance. And a TDR tag sticks with the loan as long it is on a bank’s books. “The technicalities of the impairment analysis are very troublesome,” said Mary Ann Scully, chairman and CEO the $2.4 billion-asset Howard Bancorp in Baltimore. “Collateral values may be impacted, and cash flow is most definitely impacted.” In the aftermath of the financial crisis, restructured loans at banks topped $140 billion at the end of 2011. Clearly, regulators are hoping to head off a similar surge due to the coronavirus outbreak. Rep. Blaine Luetkemeyer, R-Mo., in an interview Friday, identified TDRs as “stumbling block” that would “inhibit banks from doing what they need to do.” Luetkemeyer said at the time that he was exploring ways to rescind or suspend the accounting for such restructurings.A delay in recording TDRs should lessen any spike in problem loans in advance of first-quarter earnings and, by extension, “reduces the threat on declines to tangible book value per share,” especially for publicly traded banks, said Chris Marinac, an analyst at Janney Mntgomery Scott.Marinac had called on regulators to issue emergency guidance on how lenders should treat credits impaired by coronavirus turmoil. “This is an unprecedented credit event for all banks, therefore it requires an emergency playbook,” Marinac wrote in a Thursday research note. Many banks, including Howard, the $4.4 billion-asset Camden National in Maine, and the $6.7 billion-asset Tompkins Financial in Ithaca, N.Y., started approving temporary deferments and other loan modifications for hard-pressed clients well in advance of Sunday’s statement. “We’ve been emphasizing short-term relief, deferring payments for 90 days,” “We want to help take some of the pressure off borrowers, but we don’t want to have to classify the loans as TDRs,” Smyth added. The regulatory intervention “helps us as a bank.”
Global Level 4 Travel Advisory: Stealth Subsidy for Insurers? – Jerri-Lynn Scofield – Last week. the State Department issued a global level 4 health advisory, recommending US citizens not travel internationally, Global Level Four Health Advisory – Do Not Travel.I am one of many US nationals who was outside the US when the advisory was issued. The department recommended that we return immediately to the US. Yet at the time the advisory was issued, many countries had either ceased allowing commercial departures, or in places where they were still available, the cost had skyrocketed.And, given what is occurring in places such as NYC, California, or Washington, returning there does not necessarily seem prudent. Nor, for that matter, does boarding an airplane, to sit in close proximity to many others, and risk being stuck in crowds when passing through customs and immigration in the US. Far better to shelter in place, if one can find a safe place to do so, and hope that things return to more normal conditions eventually.The State Department warning is a recommendation, not a requirement, and for those who couldn’t – or wouldn’t return immediately, the State Department said be prepared to stay outside of the United States for an indefinite period. Well, duh. I would wager that anyone who was outside the US last week had previously considered the available options. There are precious few good ones available at the moment.Which got me to thinking about the consequences of the State Department’s self-evident warning. What effect does the warning have on travellers who hold travel travel insurance? For those who don’t, I think it would be virtually impossible to purchase travel coverage at this time. Clive summarized the effect the warning would have on the validity of travel cover: Yes, while it depends on the policy, usually travelling against a Level 4 advisory (or whatever your national government terms it) will result in your travel cover policy being cancelled (e.g., travel insurance). From the Association of British Insurers website, the travel insurance Q and A section: If you travel against government advice then you are likely to invalidate your travel insurance. If you are unsure check with your travel insurer. You should check with your travel insurer if the reasons for your trip would or would not invalidate your travel insurance. A holiday to the area would not be considered as essential.
Mnuchin backs designating financial sector workers as ‘essential’ – – Treasury Secretary Steven Mnuchin said Tuesday that he supports federal guidance identifying financial services workers as “essential critical infrastructure workers” with a unique responsibility to continue operations during the coronavirus pandemic.In March 19 guidance, the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency labeled 16 sectors as crucial for “both public health and safety as well as community well-being.”In particular, the agency said financial services workers that provide consumer access to banking and lender services, maintain systems for processing financial transactions and support financial operations are considered essential personnel. “To wake up one day and assume everyone in America is going to be above average at math and above average rational is crazy,” says Ethan Bloch. Third-party service providers that deliver core services are also considered essential, said Mnuchin.
67 Million Americans Could Miss Their Credit Payments Thanks To Virus Crisis – As social gatherings are limited and businesses shutter operations to reduce the spread of COVID-19, millions of Americans could be laid off in the next couple of months as the economy dives into a depression. Most of the job loss will be seen across both the services and manufacturing sectors. The National Restaurant Association estimates that five to seven million jobs could be lost in the next three months. While Treasury Secretary Steve Mnuchin said if government stimulus is not directed at businesses and households, upwards of 33 million jobs could be eliminated.With a depression imminent, WalletHub anticipates 67 million Americans could have difficulty servicing their credit cards due to virus impacts. As we’ve routinely pointed out, credit card usage soared to a record high in December. “Roughly 67 million Americans anticipate having trouble paying their credit card bills because of the coronavirus. Their struggles could easily ripple through the economy if left unaddressed, especially considering the more than $1 trillion in credit card debt currently owed by U.S. consumers,” said WalletHub CEO Odysseas Papadimitriou. According to WalletHub’s survey completed on March 9-12, the virus is the most significant stressor among Americans. The second stressor is money problems, then the 2020 election, and people’s current job situation.”We’ve seen a lot of panic buying as a result of the coronavirus, with people purchasing things like toilet paper en masse, largely because they don’t know what else to do. Furthermore, 94 million Americans have canceled or plan to cancel travel plans due to the coronavirus,” said WalletHub analyst Jill Gonzalez. “Less apparent, however, is the panic saving that people are engaged in right now. Around 158 million Americans, or roughly 63% of adults, say they are saving more, as opposed to buying more, as a result of this crisis. If there’s a bright side to all of this, people saving more money than usual might just be it.”
Dems’ bid to pause negative credit reporting gets pushback from industry – As the economic damage from the COVID-19 pandemic multiplies, the credit scores of millions of U.S. consumers will likely suffer in the coming months unless effective prevention measures are implemented.Congress must decide quickly whether to require the financial industry to take steps aimed at averting a flood of derogatory reports to the credit bureaus. Industry officials insist that they already have the tools necessary to do so, but many Democrats on Capitol Hill are calling for more forceful measures.Legislation introduced last week by Sens. Sherrod Brown, D-Ohio, and Brian Schatz, D-Hawaii, would require a four-month moratorium on all negative credit reporting. People whose economic fortunes suffer longer-lasting damage would get additional protection. Those kinds of consumer protections are not currently included in the emergency relief legislation under consideration in the Senate, where Republicans hold a majority. But the credit bureaus are also facing pressure from congressional Democrats to implement a moratorium on their own. Last Tuesday, more than 70 House Democrats urged the CEOs of Experian, Equifax and TransUnion to temporarily cease reporting missed payments on hospital bills, mortgage payments and credit card debt.“Adverse credit events caused by COVID-19 will have crippling, long-term and devastating effects for those who can least afford it, if credit reporting agencies are unwilling to adapt,” the House Democrats wrote in a letter.But the credit bureaus argue that suppressing the flow of negative information about particular borrowers would lead to less accurate loan decisions, and that lenders would have to compensate either by charging higher interest rates or reducing the provision of credit.“We think that’s the wrong approach,” said Francis Creighton, president and CEO of the Consumer Data Industry Association, a trade group for the credit bureaus.In situations where the borrower has been granted forbearance, which is an agreement to delay a payment obligation, the lender may elect to inform the credit bureaus that the obligation was paid as agreed, Creighton noted.He also said that when lenders can use a special code to flag missed payments that are tied to unforeseen circumstances, such as the ongoing pandemic. Companies that rely on information from the three bureaus to calculate credit scores treat this specially coded information neutrally, so that it neither helps nor hurts the borrower, he said.
Sen. Brown proposes digital account for unbanked households – – Sen. Sherrod Brown, D-Ohio, is calling for legislation that would require banks to offer free digital accounts to consumers without bank accounts so they could easily access cornonavirus relief funds.As Congress and the Trump administration consider sending individuals coronavirus relief payments in the form of checks, Brown is proposing a “FedAccount” digital wallet that would allow consumers to receive money quickly and inexpensively. Roughly 8.4 million U.S. households do not have bank accounts, according to a 2017 report from the Federal Deposit Insurance Corp. “My legislation would allow every American to set up a free bank account so they don’t have to rely on expensive check cashers to access their hard-earned money,” said Brown, the top Democrat on the Senate Banking Committee.FedAccounts would have no account fees or minimum balance requirements and would be opened at local banks and post offices, under the legislation. The Federal Reserve would be responsible for overseeeing the FedAccount program. Account holders would receive debit cards, online account access, automatic bill-pay, mobile banking, and ATM access. Each post office or bank with less than $10 billion of assets woud be reimbursed each quarter by their regional Federal Reserve bank for the actual and reasonable operational costs incurred in offering the pass-through digital dollar wallets.
“Widespread Panic” Hits Commercial Property Markets: Deals Implode, Renters Disappear, Businesses Shut Down – As a result of the coronavirus outbreak, and the ensuing lockdown, the commercial property market has essentially frozen. Buildings that were used for all types of purposes: offices, diners, restaurants, hotels – they’ve all been shut down. And industries like the travel industry are forgoing $1.4 billion per week in revenue, according to Bloomberg. The shutdown is also having an effect on apartment buildings and industrial properties. Nothing is off limits, and it’s sending the commercial property market into chaos. Alexi Panagiotakopoulos, partner at Fundamental Income, a real estate strategy firm, said: “On the investor side, there’s widespread panic. There’s downward pressure on every aspect of every asset class.” And there’s no way to value a market when you don’t have a bid and an offer – and you’re not sure when the market will “re-open”. Further, there’s no way to try and model the future value of such properties when everyone is unsure of what the real estate landscape will look like when everything is said and done. Scott Minerd, chief investment officer at Guggenheim Partners said: “There will likely be long-lasting changes.” It’s estimated that investment activity in the space could fall by 45% this year, which would be further than post-9/11 or the 2008 financial crisis. The drumbeat of large deals has already gone silent. For example, Bloomberg reports that the Canada Pension Plan Investment Board’s planned sale of a 50% stake in the 900 million pound Nova development in London’s Victoria district collapsed on Friday. Similarly, Singapore-based ARA Asset Management Ltd., which was lined up to purchase the pension fund’s half of Nova, has balked on the deal. Viacom also announced last week that it’s suspending its plans to sell the Black Rock building in Manhattan because potential buyers can’t visit the property. Simon Property Group’s proposed acquisition of Taubman Centers, Inc., is also now up in the air.
Bank CRE losses expected to spike; digital payments boom – Bankers are wondering if this year’s stress tests – due April 6 – are even worth it, given that the damage caused by the coronavirus may actually be worse than the “severely adverse” conditions the Federal Reserve wants them to prepare for. “As of now, the banks and Fed are operating as scheduled, even as the central bank is also rolling out extraordinary measures designed to keep markets functioning. The Fed on Tuesday said it would relax some examination work, particularly at smaller banks, but that big banks should still submit their plans,” the Wall Street Journal reports.The Fed said it will “temporarily stop all examination activity for banks with less than $100 billion of assets,” American Banker reports. Separately, the Fed “may ultimately need to release banks from more constraints on their balance sheets, as it has done in some respects for their liquidity,” the Journal says. “Already, for example, banks that make purchases of assets from money-market funds to support them using money from the Fed’s backstop facility will be able to exclude those assets from capital calculations. But to ensure that banks don’t themselves become new overleveraged problems, the Fed needs to keep making sure that whatever banks need to load onto their balance sheet for the sake of the system isn’t just compounding risk or leverage in the system. That will partly be done with the help of Congress and the U.S. Treasury, which will provide forms of credit protection.” For bank investors, “it will be extremely difficult to model banks’ profitability in the future,” the paper adds. “But that certainly beats fretting about banks’ survival.”“U.S. banks face crushing losses from commercial real-estate loans damaged by the Covid-19 economic crisis, but the pain might not be as great as in the years following the 2008 crash,” according to a report by Trepp, which tracks the performance of commercial mortgages. “Commercial real-estate loans made by banks will suffer as much as a 2.5% loss rate over the next five years,” the firm said, which would amount to $57.5 billion. “By comparison, loss rates last year were less than 0.1%.” However, “the default rate on loans might be less this time than during the last financial crisis,” when the peak default rate was 4.4%.
Mortgage bond sales flood market, sparking pleas for U.S. help – A crisis in credit markets deepened over the weekend and into Monday as a cluster of funds that own mortgage bonds sought to sell billions in assets to meet investor redemptions, sparking pleas for government intervention. The sales included at least $1.25 billion of securities being listed by the AlphaCentric Income Opportunities Fund, according to people with knowledge of the sales. It sought buyers for a swath of bonds backed primarily by private-label mortgages as it sought to raise cash, said the people, who asked not to be identified discussing the private offerings. The fund plunged 17% on Friday, bringing its total decline for the week to 31%. Amid the selling, the Structured Finance Association, an industry group for the asset-backed securities market, asked government leaders on Sunday to step in. The Federal Reserve announced Monday that its new wave of initiatives to support the shuttered U.S. economy would include the Term Asset-Backed Securities Loan Facility, which is designed to support the issuance of bonds backed by collateral like auto loans, credit card debt and student loans. It will also buy agency commercial mortgage-backed securities, according to a statement.“The coronavirus has resulted in severe market dislocations and liquidity issues for most segments of the bond market,” AlphaCentric’s Jerry Szilagyi said in an emailed statement on Sunday. “The Fund is not immune to these dislocations” and “like many other funds, is moving expeditiously to address the unprecedented market conditions.” The best way to obtain favorable prices is to offer a wider range of securities for bid, Szilagyi said. He declined to discuss the amount of securities the fund put up for sale. Funds that buy up bonds of all kinds – from debt of America’s largest corporations to securities backed by mortgages – have struggled with record investor withdrawals amid choppy trading conditions in fixed-income markets. The rush to unload mortgage-backed securities signals that a credit meltdown that began with corporate bonds is spreading to other corners of the market.
FHFA directs GSEs to do more to support MBS, mortgage lending – The Federal Housing Finance Agency authorized the government-sponsored enterprises to lend additional support to the mortgage-backed securities market and temporarily allow some flexibility in lending requirements to address coronavirus-related concerns.The support Fannie Mae and Freddie Mac is giving to the agency MBS market will come in the form of additional dollar-roll transactions, which investors use to obtain short-term financing for their positions. The trades must be conducted through an auction or other method that ensures a fair-market price, according to the FHFA’s order.Dollar rolls are transactions in which there is a simultaneous agreement to sell a security held in portfolio with a purchase of a similar security at a future date at an agreed-upon price. The FHFA’s move came the same day the Federal Reserve announced additional support for the economy that included purchasing more MBS and Treasury bonds as well as establishing two new credit facilities for large businesses.Meanwhile, the FHFA is directing Fannie and Freddie to relax underwriting guidelines in ways that will reduce the need for appraisers to inspect the interior of homes in person as well as the need to obtain verbal verifications from employers.Where verbal verifications are not available, emails, a recent year-to-date pay stub or recent payroll deposit on a bank statement can be used for verification.”Lenders should continue to utilize sound underwriting judgment to ensure these alternatives are appropriate to the borrower’s circumstance,” the FHFA said in a press release.Even before the virus outbreak, both Fannie Mae and Freddie Mac had been allowing more exceptions to employment verifications and appraisal requirements due to the availability of alternative forms of data-based confirmation that they deemed sufficient in some instances.
April wave of missed payments could upend mortgage servicers – April 1 could be a day of reckoning for banks and servicers anticipating a tidal wave of missed mortgage payments due to the economic fallout the coronavirus pandemic.With stay-at-home orders forcing some businesses to shutter and economists fearing high unemployment rates and reduced incomes, the housing finance system is grappling with how it will recoup lost revenue from missed payments, government-backed forbearance plans and other tremors.Banks and mortgage servicers are already struggling on the front lines assisting panicked borrowers affected by the crisis, but no one knows how many homeowners could miss payments. There is growing hope that the Federal Reserve could launch a facility to provide a backstop for the mortgage system, but it is unclear how long servicers would be able to survive without government help. “Lenders do not have the liquidity to allow borrowers to stop making payments,” said Dave Stevens, chief executive at Mountain Lake Consulting and the former head of the Federal Housing Administration. “What happens if everybody stops paying, which they will if given the option not to?” If roughly one-quarter of residential borrowers are unable to pay their mortgage and need forbearance for three months to nine months, servicers could be on the hook for from $36 billion to $100 billion, the Mortgage Bankers Association has estimated. The median mortgage payment is roughly $1,400, according to Zillow, the online real estate database company. “It will be a shockingly big number of borrowers that don’t make their payments on April 1,” said Ron Haynie, senior vice president of mortgage finance policy for the Independent Community Bankers of America.When unemployment numbers are released on April 3, some expect a 30% uptick in claims, with potentially two million to three million borrowers needing forbearance. Forbearance allows the borrower to defer payments interest-free until the loan is paid off.”All those people would be eligible for forbearance but dealing with two to three million people is going to overwhelm the system,”
Ginnie Mae Weighs Bailout For Servicers After Major Mortgage-Lender Slashes 70% Of Workforce -A top U.S. regulator is exploring whether to throw a lifeline to mortgage servicers stressed by the coronavirus pandemic by tapping a program meant to address natural disasters. Bloomberg reports that, in order to prepare for an expected wave of missed payments as borrowers deal with the economic fallout from the virus, officials at Ginnie Mae are considering using relief programs most often activated in the wake of hurricanes, floods and other calamities, according to people familiar with the matter.Mortgage-industry lobbyists unsuccessfully tried to get Congress to include some sort of liquidity facility for servicers in the stimulus bill. Still, many servicers expect the Treasury Department and the Federal Reserve to create a lifeline for servicers out of other money in the $2 trillion package. Earlier this week, we highlighted the fact that numerous mortgage-related companies were facing considerable – and in some cases existential – crises in their day-to-day operations amid margin calls, illiquidity, and a drying up of demand for non-agency products thanks to The Fed’s intervention. First, its was AG Mortgage Investment Trust which last Friday said it failed to meet some margin calls and doesn’t expect to be able to meet future margin calls with its current financing. Then it was TPG RE Finance Trust which also hit a liquidity wall and could not repay its lenders. Then, on Monday it was first Invesco, then ED&F Man Capital, and then the mortgage mayhem took down MFA Financial, which stated “due to the turmoil in the financial markets resulting from the global pandemic of the COVID-19 virus, the Company and its subsidiaries have received an unusually high number of margin calls from financing counterparties, and have also experienced higher funding costs in respect of its repurchase agreements.”And now that mortgage-mayhem has impacted one of the largest U.S. mortgage firms catering to riskier borrowers.Earlier in the week, we mentioned Angel Oak Mortgage Solutions – which specializes in so-called non-qualified mortgages that can’t be sold to Fannie Mae or Freddie Mac – pointing out that the company would pause all originations of loans for two weeks “due to the constant shifts and the inability to appropriately evaluate credit risk.”And now Sreeni Prabhu, co-chief executive officer of the firm’s parent, Angel Oak Cos., is slashing 70% of the comany’s workforce (almost 200 of its 275 employees).
New York Democratic governor finally suspends construction projects after criminal delay – The Democratic governor of New York state, Andrew Cuomo, finally banned “non-essential” construction projects on Friday, amid growing anger from the state’s construction workers and concerns from public health experts. Some sites, including those building affordable housing, hospitals or critical infrastructure, will remain open. Until yesterday, construction workers across New York City and state were still required to show up to work on almost any project, victims of Cuomo’s categorization of construction – including luxury apartment high-rises – as “essential businesses.” But as the number of confirmed cases of COVID-19 in New York state soared this week – by Friday there were 44,635 cases in the state and 25,398 in the city, with hundreds dead and a dangerous shortage of equipment and hospital beds – construction workers and their families voiced increasing opposition to the proposals from both Cuomo and Democratic New York City Mayor Bill de Blasio that workers remain on the job. Social distancing is notoriously difficult on construction sites, and running water and sanitation facilities are often scarce. Both Cuomo and de Blasio, with the backing of big realtors, construction firms and local trade unions, permitted construction to continue, even on job sites with confirmed cases of workers testing positive for coronavirus, leading to increasing concern and opposition from the more than 150,000 construction workers in the city. On Monday, carpenters working at the Hard Rock Hotel in Manhattan walked off the job after hearing about a co-worker testing positive for COVID-19. After two days of disinfecting, and without any additional protective equipment for the workers, the job site opened back up. Another worker tested positive for the virus this week at a construction site on Broadway in the site of Facebook’s new corporate offices, but the job was not shut down.
Hotels: Occupancy Rate Declined 56% Year-over-year to All Time Record Low –From HotelNewsNow.com: STR: US hotel results for week ending 21 March: Showing further effects of the COVID-19 pandemic, the U.S. hotel industry reported significant year-over-year declines in the three key performance metrics during the week of 15-21 March 2020, according to data from STR. In comparison with the week of 17-23 March 2019, the industry recorded the following:
• Occupancy: -56.4% to 30.3%
• Average daily rate (ADR): -30.2% to US$93.41
• Revenue per available room (RevPAR): -69.5% to US$28.32
“RevPAR decreases are at unprecedented levels – worse than those seen during 9/11 and the financial crisis,” said Jan Freitag, STR’s senior VP of lodging insights. “Seven of 10 rooms were empty around the country. That average is staggering on its own, but it’s tougher to process when you consider that occupancy will likely fall further. With most events cancelled around the nation, group occupancy was down to one percent with a year-over-year RevPAR decline of 96.6%. The industry is no doubt facing a situation that will take a concerted effort by brands, owners and the government to overcome.” The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels). 2020 was off to a solid start, however, COVID-19 has crushed hotel occupancy. This is the lowest weekly occupancy on record, even considering seasonality, and STR expects occupancy rates to fall further. Note the graph is a 4-week average.
The Cheesecake Factory says it will not be able to pay rent for any of its storefronts on April 1 – The Cheesecake Factory says it will not be able to pay rent on its nearly 300 storefronts come April 1 due to the loss of income it has sustained during the coronavirus outbreak. In a March 18 letter the company’s landlords, company chairman and CEO David Overton wrote: “Due to these extraordinary events, I am asking for your patience and, frankly, your help.” “Unfortunately, I must let you know that The Cheesecake Factory and its affiliated restaurant concepts will not make any of their rent payments for the month of April2020,” he added. On Monday, California-based company let investors know that it was tapping into a $90 million line of credit to increase its liquidity and stop construction on unopened restaurants, Eater reports. Additionally, 27 of the company’s restaurants have been temporarily closed since the onset of the pandemic and its stock has dropped by over half in the past month. Restaurants all across the country have been forced to either shut down completely are switch to a take-out only model, as local and federal officials try to stop of the spread of COVID-19. The Cheesecake Factory has over 38,000 employees making it one of the largest employers in the U.S.
Cheesecake Factory, Subway, other major retailers tell landlords they can’t pay April rent due to coronavirus – To slow the spread of the novel coronavirus, retailers and restaurants haveshuttered their doors. But facing a halt in income, many major retailers say they can’t pay rent for the month of April – and they are asking their landlords for deferrals. Here is an up-to-date list of retailers that are asking for special accommodations on rent payments. Cheesecake Factory, the California-based restaurant chain with over 200 U.S. locations, told landlords on March 18 that it would not be able to pay rent for April due to the novel coronavirus pandemic, according to reports. “We have very strong, long standing relationships with our landlords. We are certain that with their partnership, we will be able to work together to weather this storm in the appropriate manner,” chief financial officer Matthew Clark told Eater.Swedish clothing retailer H&M is discussing rent adjustments with landlords, according to reports.“Negotiations of rents is an ongoing part of our business, but due to the current effect on the economy, we have and will approach our landlords in the affected markets,” a spokesperson told Bloomberg. Mattress Firm, the Houston-based mattress retailer with 2,400 stores in the U.S., cited the force majeure or “act of God” contract clause invoked for major natural disasters this week, telling landlords they would not pay rent. This comes after a letter to landlords sent last week, which offered to extend their leases in exchange for cutting rent.Subway, the Milford, Conn.-based fast food retailer with over 20,000 U.S. locations, alerted landlords last week that it might reduce or postpone rental payments. Subway will also halve royalty payments and halt advertising fees for franchisees, according to reports. Many fast-food chains own the real estate their franchisees operate from and will provide rent accommodations for franchisees. McDonalds, which is a landlord to 15% of its franchises, will consider reductions in rent and other payments. About 13,826 of which are in the U.S., according to New York real estate data companyReonomy.
U.S. Workers, Businesses Lack Funds to Tide Them Over Until Help Comes – The American economy is in a race against time.With measures to halt the spread of the novel coronavirus intensifying, the U.S. is embarking on its sharpest downturn since at least the end of World War II. The states where nonessential businesses are shut down, including California, New York and Ohio, account for more than 40% of U.S. gross domestic product.Many of those workers and businesses will face severe constraints quickly, surveys suggest. In two weeks time – the period of a typical paycheck – many workers will struggle to make ends meet. After a month, more than half of them could be in trouble. At that point, a fifth of small businesses with lost sales could be on the brink.The stimulus the Federal Reserve announced Monday, including its planned program to support lending to small and midsize businesses, will help. So, too, will the fiscal spending package Congress is hammering out – when it comes.For the economy, the most important questions are how soon help will arrive, how ample it will eventually be and, above all, how long the coronavirus crisis will last. Between the big stimulus likely to come out of Washington and plans by lenders to extend loans or offer grace periods on payments, consumers and businesses can manage a shutdown lasting several weeks.Beyond that is uncharted territory, and with the crisis at an intense point right now, few people are thinking that far out. Most economists think the economy will shrink more than 10% in the second quarter, at an annual rate, a larger decline than that at the start of the financial crisis and one that would mark the worst contraction since quarterly measurements began shortly after World War II. But most are assuming that by the start summer, the spread of the virus will have been contained and activity will begin to bounce back. That is no sure thing, with many epidemiological models suggesting containment won’t occur until later.Small businesses, which account for about half of U.S. employment, according to the Small Business Administration, are among those most at risk. In a 2016 study, researchers at JPMorgan Chase Institute, the bank’s think tank, found that the median small business had a cash balance that would last just 27 days. Some were operating closer to the edge. The median retailer had a cash buffer that would last 19 days. The median restaurant’s would last 16.
Coronavirus reveals financial irresponsibility of Americans – How long could you sustain your household if you were to stop earning income? If you are like most Americans, the answer is not for long. Only40 percent of Americans can afford an unexpected $1,000 expense with their savings. In fact, nearly 80 percent of workers are living paycheck to paycheck. It is no surprise that the probability of an economic recession brought on by the coronavirus pandemic caused many to worry. In major cities such as Boston, New York, Los Angeles, and San Francisco, restaurants and businesses have been ordered to close. For many hourly workers, this means no paychecks in the coming weeks. Almost one in five Americans have already lost their jobs or have reduced hours. At the same time, salaried workers are concerned about job security, as mass layoffs at numerous companies loom. While the situation is understandably stressful for every person affected, it serves as a sobering reminder that Americans must learn to live within their means and regularly save money. The need for all Americans to be able to sustain themselves for at least a few months on savings is accentuated during a time of crisis. This means planning ahead when times are good. Financial planners suggest saving at least 20 percent of take home income, while spending at most 30 percent on discretionary items. Yet too many workers still fail to think twice about spending entire paychecks for things they want but do not need. The current panic is refocusing us on what is important. We now stockpile the things necessary for our health.. Living within our means is not just rhetoric. It is a means of guarding ourselves during times like these. We have so much to learn from those who came before us. How many of our grandparents fared the austerity of the World Wars and the Great Depression, discovering to save, mend, and repair? It is not only low income and middle income earners who blow through their paychecks every month. Many high income earners also live above their means. Indeed, at least a quarter of households making $150,000and above live paycheck to paycheck. Our fiscal irresponsibility means that when an unexpected crisis like the one today hits, Americans are unable to sustain their own families, even for a short time period.
Guns, Groceries and News: What Sells in a Pandemic – and Doesn’t – U.S. household consumption patterns have gone haywire during the early stages of the globalcoronavirus health crisis.A Wall Street Journal analysis of high-frequency data from a range of U.S. industries showed sharp declines in spending on hotels, restaurants, airlines and other travel, while spending boomed in other areas including groceries, general merchandise stores, gun and ammunition shops and marijuana suppliers. Mortgage applications surged as interest rates dropped, new car sales in many cities fell and consumers quickly grew reluctant to buy big-ticket household items.The data suggest that while overall consumer spending is likely sinking sharply, this is happening unevenly, producing losers – and some winners – among the firms that meet consumer needs.Consumers are a critical engine of the global economy, providing more than two-thirds of demand for all U.S. economic output, in addition to demand for production and jobs at major U.S. trading partners including China and Mexico. Spending patterns will surely change in the weeks ahead, as the shock plays out in the economy. Here is a look at how spending changed in the first few weeks of March. Well before several big cities began ordering millions of people to stay home,visits to restaurants in Seattle and San Francisco – where the coronavirus took hold relatively early – began tanking, according to data on reservations and walk-ins released by OpenTable, the restaurant booking app. As the West Coast went, so did the rest of the nation: By March 19, dining visits across the country through OpenTable had collapsed by 98%, according to OpenTable. Travel and leisure suffered an abrupt collapse in demand. Hotel occupancy in Seattle, where the virus has claimed the most lives so far, collapsed from 70% in late February to 33% two weeks later, according to STR, a hotel research firm. Spending on leisure – activities such as theme parks, movie theaters and other ticketed events – dropped in late February, and was down 35% on an annual basis as of March 13, reports Earnest Research, a data analytics company that tracks the purchase data of millions of anonymous U.S. consumers. In other sectors, the coronavirus pandemic has induced a consumer frenzy. As the outbreak worsened in major cities, shoppers stocked up on groceries, sending sales – both online and offline – sharply higher, according to Earnest Research. Web traffic to retailers Amazon, Target, and Walmartclimbed in March too, according to Comscore. With audiences holed up at home and seeking information about the fast-moving virus, news viewership and, in particular, online news consumption are sharply growing.
More Than 750,000 Masks Auctioned for Huge Markup While Hospitals Run Out – At a time when shortages of protective gear are putting health-care workers at risk, more than 750,000 medical-grade masks went up for online auction in Texas. Bottles of Purell sold for over $40. A box of 16 masks went for $170. They could be had retail for $3 each before the coronavirus.The week-long bidding that ended Tuesday was hosted by the website Auctions Unlimited. The health-related products pulled in $154,000 in sales, according to Houston-based website owner Tim Worstell. He estimated that he personally made as much as $40,000 on the sales. Worstell would not publicly divulge the names of the buyers, and he identified the sellers only as “large companies.” He said the companies commissioned his website to sell masks, disinfectant wipes, cleaning solutions and hand sanitizer, all items in high demand as coronavirus spreads. Because the Texas attorney general issued a cease-and-desist order on March 20 to block the sales during a state of emergency, which was declared March 16 by Governor Greg Abbott, Worstell said the transactions couldn’t be completed without approval from law enforcement.
No Refunds: Costco Hoarders Discover They Can’t Return Toilet Paper – Panic hoarders who rushed into Costco to buy years-worth of toilet paper are finding themselves out of luck when it comes to the big-box store’s typically generous return policy. Those who have regrets after realizing that COVID-19 isn’t a ‘pooping disease’ were met with signs at various Costco locations informing them that they won’t be able to return all that toilet paper, paper towels, sanitizing wipes, water, rice and lysol they bought in anticipation of a societal collapse, according to brobible. lmao Costco basically saying y’all wanted to be extra, y’all gonna deal with your millions of toilet paper all over your house #sorrytammy pic.twitter.com/eCFhoiDp33 – m (@capricorngirlyy) March 19, 2020 Enjoy your lifetime supply of toilet paper and wipes you crazy #hoarders! #Costco is not taking any more returns. Better start figuring out what you are gonna do with 10 bags of rice you bought! pic.twitter.com/z2U7tN7ru3 – Xyth Lord (@Xyth_Lord) March 19, 2020
Truckers Wary of New York Deliveries Create Headache for Grocers — Delivering food to New York City’s supermarkets isn’t easy even in normal times. Now, it’s become a supply chain conundrum that’s testing the nerves of grocers, truckers and manufacturers alike. Some truckers are refusing to carry orders into the city and surrounding suburbs like New Rochelle that have been hard hit by the coronavirus, even as demand for groceries is double or triple normal levels as shoppers stockpile soup and other everyday goods. There is no evidence that food is growing scarce in the city. But one index, which measures loads of all types of goods destined for Brooklyn that were rejected by shippers, has tripled compared with the same time last year, reflecting carriers’ inability or unwillingness to haul loads into the epicenter of the outbreak. The White House’s call for all those leaving New York City to self-quarantine for 14 days has spooked and confused some drivers, according to people monitoring shipments, while delivery curfews and requests to register “essential employees” have created additional friction. Some warehouse operators are even insisting on taking truck drivers’ temperatures as they pull into depots. “Closing the gap between demand and supply is mostly a matter of trucks and distance,” said Phil Palin, a supply-chain resiliency expert who’s currently advising grocers. “Distance has been reduced by the evaporation of traffic congestion. But — and this is a big but — truck driver fears of contagion and confusion over government health guidance threaten the volume and velocity of grocery distribution.”
Kroger warehouse workers walk out in Memphis over coronavirus concerns – About 400 Kroger warehouse workers in Memphis walked off their jobs yesterday to protest mind-numbing work shifts of up to 96 hours a week and unsafe working conditions as COVID-19 spreads through the state of Tennessee. The warehouse workers left their jobs after a warehouse worker tested positive for COVID-19, but Kroger officials refused even to tell the workers what shift he had worked. Pressure had been brewing for some time as workers repeatedly complained of woefully insufficient safety measures. In a related development, The Hill reported yesterday that Instacart “shoppers” (the company’s term for its gig workforce) will stop accepting deliveries until Instacart provides “cleanliness products at no cost to workers, hazard pay of $5 per order and an extension and expansion of pay for workers affected by the coronavirus.” Instacart, founded in 2012, is an American technology company valued at nearly $8 billion which provides a same-day grocery pick-up and delivery services in the United States and Canada. Instacart is a prime example of the new “gig-economy” which provides temporary work, low wages, little in the way of benefits, no job security and big profits for the owners and stockholders The strike is set to begin on Monday, according to the Gig Workers Collective, which organized the action.
72% Of Americans Now Avoiding All Public Places- Gallup Poll – A new Gallup poll released Tuesday found that 72% of American adults are now practicing social distancing, including avoiding going into public places like stores and restaruants.Just last week even after Trump’s March 13 national ‘state of emergency’ declaration, it was 54% that said at the time they were putting the same measures into place. The largest category answering in the affirmative in this newest Gallup survey is among those who say they are avoiding large crowds as well as mass transit, at a whopping 92%.And in what’s already being felt as a stunning blow to the aviation industry which stands on the brink of perhaps temporarily shutting down altogether, 87% are avoiding all air and other travel involving crowded transit venues. More Americans are this week are even avoiding small gatherings among their own family and friends: at 68% of those surveyed this week compared to 46% last week. The data suggests the majority of the US public is implementing federal, state, and local guidelines related to social distancing, also as more and more cities and counties issue ‘shelter in place’ emergencies. According to NY Times numbers, at least 167 million people in 17 states, 18 counties, and 10 cities have been ordered by local or state authorities to stay home except for essential travel like going to the doctor or grocery store.
U.S. Domestic Passenger Flights Could Virtually Shut Down, Voluntarily or by Government Order WSJ -Major U.S. airlines are drafting plans for a potential voluntary shutdown of virtually all passenger flights across the U.S., according to industry and federal officials, as government agencies also consider ordering such a move and the nation’s air-traffic control system continues to be ravaged by the coronavirus contagion.No final decisions have been made by the carriers or the White House, these officials said. As airlines struggle to keep aircraft flying with minimal passengers, various options are under consideration, these people said.But amid the quickly spreading pandemic and mandatory stay-at-home orders covering some 80 million U.S. residents, airline executives, pilot-union leaders and federal transportation officials said they increasingly view as inevitable further sharp reductions from already-decimated schedules in passenger flights.U.S. airlines have already eliminated the vast majority of international flying and have announced plans to cut back domestic flying by as much as 40%. Travelers are staying home at even greater rates. The Transportation Security Administration reported that passenger flow at its checkpoints was down more than 80% Sunday from the same day a year earlier.On Monday, thousands of flights were canceled, in some cases because planes weren’t full enough to justify the trip, with passengers numbering in the single digits. Some planes that did take off have been emptier than ever before. For example, a flight between New York’s LaGuardia Airport and Washington DC had just three passengers. American Airlines GroupInc. and United Airlines Holdings Inc. canceled over 40% of scheduled flights Monday, according to Flightaware.com, a flight tracking site. Some airline officials expect planes to be even emptier as the week goes on.Officials at Airlines for America, the leading trade association representing domestic carriers, didn’t immediately respond for comment.Before the pandemic, U.S. airlines operated more than 8.4 million flights annually. Airlines are preparing for the possibility that contagion-driven staffing emergencies at air-traffic control facilities could force the issue, making it impossible to continue operating in parts of the country.United States could become coronavirus epicenter: WHO – (Reuters) – The United States has the potential to become the new epicenter of the coronavirus pandemic due to a “very large acceleration” in infections there, the World Health Organization said on Tuesday. The highly contagious respiratory virus has infected more than 42,000 people in the United States, prompting more governors to join states ordering Americans to stay at home. Over the past 24 hours, 85 percent of new cases worldwide were from Europe and the United States, WHO spokeswoman Margaret Harris told reporters. Of those, 40 percent were from the United States. Asked whether the United States could become the new epicenter, she said: “We are now seeing a very large acceleration in cases in the U.S. So it does have that potential. We cannot say that is the case yet but it does have that potential.” “…They (the United States) have a very large outbreak and an outbreak that is increasing in intensity,” Harris added.
US airlines drafting plans for potential shutdown: report – U.S. airlines are drafting plans for a potential voluntary or government-ordered shutdown of passenger flights, The Wall Street Journal reported Monday night. Industry and federal officials told the Journal that no final decisions have been made by the carriers or the White House, while airlines currently struggle to operate with limited passengers. Officials also said other options were under consideration to prevent a shutdown, but the spreading pandemic has made the shut down seem more unavoidable to airline officials, pilot-union leaders and federal transportation officials, according to the Journal. The Federal Aviation Administration officials are concerned that the virus will spread among agency controllers and technicians as almost a dozen of traffic-control facilities have had to cease operations temporarily after positive cases. The U.S. airlines have already been hit financially from the virus as most international flights have been canceled and plans have been announced to reduce domestic flights by as much as 40 percent. The Transportation Security Administration (TSA) reported an 80 percent drop in travelers Sunday compared to the same day last year. Carriers, like American Airlines and United Airlines, have been forced to cancel more than 40 percent of their flights Monday because of a lack of passengers, according to Flightaware.com. An industry official told the Journal that the airlines would “definitely prefer” if the government initiated a shutdown somewhat because they could use it as leverage during calls for federal aid. But President Trump and his advisers have been reportedly hesitant to issue an order to stop commercial flights partly due to the fact that these aircrafts also carry U.S. mail and essential cargo shipments. One option for the government to continue cargo shipments is to use portions of the Civil Reserve Air Fleet, which are commercial jets for the Pentagon to use during national emergencies. The fleet would need to be activated by the Pentagon or the White House.
Pigs At The Trough- Private Jet Industry Now Asking For Absurd Government Bailout – It’s not the just wealthy commercial airline CEOs that have their hands out to the government, begging for bailouts as the coronavirus lockdown ravages their industry, but now also the private jet industry. Yes, the private jet industry – which is run by, and caters almost exclusively to the wealthy – has been the latest pig to line up at the government trough for their share of freshly printed Venezuelan Bolivars U.S. dollars. The National Business Aviation Association, which represents private jet companies and corporate jets, sent a letter to congressional leaders saying the industry is facing “increasing financial uncertainty” and that it should be bailed out, according to CNBC. The letter stated: “Due to the nature of the COVID-19 pandemic, there is currently no certainty as to when economic conditions will improve, which threatens the survival and prospects of thousands of general aviation businesses.” The NBAA claims that private jets support 1.2 million jobs and $247 billion in “economic impact”, whatever the hell that means. All the while, business has been booming for these carriers. According to CNBC:
- Magellan Jets, a private jet charter company, said trip volume was up 70% in the first two weeks of March
- VistaJet said flights are up 16% since the beginning of the year
- PrivateFly touted the attraction of flying private during a health crisis and said revenues would be up
- Wheels Up said that it is “prepared and have availability to service the uptick in demand we are seeing from individual and corporate members.”
The question then becomes: how do you sell a bailout of this industry to mom and pop on Main Street? The bailout of commercial airlines is being sold as a benefit to the public, once society restarts. But why do the rich – and those flying them around the world – need taxpayer money? Dean Baker, senior economist at the Center for Economic Policy said: “It’s hard to imagine anything worse. Putting up public money to support an industry that serves the rich would be hard to justify. It’s absurd.”
Coronavirus Triggers Record Drops in U.S., European Business Activity – WSJ – The U.S. and Europe saw record declines in business activity in March, as economic activity slowed around the world due to measures aimed at containing the new coronavirus. Data firm IHS Markit said its composite purchasing managers index for the U.S. – an aggregate measure of activity in the manufacturing and services sectors – dropped to a seasonally adjusted 40.5 in March from 49.6 in February. That was a record low for the 10½-year-old series, which started after the 2007-2009 recession. The comparable index for the eurozone fell to 31.4 from 51.6 in February, its lowest level since the surveys began in July 1998. The surveys of purchasing managers – which have a good record of measuring economic activity – point to large drops in output and big job losses in some of the world’s largest economies. The surveys are the first globally comparable measures of activity to be released since widespread lockdowns by countries began. “That global recession will be felt in the second quarter, but we’re already in it now probably,” said Chris Williamson, IHS Markit’s chief business economist. “We’re going to see some absolutely horrific [gross domestic product] numbers coming through for the second quarter based on what these surveys are telling us for March,” he said, adding that the March declines in global PMI numbers “look like spreadsheet errors.” The U.S. services sector was particularly hard hit in March, with services PMI contracting at the fastest rate on record as restaurants, bars and hotels all bore the brunt of the social-distancing measures. U.S. manufacturing also dropped to 49.2. A level above 50 indicates growth in business activity, while a reading below that mark points to contraction. The March PMI numbers are “the foreshadowing of a much deeper and broader decline in manufacturing and service activity across the globe and in the U.S.,” said Joe Brusuelas, chief economist at RSM US LLP. The scope of the economic hit “really is going to depend on the evolution of efforts to contain the disease,” he added. The shock to service providers in particular has been immediate, while measures announced by governments and central banks to help businesses and support consumer demand will take time to have an effect. But even when they do, it is unlikely there will be a bounceback in activity until the lockdowns are lifted. Economists anticipate a rise in U.S. unemployment claims as the pandemic shuts down businesses.
Michigan issues statewide lockdown, exempting auto industry as “critical infrastructure” – Michigan Governor Gretchen Whitmer announced a statewide stay-at-home order yesterday morning, as the COVID-19 virus continues to spread rapidly throughout the state. The three-week lockdown lasts until April 13 and took effect at midnight last night. The order, according to a press release, requires Michiganders to remain in their homes unless they are part of a “critical infrastructure workforce, engaged in an outdoor activity, or performing tasks necessary to the health and safety of themselves or their family, like going to the hospital or grocery store.” The announcement means that thirteen out of 50 US states have announced lockdowns in response to the pandemic. While Texas has yet to issue a statewide lockdown, the cities of Dallas, Austin and San Antonio have issued their own orders. The shutdown in Michigan comes after a rapid rise in confirmed cases throughout the state, from zero only two weeks ago to 1,328 cases and 15 deaths as of this writing. However, given the lack of testing and the atrocious level of social infrastructure in the state – especially in Detroit, the poorest large city in America – it is certain that the real total is many times higher. Whitmer’s order was long overdue. She has previously placed a ban only on large gatherings of more than 250 people, which exempted auto factories and other industrial sites employing thousands of workers. Michigan schools did not even close until March 16. The main factor in the delay was the overwhelming opposition of the major corporations doing business in the state to such an order, fearful of the impact it could have on their bottom line. As late as last Saturday, the heads of both the state and Detroit chambers of commerce issued statements “advising” the governor not to declare a lockdown. “We cannot risk a disruption in the supply chain or a break in the distribution cycle. In addition, many businesses have non-interruptible operations and those operations need to be protected as we move forward,” Michigan chamber CEO Rich Studley argued. Indifferent to the deaths and human suffering it would cause, there are growing calls from the corporate press, including the New York Times and Wall Street Journal, to restart production in industries as soon as possible in order to avoid denting the profits and share values of corporate America. President Trump, whose central preoccupation has been with the impact of the pandemic on the stock market, is reportedly mulling a lifting of restrictions to restore “normal” economic activity, a move which would expose untold numbers to infection and death.
March Vehicle Sales Forecast: 35% Year-over-year Decline – From Edmunds.com: New Vehicle Sales Drop in March to Close a Down First Quarter in 2020, Edmunds Forecasts: The car shopping experts at Edmunds say that March will be a down month for the auto industry due to the coronavirus (COVID-19) pandemic, forecasting that 1,044,805 new cars and trucks will be sold in the U.S. for an estimated seasonally adjusted annual rate (SAAR) of 11.9 million. This reflects a 35.5% decrease in sales from March 2019 and a 23.4% decrease from February 2020. … “The first two months of the year started off at a healthy sales pace, but the market took a dramatic turn in mid-March as more cities and states began to implement stay-at-home policies due to the coronavirus crisis, and consumers understandably shifted their focus to other things,” said Jessica Caldwell, Edmunds’ executive director of insights. “The whole world is turned upside down right now, and the auto industry is unfortunately not immune to the wide-ranging economic impacts of this unprecedented pandemic.”This graph shows actual sales from the BEA (Blue), and Edmunds forecast for March (Red). Note that the low during the great recession was 9.02 million SAAR in February 2009. With the sudden stop in activity, this forecast may be high – and sales will probably be lower in April.
Kansas City Fed: “Tenth District Manufacturing Activity Declined Sharply” in March – From the Kansas City Fed: Tenth District Manufacturing Activity Declined Sharply The Federal Reserve Bank of Kansas City released the March Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity declined sharply from a month ago, and expectations for future activity fell to levels last seen in early 2009.“Regional factory activity contracted sharply in March as firms were negatively impacted by COVID-19,” said Wilkerson. “Many firms indicated overall demand and sales have slowed dramatically, with capital investments being put on hold. Around 60 percent of manufacturers faced delayed payments from customers and 54 percent had concerns about cash availability.”…The month-over-month composite index was -17 in March, the lowest composite reading since April 2009, and down considerably from 5 in February and -1 in January. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The last of the regional surveys for March will be released on Monday (Dallas Fed), and I expect the Texas region will be hit hard.
Philly Fed: “Nonmanufacturing firms reported a significant weakening in activity this month” – From the Phily Fed: March 2020 Nonmanufacturing Business Outlook Survey: Note: Survey responses were collected from March 5 to March 19. Nonmanufacturing firms reported a significant weakening in regional nonmanufacturing activity this month, according to results from the Nonmanufacturing Business Outlook Survey. The survey’s indexes for general activity at the firm level, sales/revenues, new orders, and full-time employment all fell sharply and into negative territory this month, coinciding with developments related to the coronavirus. … The diffusion index for current general activity at the firm level fell sharply from 36.1 in February to -12.8 in March, its lowest reading since July 2011 … The full-time employment index fell 23 points to -1.7. This graph shows the Philly Fed Nonmanufacturing General Activity and Employment indexes. Some of this survey was in early March, but it is clear the COVID-19 is having a significant on nonmanufacturing activity.
US Services Economy Collapses At Record Pace, Signal 5% GDP Plunge – Following disastrous PMI prints across Europe (and China last month), preliminary March US Manufacturing and Services data was expected to plunge notably into contraction (having already tumbled in February).. and they both did…
- US Manufacturing PMI dropped to 49.2 (contraction) – a 127-month low – from 50.7 (dramatically better than the expected drop to 43.5 – thanks to the farcical ‘bullishness’ of longer supplier delivery times).
- US Services PMI crashed to 39.1 from 49.4 – a record low.
Steep rates of manufacturing contraction were signalled for production and new orders, both of which fell to the greatest extent since 2009, with many firms linking this to the escalation of preventative measures following the outbreak of COVID-19. Some companies have reported having to shutdown and give refunds where orders could not be fulfilled in time.Driving the downturn in services output was a steep fall in new business. The decrease in sales was the quickest since data collection began in late-2009, as both domestic and foreign client demand weakened. Companies highlighted challenging conditions across the services sector, especially in travel and tourism and other consumer-facing industries It’s Global…with the US Composite Index crashing to 40.5 – a record low…
Coronavirus-Triggered Downturn Could Cost Five Million Jobs – The fallout from the coronavirus outbreak is expected to have a significant negative impact on U.S. economic prospects, with predictions emerging for losses of up to five million jobs this year and a drop in economic output of as much as $1.5 trillion.A recession is now all but certain, according to a Wall Street Journal survey of 34 economists, which projects a downturn that would last months at least, and would in some ways rival – and possibly even surpass – the severity of the 2007-09 slump triggered by the housing collapse and subprime loan debacle.“This shock is very big,” said Bruce Kasman, head of economic research at JPMorgan. “You are going to see in the next two months the consequences of the actions taken in terms of economic activity. That set of trade-offs is not really clear in policy makers’ minds right now.”Economic forecasts, which remained upbeat just two weeks ago, suddenly turned bleak as it became clear that a pandemic, one that started in Asia and spread to Europe, would now affect American life far more than originally understood. The extent of the coming downturn remains unclear to many economists, given uncertainties stemming from an unknown trajectory of the pandemic, extreme volatility in the financial markets, restrictions on daily economic activityof unknown duration and a government response that is being adjusted every day and is likely to continue to change in the weeks and months ahead.Mr. Kasman’s current predictions are representative. He expects U.S. gross domestic product will fall by 1.8% this year. Before the outbreak, he had projected output to grow 1.5%. That would translate into $700 billion in lost output. Beyond those losses, “the rise in public-sector debt and destruction of human, and possibly physical, capital is important,” he said.The economy, Mr. Kasman believes, will lose between 7 million and 8 million jobs this spring, though some of those will likely come back if, as he expects, the economy rebounds in the second half of the year.Sung Won Sohn, a business economist at Loyola Marymount University, expects the coronavirus to cost $592 billion in output, after inflation, and a loss of nearly 5.2 million jobs in 2020, compared with his pre-virus forecast. Goldman Sachs projects U.S. output to fall 3.1% this year and unemployment to soar to 9% from the current 3.5%. Unemployment last peaked at 10% in October 2009, after the housing and financial collapse.
Unemployment Checks Delayed in Crisis – Americans are waiting anxiously for unemployment benefits as state unemployment systems adjust to record-high levels of claims in the wake of the new coronavirus.States say they are waiving waiting periods for accruing benefits and bulking up with staff to field calls and quickly process claims. But the unemployment-insurance system wasn’t designed to move as quickly as the coronavirus is knocking the U.S. labor market off course.“States are at a historically low level of administrative funding, but processing a historically high level of claims,” said Michele Evermore, policy analyst at the National Employment Law Project, which advocates for lower-wage workers. “There are mechanisms to staff up quickly, but it’s never smooth, easy or perfect.” Economists surveyed by The Wall Street Journal estimated that 1.5 million new jobless claims were filed last week. The U.S. Labor Department will release a national compilation of claims on Thursday. The highest number of new claims on record is 695,000 filed in the week ended Oct. 2, 1982.Georgia’s Labor Department website tells applicants to expect to wait. “Due to an extremely high volume of unemployment claims filed as a result of the Covid-19 outbreak, individuals may experience a delay in requesting weekly benefit payments,” the website said on Monday afternoon, referring to the disease caused by the coronavirus.Ohio’s call center and website to register for unemployment benefits experienced hiccups earlier on Monday due to high traffic.“This system was not built for a crisis,” said Ohio Lt. Gov. Jon Husted at a press conference. “It was built to take care of what we could expect on a regular or even robust basis. But what we’re experiencing now is frankly unprecedented.” The delays come as other measures to put money in Americans’ pockets face setbacks. The Senate is negotiating on legislation that would provide direct payments to American households and expand how many weeks of unemployment insurance Americans can receive.
A few Comments on Weekly and Continued Unemployment Claims – McBride – On Thursday, the Department of Labor will release Unemployment Insurance Weekly Claims. The consensus is initial claims will increase to 750,000, but that is way too low. Based on early reporting from various states, initial weekly claims will probably be several million this week. The all time high for initial weekly unemployment claims, Seasonally Adjusted, was 695,000 in Oct 82. The high during the great recession was 665,000 in Mar 09.The previous record will be obliterated this week due to the sudden economic stop.The extremely high level of claims will probably continue for several weeks. But it will be important to track Continued Claims too – since many of these people won’t be returning to work for some time. Here is a graph of continued claims since 1967.If we look at Hurricane Katrina in 2005, weekly claims jumped up immediately, and then declined fairly quickly back to normal levels – but continued claims stayed high for a few months (since it took some time for people in New Orleans and along the Gulf coast to return to work). This pandemic sudden stop is like Hurricane Katrina for unemployment claims, but all across the country. This week initial claims will skyrocket, and the following week continued claims will follow. At the worst of the Great Recession, continued claims peaked at 6.635 million, but then steadily declined. Over the next few weeks, continued claims will increase rapidly, and then will likely stay at that high level until the crisis abates.
The coronavirus crisis led to a record-breaking spike in weekly unemployment insurance claims: An estimated 3.4 million workers filed for unemployment last week -A greater share of Americans filed for unemployment insurance in the week ending March 21 than in any prior week in American history, according to our analysis of news reports. Many states reported initial claims growth of over 1,000%. Our model predicts that 3.4 million Americans filed new claims for unemployment insurance this past week, although we believe that number could be as low as 3 million or could be substantially higher. This will dwarf every other week in history, as can be seen by comparing the projection against the trend in initial claims back to 1967 (Figure A).For scale, consider that 3.4 million Americans moving from employment to unemployment would raise the number of the unemployed from 5.7 million to 9.1 million. This alone would raise the unemployment rate by more than half, by 2 percentage points from 3.5% to 5.5%, moving back to 2015 levels in just one week. This spike represents 2.2% of all jobs in the economy. The largest monthly rise in the unemployment rate in American history was plus 1.3 percentage points in October 1949.To arrive at our estimate of 3.4 million newly unemployed workers over the last week, we collected news reports from March 15 to March 21 and applied a simple extrapolation to fill in estimates for those days and those states that were missing reports.Many state UI agencies reported partial information to the press over the course of the week. We gathered and harmonized the reported numbers to calculate an estimated full-week initial claims statistic for as many states as possible; we were able to do so for 35 states and the District of Columbia (see Table 1). This required extrapolating to a weekly number based on a few days of reported information, paying attention to the number of weekdays and weekend days included in each public report. These 35 states and the District of Columbia accounted for 78% of national claims over the prior four weeks. This implies a state growth rate relative to its average weekly initial claims over the prior four weeks among these states.
Weekly Initial Unemployment Claims Increase to 3,283,000 – The DOL reported:In the week ending March 21, the advance figure for seasonally adjusted initial claims was 3,283,000, an increase of 3,001,000 from the previous week’s revised level. This marks the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series. The previous high was 695,000 in October of 1982. The previous week’s level was revised up by 1,000 from 281,000 to 282,000. The 4-week moving average was 998,250, an increase of 765,750 from the previous week’s revised average. The previous week’s average was revised up by 250 from 232,250 to 232,500. The previous week was revised up. The following graph shows the 4-week moving average of weekly claims since 1971. The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 998,250.This was much higher than the consensus forecast. This week initial claims skyrocketed, and next week continued claims will follow. The second graph shows seasonally adjust continued claims since 1967. At the worst of the Great Recession, continued claims peaked at 6.635 million, but then steadily declined. Over the next few weeks, continued claims will increase rapidly to a new record high, and then will likely stay at that high level until the crisis abates.
Jobless claims soar past 3 million to record – Americans displaced by the coronavirus crisis filed unemployment claims in record numbers last week, with the Labor Department reporting Thursday a surge to 3.28 million. The number shatters the Great Recession peak of 665,000 in March 2009 and the all-time mark of 695,000 in October 1982. The previous week, which reflected the period before the worst of the coronavirus hit, was 282,000, which was higher than expected at the time. Consensus estimates from economists surveyed by Dow Jones showed an expectation for 1.5 million new claims, though individual forecasts on Wall Street had been anticipating a much higher number. The surge comes amid a crippling slowdown brought on by the coronavirus crisis. The four-week moving average, which smooths out weekly distortions, was 1,731,000, an increase of 27,500 from the previous week’s revised average. Despite the news being even worse than expected, the maj or stock indexes opened more than 2% higher, wiping ut what had been sharp earlier losses. Businesses across the country have shut down amid a policy of social distancing aimed at keeping COVID-19′s growth in check. Individual states have reported websites crashing amid a rush to file. “We’ve known this number was coming for a week and a half,” said Tom Gimbel, founder and CEO of the LaSalle Network, a Chicago-based employment agency. “It doesn’t surprise me at all. When you see a city like Las Vegas get shut down, I don’t know what other options there were than seeing a number like this.” Jobless claims are considered the quickest window into current economic conditions. Most data reports in recent weeks reflect periods before the worst of the coronavirus hit and have been showing the U.S. in relatively good shape heading into the crisis. “This is a unique situation. People need to understand, this is not a typical downturn,” Federal Reserve Chairman Jerome Powell said earlier Thursday on NBC’s “TODAY.”
Record Rise in Jobless Claims Halts Historic Run of Employment Growth – A record 3.28 million workers applied for unemployment benefits last week as the new coronavirus hit the U.S. economy, marking an abrupt end to the nation’s historic, decadelong run of job growth. The number of Americans filing for claims was nearly five times the previous record high. The surge was for the week ended March 21 and could rise further. Pennsylvania, Ohio and California were among 10 states reporting more than 100,000 claims, leaving unemployment systems overloaded.Millions of U.S. businesses have announced layoffs or furloughs, as their cash flows dry up. Several state and local authorities have ordered nonessential businesses to close in response to the novel coronavirus pandemic, bringing the great American job machine to a sudden halt. Until March, U.S. employers added jobs for a record 113 straight months, causing payrolls to grow by 22 million. In the process, millions of people – including low-wage hourly laborers, disabled people, minorities, former inmates and others – found work. The unemployment rate, which was 3.5% in February, had been at levels not seen since the 1960s. Wages started to accelerate in the last two years after lagging during the early stages of the expansion that followed the 2007-09 recession.The strong labor market kept the U.S. economy humming for a decade – straight through a European debt crisis, Japan’s tsunami, a Chinese economic slowdown, a domestic manufacturing slump, volatile energy prices and a global trade war. And then, in a matter of days, it stopped. Millions of Americans, already fearful the new coronavirus could infect them or their families, now have two new worries: When will the job machine start again? And can they hold out until it does? Much will depend on how long the virus crisis lasts and whether federal and state unemployment insurance programs can adapt quickly to fill the immense gaps building in household cash flows until the virus recedes.
States are projected to lose more jobs due to the coronavirus: 14 million jobs could be lost by summer – EPI Blog – Last week, we published a map showing the job losses in each state likely to occur over the coming months as businesses shutter in response to the social distancing measures necessary to stop the spread of COVID-19. Sadly, our predictions were likely too optimistic. Expectations of how many jobs will ultimately be lost are rapidly evolving, with new forecasts from different macroeconomic analysts being released on an almost daily basis. As new data and projections become available, EPI is updating our estimates of the number of jobs nationally, and by state, that the economy is likely to lose in the coming months. Our best guess at this point is that the national economy could lose 14 million jobs by summer 2020. These estimates assume $1 trillion in fiscal stimulus – in other words, even with $1 trillion in stimulus, the job losses will be enormous. EPI estimates we will need at least $2.1 trillion in federal stimulus through 2020 to restore the country to reasonable economic health.. Congress is debating an economic stimulus package around $2 trillion, and if it is targeted enough, it could help mitigate some of these losses. Yet even with these measures, many people will still need to remain out of work, potentially for months, in order to stop the virus’s spread. In addition to federal action, lawmakers at the state and local level must do everything they can to ensure that these workers and their families do not suffer economically during this time. As with our previous post, the map in Figure A shows how the projected 14 million jobs lost nationally are likely to be distributed across the states. The national job losses are distributed in proportion to the average of each state’s share of total national private sector employment and each state’s share of national retail, leisure, and hospitality employment. We give added weight to these sectors as they are likely to be disproportionately affected by the social distancing measures that are needed to slow this pandemic. States like Nevada, Montana, and Hawaii are projected to lose the highest percentage of their employment because a large amount of their workforce is employed in the leisure, hospitality, and retail sectors.
Trump Administration Asks States To Bury Unemployment Claim Figures – The Trump administration’s Labor Department sent an email to state officials this week asking them to report new unemployment claims only in “generalities” to avoid spooking financial markets, The New York Times reported.The email on Wednesday asked state labor authorities to only “provide information using generalities to describe claims levels (very high, large increase)” until the Labor Department releases the total number of national claims next Thursday. “States should not provide numeric values to the public,” Gay Gilbert, the administrator of the department’s Office of Employment Insurance, wrote in the email shared with the Times. The message noted that the figures are closely tracked by financial markets judging the strength of the economy.Unemployment claims have been skyrocketing as thousands are laid off from jobs amid the spread of coronavirus. Treasury Secretary Steve Mnuchin reportedly warned senators that unemployment during the pandemic could hit 20% without a financial rescue package.Georgia did not release exact figures. State Labor Department spokeswoman Kersha Cartwright told the Atlanta Journal-Constitution the state was not yet ready to reveal specific numbers – though she did not mention the memo. New claims were so numerous that the state’s unemployment website was clogged, said Cartwright, adding: “We are seeing as many claims filed in a day as we usually see in a week.”
Ohio stops daily reporting of new unemployment claims at request of Trump administration – Ohio will no longer release its growing unemployment claim numbers on a daily basis as the economy slumps through the COVID-19 outbreak after the Trump administration told states to hold the statistics for weekly reports. Last week, the Ohio Department of Job and Family Services reported that claims for unemployment filed between Sunday and Thursday had reached nearly 140,000, up from fewer than 5,000 during the same period a week earlier.
CVS, Walmart, and 14 other ‘essential’ businesses that are desperate for workers right now – As retailers around the nation shut their doors in an effort to curb the spread of the coronavirus, “essential” businesses like grocery stores and pharmacies are seeking support to accommodate overwhelming demand. Companies including Kroger, Dollar General, and Amazon have listed thousands of job openings for sales associates, distribution workers, and delivery drivers, among others. The jobs – many of which are available immediately and require no background experience – are meant to alleviate overrun stores and warehouses dealing with an influx of orders from panicked Americans stocking up on items like canned goods and toilet paper. The open positions also come as many workers find themselves suddenly without jobs, in some cases without pay and benefits, as a spate of stores close indefinitely. According to the Economic Policy Institute, an estimated three million jobs will be eliminated by this summer alone as a result of the economic impact of the coronavirus. Other figures from IHS Markit show that the US unemployment rate is on track to nearly double from 3.5% in February to 6% by mid-2021. As the country braces itself for a possible recession, the economic turbulence is also exposing a lack of social safety net for many workers who can’t afford to be out of work. On social media, a rash of recently laid-off employees have voiced their concerns, leading to a growing number of posts on job openings. While policy changes to support these workers may be far off, in the short term, see below for a list of companies seeking immediate employment. Instacart announced on March 23 that it would hire 300,000 full-service shoppers in the next three months to manage increased demand. According to Instacart, in the past week alone the company’s order volume increased by 150% in the wake of the coronavirus outbreak in the US. The company said hiring will be prioritized in states currently experiencing the highest demand, including California, New York, Texas, Florida, Illinois, Pennsylvania, Virginia, New Jersey, Georgia, and Ohio.
Walmart is raising the minimum wage for entry level workers at its ecommerce warehouses as it grapples with a surge in online orders – Walmart Inc said on Monday it has temporarily raised entry wages for workers in its e-commerce warehouses by $2, following similar moves by rivals, as it attempts to manage a shopping surge brought about by the coronavirus outbreak. Walmart said the hike will increase entry wages for workers in e-commerce fulfillment centers or warehouses to between $15 and $19 an hour effective immediately through Memorial Day, a holiday in the United States that falls on May 25 this year. The world’s largest retailer, which employs 1.5 million people in the United States, has struggled to keep store shelves stocked and fulfill online orders amid panic-buying by shoppers spooked by the outbreak. The virus has infected over 32,000 people in the United States leading to more than 415 deaths, showed a Reuters tally. Last week, Walmart said it would pay special cash bonuses totaling $550 million to hourly staff and hire 150,000 temporary workers through the end of May in its stores and fulfillment centers. Workers in distribution centers, which primarily help stock stores, start at $17 to $18 an hour. The starting wage for store workers in most locations remains $11 an hour, with the average wage among full-time hourly workers at $14.26. Rivals such as Amazon.com Inc and Target Corp have also boosted pay and gone on a hiring spree to manage a surge in orders while many clothing and mall-based retailers have been forced to shut stores. Amazon hiked entry wages to $17 from $15 and announced plans to hire 100,000 warehouse and delivery workers in the United States. On Saturday, it said it would raise overtime pay for associates working in its U.S. warehouses. Target said last week it would raise its minimum wage by $2 an hour for store and distribution center workers through May 2. Walmart officials said on Thursday they had reached out to industry groups representing hotels and restaurants, offering to hire staff who have recently lost their jobs due to the virus-induced slowdown in tourism and catering.
NYC Cuts Subway Service By A Quarter After Ridership Plummets 87% –In an extremely rare move considering it’s managed to stay operational in its over century of existence, the Metropolitan Transportation Authority (MTA) will begin to cut services starting Wednesday after the coronavirus pandemic has seen ridership plummet 87% compared to the same day last year. The New York Times reports the city is cutting bus and commuter rail services as well, in total slashing public transport by at least 25%. This is a stunning drop of nearly 4.8 million riders.In normal times the city’s famous subway system sees about 5.5 million people ride each weekday, but even with the plummeting numbers and with more commuters opting for more ‘social distancing’ friendly means like bicycles or walking, the MTA has struggled with personnel shortages as well amid the crisis. The NY Times reports: Personnel shortages forced the Metropolitan Transportation Authority, which oversees subways, buses and two commuter rails, to temporarily eliminate service on three subway lines: the B, the W and the Z. So far, 52 M.T.A. workers have tested positive for the coronavirus, officials said, and worker shortages have caused around 800 service delays.The MTA began mulling the scale-back of operations starting two weeks ago as at that moment around the time of Trump’s ‘national emergency’ declaration there was a noticeable 20% drop in ridership as New Yorkers sought to increasingly avoid crowds. MTA recently tried to assure the public that the trains “remain safe” but still recommended for those with underlying health issues, “If you can get around without riding the subway, do it.”
Florida Man Faces Five Years For Stealing 66 Rolls Of Toilet Paper –It is truly a crime for our times… In Orlando, Florida, Angel Hernandezcinto, 31, has been arrested for allegedly stealing 66 rolls of toilet paper from a hotel – something that could constitute a bizarre new form of a crime of passion in the coronavirus pandemic. However, the rolls are valued at 99 cents each, meaning that this master crime amounted to around $65.Yet, it could be punished with up to five years in prison. Another Florida man is being held on $5000 bond for stealing a single roll of toilet paper.Thefts of short supplies in the outbreak have become increasingly common and increasingly the focus of police who seem to be trying to deter such crimes with enhanced charges.According to Fox 35 Orlando, a security guard for the Marriott Hotel in Orlando saw Hernandezcinto, who is reportedly part of the cleaning crew at the hotel, pushing a trash can and bag inside his van. When he looked inside, he saw the toilet paper.Police say that Hernandezcinto said that it was for a poor woman that he knows. He was charged with theft from a public lodging establishment.If anything, he was thinking small. In North Carolina, police have seized a stolen truck with 18,000 pounds of toilet paper.Nevertheless, this is a felony in the third degree which is punishable with up to five years incarceration. What is curious is that the provision does not have a threshold amount to qualify for a felony charge:
“I Want to See my Child.” Juvenile Lockups Cut Visits Over COVID-19 Fears Ophelia Davis, of Columbia, South Carolina, says she doesn’t know if she’ll see her grandson again. That’s not just because she’s in the demographic most vulnerable to the coronavirus – she’s 67, has an autoimmune disease and is currently struggling with a cough that she thinks is just the pollen. It’s also that her grandson is in juvenile detention, and as has been happening across the country, the jail where he’s confined has indefinitely ended all visits between families and their children.Davis’s grandson was 14 when he was arrested late last year for allegedly participating in a crime with a group of boys she had warned him to avoid. He was sent to the juvenile detention center in Columbia, notorious for its violence. Both the elder Davis as well as the teen’s father, Kevin Davis, worried about his safety.But at least they could visit him, see his face, see if he was hurt, tell him in person that they loved him. Now there’s the coronavirus, and they cannot.”There’s just nothing we can do,” said Davis, the father. “I get one of those parent intuitions, an intuition that he’s worried and upset. But there is just nothing that we can do.”In an effort to slow the advance of coronavirus into jails and prisons – where it could spread like wildfire given these facilities’ confined spaces, poor sanitation and often inadequate medical care – corrections agencies nationwide have been shutting down family visits, putting inmates who might have been exposed to the disease on lockdown and canceling educational and rehabilitative programs.These measures might seem less necessary in juvenile facilities, because children are at lower risk of dying from the virus than the rapidly aging population of adult prisons. But they can still spread it to jail staff – and teens in the justice system are also more likely to have underlying conditions like H.I.V. and drug addictions that make them more susceptible to serious illness than others their age.Then there’s the emotional toll of being a child already in isolation, isolated even further. In the New Orleans jail, teenagers ask constantly about the health of staff members who are no longer coming in to work, says Christy Sampson-Kelly, director of schools for the Center for Educational Excellence in Alternative Settings, which runs a school there. They are also anxious about their court cases, most of which have been delayed, potentially leaving them to sit in jail longer.
Fort Worth Hospital Sees Spike in Severe Child Abuse Cases Over Last Week – NBC Doctors at Cook Children’s Hospital in Fort Worth say stress from the coronavirus pandemic may be linked to the six cases of child abuse they saw this week, one resulting in death. Dr. Jayme Coffman, medical director of the CARE team at Cook Children’s, said all six cases were related to physical abuse. T “Thursday night, we had one child admitted with unfortunately, life-threatening injuries, which they succumbed to, as well as four other children in the emergency department at the same time who were treated and released,” Coffman said. “It was like, we have to reach out to the community.” Coffman said all of the children were 6 years old or younger. Though she said they could not say with full certainty the impacts of COVID-19 motivated the abuse, “it’s hard to think that it’s just coincidental”. “There’s no way for us to directly link that, but that’s the concern – are these families under more stress related to financial issues, whether it’s lost jobs or concerns for their jobs?” she said. “We also saw similar types of things happen during the recession where, in our trauma department, the most common cause of trauma death in children was motor vehicle collisions. During the recession, that changed to abusive head trauma, and I don’t want to see that again.” “One thing we know is that educators, our school professionals are the largest group of people who report suspected child abuse and that makes sense. They’re usually with kids a good portion of the day,” McMillon said. “Now that kids are not in school, they’re at home – a lot of times, they don’t have that, what we call a trusted adult, to maybe tell about what’s going on.” McMillon said one of the crucial things parents or caretakers should keep in mind if they are stressed is to not hesitate to ask for help. “I think, too, if you’re feeling really stressed and really feeling anger towards your kids – it’s OK, as long as they’re in a safe place, right? Kind of a safe spot in the house walk away and calm down,” she said. “It’s OK to leave your child if they’re crying or something, if you feel like you’re at wit’s end.”
US officials use economic fallout from pandemic to slash school funding – At least 46 states and the District of Columbia in the United States have completely closed schools due to the spread of the COVID-19 pandemic, affecting 54.5 million students. While the closures are necessary to slow the spread of the deadly disease, students are suffering from the loss of social interaction and access to counselors, nurses and a consistent food supply. Some 22 million low-income students receive free or reduced cost breakfasts, lunches and in some cases dinners during the school year through a federal program run by the US Department of Agriculture. The school meals are the second largest federal antihunger program behind the government’s food stamp program, the Supplemental Nutrition Assistance Program or SNAP. A recent survey of directors of meal programs by the School Nutrition Association indicates that over 90 percent are concerned about students missing meals during the school closures. They are also concerned about the financial impact on their meal programs, which depend on cafeteria sales. Government reimbursements for the recorded number of students will be more difficult to collect during the closures. Due to the school closures and lockdown orders, the country’s three largest districts in the US – New York City, Los Angeles and Chicago – along with urban and rural districts across the country have been forced to improvise using whatever resources are available to distribute meals as well as learning packets. In New York City, with 1.1 million students, parents are being directed to 400 centers where they can pick up three meals from 7:30 a.m. to 1:30 p.m. Roughly three-quarters of New York’s students qualify for free or reduced price school breakfasts and lunches. “Some schools haven’t even been able to figure out how to contact a significant percentage of the kids, never mind support those who are in real need, with their parents quarantined and losing their jobs.Districts are implementing e-learning programs that are chaotic and unprepared. Students will struggle to receive the online instruction because of the impact of social inequality, including access to computers and an internet connection. Where there are restrictions against social gathering, students will not be able to go to libraries or fast food restaurants to access a Wi-Fi network. In addition, students with special needs will not be able to get instruction from trained special education teachers.Last week, Education Week published an article titled, “Districts Brace for Crash in State K-12 Revenue Due to Coronavirus,” which detailed plans being made to cut school district funding, particularly districts with low property values and tax revenues that are least able to afford it. “School districts should brace for a precipitous drop in state K-12 aid next year because of the coronavirus’s widespread impact on the economy – and they should start preparing now, funding experts warn,” the article states.
“If I Get Corona, I Get Corona”: Deniers & Disbelievers Choose To Party Until The End – As cities across the nation began going into lockdown last week and millions of Americans started self-isolating, we brought your attention to the lascivious scenes of beer-guzzling thong-clad coeds and self-styled ‘invincible’ frat bros swarming the remainder of open beaches throughout Florida, Texas and the south – who partied right up to the moment some beach towns began closing down on their ‘extended’ Spring Break as universities went to online-only classes.So who would have have thought more and more universities across the country would days later begin seeing local reports like this? Five University of Tampa students are recovering after testing positive for COVID-19 during spring break, the school said.The university said the students were traveling together and with other UT students during spring break before testing positive. The school didn’t say where they went during their break or if they lived on or off campus.At the end of this chaotic week of a flood of unprecedented headlines as Covid-19 infection rates rise exponentially in the United States – tracking with virus-devastated Italy numbers – The New York Times has this aptly titled story: Deniers and Disbelievers: ‘If I Get Corona, I Get Corona.’The story begins: They were the defiers and the disbelievers. They were those eager to flout authority or those afflicted with cabin fever, if not Covid-19. They were the officials crowded on the podiu m of the White House briefing room, doing not as they say.They were all people who dismissed the calls for isolation, seeing more reward than risk in gathering. They conflated confidence with immunity. As in other times of national crisis, they exposed the relationship between individuals and society and our responsibility to others.“If I get corona, I get corona,” a reveler in Florida said in a widely-shared television interview. “At the end of the day, I’m not going to let it stop me from partying.”
Florida university announces 5 spring breakers tested positive for coronavirus – The University of Tampa in Florida announced at least five students have tested positive for coronavirus after traveling with other students on a spring break trip.”UT has been notified that five UT students, traveling together and with other UT students during Spring Break, have tested positive for COVID-19,” the university announced over the weekend. “We sincerely wish our students, and any others who may be affected, a full and rapid recovery.” The University of Tampa, like numerous other schools across the country, moved all of its classes online earlier this month, but resident halls are still open and some students are still in close contact. The multiple diagnoses come as spring breakers flocking to Florida beaches have sparked a backlash, as the coronavirus pandemic spreads and people are urged to social distance and to stay at home.A recent video released by CBS News, for example, showed a number of spring breakers in Miami, Fla., downplaying concerns about the COVID-19 outbreak and sparked viral criticism online. “If I get corona, I get corona. At the end of the day, I’m not going to let it stop me from partying,” one person said in the video. “I’ve been waiting, we’ve been waiting for Miami spring break for a while. About two months we’ve had this trip planned, two, three months, and we’re just out here to having a good time.”
How novel coronavirus is affecting college students’ access to medical care -When colleges nationwide canceled in-person classes and closed dorms for the semester, thousands of college students like me moved away from our campuses. Like most full-time students with university-sponsored coverage, my health insurance is primarily intended to let me access care from on-campus providers during the academic year. So how will moving away from campus affect college students’ access to needed medical care during this pandemic? In the context of a growing pandemic that affects people of all ages, the costs associated with limited health insurance coverage could discourage displaced students from accessing needed care, especially those from low-income and middle-income families. Many university-sponsored health insurance plans impose high out-of-network costs, meaning that accessing even vitally-necessary care could pose a serious financial burden for low-income students. I’m no longer living in university housing, so my former primary care doctor is not in my insurance network. This means that I would pay 30% of the cost out of pocket for a visit to my primary care physician or an out-of-network hospital. That could easily cost thousands of dollars. Financial disincentives to access care like this, especially now, are a public health concern, but I can’t seem to find a single article discussing this potential disaster. I’m not overly worried about paying for my own care. I come from a middle-class family (my parents are teachers), I’m young, and I’m fairly healthy. For lower-income students that don’t qualify for Medicaid, though, paying 30% of a hospital bill would likely prove impossible. It could lead to bankruptcy. Needing hospital care is not much of a choice, but low-income students in need of care could soon be forced to choose between receiving life-saving treatment or paying rent. Even as someone from a middle-class family, paying up to my yearly out-of-pocket maximum of $6,350 for a prolonged hospital stay could put my family into dire financial straits. While COVID-19 disproportionately impacts older people, college students are not immune to the virus. According to the CDC’s most recent data, 20% of those hospitalized for COVID-19 were between 20 and 44 years old. College students can still be at high risk for severe complications from the virus if they have diabetes, severe asthma, or are otherwise immunocompromised. Even otherwise young and healthy people can become severely ill or die from COVID-1
Factsheet: Cancel Federal Student Loans to Provide Short and Long-Term Stimulus Amid Pandemic – Americans for Financial Reform – In response to the COVID-19 pandemic and its devastating economic impact, Americans for Financial Reform calls on Congress and the U.S. Department of Education to use their authority to cancel federal student loan debt. In the short term, the Department should act with urgency to end any offsets of tax refunds and immediately halt wage garnishment for federal student loans. The Department and Congress should also consider making principal and interest payments on outstanding federal student loans. Even prior to the COVID-19 crisis, federal student loan defaults had increased nearly 14% from federal fiscal year 2018 to 2019. This works out to approximately one default every 26 seconds. Labor shocks like those the pandemic are likely to cause will undoubtedly increase federal student loan defaults. The consequences for borrowers in default on federal student loans are punitive and severe, with tax refunds seized and wages garnished. Cancelling debt would be a powerful and efficient way to immediately relieve pressure on distressed borrowers, boost consumer spending at a time when the economy is contracting, and reduce hardship on people who lose income because of the pandemic and efforts to fight its spread. Cancelling federal student debt would provide short-term stimulus:
- Instead of wages being garnished for student loans, borrowers would pass the savings right back into the economy by spending to meet day-to-day needs and paying other bills. A Brandeis University report showsthat debt cancellation would free up several hundred dollars each month for consumption and investment that is currently going to interest payments.
- Research also shows that federal student debt cancellation increases borrowers income by about $3000 over a three year period.
In the medium-term, canceling student debt can also soften the blow of recession, as student debt cancellation has many stimulative effects. Cancelling federal student debt also provides long and medium-term benefits:
- The Levy Institute has estimated that student debt cancellation would boost GDP by up to $108 billion a year, and add up to 1.5 million jobs per year, over a ten year period.
- Moody’s Investors Service has said “In the near term, we would expect student loan debt cancellation to yield a tax-cut-like stimulus to economic activity.”
The Secretary of Education has the authority, under the Higher Education Act, to compromise and modify student debt. Student debt cancellation would provide relief for low-income Americans who may otherwise have trouble paying medical or housing bills, and for anyone whose income is affected by the crisis. Cancelling student debt would be a powerful tool to mitigate the impact of the Coronavirus crisis on individuals, families, communities and the broader economy. The government should swiftly take action to use it.
The Stimulus Fails Student Borrowers. Congress Must Cancel Their Debt. – Alexis Goldstein – Just before midnight on Wednesday, the Senate passed the long-negotiated $2 trillion stimulus package. The theme of the stimulus overall seems to be that every win for ordinary people is paired with far more wins for companies. And while the package is imaginative when it comes to enormous loan funds for big businesses with few conditions, for the 43 million federal student loan borrowers in the United States, the relief is severely inadequate. There is cash in the bill for colleges and universities, but no federal student loan cancellation for borrowers who attended those schools in the past. In other words, colleges got bailed out, but alumni got sold out. The bill creates a $14.25 billion higher education emergency relief fund for institutions that were not completely online prior to the coronavirus emergency. Thankfully, schools must use at least half of the funds on its students: for food, housing, health care or other expenses. But the rest of the funds lack any bans on using them for executive bonuses or advertising and marketing. And that’s a real problem since for-profit colleges that were not completely online prior to the pandemic can also access these funds. For-profit colleges are infamous for their horrible student outcomes, series of bankrupt institutions, piles of lawsuits and their targeting of people hardest hit by the last financial crisis. Despite this, their CEOs often make millions, and they spend enormous sums on advertising – and now, some of these schools may use the emergency relief funds to do so.Contrast this freewheeling approach toward schools with the relief given to students by the bill. The most significant relief is a six-month suspension (through September 30) on some, but not all, federal student loans. According to 2020 data from the National Student Loan Data System, nearly 2 million Perkins borrowers and over 7 million with commercially held or guaranty agency-held FFEL loans will be left out of stimulus relief. For those who are eligible, interest will not accumulate on these federal student loans during those six months (throughSeptember 30), and there will be no negative reporting to credit reporting agencies during that time, either. But borrowers’ principal will remain the same – there is no student debt cancellation included in the bill.One serious problem with this bill is that it doesn’t apply to all federal student loan borrowers, but only those with loans held by the federal government. Most borrowers don’t know what kind of loans they have, but there are several types. Those who borrowed after 2010 will have a Federal Direct Loan, which is held by the federal government. But those with loans prior to that may have a Federal Family Education Loan (FFEL). Some of these are held by the government, but some are held by private companies. Those borrowers with FFEL loans that are privately held will not be eligible for any of the relief: not the six months of suspended payments, nor the waiving of interest, nor the stop on debt collection and wage garnishments. This is going to create an enormous amount of confusion for many student borrowers with older loans, and it will seem unfair and arbitrary. Worse still, it’s coming at a time when borrowers are having extraordinary trouble even reaching their servicers, in part due to them closing some call centers or reducing hours – so those seeking clarity may have trouble finding it from the companies the Department of Education pays to help them.
Countries Starting to Hoard Food, Threatening Global Trade – It’s not just grocery shoppers who are hoarding pantry staples. Some governments are moving to secure domestic food supplies during the conoravirus pandemic. Kazakhstan, one of the world’s biggest shippers of wheat flour, banned exports of that product along with others, including carrots, sugar and potatoes. Vietnam temporarily suspended new rice export contracts. Serbia has stopped the flow of its sunflower oil and other goods, while Russia is leaving the door open to shipment bans and said it’s assessing the situation weekly. To be perfectly clear, there have been just a handful of moves and no sure signs that much more is on the horizon. Still, what’s been happening has raised a question: Is this the start of a wave of food nationalism that will further disrupt supply chains and trade flows? U.K. Grocers Ration Buying and Bulk Up Online to Deal With Virus Shoppers wait on the street for the general opening of the store, during a time set aside for elderly and vulnerable members of the community to shop, at an Iceland Foods store in London on March 18.Photographer: Simon Dawson/Bloomberg “We’re starting to see this happening already — and all we can see is that the lockdown is going to get worse,” said Tim Benton, research director in emerging risks at think tank Chatham House in London. Though food supplies are ample, logistical hurdles are making it harder to get products where they need to be as the coronavirus unleashes unprecedented measures, panic buying and the threat of labor crunches. Consumers across the globe are still loading their pantries — and the economic fallout from the virus is just starting. The specter of more trade restrictions is stirring memories of how protectionism can often end up causing more harm than good. That adage rings especially true now as the moves would be driven by anxiety and not made in response to crop failures or other supply problems. As it is, many governments have employed extreme measures, setting curfews and limits on crowds or even on people venturing out for anything but to acquire essentials. That could spill over to food policy, said Ann Berg, an independent consultant and veteran agricultural trader who started her career at Louis Dreyfus Co. in 1974. “You could see wartime rationing, price controls and domestic stockpiling,” she said.Some nations are adding to their strategic reserves. China, the biggest rice grower and consumer, pledged to buy more than ever before from its domestic harvest, even though the government already holds massive stockpiles of rice and wheat, enough for one year of consumption.
Coronavirus measures could cause global food shortage, UN warns – Protectionist measures by national governments during the coronavirus crisis could provoke food shortages around the world, the UN’s food body has warned. Harvests have been good and the outlook for staple crops is promising, but a shortage of field workers brought on by the virus crisis and a move towards protectionism – tariffs and export bans – mean problems could quickly appear in the coming weeks, Maximo Torero, chief economist of the UN Food and Agriculture Organisation, told the Guardian. “The worst that can happen is that governments restrict the flow of food,” he said. “All measures against free trade will be counterproductive. Now is not the time for restrictions or putting in place trade barriers. Now is the time to protect the flow of food around the world.” Governments must resist calls from some quarters to protect their own food supply by restricting exports, he said, as some have begun to do. Kazakhstan, for instance, according to a report from Bloomberg, has banned exports of wheat flour, of which it is one of the world’s biggest sources, as well as restrictions on buckwheat and vegetables including onions, carrots and potatoes. Vietnam, the world’s third biggest rice exporter, has temporarily suspended rice export contracts. Russia, the world’s biggest wheat exporter, may also threaten to restrict exports, as it has done before, and the position of the US is in doubt given Donald Trump’s eagerness for a trade war in other commodities.“Trade barriers will create extreme volatility,” warned Torero. “[They] will make the situation worse. That’s what we observe in food crises.” While the supply of food is functioning well in most countries at present, problems could start to be seen within weeks and intensify over the following two months as key fruit and vegetables come into season. These types of produce often have short ripening times and are highly perishable, and need skilled pickers to work quickly at the right time.“We need to be careful not to break the food value chain and the logistics or we will be looking at problems with fresh vegetables and fruits soon,” said Torero. “Fruit and vegetables are also very labour intensive, if the labour force is threatened because people can’t move then you have a problem.”
Parking pain: Airlines, airports hunt for storage space as pandemic idles planes – (Reuters) – As airlines idle thousands of aircraft for which there are no passengers, they are hitting an unprecedented problem: finding a place to park them. Taxiways, maintenance hangars and even runways at major airports are being transformed into giant parking lots for more than 2,500 airliners, the biggest of which takes up about as much room as an eight-story building with a footprint 3/4 the size of an American football field. The number of planes in storage has doubled to more than 5,000 since the start of the year, according to Cirium data, with more expected to be parked in the coming weeks as carriers like Australia’s Qantas Airways Ltd and Singapore Airlines Ltd proceed with further announced cuts to flight schedules. In Frankfurt, Germany’s biggest airport is a ghost town of silent airliners. Its northwest landing runway, including taxiways and bridges, has been converted to an aircraft parking lot for Lufthansa, Condor and other airlines. Lufthansa brand Swiss has rented parking spots at a military airport close to Zurich. Similar crowds of planes are parked at other major airports, including Hong Kong, Seoul, Berlin and Vienna as well as traditional desert parking lots in Victorville, California, and Marana, Arizona, according to data from flight tracking website FlightRadar24. In Manila, some Philippines Airlines jets are parked in the Lufthansa Technik Philippines hangar, an airline official said. Even some smaller airports have been converted to parking lots. Avalon Airport west of Melbourne expects to take 50 planes from Qantas and its low-cost offshoot, Jetstar
Olympics Committee member says games will be postponed this year – The 2020 Tokyo Olympic Games will be postponed amid the coronavirus pandemic, a committee member told USA Today in an interview Monday. “On the basis of the information the IOC has, postponement has been decided,” veteran International Olympic Committee member Dick Pound told the newspaper. “The parameters going forward have not been determined, but the Games are not going to start on July 24, that much I know.” The IOC will announce its next steps soon, said Pound, a Canadian former swimming champion. “We will postpone this and begin to deal with all the ramifications of moving this, which are immense,” he told USA Today. The Olympic Committee has faced growing calls to postpone the summer games, including from Global Athlete, which represents Olympic hopefuls, and USA Swimming and USA Track & Field. Australia and Canada had already announced they would not compete in the Tokyo Games if they took place as originally scheduled. The IOC said Sunday that officials were considering postponing the games, but they have repeatedly insisted the event will not be canceled. “The IOC [executive board] emphasized that a cancellation of the Olympic Games Tokyo 2020 would not solve any of the problems or help anybody. Therefore, cancellation is not on the agenda,” the committee said Sunday. Large gatherings – including other sporting events across the globe – have been canceled over the coronavirus, which has infected more than 367,000 people globally, according to data compiled by Johns Hopkins University.
The Second Virus Shockwave Is Hitting China’s Factories Already – Since last week, emails from foreign clients have been flooding into export manager Grace Gao’s in-box, asking to delay orders already made, putting goods ready to be shipped on hold until further notice, or asking for payment grace periods of up to two months. Gao’s firm, Shandong Pangu Industrial Co., makes tools like hammers and axes, 60% of which go to the European market. As the virus ravages the continent from Spain to Italy, the shutdowns there are cutting off orders to Chinese factories just as they were beginning to get back on their feet. It’s a story playing out across the country. “It’s a complete, dramatic turnaround,” lamented Gao, estimating sales in April to May will plunge as much as 40% from last year. “Last month, it was our customers who chased after us checking if we could still deliver goods as planned. Now it’s become us chasing after them asking if we should still deliver products as they ordered.” This emerging pattern poses a grave risk to the chances the world’s second-largest economy can repair the damage from the closures in February to curb the virus. Even as policy makers including Premier Li Keqiang talk up a recovery and roll out support measures, economists continue to cut their growth forecasts. “It is definitely the second shock-wave for the Chinese economy,” said Xing Zhaopeng, an economist at Australia & New Zealand Banking Group. The global spread of the virus “will affect China manufacturing through two channels: disrupted supply chains and declining external demand.” The earliest insight from official data into the emerging pain for industry will come on March 31, when the purchasing managers’ indexes for the month are released. But unless there is a strong rebound, the record slump in profits seen in the first two months of the year is likely to continue. In the meantime, firms are saying that canceled orders, uncertain logistics and delayed payment have become their latest headaches. “Manufacturers are seeing many cases where overseas clients regretted their orders or where goods can’t be delivered due to customs closures in other countries,” said Dong Liu, vice president of Fujian Strait Textile Technology Co. in southeastern China. His factory was about to resume full capacity, after the return of workers who had been stranded in Hubei province, the center of the original outbreak. “The dent on export orders is rather serious.”
Retailers Cancel Orders From Asian Factories, Threatening Millions of Jobs – Retailers are suspending and canceling clothing orders, threatening millions of factory jobs in Asia just as China shows signs of recovering from the worst of the coronavirus outbreak. Among the first to be hit by the consumer shutdown in the West are suppliers to the world’s “fast-fashion” giants, like H&M HM.B 3.65% owner Hennes & Mauritz AB. Their business models depend on being able to get orders from factory floors to retail outlets in a matter of weeks. They are now pausing or canceling factory orders, boding ill for Asian manufacturers of other, slower-moving consumer goods like cosmetics, smartphones and cars. Associated British Foods ASBFY 11.43% PLC, which owns Primark, a retailer with stores across Europe, and Peacocks Stores Ltd., a U.K. retailer owned by EWM Group, have suspended or canceled orders, according to public statements and notices to suppliers viewed by The Wall Street Journal. Mostafiz Uddin, who owns a Bangladeshi jeans manufacturer, said his factory made around 14,500 jeans for Peacocks only to receive a letter saying that the store wouldn’t accept the order. “If they don’t take the goods, it’s a big loss for me,” he said. “What will I do with this?” Mr. Uddin said he is negotiating with the retailer to receive payment for the jeans. Factory owners are usually very reluctant to take legal action because they don’t want to alienate buyers. In a March 17 email to Mr. Uddin, Peacocks described its move as an “extreme measure,” but said “no stock will be allowed to be delivered into this business.” He responded that this “should be a time of support and not turning backs on partnerships.” Peacocks didn’t respond to requests for comment about the status of its clothing orders. Primark and H&M say they, too, are pausing new orders. H&M said it is also evaluating “potential changes on recently placed orders.” The company buys from around 1,400 factories globally, with clothing production concentrated in China and Bangladesh. Ulrika Isaksson, an H&M spokeswoman, said “our long-term commitment to suppliers will remain intact, but in this extreme situation we need to respond fast.” An ABF spokesperson said that “no company could be expected to shoulder financial losses of the scale that would arise without ending these garment orders.” The spokesperson said the company is paying for inventory that is already at sea in transit, and is in talks with suppliers to explore other forms of mitigation.
Global economic slump accelerating –As the coronavirus spreads, taking more lives at an escalating rate, its effects are penetrating ever deeper into the global economy. Goldman Sachs warned last week that US gross domestic product (GDP) would contract by 24 percent in the second quarter. There are forecasts that up to 5 million jobs will be lost in the American economy this year, with the fall in economic output to total as much as $1.5 trillion. Goldman expects, at this stage, that US output will contract 3.1 percent this year and the unemployment rate will rise to 9 percent from the current level of 3.5 percent. This is on a par with the jobless rate of 10 percent in October 2009, following the financial meltdown of 2008. But just as the health impact of the virus was significantly underestimated, the same may apply to the current economic forecasts. “Things look so gloomy right now that perhaps we should be grateful if we can get out of this health crisis with a brief recession,” Bernard Baumohl of the Economic Outlook Group told the Wall Street Journal. “You just cannot rule out the prospect of a longer, more destructive depression,” he said. In other words, a relatively short but deep recession is now the “best case” scenario. The eurozone is expected to experience a fall of around 10 percent of GDP. But this forecast could well be exceeded. There is no end in sight to the spread of the virus and no clear assessment of the economic effect of the shutdowns being implemented to try to combat it.
UN chief calls for halt to armed conflict worldwide, focus on ‘true fight of our lives’ -United Nations Secretary-General António Guterres said Monday that the world should declare a global cease-fire to focus on the coronavirus pandemic. “It is time to put armed conflict on lockdown and focus together on the true fight of our lives,” Guterres said in a virtual news conference, Reuters reported. “The virus does not care about nationality or ethnicity, faction or faith. It attacks all, relentlessly. Meanwhile, armed conflict rages on around the world,” he said. “The most vulnerable – women and children, people with disabilities, the marginalized and the displaced – pay the highest price,” Guterres added. “They are also at the highest risk of suffering devastating losses from COVID-19.” The U.N. head warned that international conflicts in countries such as Syria, Yemen and Libya have caused the collapse of health care infrastructure, leaving both the victims of war and coronavirus patients in those regions particularly vulnerable. “End the sickness of war and fight the disease that is ravaging our world,” he reportedly said. “It starts by stopping the fighting everywhere. Now. That is what our human family needs, now more than ever.” More than 351,000 cases of the virus and over 15,330 deaths have been confirmed worldwide as of Monday, according to a Reuters tally.
“European PMIs are… Well, There Is No Word For That!’ – Speechless. March statistics are very ugly everywhere in Europe. German Flash manufacturing PMI is out at 45.7 and services PMI is falling at 34.5 (yes, 34.5!!!). The below chart is the first of many others that will look like this all around the world. There is no doubt that Germany and the eurozone are already in recession.In many European countries, the manufacturing sector declined further, but the services sector saw the sharpest slowdown, even more than anticipated (28.4 for the eurozone, 29.0 for France and 35.7 for the UK). It is a very worrying sign for countries, such as France or the United Kingdom, that have a strong reliance on services.In terms of policy, this is pretty clear what kind of business is most in need of immediate support here. European countries will need to do much more to address the current situation and implement demand-oriented measures to support the economy.Amongst the potential measures, we favor a decrease in VAT (as there is zero chance that helicopter money will be considered) which would create a positive shock on consumer confidence and thus have a immediate impact on economic activity.
Canada registers 500,000 Employment Insurance claims in one week, as Coronavirus triggers jobs massacre – In just four days last week, Canada’s federal government received 500,000 applications for Employment Insurance (EI) from laid-off workers. The figure is far higher than the 425,000 total jobs lost in the eight months immediately following the eruption of the 2008 global financial crisis, and points to the countrywide job massacre that has been triggered by the spread of the coronavirus pandemic. According to University of Calgary economist Trevor Tombe, last week’s EI applications equaled 2.6 percent of the total Canadian labour force. This is in line with percentage of the workforce that lost their jobs in July 1932, the worst month for layoffs and plant closures during the Great Depression. But in reality, the current jobs crisis is even worse. As a result of the cuts made to unemployment benefits by Liberal and Conservative federal governments over the past 40 years and the rise of precarious contract work, just 40 percent of jobless workers qualify for EI, although this figure tends to rise in the first stages of a pronounced economic crisis, when many longtime workers lose their job. All this suggests that the true number of workers who lost their jobs last week is many hundreds of thousands more than half-a-million, and could possibly be as high as a million. Economic analysts are now projecting that Canada’s economic output will contract by a staggering 11 percent in the second quarter of 2020. In the United States, far and away Canada’s most important trading partner, output is expected to plunge 24 percent, according to Goldman Sachs. The layoffs have swept across the entire economy. In the airline sector, Air Canada is laying off 5,100 flight attendants, while Air Transat will cut 2,000 jobs. Longview Aviation Capital, which manufactures twin-engine aircraft, will cut close to 1,000 positions at its production sites in Ontario, Alberta, and British Columbia. In the auto industry, tens of thousands of workers at the Detroit Three plants in Ontario and related parts suppliers have been, or soon will be, laid off, after workers protested over being made to work in unsafe conditions, packed together on assembly lines. In the arts and entertainment sector, the Banff Centre for Arts and Creativity is laying off 400 workers. Hundreds of thousands of low-paid workers in theaters, cinemas, restaurants, the film and television industries, and tourist services are now out of work. The best the many hundreds of thousands of workers of newly unemployed can hope for is that they receive 60 percent of their former salary, as under the current EI system, with the maximum benefit capped at $573 per week.
How the World Will Look After the Coronavirus Pandemic Foreign Policy – Like the fall of the Berlin Wall or the collapse of Lehman Brothers, the coronavirus pandemic is a world-shattering event whose far-ranging consequences we can only begin to imagine today.This much is certain: Just as this disease has shattered lives, disrupted markets and exposed the competence (or lack thereof) of governments, it will lead to permanent shifts in political and economic power in ways that will become apparent only later. To help us make sense of the ground shifting beneath our feet as this crisis unfolds, Foreign Policy asked 12 leading thinkers from around the world to weigh in with their predictions for the global order after the pandemic.
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