Written by rjs, MarketWatch 666
News posted last week about economic effects related to the coronavirus 2019-nCoV (aka SARS-CoV-2), which produces COVID-19 disease, has been surveyed and some articles are summarized here. We cover the latest economic data, especially Munchin’s withdrawal of support for the Fed’s covid lending programs, housing market reports, mortgage delinquencies & forbearance, layoffs, lockdowns, and schools, as well as GDP. The bulk of the news is from the U.S., with a few articles from overseas at the end. (Picture below is morning rush hour in downtown Chicago, 20 March 2020.) News items about epidemiology and other medical news for the virus are reported in a companion article.
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Fed Signals New Guidance Coming on Asset-Purchase Program – WSJ — Federal Reserve officials this month discussed plans to provide more information about how long they will keep purchasing Treasury and mortgage-backed securities by linking the time frame for the stimulus program to economic conditions. Minutes of the Nov 4-5 meeting released Wednesday showed officials were prepared to roll out the revised guidance as soon as their next meeting, set for Dec. 15-16. They also discussed ways that the purchases could be altered to provide more stimulus to the economy, if needed. But they didn’t indicate any imminent changes in that direction. Whether the Fed takes any of those additional steps next month could depend on how the economy and financial markets weather rising virus infections and the removal, at the end of the year, of emergency lending programs established by the Fed and the Treasury Department. Since June, the Fed has been buying $80 billion a month in Treasurys and $40 billion in mortgage securities, net of redemptions, and its rate-setting committee said in its policy statement that those purchases would continue “over coming months.” “Many participants judged that the committee might want to enhance its guidance for asset purchases fairly soon,” the minutes said. In September, the Fed provided guidance about its interest-rate plans by laying out three economic conditions that would need to be met before it raised rates from near zero. The Fed said it would hold rates at that level until the labor market is healed, inflation hits 2% and inflation is projected to run moderately above 2%. Similar guidance for the asset purchases could say, for example, that the central bank won’t reduce the pace until the pandemic has passed, or until officials are satisfied that they are on track to meet those other conditions. Most officials thought the guidance should imply that they would slow the pace of bond purchases before beginning to raise short-term interest rates, the minutes said. At their meeting this month, officials said it would be important for the new guidance around asset purchases to be consistent with the September guidance around interest rates “so that the use of these tools would be well coordinated,” the minutes said. A few officials said they were hesitant to make the change soon because the economic outlook was so uncertain. Fed officials are navigating an outlook clouded by the risk that the economic recovery slows in the winter months amid rising coronavirus cases. At the same time, positive developments about vaccine trials raises the prospect of a stronger rebound later in 2021.
Why the Trump administration curbing the Fed’s lending powers is such a big deal – Dec. 31 is shaping up to be a bleak day for the U.S. economy. Millions of unemployed Americans will no longer qualify for government aid. Renters will lose their protections for evictions. Student loan debt-holders will lose their relief. And now it looks like the Federal Reserve will be forced to end a bunch of emergency lifeline programs for troubled businesses, cities and states. The ending of all this aid is coming at a rough time. The economic recovery is stalling and starting to backslide. Layoffs are ticking up again, household spending is slowing and people aren’t venturing out much as coronavirus cases skyrocket in much of the country. Business leaders, economists and even many Wall Street investors are urging government leaders to enact more aid to get the nation through the winter without more dramatic losses of jobs, businesses and even lives. Yet instead of looking for ways to get more relief out, the Trump administration took steps this week to further reduce what aid will be available in January. On Thursday, Treasury Secretary Steven Mnuchin stunned many by sending a letter to the Fed insisting the central bank return all unused emergency Cares Act funds to Treasury by the end of the year. Ever since the Fed announced these special lendin facilities that would provide additional aid, if needed, to small businesses, corporations and municipalities, the bond markets relaxed. It was basically the equivalent of a young child being able to see a parent at the edge of the playground. The child doesn’t necessarily need to hold the parent’s hand all the time, but just knowing that backup support is nearby provides enough of a sense of comfort. The cost of corporate borrowing fell after the Fed put these supports in place. Mnuchin wants to take that support away just as the economy appears to be heading into a very rough winter – and a transition of power to the Biden administration. The situation is so worrisome that Wall Street firm JPMorgan Chase just started warning clients that U.S. economic growth is likely to be negative in early 2021.Even the Fed, which has gone out of its way to refrain from saying anything about the Trump administration, felt the need to issue a statement Thursday publicly disagreeing with Mnuchin’s request.”The Federal Reserve would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy,” the Fed said. It’s a gamble that could have devastating consequences this winter if the nation can’t get the coronavirus under control while layoffs and business closures escalate.
The Mnuchin-Powell Affair Over the Fed’s “Special Purpose Vehicles” in Dollars & Effects — Fed Chair Jerome Powell replied on Friday afternoon with his own “Dear Mr. Secretary” letter to Treasury Secretary Steven Mnuchin’s “Dear Chair Powell” letter on Thursday. Both letters were full of compliments for the other and for their cooperation and for their success in inflating asset prices. But with regards to asset prices in the credit markets, Mnuchin’s letter gave specific metrics and said enough is enough. And Powell’s letter said, OK, the Treasury can have the taxpayer money back that it sent us. You’d think something earth-shattering happened based on the media hullabaloo that ensued. On Thursday afternoon, Mnuchin informed the Fed of two things: One that he would not extend again the already extended expiration date of December 31 of five of the controversial over-the-line Special Purpose Vehicles (SPVs) the Fed had set up earlier this year under the direction of the Treasury to bail out and enrich bondholders, particularly junk-bond holders and speculators with huge leveraged bets; and two, that he wants the Fed to return the $455 billion in taxpayer money the Treasury had sent to the Fed to fund these SPVs with equity capital, and that the Fed has not used. The actual bond purchases the Fed did under these five SPVs were minuscule by Fed standards, whose balance sheet is measured in trillions of dollars. Those SPVs were mostly used as a jawboning tool to inflate asset prices. Between the Fed’s first announcement of these SPVs in March and the end of October, the Fed bought just $22.6 billion under these five programs, including corporate bonds, corporate bond ETFs, asset-backed securities, municipal bonds, and bank loans to main-street businesses, a minuscule amount considering its $7.24 trillion with a T in total assets. The total assets on the Fed’s balance sheet as of Wednesday amounted to $7.24 trillion, a tad higher than on June 10, with a dip in the middle. Of that $7.24 trillion in assets, the $22.6 billion in these to be expiring SPVs is so small that it cannot even be marked into this chart: In his letter on Thursday, Mnuchin listed 12 key financial metrics to show that those SPVs did accomplish their goal of bailing out and enriching bondholders and leveraged speculators, and in the process, they created wondrous credit markets that are now frothing at the mouth. And the Fed did it, as Mnuchin acknowledged, almost exclusively through hype and jawboning, instead of actually buying the corporate bonds and other instruments. And most of the money the Treasury had sent remained unused, and could now be used for direct Covid-related fiscal relief by the government instead of enriching bondholders via the Fed. In an interview on CNBC, Mnuchin, after being accused of playing political games, said all the right things – maybe for the wrong reasons – when discussing why he’d let these five SPVs expire as planned: “We’re not trying to hinder anything. We’re following the law,” he said. “I am being prudent and returning the money to Congress like I’m supposed to,” he said. “This is not a political decision.” And he said, “The people that really need support right now are not the rich corporations, it is the small businesses.” OK, what Mnuchin didn’t say was that bondholders and bond-speculators have gotten immensely rich by the market’s reaction to the March announcement of these SPVs and the hype and jawboning that came along with it, as bond prices surged across the board. Powell in his “Dear Mr. Secretary” letter on Friday afternoon told Mnuchin – after going through the same kind of mutual back-slapping Mnuchin had gone through – that the Fed would return those taxpayer funds to the Treasury. But given how small the actual amounts were in these SPVs, and given the magnitude of its QE binge – $3 trillion in three months – it is clear that letting these essentially unused facilities expire as planned isn’t going to matter to the real economy, though it might matter a little to the speculators and investors who got rich off the jawboning, but they had it so good for so long and they shouldn’t complain. But returning $455 billion to the Treasury and having Congress fashion new fiscal aid programs for Covid relief to small businesses and the unemployed would make a huge difference. Why do bondholders and speculators have to be coddled all the time to further increase the wealth disparity, instead of providing a modicum of fiscal relief to the unemployed and struggling small businesses? Powell didn’t even attempt to explain that.
The Untold Story of Mnuchin’s Demand for the Fed to Shut Down Emergency Lending Programs — Pam Martens – Fourteen days before U.S. Treasury Secretary Steve Mnuchin released a letter to Federal Reserve Chair Jerome Powell, demanding the return of taxpayers’ money and the end to specific Fed emergency programs by the end of the year, four Senate Democrats had written to Mnuchin and Powell asking them to extend those very same emergency programs. The Senate Democrats who authored the letter were Senators Sherrod Brown of Ohio, Elizabeth Warren of Massachusetts, Mark Warner of Virginia and Chuck Schumer of New York. The letter explained that “As of September, 3.8 million workers suffered permanent job losses, with 2.4 million considered long-term unemployed. Moreover, according to an analysis from Moody’s, without more federal support, another 3 million teachers, nurses, emergency responders, firefighters, and others from around the country will lose their jobs in the next two years.”The Senators outlined sensible plans for both extending and modifying the Fed’s Main Street Lending Program and the Municipal Liquidity Facility. Exactly two weeks later, on November 19, Mnuchin sent his own letter to Powell telling him to kill those exact programs by the end of the year, along with the Corporate Credit Facilities and the Term Asset-Backed Securities Loan Facility (TALF). See the full text of the letter here.The four programs directed at helping Wall Street were the only programs that Mnuchin instructed the Fed to keep alive past December 31, 2020. Those programs are the Primary Dealer Credit Facility, which sluiced tens of billions of dollars to the trading houses on Wall Street that are owned by the big Wall Street banks; the Commercial Paper Funding Facility; the Money Market Mutual Fund Liquidity Facility; and the Paycheck Protection Program Liquidity Facility, which reimburses certain banks for loans they had provided under the Small Business Administration’s PPP program. Citigroup, the recipient of the largest bailout in history during the 2007 to 2010 financial crisis, has inexplicably received over $3 billion from that Fed program this year. (SeeCitigroup Has Made a Sap of the Fed: It’s Borrowing at 0.35 % from the Fed While Charging Struggling Consumers 27.4 % on Credit Cards.) The Fed has made transaction level data available for all of its lending programs exceptthree of the four that Mnuchin wants to keep alive. The Fed has not made one scintilla of information available about the names of the borrowers or the dollar amount loaned to specific borrowers under the Primary Dealer Credit Facility, the Commercial Paper Funding Facility and the Money Market Mutual Fund Liquidity Facility.
75% of the $454 Billion CARES Act Money Never Went to the Fed; It Was Invested by a Mnuchin Slush Fund Called the ESF – Pam Martens – The CARES Act was signed into law on March 27. Congress earmarked $454 billion of that stimulus money to be distributed by the Treasury to the Federal Reserve to be used for emergency lending programs to save businesses and jobs during the pandemic and keep credit flowing to the U.S. economy. The catch was that the Treasury Secretary, Steve Mnuchin, would have to give his approval for each of the programs. Since June, Wall Street On Parade has been reportingthat $340 billion of the $454 billion that Mnuchin was instructed to turn over to the Fed was unaccounted for. We noted that 98,000 businesses had permanently closed in the U.S. while this money, intended for economic relief, went missing. On November 19, Mnuchin publicly issued a letter to Fed Chair Jerome Powell, making it sound like most of the CARES Act money has been sitting idle at the Fed and Mnuchin was demanding it back to put to better use.Adding to our conviction that Mnuchin was intentionally misleading the public, Bloomberg News published an article on Tuesday about the funds that Mnuchin planned to claw back from the Fed. The Bloomberg article carried this sentence: “The money in question includes $429 billion that Mnuchin is clawing back from the Fed – which backed some of the central bank’s emergency lending facilities … ” But for months now, the Federal Reserve’s weekly financial statements known as the H.4.1 have indicated that all the Fed received from Treasury for its emergency lending facilities was $114 billion, leaving $340 billion unaccounted for. Wall Street On Parade has repeatedly asked the press office of the U.S. Treasury to explain this discrepancy. It has refused to answer our inquiries. We have repeatedly asked the Fed’s press office to explain this discrepancy and it has directed us to its official financial statements which show it has received just $114 billion from the Treasury for its emergency lending programs. This morning, we located the missing funds on our own with no help from the Treasury’s press office that is paid by American taxpayers to keep the public informed. Tens of billions of dollars of CARES Act money has been put to very strange use by Mnuchin in a slush fund called the Exchange Stabilization Fund (ESF) which states that it gives the U.S. Treasury Secretary “considerable discretion in the use of ESF resources.”We located the financial statements for the Exchange Stabilization Fund and they confirmed that all the Treasury has given the Fed for its emergency lending facilities was the same $114 billion that the Fed has been reporting on its financial statements.We compared the Exchange Stabilization Fund’s most recent financial statement for September 30, 2020 to its fiscal year-end financial statement for September 30, 2019. At the end of 2019, the ESF had assets of $93.3 billion. With the money from the CARES Act, that amount had grown to $682 billion by September 30, 2020. Here are some of the peculiar line items that show how Mnuchin allocated money meant to save businesses in the U.S. during the pandemic and avoid millions of unnecessary job losses in the United States:
FOMC Minutes: “Concerned about the possibility of a further resurgence of the virus that could undermine the recovery” — From the Fed: Minutes of the Federal Open Market Committee, November 4-5, 2020. A few excerpts: Participants continued to see the uncertainty surrounding the economic outlook as quite elevated, with the path of the economy highly dependent on the course of the virus; on how individuals, businesses, and public officials responded to it; and on the effectiveness of public health measures to address it. Participants cited several downside risks that could threaten the recovery. While another broad economic shutdown was seen as unlikely, participants remainedconcerned about the possibility of a further resurgence of the virus that could undermine the recovery. The majority of participants also saw the risk that current and expected fiscal support for households, businesses, and state and local governments might not be sufficient to sustain activity levels in those sectors, while a few participants noted that additional fiscal stimulus that was larger than anticipated could be an upside risk. Some participants commented that the recent surge in virus cases in Europe and the reimposition of restrictions there could lead to a slowdown in economic activity in the euro area and have negative spillover effects on the U.S. recovery. Some participants raised concerns regarding the longer-run effects of the pandemic, including sectoral restructurings that could slow employment growth or an acceleration of technological disruptions that could be limiting the pricing power of some firms.
Joe Biden’s cabinet: A rainbow coalition of imperialist reaction – The corporate media and Democratic Party are celebrating Joe Biden’s incoming cabinet as “the most diverse in US history,” proclaiming that the appointment of women, African Americans and Latinos to key cabinet positions is a sign of tremendous social progress. In reality, Biden’s rainbow coalition of imperialist reaction encapsulates and exposes the right-wing essence of identity politics. Nowhere is the excitement more palpable than in the editorial offices of the New York Times, a leading proponent of racial and gender politics, which gushed that the president-elect has “signaled his intention to draw from a diverse cross section of America in building his cabinet.” Whatever the skin color of the cabinet members, the Biden administration will not think like America. The population is demanding massive social change to address the deadly pandemic and unprecedented levels of inequality and social desperation. Though over seven in 10 Americans favor universal health care, there will be no constituency within the cabinet for such a policy. The same goes for the more than six in 10 Americans who support tuition-free college and student debt forgiveness. They will be “represented” by a cabinet consisting of equity fund partners of various races and genders. And for the over 75 percent of Americans who want troops removed from Afghanistan and Iraq and who support cutting defense spending, the multi-racial Biden cabinet will give them the exact opposite. The nominees are not pioneers of their race or gender, they are social criminals: Avril Haines, a former CIA deputy director, will be the first woman director of national intelligence. Haines was an architect of the Obama administration’s drone assassination program, which killed thousands of impoverished Africans, Arabs and Central Asians, with no attention to the victims’ gender. Alejandro Mayorkas will be the first Latino to head the Department of Homeland Security. This will be little comfort for the hundreds of thousands of Latino (and other) immigrants he will deport in the coming months and years, or to the immigrant children he jailed in cages when he was deputy DHS secretary from 2013 to 2016. Linda Thomas-Greenfield, an African American, will be ambassador to the United Nations. Thomas-Greenfield worked in the State Department to help American oil and mining corporations extract resources from the world’s most impoverished countries. Though not formally a member of the cabinet, Vice President-elect Kamala Harris-the first woman and first African American in that position-made her career as a “black woman prosecutor” by trampling on the lives of the mostly impoverished people she incarcerated. Then there are the white men, whose own records are no more and no less criminal than those of their female and minority counterparts. Antony Blinken is the nominee for secretary of state, having helped orchestrate the wars in Syria, Libya and Yemen. He was a partner at a private equity firm and co-founded WestExec Advisors, which works with Israeli intelligence and helped develop Google’s censorship tools. Former Secretary of State John Kerry, supporter of intervention in Syria and the 2013 coup in Egypt that established the murderous al-Sisi dictatorship, will be “climate czar.” As for those on the shortlists for other cabinet positions, the Times holds its breath for the prospect of Tammy Duckworth becoming the first handicapped, Thai woman to serve as defense secretary. Former South Bend, Indiana Mayor Pete Buttigieg could be the first openly gay secretary of transportation. These servants of Wall Street and US imperialism have nothing in common with the working people of “their own” race, gender or sexual orientation.
Yellen at Treasury could resuscitate Fed’s loan programs – President-elect Joe Biden’s selection of Janet Yellen to be Treasury secretary increases the odds the government will double down on pandemic recovery efforts, which include lending programs that enable banks to provide credit to households and businesses. If confirmed, Yellen – a former head of the Federal Reserve – would inherit a shaky economy rattled by the coronavirus pandemic and growing division between Treasury and the Fed about how the recovery should proceed. After Treasury Secretary Steven Mnuchin essentially ordered the central bank to shut down credit backstops such as the Main Street Lending Program, many experts expect Yellen would work with Fed Chair Jerome Powell immediately to revive its emergency lending programs and would even try to convince Congress that those programs need more fiscal support. “Both Powell and Yellen believe that it’s good to have a full toolbox, and that having those programs available is helpful even if you don’t end up using them,” said Ian Katz, a director at Capital Alpha Partners. Mnuchin last week called on the Fed to let programs meant to limit the economic effect of COVID-19 expire at the end of the year and return unused funds appropriated by the Coronavirus Aid, Relief and Economic Security Act to backstop the facilities. After the Fed initially resisted, saying it preferred “that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role,” Powell later relented and said in a letter to Mnuchin that the central bank would return the money. That means five programs, including the Main Street Lending Program and the Municipal Liquidity Facility, will shut down on Dec. 31. The $600 billion Main Street program provides banks financial backing to make loans to midsize firms meeting certain criteria that need pandemic relief. But the program has been criticized for a slow start and limited participation by banks and borrowers. Brian Gardner, chief Washington policy strategist at Stifel, argued in a research note that replenishing the emergency lending programs will be one of Yellen’s top priorities once she is confirmed. “Yellen’s first matter of business will be to not only provide additional COVID-relief funding but to reestablish additional, temporary [Exchange] Stabilization Fund support that Treasury can provide to backstop Federal Reserve funding programs,” he said.
Yellen Will Confront a Cooling Economic Recovery, Uncertain Stimulus Prospects – WSJ – Janet Yellen, President-elect Joe Biden’s nominee to be Treasury secretary, will confront an economic recovery that appears to be losing momentum and uncertain prospects for additional stimulus from Congress.If confirmed by the Senate, Ms. Yellen would play a key role pushing for more aid for an economy battered by the coronavirus pandemic and related shutdowns, especially if Congress is unable to reach an agreement on a relief package before Mr. Biden takes office on Jan. 20.The rebound that began over the summer is showing signs of faltering as new virus cases surge and job growth slows, and much of the aid lawmakers passed earlier this year has run out. JPMorgan Chase & Co. economists said last week they expect the economy to shrink in the first quarter of 2021.Ms. Yellen, a former Federal Reserve chair, will have to forge broad consensus on economic policy and sell ideas within the administration, on Capitol Hill and among the general public, said Tony Fratto, a Treasury official in the George W. Bush administration.”Right now, we live in a country where people look at the same set of facts and come to diametrically opposite conclusions, so that is a big challenge for anybody who takes that job, to build support for your policy outcomes,” he said.Congress came together swiftly in the early months of the pandemic to pass a series of emergency aid bills totaling $3.3 trillion, including one-time stimulus payments for households, enhanced jobless benefits, loans for small businesses and vaccine research.Lawmakers have since been split over how much more support the economy needs. Senate Republicans, concerned about record budget deficits, have proposed a $650 billion package aimed at hard-hit businesses, including restaurants and airlines. Democrats have pushed for a $2.2 trillion measure that includes aid for state and local governments, jobless workers and a national virus testing strategy. Ms. Yellen has said that pulling back on spending too abruptly could lead to a slow recovery, like the one that followed the 2007-09 recession. As long as interest rates and inflation are low, there is little downside to borrowing more to help return the economy to its pre-pandemic health, she has said.Ms. Yellen, 74, served as a Fed governor from 1994 to 1997 and did a stint as chairwoman of the White House Council of Economic Advisers in the late 1990s. She was president of the San Francisco Fed from 2004 to 2010 and served as Fed vice chair from 2010 to 2014, alongside then-Chairman Ben Bernanke. President Obama picked her to lead the Fed from 2014 to 2018. “There is no one with more experience to help pull the economy out of the ditch,” Sen. Ron Wyden of Oregon, the top Democrat on the Finance Committee, said in a statement Monday.
Trump Is Trying to Set Yellen and Biden Up to Fail as He Sabotages the Economy — Alexis Goldstein – News that President-elect Joe Biden intends to nominate former Federal Reserve Chair Janet Yellen – the first fed chair to acknowledge the problems caused by inequality – to serve as treasury secretary broke yesterday. During her time as chair of the Federal Reserve, Yellen was receptive to progressives who pushed the Fed to be more responsive to communities of color. As treasury secretary, Yellen will now have her work cut out for her, as both she and Biden are inheriting a messy situation made messier by Trump’s active attempts at sabotage.The long delay to the start of the formal transition is hardly the only way that the Trump administration is working furiously to sabotage the incoming administration. Trump officials are also making moves to make future diplomacy, economic recovery and climate change remediation more difficult. Secretary of State Mike Pompeo, who has not acknowledged Joe Biden’s victory, spent the last week and a half creating diplomatic outrage across the world. In Paris, Pompeo met with reporters from the right-wing French magazine Valeurs Actuelles, which was criticized for its racism after it printed an image depicting a Black French lawmaker as a slave. Then, Pompeo became the most senior U.S. official to visit an Israeli settlement in the occupied West Bank. He traveled to a winery built on land claimed byPalestinians; the Israeli-owned winery had previously named a wineafter Pompeo. Most in the international community, including the United Nations, consider these settlements illegal under the Geneva Convention. But Pompeo announced that the U.S. will allow goods produced in Israeli settlements in occupied Palestinian territory to use a “Made in Israel” label. Pompeo also visited the Israeli-occupied Golan Heights in Syria. Syria condemned the visit, calling it “provocative” and a “flagrant violation” of Syrian sovereignty.Stephen Miles, executive director of Win Without War, describedPompeo’s 10-day tour as a way to actively sabotage Joe Biden. Shadi Hamid, a senior fellow at the Brookings Institution, told Bloomberg that Pompeo was spending the remainder of his time in office “trolling the world.“It’s not just diplomatic problems the outgoing Trump administration is causing; it appears to be attempting to create economic ones as well. Last week, Treasury Secretary Steven Mnuchin said he would shut downmost of the Federal Reserve’s emergency lending programs – including the program meant to lend to municipalities – and return any unused money. Since the Fed has only used about $25 billion, that totals some $429 billion. This means the likely end to future loans the Fed could have made to municipalities and medium-sized businesses in order to help aid the economic recovery. It’s worth noting, though, that the CARES Act only demands that any unused funds be sent back to the Treasury’s general fund – to be used for deficit reduction – in 2026. This means Yellen could, in coordination with the Fed, potentially restart the programs in the next administration.
Q3 GDP Growth Unchanged at 33.1% Annual Rate — From the BEA: Gross Domestic Product, Third Quarter 2020 (Second Estimate); Corporate Profits, Third Quarter 2020 (Preliminary Estimate) Real gross domestic product (GDP) increased at an annual rate of 33.1 percent in the third quarter of 2020, according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 31.4 percent.The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month that also showed an increase in real GDP of 33.1 percent. With the second estimate, upward revisions to nonresidential fixed investment, residential investment, and exports were offset by downward revisions to state and local government spending, private inventory investment, and personal consumption expenditures (PCE). Imports, which are a subtraction in the calculation of GDP, were revised up Here is a Comparison of Second and Advance Estimates. PCE growth was revised down slightly to 40.6% from 40.7%. Residential investment was revised up from 59.3% to 62.3%. This was at the consensus forecast.
Q3 GDP Second Estimate: Real GDP at 33.1%, Record High – The Second Estimate for Q3 GDP, to one decimal, came in at 33.1% (33.08% to two decimal places), a record increase from -31.4% (-31.38% to two decimal places) for the Q2 Third Estimate. Investing.com had a consensus of 33.2%. Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release: Real gross domestic product (GDP) increased at an annual rate of 33.1 percent in the third quarter of 2020 (table 1), according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 31.4 percent. The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month that also showed an increase in real GDP of 33.1 percent. With the second estimate, upward revisions to nonresidential fixed investment, residential investment, and exports were offset by downward revisions to state and local government spending, private inventory investment, and personal consumption expenditures (PCE). Imports, which are a subtraction in the calculation of GDP, were revised up (see “Updates to GDP”). The increase in third quarter GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to COVID-19. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the third quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note. [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We’ve also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.17% average (arithmetic mean) and the 10-year moving average, currently at 2.01%. Here is a log-scale chart of real GDP with an exponential regression, which helps us understand growth cycles since the 1947 inception of quarterly GDP. The latest number puts us 17.7% below trend. A particularly telling representation of slowing growth in the US economy is the year-over-year rate of change. The average rate at the start of recessions is 3.27%. All twelve recessions over this timeframe have begun at a higher level of current real YoY GDP.
Unchanged from early estimate, US economy grew 33.1% in Q3 –The second of three estimates on U.S. growth for the July-September quarter was unchanged at a record pace of 33.1%. But a resurgence in the coronavirus is expected to slow growth sharply in the current quarter with some economists even raising the specter of a double-dip recession. While the overall increase in the country’s total output of goods and services was static, the Commerce Department reported Wednesday, some components were revised. Bigger gains in business investment, housing and exports were offset by downward revisions to state and local government spending, business inventories and consumer spending. The 33.1% gain was the largest quarterly gain on records going back to 1947 and surpassed the old mark of a 16.7% surge in 1950. Still, the economy has not fully recovered from output lost in the first six months of the year when GDP suffered a record-shattering drop of 31.4% in the second quarter. That followed a slide at an annual rate of 5% in the first quarter as when the pandemic shut down much of the economy and triggered millions of layoffs. Economists are concerned that growth has slowed sharply in the current October-December and there are fears that GDP could dip back into negative territory in the first three months of next year. Mark Zandi, chief economist at Moody’s Analytics, said he had forecast GDP growth of around 2% in the fourth quarter, with the real possibility of GDP turning negative in the first quarter of next year. Economists at JPMorgan Chase have trimmed their forecast for the first quarter to a negative 1% GDP rate. “This winter will be grim and we believe the economy will contract again in the first quarter,” the JPMorgan economists wrote in a research note. “The economy is going to be very uncomfortable between now and when we get the next fiscal rescue package,” Zandi said. “If lawmakers can’t get it together, it will be very difficult for the economy to avoid going back into a recession.” While lawmakers have returned for a lame-duck session, there has been no progress so far in narrowing the differences between Democrats who are pushing for a big package of $1 trillion or more, and Senate Republicans who are refusing to approve anything above approximately $500 billion. More than 9 million people will lose their unemployment benefits at the end of the year when two jobless benefit programs are set to expire unless Congress extends them. At the same time virus cases are surging, triggering a number of states to re-impose business limits such as earlier closing times for bars and restaurants and stricter limits on the number of in-store shoppers.#160;
Business Cycle Indicators as of November 25th — Menzie Chinn – With October personal income and September manufacturing and trade sales reported today, we have this picture of the NBER Business Cycle Dating Committee‘s key indicators: Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus for employment as of 11/25 (light blue square), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (11/2 release), NBER, Bloomberg, and author’s calculations.The picture is consistent with growth at a greatly decelerated rate. The Bloomberg consensus for November employment growth rate is 4.4% (annualized, log terms), compared to the actually recorded October rate of 5.4% (annualized). I don’t think this incorporates the latest information regarding unemployment claims. In addition, some high frequency indicators (Tedeschi) suggest a negative growth rate for November. If there is an incipient downturn at year’s end, it hasn’t shown up in the conventional indicators. Personally, give the Covid-19 surge, administration and legislative branch obstructionism (if not scorched earth sabotage), I am a bit pessimistic.
Q4 GDP Forecasts: Some Upward Revisions – From Merrill Lynch: 4Q GDP tracking jumped to 6.0% qoq saar as strong consumer, capex, housing and inventories data in October kicked the quarter off to a solid start. [Nov 25 estimate] From the NY Fed Nowcasting Report: The New York Fed Staff Nowcast stands at 2.8% for 2020:Q4. News from this week’s data releases decreased the nowcast by 0.1 percentage point. [Nov 27 estimate] And from the Altanta Fed: GDPNow:The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2020 is 11.0 percent on November 25, up from 5.6 percent on November 18. [Nov 25 estimate]
Seven High Frequency Indicators for the Economy – These indicators are mostly for travel and entertainment. It will interesting to watch these sectors recover as the vaccine is distributed. The TSA is providing daily travel numbers. This data shows the seven day average of daily total traveler throughput from the TSA for 2019 (Blue) and 2020 (Red). The dashed line is the percent of last year for the seven day average. This data is as of Nov 22nd. The seven day average is down 60% from last year (40% of last year). There has been a slow increase from the bottom, and appears to have increased for the Thanksgiving week holiday. The second graph shows the 7 day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities. This data is updated through November 21, 2020. Note that this data is for “only the restaurants that have chosen to reopen in a given market”. Since some restaurants have not reopened, the actual year-over-year decline is worse than shown. Note that dining is generally lower in the northern states – Illinois, Pennsylvania, and New York – and only down slightly in the southern states. This data shows domestic box office for each week (red) and the maximum and minimum for the previous four years. Data is from BoxOfficeMojo through November 19th. Movie ticket sales have picked up slightly over the last couple of months, and were at $13 million last week (compared to usually around $250 million per week during the Thanksgiving blockbuster period). This 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 since the Great Depression for hotels – prior to 2020).This data is through November 14th. Hotel occupancy is currently down 32.7% year-over-year. This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week last year of . At one point, gasoline supplied was off almost 50% YoY. As of November 13th, gasoline supplied was off about 10.2% YoY (about 89.8% of last year). This graph is from Apple mobility. From Apple: “This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities.” There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. This data is through November 21st for the United States and several selected cities.According to the Apple data directions requests, public transit in the 7 day average for the US is at 50% of the January level. It is at 36% in Chicago, and 54% in Houston – and declining recently.Here is some interesting data on New York subway usage. This graph is from Todd W Schneider. This is daily data for this year.This data is through Friday, November 20th. Schneider has graphs for each borough, and links to all the data sources.
Covid-19 Weekly Fatalities and Excess Fatalities, as of November 25 – Menzie Chinn – Fatalities are rising; CDC determined fatalities consistently below alternative estimates in recent weeks; excess fatalities are revised upward (a lot, again). Figure 1: Weekly fatalities due to Covid-19 as reported to CDC for weeks ending on indicated dates (black), excess fatalities calculated as actual minus expected (teal), fatalities as tabulated by Our World in Data (dark red). Note excess fatalities differ from CDC series which are bounded below at zero. Light green shading denotes CDC data that are likely to be revised. Source: CDC 11/25/2020 vintage, OurWorldinData version of 11/25 accessed 11/25/2020 and author’s calculations. Upward revision of excess deaths (calculated as actual minus expected) going from 11/11 vintage to 11/25 vintage for the week ending 10/24 is about 5700 (that’s a 7 day total) My experience with these series is that the CDC excess count series moves upward toward a line parallel to, and shifted upward from, the Our World in Data series (see this post). In other words, excess fatalities are likely rising (I say likely, because these are statistical estimates, not administrative counts; note I calculate excess fatalities as actual minus expected allowing for negative counts, while CDC bounds below at zero). So, whatever you think of the trend in the commonly reported (administratively designated) fatality series, the truth is likely worse. As hospitalization rates and fatality rates climb – also I think likely in the wake of the Thanksgiving holidays – I expect further decreases relative to usual levels of contact-intensive services spending. The increasing frequency of news reports (e.g., NYT) about a further deceleration in Q1 – perhaps even negative – reflects the enormity of the surge and the diminishing hopes for a large and imminent fiscal recovery package. The news reports reflect in turn the increasing short term pessimism for growth from investment bank reports. The unemployment claims increase for the last week merely reinforces the negative short term view.
Midwestern Governors Seek More Federal Covid-19 Aid for Businesses – WSJ – A growing number of governors are calling for another round of coronavirus-relief legislation from Washington, saying they are unable to provide additional funds to small businesses amid budget shortfalls. The issue is gaining urgency as money from federal relief passed earlier this year runs out ahead of a year-end deadline to spend it. States have funneled hundreds of millions of dollars in federal aid into everything from personal-protective equipment and hazard pay for front-line health-care workers to schools and food banks. Businesses, which generally got a smaller slice of the aid than programs directly tied to the public-health emergency, are in a particularly precarious spot. In addition, federal loans to businesses during the shutdown earlier this year – known as the Paycheck Protection Program – have since run out. The crunch is tough in the Midwest, where some of the nation’s strongest coronavirus restrictions have been implemented amid increases in Covid-19 cases, hitting businesses just ahead of the holiday season. Michigan Gov. Gretchen Whitmer said that the state had used up all of its federal stimulus funding from the spring and now faces a $1 billion shortfall. She recently banned indoor dining for three weeks and shut businesses like movie theaters and bowling alleys. “Our resources are strapped, just like every state in the nation,” Ms. Whitmer, a Democrat, said earlier this month. “And that’s why this stimulus is so important.” Rich Studley, president and CEO of the Michigan Chamber of Commerce, has criticized Ms. Whitmer’s shutdown orders as causing unnecessary economic damage. The latest round will cause many businesses to close permanently, he said. Yet he favors a new round of federal relief targeted to help businesses and unemployed workers. A priority, he said, should be funding state unemployment insurance trust funds that have been depleted. That would help laid-off workers and also prevent states from raising payroll taxes on businesses, which could deter them from rehiring people. “Simply dropping money out of airplanes and hoping politicians will spend it wisely is not a very good strategy,” he said.
Fossil Fuel Industry Feasted on COVID-19 Relief Programs, Report Reveals – – A report published Monday reveals the Trumpadministration has given fossil fuel companies as much as $15.2 billion in direct relief – and tens of billions more indirectly – through federal COVID-19 recovery programs since March. The report by BailoutWatch, Public Citizen, and Friends of the Earth – titled Bailed Out and Propped Up – tracks taxpayer funds flowing to fossil fuel companies since pandemic-related bailouts began. It found a total of $110 billion in direct and indirect benefits went to 66 companies, including between $10.4 and $15.2 billion in direct disbursements to coal, oil, and gas companies that are largely responsible for the worsening climate emergency.Here’s a breakdown, according to the report:
- At least $5.5 billion went to 70 money-losing polluters via the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
- $582 million in direct, subsidized loans were approved for 37 mid-sized fossil fuel and related companies through the Federal Reserve’s Main Street Lending Program.
- $4.3 to $9.1 billion in forgivable loans went to at least 25,931 companies through the Small Business Administration’s Paycheck Protection Program.
- At least 229 oil and gas companies received waivers for fees normally paid to drill on public land – giveaways that cost the government a minimum of $4.5 million in lost revenue, and likely far more.
The report found that five fossil fuel companies – Diamondback Energy, EOG Resources, Marathon Petroleum, Phillips 66, and Valero – received more than 10% of the $110 billion in direct benefits, including tax refunds, and indirect support through the issuance of bonds, even if they were losing money. Reassured by the Fed’s actions, private investors purchased more fossil fuel bonds, generating some $100 billion in additional indirect benefits. “When the pandemic hit last spring, Trump’s corporate cronies made sure the fossil fuel industry was able to squeeze whatever favors they could out of the resulting economic rescues,” wrote Alan Zibel, research director of Public Citizen’s Corporate Presidency Project and a co-author of the report. “By artificially delaying the industry’s inevitable decline at taxpayers’ expense, the government has made it that much harder to make the necessary transition to clean energy sources,”
PPP Borrowers Are Asked to Justify Need for Loans Over $2 Million – WSJ -The Small Business Administration has begun asking some Paycheck Protection Program borrowers to document why they needed the loans, drawing concern from advocacy and trade groups that say such disclosures weren’t required when the businesses applied for aid. The Loan Necessity questionnaire is aimed at borrowers that took loans of $2 million or more under PPP, the federal government’s main coronavirus-aid initiative for small businesses. It directs them to answer questions about business activity and liquidity. The form says the questions will help the SBA evaluate a certification borrowers made when they applied for aid. The certification stated that economic uncertainty made the loan request necessary to support business operations. But the loan application didn’t specify what the SBA meant by “economic uncertainty” or how borrowers would demonstrate their need, according to Mike Kennedy, general counsel at the Associated General Contractors of America, a trade group. Mr. Kennedy said the questionnaire “essentially moves the goal post.” For example, it asks borrowers whether they have been subject to a government-mandated, coronavirus-related shutdown and how much cash they had on hand before taking the loans, questions that weren’t part of the original application. “The loan necessity review only applies to a limited number of loans, and it is necessary given that American taxpayers are providing billions of dollars in forgivable loans to these borrowers,” said SBA Administrator Jovita Carranza. “Using this questionnaire helps ensure that the SBA is maintaining program integrity and ensuring the program works as intended.” AGC of America, along with more than six dozen other trade and advocacy groups, sent a letter this week to congressional leaders, Ms. Carranza and Treasury Secretary Steven Mnuchin. The questionnaires “introduce a confusing and burdensome process for both borrowers and lenders, and we fear that it could lead the agencies to inappropriately question thousands of qualified PPP loans made to struggling small businesses,” the letters said.
Biden aides dispute push for quicker, pared-down relief deal –President-elect Joe Biden’s transition team on Monday pushed back on a report that he would favor a quicker economic relief deal, even if it meant ceding ground on some Democratic demands.”This is incorrect. The President-elect fully supports the Speaker and Leader in their negotiations,” transition spokesperson Andrew Bates said in a statement.The New York Times reported Sunday that Biden’s advisers were pushing Democratic leaders to broker a quick stimulus deal with Senate Republicans to avoid further strain on the economy as the U.S. faces a worsening coronavirus pandemic.The country is regularly reporting more than 100,000 daily infections and a steady increase in hospitalizations, and public health experts have warned the situation may further deteriorate in the winter as Americans are largely confined indoors where the virus can spread more easily. Congressional Democrats have for months held out for a large, broad stimulus bill. House Democrats passed a $3 trillion version of the HEROES Act in May and passed a $2.2 trillion, slimmed-down version of the package in October. Both versions include money for state and local governments, enhanced unemployment benefits, and a second round of stimulus payments. That package has gone nowhere in the Senate, however, where the GOP proposed a $500 billion deal that contained more targeted relief. Biden has been publicly supportive of the Democrats’ bill, and the statement from his team reflects an effort to maintain a unified front. The president-elect last week urged Congress to pass a coronavirus relief package “like the HEROES Act.”
To Save the Economy, Biden Must First Save Lives – — Recently I wrote: Thanks to partisan politics, neoliberal Democrats & libertarian Republicans, the whole country has to choose between: Staying open to survive economically Shutting down to survive biologicallyThat was always a false choice driven by putting austerity economics (“mustn’t give too much to the undeserving”) ahead of people’s health and well-being.One could do both, preserve the economy and preserve people’s health, but only by mandating virus control first, then compensating people for the cost. The government could always ensure people’s biologic survival with enforced mask-wearing and lockdowns, plus free treatment and other measures, and also ensure their economic survival with direct public spending that puts money in the pockets of workers it orders not to work.The problem is that the neoliberals who run the Democratic Party and the libertarians who control much of Republican decision-making have combined to offer the nation an impossible choice – “Your livelihood or your life. You can only save one.” In reality, the choice isn’t saving one or the other – it’s saving both or neither. And choosing both starts with saving lives. A new report published at the Institute for New Economic Thinking has taken a data-driven approach to solving the nation’s Covid problem, and it finds that all of the above is true. The data shows that it’s impossible to preserve lives if a country puts the economy first. It’s also impossible to preserve the economy if it puts the economy first. The only way to preserve the economy is to saves lives first. Here’s part of the report. The first point to consider is that lockdowns do work:With over ten months of data from dozens of coronavirus hotspots around the world, statements proclaiming the futility of lockdowns are now provably false. Strict lockdowns do work, and they work swiftly, within 4-6 weeks. They worked not only to suppress, but to virtually eliminate the virus in Australia, New Zealand, and Iceland, as well as in China, Korea, and Taiwan. Figure 1 below tells the story in one picture of new COVID-19 case counts by country. [emphasis added] The second point is this: The data shows that attempting to save the economy loses the race to control the virus and further endangers the economy. Limiting economic damage caused by the pandemic starts and ends with controlling the spread of the virus. Dozens of experiments conducted in different countries across the world definitively show that no country can prevent the economic damage without first addressing the pandemic that causes it. The countries that swiftly focused first on pandemic abatement measures are now reopening in stages and growing their economies. Most of the countries that prioritized bolstering their economies and resisted, limited, or prematurely curtailed interventions to control the pandemic are now facing runaway rates of infection and imminent state and national lockdowns.
Biden’s transition team to begin meeting with federal officials – executive director (Reuters) – President-elect Joe Biden’s team will begin meeting with federal government officials to discuss the pandemic response, national security and other issues after a U.S. agency gave the go-ahead for the formal transition on Monday, a transition official said. “In the days ahead, transition officials will begin meeting with federal officials to discuss the pandemic response, have a full accounting of our national security interests, and gain complete understanding of the Trump administration’s efforts to hollow out government agencies,” Biden transition executive director Yohannes Abraham said in a statement.
Biden picks Obama communications director to lead confirmation team: report – President-elect Joe Biden has enlisted former White House communications director Jen Psaki to spearhead Senate confirmation battles, Politico reported Wednesday.Control of the Senate will come down to two January runoffs in Georgia, with Democrats achieving a 50-50 split in a best-case scenario. As a result, the new Biden administration may face a series of battles as Biden names his Cabinet.Reema Dodin, who serves as floor director for Senate Minority Whip Dick Durbin (D-Ill.), will serve in a similar capacity on legislative fights, according to Politico.The Biden team is set to expand its war room in the next week, adding a combination of campaign staffers and Capitol Hill volunteers.The team is also reportedly considering mounting public relations offensives for Cabinet nominees, introducing them to America at large ahead of Senate hearings to increase their public support.Biden has touted his capacity to work across the aisle and bargain with Republicans, but publicly opposing his nominations will also likely be an early audition for GOP 2024 hopefuls in the chamber, Politico notes. Psaki, who currently works as a senior transition adviser to Biden, has repeatedly sounded the alarm about the Trump administration’s refusal to allow access to materials relating to national security and the coronavirus pandemic.
Biden Picks Janet Yellen for Treasury Secretary – WSJ — President-elect Joe Biden plans to nominate former Federal Reserve Chairwoman Janet Yellen, an economist at the forefront of policy-making for three decades, to become the next Treasury secretary, according to people familiar with the decision. If confirmed by the Senate, Ms. Yellen would become the first woman to hold the job. Mr. Biden’s selection positions the 74-year-old labor economist to lead his administration’s efforts to further the recovery from the destruction caused by the coronavirus pandemic and shutdowns. Ms. Yellen, who was the first woman to lead the Fed, would become the first person to have headed the Treasury, the central bank and the White House Council of Economic Advisers. Separately, Mr. Biden’s transition team said he would nominate Alejandro Mayorkas to lead the Department of Homeland Security and Avril Haines as director of national intelligence. Both are former Obama administration aides. Mr. Biden’s economic team is set to confront a challenging outlook, with millions of people still out of work and job growth slowing after a sharp bounceback when businesses reopened in May, June and July. Economists at JPMorgan Chase & Co. said last week they expect the U.S. economy to contract slightly in the first quarter of 2021 due to rising virus infections. While the Obama administration also faced a challenging landscape before taking office in January 2009, Democrats then enjoyed large House and Senate majorities that created far fewer political constraints to pursuing their preferred course of action – something Mr. Biden won’t have even if Democrats deny Republicans a Senate majority by winning two Georgia runoff elections in early January. Ms. Yellen has said recently the recovery will be uneven and lackluster if Congress doesn’t spend more to fight unemployment and keep small businesses afloat. “There is a huge amount of suffering out there. The economy needs the spending,” Ms. Yellen said in a Sept. 28 interview. She is viewed by Biden transition officials as a credible authority on the dangers of prematurely withdrawing government stimulus and as someone who could collaborate closely with the Fed and executive-branch agencies to engineer more support if Congress is reluctant to take additional action. Ms. Yellen is an “excellent choice for Treasury secretary,” said Gary Cohn, President Trump’s former top economic adviser, in a statement. “Having had the opportunity to work with then-Chair Yellen, I have no doubt she will be the steady hand we need to promote an economy that works for everyone, especially during these difficult times.” Sen. Pat Toomey (R., Pa.), a member of the Senate Finance Committee, said Monday night he looked forward to considering her nomination. “While Dr. Yellen and I had our fair share of disagreements during her tenure as chair of the Federal Reserve, I have no doubts about her integrity or technical expertise,” he said.
The Wall Street Journal Nominates Janet Yellen as Treasury Secretary — Pam Martens –Late yesterday afternoon, while the stock market was still open, three reporters at the Wall Street Journal penned an article with this opening statement: “President-elect Joe Biden plans to nominate former Federal Reserve Chairwoman Janet Yellen, an economist at the forefront of policy-making for three decades, to become the next Treasury secretary, according to people familiar with the decision.” Within the next half hour, every major newswire and many of the largest newspapers in the U.S. were repeating the Journal’s story. The Journal noted that the Biden camp wasn’t expected to make a “formal announcement” of the Yellen nomination until November 30. Nonetheless, the Journal decided it had the self-anointed right to stand in for the Biden transition team and make the announcement a week ahead of time. To induce a nice big stock market rally on the news (the Dow closed up 327.7 points) the Journal article carried this pivotal paragraph: “Ms. Yellen is an ‘excellent choice for Treasury secretary,’ said Gary Cohn, President Trump’s former top economic adviser, in a statement. ‘Having had the opportunity to work with then-Chair Yellen, I have no doubt she will be the steady hand we need to promote an economy that works for everyone, especially during these difficult times.’ ” By invoking Cohn’s name, the Journal was simultaneously invoking the approval of Goldman Sachs. Prior to arriving in the Trump administration, Cohn was the Co-President of Goldman Sachs who oversaw its trading business in the leadup to the 2008 crash. While Cohn sat in a top management position at Goldman, it offloaded billions of dollars of toxic subprime mortgage securities onto unwary customers, with employees even referring to one offering as a “shitty deal” in emails. Goldman was shorting (betting against) some of the pools of mortgages it was representing to its customers as a good investment and allowing John Paulson’s hedge fund to do the same after the hedge fund selected mortgages designed to fail. Billions of dollars of this rotten paper were sold to public pension funds and other institutional investors. In an effort to counter the glee on Wall Street yesterday with the Yellen news, which might be interpreted by progressives that Biden was selling out to Wall Street, Elizabeth Warren Tweeted the following at 4:34 p.m. yesterday as the Yellen headlines were appearing coast-to-coast: “Janet Yellen would be an outstanding choice for Treasury Secretary. She is smart, tough, and principled. As one of the most successful Fed Chairs ever, she has stood up to Wall Street banks, including holding Wells Fargo accountable for cheating working families.” In truth, no federal regulator has held Wall Street banks accountable in either the Obama or Trump administrations. JPMorgan Chase just landed its 4th and 5th felony counts in six years; Goldman was just criminally charged by the Justice Department in an international bribery and kickback scandal; and Citigroup has the worst rap sheet in its century of existence.
Biden plans to nominate Janet Yellen for Treasury secretary – President-elect Joe Biden plans to nominate former Federal Reserve Chair Janet Yellen to serve as his Treasury secretary, a move that would put the first woman and a seasoned central banker into the nation’s top economic policy job as the coronavirus pandemic threatens another U.S. downturn, people familiar with the matter said. In Yellen, Biden is likely to find support from both Wall Street, which feared a more provocative pick such as Sen. Elizabeth Warren, and progressives, who were concerned he might choose someone too friendly to big banks and the wealthy. If confirmed by the Senate, Yellen, 74, would be tasked with helping steer the U.S. economy through a resurgent pandemic that is already causing parts of the nation to resume painful lockdowns. The most immediate challenge would be breaking a logjam on Capitol Hill to deliver economic relief to long and growing unemployment lines. Nine months into the pandemic, more than 6 million people still claim extended unemployment assistance and joblessness is again on the rise as U.S. coronavirus infections spiked to well more than 100,000 a day. Investors, though, are likely to welcome Yellen. During her time as Fed chair, tech stocks doubled even as she presided over the first interest rate increases in 11 years. At the same time, investors may be wary of recent comments she made on the need to take greater regulatory action after financial market mayhem when the economy was locked down in March to combat the spread of the coronavirus. Still, investors are likely to take comfort in her stance in favor of additional emergency government spending. “While the pandemic is still seriously affecting the economy we need to continue extraordinary fiscal support, but even beyond that I think it will be necessary,” Yellen said Oct. 19 on Bloomberg Television.
Wisconsin Republican tests positive for coronavirus – A Wisconsin congressman on Sunday announced he had been diagnosed with COVID-19 and was experiencing mild symptoms. Rep. Bryan Steil (R-Wis.) said in a statement he tested positive Sunday after experiencing symptoms following his return to the state from Washington, D.C. He added that he would quarantine at home. His diagnosis comes as both Washington, D.C., and Wisconsin have seen surging rates of new confirmed cases of the virus in recent weeks. In Wisconsin, more than 376,000 total cases have been confirmed and the state is now reporting around 7,000 new cases per day. Washington, D.C., health officials are reporting around just over 100 new cases per day, a rising rate that has so far remained under a peak the city saw earlier this year. The U.S. has now seen more than 12 million cases of COVID-19, and more than 250,000 Americans have died from the virus.
Connecticut Democrat diagnosed with COVID-19 – A Democratic congressman from Connecticut tested positive for COVID-19, according to a statement released through his office Sunday. In the statement, Rep. Joe Courtney (D-Conn.) said that he was exposed to the virus by someone who did not know at the time they had contracted it. He said he was experiencing “mild” symptoms. “Upon learning of that initial exposure, I immediately began following the strict isolation guidelines laid out by the CDC and by my doctor while I waited to get a coronavirus test. After my first test came back negative, I continued to isolate but began to experience mild symptoms,” said the congressman. “I got another test and, this evening I was notified that the second test came back positive,” he continued. “I’ve got a lot of confidence in my treating doctor and in my team – our work for eastern Connecticut will continue as always, and I’ll keep performing my duties in a safe, remote fashion while isolated at my home.” Courtney’s diagnosis comes as the U.S. surged past 12 million cases of COVID-19 this week and officials marked a tragic milestone of 250,000 Americans dead from the virus. In Connecticut, the rate of new cases has surged past a peak the state saw earlier this year and now sits at a 7-day average of more than 1,800 new cases per day.
Loeffler to continue to self-isolate after conflicting COVID-19 test results – Sen. Kelly Loeffler (R-Ga.) will continue to self-isolate after receiving conflicting COVID-19 test results, a campaign official said Sunday. Campaign spokesperson Stephen Lawson released a statement saying Loeffler’s “inconclusive” coronavirus test results from Saturday were retested overnight and “thankfully came back negative.” “Out of an abundance of caution, she will continue to self-isolate and be retested again to hopefully receive consecutive negative test results,” Lawson said. “We will share those results as they are made available,” he continued. “She will continue to confer with medical experts and follow CDC guidelines.” The update comes after the Loeffler campaign announced Saturday night that she would be self-isolating after a possible COVID-19 exposure. In a Saturday statement, Lawson said the Georgia senator took two tests on Friday, including a rapid test that came back negative and allowed her to participate in two campaign events with Vice President Mike Pence. But after the events, she was informed that a polymerase chain reaction test (PCR) returned positive results. Loeffler then was tested on Saturday, leading to “inconclusive” results. Lawson had said she was not experiencing symptoms. Loeffler is competing in a runoff race against Rev. Raphael Warnock on Jan. 5, one of two races in Georgia that will determine which party controls the U.S. Senate. In the other race, Sen. David Perdue (R-Ga.) faces Democratic candidate Jon Ossoff. Sens. Rick Scott (R-Fla.) and Chuck Grassley (R-Iowa) both announced that they tested positive for the virus this week. Last month, Loeffler tested negative for the virus after two of her staff members received positive test results.
Nevada congresswoman tests positive for COVID-19 after traveling to Ohio to visit dying mother – A United States representative from Nevada said she has tested positive for the coronavirus following a recent trip to Ohio. U.S. Rep. Susie Lee shared news about the infection on Wednesday, announcing that the positive test result came after traveling to Ohio to visit her dying mother. According to U.S. Rep. Lee, she traveled to Ohio on Monday after her mother started to receive in-home hospice care. She said she maintained social distance, wore a mask, and took a COVID-19 test before traveling. The test on Sunday was negative, but U.S. Rep. Lee said a positive result confirmed the coronavirus when testing again on Wednesday. Tragically, U.S. Rep. Lee said her mother died on Tuesday night following months of deteriorating health. The congresswoman said she is currently feeling no symptoms and plans to participate in funeral services for her mother and for her legislative work remotely while isolating.
Fauci: ‘We’re in a very difficult situation at all levels’ but ‘help is on the way’ – Anthony Fauci, the nation’s top infectious diseases expert, warned that the U.S. was in a “very, very difficult situation at all levels” with regard to the coronavirus pandemic, but said “we should not look upon this as a hopeless situation.” “We’re in a very, very difficult situation at all levels,” Fauci said on CBS’ “Face the Nation,” citing increasing infections throughout most of the country. He added that in terms of public health measures to stem the spread, “we’re not talking about shutting down the country and locking down completely but we do know mitigation measures work” such as wearing masks, social distancing and frequent hand-washing. Fauci, pointing to the development of two separate vaccine candidates, urged Americans not to lose hope even as they continued to take precautions. “You don’t want people to get terrified but you want them to understand that we can do something about that by mitigation methods and also help is on the way, so we should not look upon this as a hopeless situation,” he said. “When you get COVID fatigue, which is entirely understandable, that people just throw up their hands and say heck, we’re not going to be able to do anything about it, let’s just do what we want to do, that’s the wrong decision, because vaccines are coming and they’re going to be available relatively soon if we can hang in there with the mitigation methods,” Fauci added. Fauci cautioned that for a vaccine to achieve herd immunity depended on a combination of the vaccine’s efficacy and how many people take it. “If you have a highly efficacious vaccine and only a relatively small 40 to 50 percent of the population get vaccinated, you’re not going to get the herd immunity you need,” he added.
Vaccine czar predicts life could be back to normal in May – The chief adviser to the Trump administration’s Operation Warp Speed estimates the U.S. could reach herd immunity from the coronavirus in May as immunizations are expected to begin sometime next month. During an interview with CNN’s “State of the Union” Sunday, Moncef Slaoui estimated 70 percent of the U.S. population could receive a coronavirus vaccine several months into 2021. “Our plan is to be able to ship vaccines to the immunization sites within 24 hours from the approval, so I would expect maybe on day two after approval on the 11th or the 12th of December,” Slaoui told CNN Sunday. “Normally, with the level of efficacy we have, 95 percent, 70 percent or so of the population being immunized would allow for true herd immunity to take place,” he said. “That is likely to happen somewhere in the month of May, or something like that, based on our plans.” Slaoui’s comments on Sunday come after Pfizer applied for emergency authorization for its coronavirus vaccine Friday, which the drugmaker said showed to be 95 percent effective in phase three clinical trials. A second vaccine from Moderna is expected to be submitted for emergency authorization soon as well. Drugmaker AstraZeneca also announced Monday that its vaccine candidate developed by Oxford University has shown an average efficacy of 70 percent in large-scale trials. Tens of millions of people in the U.S. could be vaccinated in the weeks and months following emergency use authorization. Health care workers and the most vulnerable populations are first on the list to receive the vaccine. The estimate comes as the U.S. is seeing cases of the coronavirus rise at an alarming rate in nearly every state. More than 167,000 new cases are being reported each day with 1,470 new deaths, according to The Covid Tracking Project. Currently, 83,870 people are hospitalized with COVID-19 across the country, a record high.
Former NATO commander: More than one company needed to distribute COVID-19 vaccines – Former NATO commander James Stavridis wrote in an op-ed for Fortunemagazine that the U.S. government must task more than one company with distributing the COVID-19 vaccine if it hopes to succeed in immunizing enough of the population. “A key tenet in the military’s operational planning for any contingency is to never allow for a single point of failure,” Stavridis wrote. “Our military regularly scrutinizes each part of an operation to ensure every contingency has been considered and no resources are left on the sideline. The scale and importance of a COVID-19 vaccination program demands the U.S. government focus on resilience.” Stavridis notes that the U.S. government hopes to provide enough vaccines for at least 300 million people and has so far only hired one drug distributor, McKesson, to handle this enormous task. “Putting all of our eggs in a single basket exposes our vaccination process to the potential for what we in the military call a single point of failure risk,” writes Stavridis. Pharmaceutical companies Pfizer and Moderna recently announced that their coronavirus vaccine candidates have been shown to be more than 90 percent effective. Pfizer applied for emergency approval from the Food and Drug Administration for its vaccine on Saturday. “But there is less clarity around the national vaccination effort,” writes Stavridis. “The parameters around who will receive the vaccine, when, and how are still murky. The sooner the process is made more transparent, the more trust and confidence the public will feel.” The former U.S. Navy admiral suggested that the government use the military, which is already running exercises in case of distribution failures, to test how effectively multiple companies could distribute the vaccine.”The U.S. has the most professional military in the world. I have no doubt that with the Defense Department supporting the development, production, and distribution of COVID vaccines, America can carry out an effective vaccination program,” Stavridis wrote.
Coronavirus update: HHS puts vaccine distribution in states’ power; Wall Street analysts project lifelong vaccine protection – With three vaccine candidates out with a first look at efficacy data, Wall Street is more optimistic about the light at the end of the pandemic tunnel. SVB Leerink analysts upgraded outlooks for Pfizer, BioNTech, Moderna, and AstraZeneca Tuesday, pointing to the long-term protection that is likely to come from the various candidates.While health experts are still wary to commit to the durability outlook, analyst Geoffrey Porges said in a note Tuesday, “We now believe that immunity after natural infection will be virtually lifelong and expect recovered COVID cases to need only a single boosting immunization a year or two after their infection to be protected against re-infection for life (similar to immunity after measles or other respiratory pathogens apart from influenza).”Porges said that takes needing annual vaccines off the table, likely requiring one additional vaccination in a lifetime. A recent study supported a longer protection time, but whether it would be lifelong is still unknown.”We failed to realize that it’s not like influenza, but more like measles, mumps and rubella,” Porges said. This means that investment into the vaccines is not going to result in a huge payoff, he added. Even so, that won’t stop the innovation, Porges said. Pfizer and BioNTech have been criticized for the ultra-cold storage needs, posing a hurdle for countries without the necessary infrastructure. To that, Porges said patience is key.”Don’t sell the Pfizer program short. They will announce better storage conditions in a matter of weeks,” he said, noting that the company needs to take the time to complete stability testing. Pfizer’s sheer size as a pharmaceutical company, and as a top vaccine producer, gives the company a leg up against Moderna. But both are using a platform that can be scaled up far more easily, since its chemical-based, compared to the biological process of AstraZeneca.
Both Citigroup and JPMorgan Have Now Received Huge Fines for Crimes the Regulators Won’t Reveal – Pam Martens – Maybe it’s because the nonpartisan watchdog, Better Markets, published a report last year titled “Wall Street’s Six Biggest Bailed-Out Banks: Their RAP Sheets & Their Ongoing Crime Spree.” Or maybe it all comes down to what Senator Dick Durbin of Illinois said after the financial crisis of 2008: “And the banks are still the most powerful lobby on Capitol Hill. And they frankly own the place.” Whatever the reason, the darkness that started growing around the crimes committed by the big Wall Street banks during the Obama administration has now evolved into such a complete dark curtain that regulators are refusing to say what the crimes actually are that are being settled for huge amounts of money. On October 7, the Federal Reserve and Office of the Comptroller of the Currency (OCC) announced consent decrees with Citigroup, the third largest bank in the country. The OCC imposed a $400 million fine on Citigroup’s federally-insured commercial bank, Citibank, and stated in its Consent Order that it had “identified unsafe or unsound practices with respect to the Bank’s internal controls, including, among other things, an absence of clearly defined roles and responsibilities and noncompliance with multiple laws and regulations.” We were so stunned by a $400 million fine for crimes that can’t be put in print or shared with the public, that we penned the headline: Citigroup Is Slapped with a $400 Million Fine for Doing Something So Bad It Can’t Be Spoken Out Loud. Yesterday, as further proof that this is a pattern coming out of the Trump administration, the OCC did the exact same thing with JPMorgan Chase, the largest bank in the country which on September 29 admitted to its fourth and fifth criminal felony charges brought by the U.S. Department of Justice in the past six years.Yesterday, the OCC fined JPMorgan Chase $250 million without detailing any specific crimes it had committed. The Consent Order simply said the bank had, for several years, “maintained a weak management and control framework for its fiduciary activities and had an insufficient audit program for, and inadequate internal controls over, those activities. Among other things, the Bank had deficient risk management practices and an insufficient framework for avoiding conflicts of interest.”A Wall Street bank like JPMorgan Chase that has brazenly committed five felonies for very specific crimes, doesn’t get fined $250 million for non-specific crimes. Something very bad has once again happened at JPMorgan Chase and its federal regulators who are all rushing to get new jobs on Wall Street, or at Wall Street’s outside law firms, don’t want to talk about it. That’s inexcusable behavior and leaves the public in the dark as to whether what JPMorgan was doing might impact their own accounts at the bank. It also destroys public confidence in the regulators and the Wall Street banks.
Small banks welcome PPP relief but fear it may not be enough – Small banks that have ballooned in size during the coronavirus pandemic breathed a sigh of relief last week when federal regulators gave them a reprieve from tougher supervisory rules that kick in at certain asset thresholds. But a grateful industry is also concerned about the potential impact of the upswing in COVID-19 cases and the growing possibility of additional emergency lending. Some banking officials and policy experts are already wondering if there will be enough time for lenders to shrink back to normal size by the deadline in 2022. “If things go south next year we may be singing a different story,” said Chris Cole, senior regulatory counsel for the Independent Community Bankers of America. “If you had another [Paycheck Protection Program] round, you may very well need an extension.” Banks will be able to rely on their asset sizes as of Dec. 31, 2019, for regulatory purposes under the rule issued Nov. 20 by the Federal Deposit Insurance Corp., the Federal Reserve and the Office of the Comptroller of the Currency. The relief applies to a series of regulatory requirements that kick in at various stages of a bank’s growth, including when assets reach $100 million, $500 million, $3 billion, $5 billion and $10 billion. The stricter supervisory rules involve capital levels, caps on debit interchange fees, financial reporting, frequency of exams and other matters. The agencies estimate that 44 holding companies and 582 community banks crossed at least one of those regulatory thresholds in the first half of the year. Smaller banks have accounted for most of the PPP lending since the program launched in April, and their growth accelerated as a result. For example, nine banks passed $10 billion in assets from the end of last year to June 30, and their combined asset sizes increased more than 30% over that time to nearly $100 billion total, according to data provided by the FDIC. Banks will have until 2022 to shrink back below any of these thresholds before the new rules would take effect.
Freddie Mac: Mortgage Serious Delinquency Rate decreased in October – Freddie Mac reported that the Single-Family serious delinquency rate in October was 2.89%, down from 3.04% in September. Freddie’s rate is up from 0.61% in October 2019.Freddie’s serious delinquency rate peaked in February 2010 at 4.20%. These are mortgage loans that are “three monthly payments or more past due or in foreclosure”. Mortgages in forbearance are being counted as delinquent in this monthly report, but they will not be reported to the credit bureaus.This is very different from the increase in delinquencies following the housing bubble. Lending standards have been fairly solid over the last decade, and most of these homeowners have equity in their homes – and they will be able to restructure their loans once (if) they are employed.
Black Knight: National Mortgage Delinquency Rate Decreased in October – =- Note: Loans in forbearance are counted as delinquent in this survey, but those loans are not reported as delinquent to the credit bureaus. From Black Knight: Mortgage Delinquencies Decline for Fifth Consecutive Month in October; Record-Low Rates Push Prepayment Activity to 16-Year High:
Mortgage delinquencies improved again in October, falling to 6.44%, the lowest level since March
Despite five consecutive months of improvement, there are still more than 3.4 million delinquent mortgages, nearly twice as many as there were entering the year
Serious delinquencies – loans 90 or more days past due – improved in October as well, but volumes remain at more than five times (+1.8 million) pre-pandemic levels
October’s 4,700 foreclosure starts marked a nearly 90% year-over-year reduction as widespread moratoriums remain in place, while active foreclosure inventory set yet another record low at 178,000
Record-low interest rates again pushed prepayment activity higher, with October’s prepayment rate of 3.17% setting the highest single-month mark in more than 16 years
According to Black Knight’s First Look report, the percent of loans delinquent decreased 3.3% in October compared to September, and increased 90% year-over-year. The percent of loans in the foreclosure process decreased 1.6% in October and were down 31% over the last year. Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 6.44% in October, down from 6.66% in September. The percent of loans in the foreclosure process decreased in October to 0.33%, from 0.34% in September. The number of delinquent properties, but not in foreclosure, is up 1,651,000 properties year-over-year, and the number of properties in the foreclosure process is down 77,000 properties year-over-year.
MBA Survey: “Share of Mortgage Loans in Forbearance Increases Slightly to 5.48%” –Note: This is as of November 15th. From the MBA: Share of Mortgage Loans in Forbearance Increases Slightly to 5.48% The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance increased from 5.47% of servicers’ portfolio volume in the prior week to 5.48% as of November 15, 2020. According to MBA’s estimate, 2.7 million homeowners are in forbearance plans…”A marked slowdown in forbearance exits, as well as a slight rise in the share of Ginnie Mae, portfolio, and PLS loans in forbearance, led to an overall increase for the first time since early June. The decline in exits in the prior week follows a flurry of them last month, when many borrowers reached the six-month point in their forbearance terms,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The share of GSE loans in forbearance continued its downward trend and have now declined every week for six straight months.”Added Fratantoni, “Incoming housing market data remain quite strong, with existing-home sales in October reaching their fastest pace since 2005, and the inventory of homes on the market hitting a record low. However, renewed weakness in the latest job market data indicate that many homeowners are continuing to experience severe hardships due to the pandemic and still need the support that forbearance provides.”…By stage, 21.32% of total loans in forbearance are in the initial forbearance plan stage, while 76.76% are in a forbearance extension. The remaining 1.92% are forbearance re-entries.This graph shows the percent of portfolio in forbearance by investor type over time. Most of the increase was in late March and early April, and has been trending down for the last few months.The MBA notes: “Weekly forbearance requests as a percent of servicing portfolio volume (#) increased to 0.09 percent from 0.08 percent the previous week.”There wsan’t a pickup in forbearance activity related to the end of the extra unemployment benefits.
Black Knight: Number of Homeowners in COVID-19-Related Forbearance Plans Increased Slightly – Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance. This data is as of November 23rd. From Black Knight: Forbearances Numbers See Another Slight Uptick: Our weekly snapshot of daily forbearance tracking data showed another slight uptick in active forbearance plans through Monday, November 23. It’s worth noting that this week’s data represents a slightly truncated view – normally, we report forbearance numbers through the Tuesday of any given week. After rising by some 30,000 last week, active forbearances were up another 27,000 from last Tuesday. We should keep in mind that mild increases like this have been common in the middle of the month. Since the recovery started, the strongest declines have typically been seen early in the month, as expiring forbearance plans are removed. The performance of the last two weeks has continued this trend. Despite this week’s increase, the number of active forbearances remains down 7% (-207,00) from last month, roughly equivalent to the declines we’d seen in August and September. In total, as of November 23, there are now 2.78 million homeowners in active forbearance plans. Together, representing approximately 5.3% of all active mortgages – up from 5.2% from last week – they account for approximately $564 billion in unpaid principal.
BankThink: Reducing mortgage defaults starts with beefing up housing supply The coronavirus pandemic has revealed a distressing fact in the housing world: Federal home-loan policies that promote “responsible, affordable mortgage credit access” for minorities are instead setting them up for an increased risk of failure. Sadly, structural barriers for people of color do exist in housing. Rather than being the result of inadvertent discrimination by lenders, it mostly stems from misguided government policies. At the state and local level, zoning and building codes have created a supply shortage that is most pronounced at lower price points, where minorities tend to buy and which helps to drive up prices. At the federal level, policymakers and advocacy groups have been trying to promote greater buying power for marginalized groups in a futile attempt to increase access. However, lowering lending standards or interest rates only works when there is ample supply. In today’s constrained market, the unintended consequence is that marginalized borrowers mainly bid against one another for scarce homes. The additional buying power is thus quickly capitalized into higher home prices, which means stretched budgets for marginalized borrowers. During economic hardship, this translates into higher default risk. A new analysis by the AEI Housing Center shows that because of these federal policies, today the single best predictor (per ZIP code) of a change in delinquency rate due to the pandemic has become the share of minority borrowers residing in it. The higher the minority share, the larger the increase in the delinquency rate. The outcome is a fundamental injustice that runs counter to the 1968 Fair Housing Act, which not only prohibits discrimination in housing, but legally requires federal agencies to further the goal of fair housing. These heightened delinquencies are occurring mostly in the same neighborhoods that were devastated a decade ago in the aftermath of the Great Recession. The only difference is that it is happening despite all the purported safeguards of the 2010 Dodd-Frank Act, which stopped the most egregious underwriting practices, and the U.S. government securitizing about three in four of all mortgages. But there is a second issue. These affordable federal housing policies, which enable minorities to buy especially during a boom when houses are more expensive, expose them to greater default risk during a bust. This also creates greater home price volatility in less affluent communities – a phenomenon that is greatly attenuated in more affluent ones with less risky lending and greater borrower resources to fall back on. While it is often argued that buying a home early in life is the key to building wealth, it is when and where you buy that matters most. Ultimately, nothing strips wealth faster from borrowers of color than purchasing a home in high-risk neighborhoods late in a housing up-cycle.
House Down Payments Soar To 20 Year High As Banks Crack Down On New Loans -American homebuyers have to pony up even greater amounts of money for a down payment due to tightening credit standards and skyrocketing home prices. According to Bloomberg, citing a new report from Attom Data Solutions, the median down payment for a single-family home is $20,775 for the third quarter, the most in at least two decades and up more than 69% from $12,325 a year earlier. Over the last year, the jump in the down payment cost outlines how lenders have become more cautious in these uncertain economic times. It was also noted borrowers paid 6.6% of the median sale price of homes financed over the quarter, up from 4.7% a year earlier and the highest level since 2018. On average, borrowers were loaned around $275,000, the highest since 2000, up 24% from last year’s third quarter.Todd Teta, chief product officer at ATTOM Data Solutions, said, “down payments are rising at a time when lenders are tightening their guidelines.” Teta continued: “Lenders have grown more cautious to protect themselves from more delinquencies.” A combination of outbound migration flows from cities and a record low 30-year mortgage rate below 3% ignited home prices in rural communities. Bloomberg noted, “mortgage companies are raking in cash amid the pandemic, earning hefty margins. At the same time, consumers flood in to buy homes or refinance existing loans to take advantage of record-low mortgage rates.” A senior loan officer at Freedom Mortgage, Lewis Sogge, said, “2020 has been a record-breaking year for the volume of new loans and refinances as consumers take advantage of record-low mortgage rates.” Lenders are becoming increasingly worried about borrowers as the virus pandemic’s reemergence has resulted in states and cities reimposing strict social distancing measures. Worried about delinquencies and a possible double-dip recession that would result in job loss, lenders at JPMorgan Chase & Co. have tightened terms for borrowers. Loan officers at the bank were recently put on notice to limit jumbo loans to 70% of the sale price for co-ops and condos in Manhattan. Besides real estate, a similar picture was seen for tightening credit standards of consumer loans.
Case-Shiller: National House Price Index increased 7.0% year-over-year in September — S&P/Case-Shiller released the monthly Home Price Indices for September (“September” is a 3 month average of July, August and September prices). This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. From S&P: S&P CoreLogic Case-Shiller Index Shows Annual Home Price Gains Soared to 7% in September: The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 7.0% annual gain in September, up from 5.8% in the previous month. The 10-City Composite annual increase came in at 6.2%, up from 4.9% in the previous month. The 20-City Composite posted a 6.6% year-over-year gain, up from 5.3% in the previous month.Phoenix, Seattle and San Diego continued to report the highest year-over-year gains among the 19 cities (excluding Detroit) in September. Phoenix led the way with an 11.4% year-over-year price increase, followed by Seattle with a 10.1% increase and San Diego with a 9.5% increase. All 19 cities reported higher price increases in the year ending September 2020 versus the year ending August 2020….The National Index posted a 1.2% month-over-month increase, while the 10-City and 20-City Composites both posted increases of 1.3% and 1.2% respectively, before seasonal adjustment in September. After seasonal adjustment, the National Index posted a month-over-month increase of 1.4%, while the 10-City and 20-City Composites both posted increases of 1.2% and 1.3% respectively. In September, all 19 cities (excluding Detroit) reported increases before seasonal adjustment, and after seasonal adjustment. Housing prices were notably – I am tempted to say ‘very’ – strong in September,” The 10- and 20-City Composites (up 6.2% and 6.6%, respectively) also rose at an accelerating pace in September. The strength of the housing market was consistent nationally – all 19 cities for which we have September data rose, and all 19 gained more in the 12 months ended in September than they had done in the 12 months ended in August.”A trend of accelerating increases in the National Composite Index began in August 2019 but was interrupted in May and June, as COVID-related restrictions produced modestly-decelerating price gains. Our three monthly readings since June of this year have all shown accelerating growth in home prices, and September’s results are quite strong. The last time that the National Composite matched September’s 7.0% growth rate was more than six years ago, in May 2014. The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).
Home Prices In Every Major City Jump More Than Double The Fed’s Inflation Target – While various Fed speakers are vowing this week that there will be no rate hikes until at least 2023 or 2024, the Fed may be surprised to learn that if it were to broaden its definition of inflation, it would find it is quite ample already. One month ago, we looked at the housing market which we said was in the middle of a buying “frenzy.” Today’s Case-Shiller data for September confirmed this, with the 20-City Composite index surging at a stunning 6.6% Y/Y more than 1% higher than August (and smashing expectations of a 5.3% print), and the highest in 30 months. But the real shocker was looking at the component cities that make up the composite index. Here, not only is the housing bubble clearly back in certain Western cities such as Phoenic, Seattle, San Diego and LA, all of which posted a 9.5% or higher increase in annual home prices, but more remarkably even the lowest increase – that of New York – was no less than 4.3% (up from 2.8% just last month). This means that every major US city saw home price increases that were more than double the Fed’s stated 2% inflation target (although under the new Average Inflation Targeting, the Fed’s so-called target is a fluid number and can be whatever the Fed decides it is). But why should we – or central bankers for that matter – care about soaring home prices? For the answer look no further than New Zealand, whose central bank just 6 weeks ago warned that negative rates could be coming, yet where home prices have soared so much, overnight the Finance Minister Grant Robertson sent a letter to the central bank expressing concerns over how low rates have stoked home prices, and asking the RBNZ to include home prices to its monetary policy remit in order to halt the staggering surge in prices and force the central bank to consider tightening financial conditions only due to out of control home prices. The result, as we reported earlier, was a surge in the New Zealand dollar as odds for a rate cut in 2021 collapsed and the market is on the verge of pricing in a rate hike. Is this relevant for the US? Well, if one takes Yellen at her word that she is worried about wealth inequality, what other more relevant sector is there to focus on boosting the net worth of lower and middle classes than housing, and specifically making it more affordable so that more Americans can afford buying a home rather than be stuck as renters all their lives. Of course, if this becomes a concern for the Fed, and considering the unprecedented spike in home prices in recent months, the first rate hike will take place not in 2024 but some time in 2021 as the Fed continues to inject an unprecedented 0.6% of GDP into the market every single month, ensuring that the housing bubble gets bigger with every passing month.
FHFA House Price Index: Up 1.7% in September, Record High The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for September. Here is the opening of the press release: U.S. house prices rose 7.8 percent from the third quarter of 2019 to the third quarter of 2020 according to the Federal Housing Finance Agency House Price Index (FHFA HPI). House prices were up 3.1 percent in the third quarter of 2020. FHFA’s seasonally adjusted monthly index for September was up 1.7 percent from August.“House prices recorded their strongest quarterly gain in the history of the FHFA HPI purchase-only series in the third quarter of 2020,” said Dr. Lynn Fisher, Deputy Director of the Division of Research and Statistics at FHFA. “Relative to a year ago, prices were up 7.8 percent during the quarter – the fastest year-over-year rate of appreciation since 2006. Monthly data indicate that prices continued to accelerate during the quarter, reaching 9.1 percent in September, as demand continues to outpace the supply of homes available for sale.” The chart below illustrates the monthly HPI series, which is not adjusted for inflation, along with a real (inflation-adjusted) series using the Consumer Price Index: All Items Less Shelter.
New Home Sales at 999,000 Annual Rate in October – The Census Bureau reports New Home Sales in October were at a seasonally adjusted annual rate (SAAR) of 999 thousand. The previous three months were revised up. Sales of new single-family houses in October 2020 were at a seasonally adjusted annual rate of 999,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.3 percent below the revised September rate of 1,002,000, but is 41.5 percent above the October 2019 estimate of 706,000.The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.This is the third highest sales rate since 2006 (just below the last two months).The second graph shows New Home Months of Supply. The months of supply was unchanged in October at 3.3 months from 3.3 months in September. The all time record high was 12.1 months of supply in January 2009. The all time record low is 3.3 months in September and October 2020.This is below the normal range (about 4 to 6 months supply is normal). “The seasonally-adjusted estimate of new houses for sale at the end of September was 284,000. This represents a supply of 3.6 months at the current sales rate.” Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed.The third graph shows the three categories of inventory starting in 1973.The inventory of completed homes for sale is low, and the combined total of completed and under construction is lower than normal.The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).In October 2020 (red column), 80 thousand new homes were sold (NSA). Last year, 55 thousand homes were sold in October.The all time high for October was 105 thousand in 2005, and the all time low for October was 23 thousand in 2010. This was slightly above expectations and sales in the three previous months were revised up.
A few Comments on October New Home Sales — New home sales for October were reported at 999,000 on a seasonally adjusted annual rate basis (SAAR). Sales for the previous three months were revised up. This was below consensus expectations of 975,000, and was the third highest sales rate since 2006 (behind August and September – that were both revised up). Clearly low mortgages rates, low existing home supply, and low sales in March and April (due to the pandemic) have led to a strong increase in sales. Favorable demographics (something I wrote about many times over the last decade) and a surging stock market have probably helped new home sales too. Earlier: New Home Sales at 999,000 Annual Rate in October. This graph shows new home sales for 2019 and 2020 by month (Seasonally Adjusted Annual Rate). New home sales were up 41.5% year-over-year (YoY) in October. Year-to-date (YTD) sales are up 20.6% (This is even above my optimistic forecast for 2020!). And on inventory: since new home sales are reported when the contract is signed – even if the home hasn’t been started – new home sales are not limited by inventory (except if no lots are available). Inventory for new home sales is important in that it means there will be more housing starts if inventory is low (like right now) – and fewer starts if inventory is too high (not now).
Hotels: Occupancy Rate Declined 32.6% Year-over-year — From HotelNewsNow.com: STR: US hotel results for week ending 21 November: U.S. weekly hotel occupancy continued to slip further from previous weeks, according to the latest data from STR through 21 November.
15-21 November 2020 (percentage change from comparable week in 2019):
Occupancy: 41.2% (-32.6%)
Average daily rate (ADR): US$88.54 (-29.0%)
Revenue per available room (RevPAR): US$36.45 (-52.2%)
Since there is a seasonal pattern to the occupancy rate – see graph below – we can track the year-over-year change in occupancy to look for any improvement. This table shows the year-over-year change since the week ending Sept 19, 2020: This suggests no improvement over the last 10 weeks. 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 since the Great Depression for hotels – before 2020). Seasonally we’d expect the occupancy rate to decline into the new year. Note that there was little pickup in business travel that usually happens in the Fall.
U.S. Consumer Spending Grows for Sixth Straight Month, Albeit Slower – WSJ -The U.S. economy is recovering at a sturdy but slowing pace heading into the holidays.Consumers stepped up their spending by a brisk 0.5% in October, down from a gain of 1.2% the month before, the Commerce Department said Wednesday. Factory orders for long-lasting goods rose a solid 1.3%, in part because businesses shelled out more for long-term projects, the agency said. Sales of newly built homes slipped last month but remained near the highest level in almost 14 years.All pointed to an economy continuing to regain ground lost during the spring coronavirus lockdowns and other restrictions, even if the expansion has slowed since the third quarter’s rapid rebound.The good news was tempered by reports Wednesday of rising layoffs, falling income and declining consumer confidence.New applications for jobless benefits, a proxy for layoffs, rose to 778,000 last week, the second straight weekly increase after declining since the summer, the Labor Department said. Household income fell 0.7% last month, as temporary federal aid programs for unemployed workers faded, the Commerce Department said. A measure of consumer confidence released Wednesday showed that Americans have become more worried about the months ahead, according to a University of Michigan survey.Those shifts could cause many households to rein in spending this winter, which would impede the recovery. Consumer spending accounts for more than two-thirds of economic activity in the U.S.
Personal Income decreased 0.7% in October, Spending increased 0.5% – The BEA released the Personal Income and Outlays report for October: Personal income decreased $130.1 billion (0.7 percent) in October according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) decreased $134.8 billion (0.8 percent) and personal consumption expenditures (PCE) increased $70.9 billion (0.5 percent). Real DPI decreased 0.8 percent in October and Real PCE increased 0.5 percent. The PCE price index was unchanged from September. The PCE price index excluding food and energy was also unchanged. The October PCE price index increased 1.2 percent year-over-year and the October PCE price index, excluding food and energy, increased 1.4 percent year-over-year. The following graph shows real Personal Consumption Expenditures (PCE) through October 2020 (2012 dollars). Note that the y-axis doesn’t start at zero to better show the change.The dashed red lines are the quarterly levels for real PCE. Personal income was much lower than expected, and the increase in PCE was above expectations. Note the red line for Q3 (the quarterly level of PCE). This was 3.3% below the Q4 2019 level for PCE. Also note: If real PCE in November and December are just at the same level as in October, PCE will increase at a 6% annual rate in Q4.
Real Disposable Income Per Capita in October – With the release of this morning’s report on October Personal Incomes and Outlays, we can now take a closer look at “Real” Disposable Personal Income Per Capita. At two decimal places, the nominal -0.81% month-over-month change in disposable income is unchanged when we adjust for inflation. This is a decrease from last month’s 0.70% nominal and 0.53% real increase last month. The year-over-year metrics are 5.72% nominal and 4.48% real. Post-recession, the trend was one of steady growth, but generally flattened out in late 2015 with increases in 2012 and 2013. As a result of the CARES Act and the COVID pandemic, a major spike is seen in April 2020. The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator was significantly disrupted by the bizarre but predictable oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013 and more recently, by the CARES Act stimulus. The BEA uses the average dollar value in 2012 for inflation adjustment. But the 2012 peg is arbitrary and unintuitive. For a more natural comparison, let’s compare the nominal and real growth in per-capita disposable income since 2000. Nominal disposable income is up 108% since then. But the real purchasing power of those dollars is up 43.2%.
US Consumer Confidence Slumps In November As Hope Fades -After a mixed bag in October (present situation up, future hope down), analysts expected The Conference Board to report a worsening in overall consumer confidence in November (despite soaring stocks), and in fact things were worse than expected.Headline consumer confidence slipped to 96.1 from 100.9 (well below the 98.0 expectation) as expectations tumbled from 98.2 to 89.5 and the present situation dropped modestly from an upwardly revised 106.2 to 105.9.If stock markets are forward-looking then this should be worrisome…Interestingly, despite the drop in confidence, buying expectations rose for homes, cars, and major appliances, and expectations for rising incomes also rose modestly.
Consumer Confidence Decreases in November – The headline number of 96.1 was a decrease from the final reading of 101.4 for October. Today’s number was below theInvesting.com consensus of 98.0. “Consumer confidence declined in November, after remaining virtually flat in October,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “Consumers’ assessment of present-day conditions held steady, though consumers noted a moderation in business conditions, suggesting growth has slowed in Q4. Heading into 2021, consumers do not foresee the economy, nor the labor market, gaining strength. In addition, the resurgence of COVID-19 is further increasing uncertainty and exacerbating concerns about the outlook.” Read more The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.
Michigan Consumer Sentiment: November Final Mostly Unchanged – The November Final came in at 76.9, down 4.9 from the October Final. Investing.com had forecast 77.0. Since its beginning in 1978, consumer sentiment is 10.8 percent below the average reading (arithmetic mean) and 9.8 percent below the geometric mean. Surveys of Consumers chief economist, Richard Curtin, makes the following comments: Consumer sentiment was unchanged in late November–a difference of just 0.1 points from mid-month–although there was a significant decline in the Expectations component which was offset by more favorable assessments of current economic conditions. Importantly, the November data were less optimistic than last month due to the resurgence in covid infections and deaths as well as partisan shifts due to the outcome of the presidential election. For the first time since Trump entered office, Democrats rather than Republicans held a more optimistic economic outlook (see the chart). The steep rise in covid infections had a greater impact on Democrats as 59% of Democrats reported that the coronavirus had changed their lives to a great extent compared with just 36% among Republicans. In the months ahead, if infections and deaths rise as anticipated, further declines in optimism are likely. The anticipated declines, however, will be tempered by the approval of several vaccines by the end of the year. The approval of vaccines will heighten concerns about vaccination priorities, especially when accompanied by the expected increase in deaths in the next several months. These events are likely to promote more closures and stay-at-home orders in addition to mandatory masks and social distancing. Widespread closures would incur a heavy toll on the entire economy and cause escalating hardships among some households. A delay in federal aid until next year would allow great harm and permanent damage to occur to many firms, local governments, and households. [More….] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
November Vehicle Sales Forecast: “Second Straight Month-to-Month Decline” – From Wards: November U.S. Light-Vehicle Sales Forecast for Second Straight Month-to-Month Decline (pay content) This graph shows actual sales from the BEA (Blue), and Wards forecast for November (Red). Sales have bounced back from the April low, but will likely be down around 7% year-over-year in November. The Wards forecast of 15.7 million SAAR, would be down about 3% from October. This would put sales in 2020, through November, down about 16% compared to the same period in 2019.
Guitar Center, Largest US Retailer Of Music Instruments, Files For Bankruptcy – Back in May, Guitar Center – the largest U.S. retailer of music instruments and equipment – dodged bankruptcy after missing interest payments on a group of bonds. At the time, the retailer was able to work out a deal with bondholders that allowed it to preserve its cash while it tried to survive the disruption from the COVID-19 pandemic. But analysts expected more restructuring down the road, and in recent weeks media reports had pointed to an inevitable bankruptcy filing.On Saturday, the clock for Guitar Center, which began in 1959 as a store selling home organs in Hollywood, finally ran out when the company filed for Chapter 11 bankruptcy protection as music lovers moved their shopping online during the coronavirus pandemic.As part of a pre-packaged bankruptcy filing the retailer negotiated to have a total of $375 million in debtor-in-possession financing from its existing lenders and announced its intention to raise $335 million in new senior secured notes, the company said in a statement. The Plan is intended to allow Guitar Center and its related brands (including Music & Arts, Musician’s Friend, Woodwind Brasswind and AVDG) to continue to operate in the normal course while the transaction is implemented. As a result of the Plan, Guitar Center will continue to meet its financial obligations to vendors, suppliers, and employees, and intends to make payments in full to these parties without interruption in the ordinary course of business.
A Covid-19 Vaccine Could Unleash Pent-Up Demand, Bringing Along Inflation – WSJ – Inflation could be poised for a comeback. Some economists are starting to embrace the idea that a prospective Covid-19 vaccine could allow people to once again spend money on travel, restaurants and other services – and drive up prices in the U.S.That would be a change from the past 10 years, when inflation rarely hit the Federal Reserve’s 2% target despite a strong economy and low unemployment. It would also test the central bank’s new framework, which calls for periods of inflation above that level after stretches, like the current one, when it has run below.The economy’s progress since the sharp, pandemic-induced recession in the spring hasmade forecasters more confident of a strong recovery once a vaccine enables people to resume their pre-pandemic lives.Airlines and hotels, which laid off thousands of workers and slashed prices at the start of the pandemic, could struggle to meet the surge in demand, sending prices higher. And city rents, which dropped as people hunkered down, could start creeping up again as they look at alternatives.Likewise, the March coronavirus relief bill, which sent direct payments to households and increased unemployment aid, gave people more cash – and much of it has yet to be spent, as suggested by a relatively high savings rate. Those payments will contribute to pushing the federal debt to 98% of gross domestic product this year, according to the Congressional Budget Office, the highest since the end of World War II. That also should cause prices to rise since there is more money sloshing through the economy. All this could push up the price index for personal-consumption expenditures, the Federal Reserve’s closely watched measure of inflation. Annual inflation by that measure stood at 1.4% in October, shy of the central bank’s 2% target.
U.S. Economic Activity Picks Up on Postelection Lift, Vaccine Results – WSJ The U.S. economy continues to recover from the downturn caused by the coronavirus pandemic, according to business surveys that show services and manufacturing activity growing despite a rising number of infections. The U.S. performance contrasts with surveys showing the European economy is set for a fresh contraction in the final quarter of 2020, as lockdowns aimed at containing the coronavirus have led to a sharp decline in activity in the dominant services sector. Data firm IHS Markit said Monday its composite index of U.S. business activity, which covers both the services and manufacturing sectors, rose to 57.9 in November from 56.3 in October. The new reading, a preliminary estimate for this month, represented the strongest rate of growth for U.S. business activity since March 2015, IHS Markit said. A reading above 50.0 indicates that activity is increasing, while a reading below points to a decline in activity. An increase in new orders helped drive the overall boost in activity for both services providers and manufacturers, while business confidence also improved, according to IHS Markit. Services firms expanded their workforces in November to keep up with stronger demand, although manufacturing job creation slowed, the surveys showed. The data were compiled between Nov. 12 and 20, and offered a look at how U.S. services and manufacturing firms were faring right after the presidential election amid reports of progress from several companies working to develop a coronavirus vaccine. “Expectations about the year ahead have surged to the most optimistic for over six years, reflecting the combination of a postelection lift to confidence and encouraging news that vaccines may allow a return to more normal business conditions in the not too distant future,” said Chris Williamson, IHS Markit’s chief business economist. Still, a surge in Covid-19 cases in the U.S. poses a fresh challenge for the economic recovery. Job-market growth has shown signs of slowing and some states and localities have reinstated restrictions aimed at combating the virus’s spread.
Headline Durable Goods Orders Up 1.3% in October The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau’s summary on new orders: New orders for manufactured durable goods in October increased $3.0 billion or 1.3 percent to $240.8 billion, the U.S. Census Bureau announced today. This increase, up six consecutive months, followed a 2.1 percent September increase. Excluding transportation, new orders increased 1.3 percent. Excluding defense, new orders increased 0.2 percent. Transportation equipment, up five of the last six months, led the increase, $0.9 billion or 1.2 percent to $77.1 billion. Download full PDF The latest new orders number at 1.3% month-over-month (MoM) was better than the Investing.com 0.9% estimate. The series is down 0.3% year-over-year (YoY). If we exclude transportation, “core” durable goods was up 1.3% MoM, which was better than the Investing.com consensus of 0.5%. The core measure is up 4.0% YoY. If we exclude both transportation and defense for an even more fundamental “core”, the latest number is down 0.4% MoM and up 7.3% YoY. Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It is up 0.7% MoM and up 6.2% YoY. For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We’ve also included a dotted line to show the relative size of Core Capex.
U.S. core capital goods orders beat expectations in October – New orders for key U.S.-made capital goods increased more than expected in October, but momentum is slowing in line with expectations for slower economic growth in the fourth quarter. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.7% last month. These so-called core capital goods orders surged 1.9% in September. Economists polled by Reuters had forecast core capital goods orders increasing 0.5%. Core capital goods orders rose 0.2% year-on-year in October. Orders last month were supported by demand for electrical equipment, appliances and components, computers and electronic products, primary metals and fabricated metal products. But orders for machinery fell. Shipments of core capital goods jumped 2.3% last month. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement. They rose 0.7% in September. Business investment on equipment rebounded strongly in the third quarter after five straight quarterly declines. Economists expect slower economic growth after a historic pace of expansion in the third quarter. The economy grew at a 33.1% rate in the July-September quarter after contracting at a 31.4% pace in the second quarter, the deepest since the government started keeping records in 1947. Growth estimates for the fourth quarter are below a 5% rate. Orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, increased 1.3% in October after racing up 2.1% in September. Durable goods orders were lifted by a 1.2% increase in orders for transportation equipment, which followed a 3.3% jump in September. Orders for motor vehicles and parts fell 3.2%. Orders for civilian aircraft increased 38.8%. There had been no civilian aircraft orders for three straight months.
Richmond Fed Manufacturing Broadly Positive in November – Fifth District manufacturing activity strengthened in November, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite index fell to 15 in November from 29 in October but still indicates expansion. The complete data series behind today’s Richmond Fed manufacturing report, which dates from November 1993, is available here. Here is a snapshot of the complete Richmond Fed Manufacturing Composite series. Here is an excerpt from the latest Richmond Fed manufacturing overview: Reports from Fifth District manufacturers were broadly positive in November, according to the most recent survey from the Richmond Fed. The composite fell from 29 in October to 15 in November, but remained firmly in expansionary territory, as all three component indexes – shipments, new orders, and employment – had positive readings. Manufacturers reported improvement in local business conditions, but the spending indexes softened somewhat. Survey participants were optimistic about the future, expecting growth to continue in the coming months. Link to Report Here is a somewhat closer look at the index since the turn of the century.
Weekly Initial Unemployment Claims increased to 778,000 – The DOL reported: In the week ending November 21, the advance figure for seasonally adjusted initial claims was 778,000, an increase of 30,000 from the previous week’s revised level. The previous week’s level was revised up by 6,000 from 742,000 to 748,000. The 4-week moving average was 748,500, an increase of 5,000 from the previous week’s revised average. The previous week’s average was revised up by 1,500 from 742,000 to 743,500. This does not include the 311,675 initial claims for Pandemic Unemployment Assistance (PUA) that was down from 319,694 the previous week. The following graph shows the 4-week moving average of weekly claims since 1971. Continued claims decreased to 6,037,690 (SA) from 6,452,002 (SA) last week and will likely stay at a high level until the crisis abates. Note: There are an additional 9,147,753 receiving Pandemic Unemployment Assistance (PUA) that increased from 8,681,647 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance. An additional 4,509,284 are receiving Pandemic Emergency Unemployment Compensation (PEUC) that increased from 4,376,847 the previous week. These last two programs are set to expire on December 26th. This was worse than expected.
Unemployment claims rise for second week in a row: Millions will lose federal unemployment benefits in December unless Senate Republicans act EPI Blog – The data show that another 1.1 million people applied for UI benefits last week, including 778,000 people who applied for regular state UI and 312,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.1 million who applied for UI last week was an increase of 22,000 from the prior week’s figures – the second week in a row that initial claims have risen. Further, last week was the 36th straight week total initial claims were greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims – because we didn’t have PUA in the Great Recession – initial claims last week were still greater than the second-worst week of the Great Recession.)Most states provide 26 weeks of regular benefits, but this crisis has gone on much longer than that. That means many workers are exhausting their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by 299,000, from 6.4 million to 6.1 million.For now, after an individual exhausts regular state benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 13 weeks of regular state UI. However, PEUC is set to expire on December 26th (as is PUA – more on these expirations below).In the latest data available for PEUC, (the week ending November 7) PEUC rose by 132,000, from 4.4 million to 4.5 million, offsetting only about a third of the 414,000 decline in continuing claims f or regular state benefits for the same week. Why didn’t PEUC rise more? Many of the roughly 2 million workers who were on UI before the recession began, or who are in states with less than the standard 26 weeks of regular state benefits, are now exhausting PEUC benefits, at the same time others are taking it up. More than 1.5 million workers have exhausted PEUC so far (see column C43 in form ETA 5159 for PEUC here). In some states, if workers exhaust PEUC, they can get on yet another program, Extended Benefits (EB). However, in the latest data, just 601,000 workers were on EB. That’s far less than half of those who have exhausted PEUC. Most are left with nothing. Figure A shows continuing claims in all programs over time (the latest data are for November 7). The total number of workers on UI ticked up in the latest data, even with the exhaustions we’ve seen so far. This is a wake-up call.
Disney to lay off 4,000 more employees than it initially reported – The Walt Disney Co. is planning to layoff about 4,000 more employees than it initially reported to the federal government because of the ongoing COVID-19 pandemic.In total, the company expects to layoff 32,000 employees in the upcoming months, according to its U.S. Securities and Exchange Commission (SEC) report filed Wednesday. The entertainment company, which employs 203,000 people worldwide, includes media networks, studio entertainment, parks, other experiences.In the filing, Disney revealed its plans to terminate the additional employees, mostly in parks, experiences and products.”Due to the current climate, including COVID-19 impacts, and changing environment in which we are operating, the company has generated efficiencies in its staffing, including limiting hiring to critical business roles, furloughs and reductions-in-force,” Disney said in the filing.About 155,000 employees work in Disney’s parks, resorts and retail stores worldwide, according to the report. The company had announced in September that it would layoff 28,000 workers, mostly from the business sector. The job cuts will take place through the first half of fiscal year 2021.Disney furlough more than 120,000 employees during the initial months of the pandemic, continuing to provide medical benefits. Disney Cruise Line sailings have remained suspended since March 14. The company also closed resorts and parks in the U.S. in March and reopened them in July. Some employees were able to return to work as government regulations were lifted but with limited operations.The company has incurred about $1 billion in additional costs from COVID-19 safety requirements and modifications, according to the report. “With the unknown duration of COVID-19 and yet to be determined timing of the phased reopening of certain businesses, it is not possible to precisely estimate the impact of COVID-19 on our operations in future quarters,” Disney said in the filing. “The reopening or closure of our businesses is dependent on applicable government requirements, which vary by location, are subject to ongoing changes, which could result from increasing COVID-19 cases.”
A month after being hired at suburban Detroit Fiat Chrysler plant, worker dies from COVID-19 — A Fiat Chrysler worker died Saturday morning after contracting COVID-19 at the Warren Truck Assembly Plant (WTAP) in suburban Detroit. The worker, identified as Stevie Brown, was only hired into the plant as a temporary part-time employee last month. The tragic death points to the deadly conditions that now exist in auto factories and other industrial facilities throughout Michigan and other midwestern US states.Workers began circulating messages and posts on social media over the weekend and began demanding information about their coworker’s death. However, management and the United Auto Workers (UAW) union remained silent and the media did not report any information. On Monday, the death was confirmed by the wife of the deceased worker. In a post on the WTAP Local 14 Facebook page she wrote, “My wonderful husband, Stevie Brown, started working at the FCA Mound/8 Mile plant (Warren Trucking) in Oct 2020. Now he no longer here, lost his life to Covid-19 on Sat. Nov 21, 2020 after two weeks in this place!!! Be safe and don’t become a statistic. His loving wife.” Coworkers say Brown worked in the factory’s paint shop, in a section known as the blackout area. The paint shop has been the scene of several COVID-19 deaths since the beginning of the pandemic. By April 28, at least four workers had died in the plant, which employs 2,600 workers. At least one other worker has died at the adjacent Warren Stamping plant. Neither the UAW nor FCA has issued any public statements about Brown’s death. According to one worker, eight teams with six to eight workers each have been sent home due to the virus since September 28. This is being systematically covered up by the company, with the full support of the UAW. Management has not provided any information on the spread of infections in the plant. “All we were told is the paint shop was being fogged for COVID-19 on Sunday last week,” said one worker.
As virus surges in North Dakota, Fargo food distribution workers strike over lack of COVID-19 protections – Seventy-five workers at food distributor Cash-Wa in Fargo, North Dakota are continuing a strike over health and safety issues as COVID-19 rampages through the state, which recently reported the highest death rate for any state or country in the world. The workers warn that inadequate safety protections risk turning the Fargo warehouse, operated by Cash-Wa, into a major vector for disease transmission. The workers, members of Teamsters Local 120, walked out November 18. They had been working without a contract since August. Local 120 claims management has been knowingly violating CDC guidelines. Workers walked out after over 10 percent of the Fargo workforce tested positive for COVID-19. Strikers are calling for adequate screening measures, proper training of workers in cleaning, and adequate safety protections, including dividers in break areas. The drivers and warehouse workers deliver food to area schools and restaurants. The walkout could affect facilities in South Dakota, Minnesota and North Dakota, including Sioux Falls schools as well as Dairy Queen, Subway, Taco John’s and Pizza Ranch locations in the three states. Cash-Wa Food Services of Americ is a multi-state company based in Kearney, Nebraska. It bills itself as the eighteenth-largest Broadline Foodservice Distribution company in the US, with facilities in Fargo, Kearney and Aberdeen, South Dakota. Fargo is the only unionized location. The strike had been initially set for November 19, but workers began setting up pickets the day before. Cash-Wa has been attempting to continue operations using management personnel. According to a statement by Local 120 spokesman Brian Nowak, “We want them to advise our employees, give them proper instruction on how to handle this COVID virus. We don’t want this stuff going into restaurants and other facilities. We know that North Dakota is a hot spot right now, and it’s only going to get worse.” While North Dakota, along with other relatively rural areas, escaped the brunt of the initial wave of COVID-19 infections and deaths, that has now completely reversed. According to an analysis by the American Federation of Scientists, North Dakota has recently experienced the highest COVID-19 daily mortality rate in the world of any state or country. North Dakota is recording 18.2 daily deaths per 1 million people while neighboring South Dakota has 17.4 deaths per million, the third-highest rate in the world.
Scams led California to send COVID jobless benefits to Scott Peterson, death row inmates — San Quentin inmate Scott Peterson, convicted of killing his wife and unborn son, was sent California unemployment benefits in recent months, according to a group of state and federal prosecutors who have been investigating fraud in the pandemic relief system administered by the state Employment Development Department. So was convicted serial killer Cary Stayner, who in 1999 murdered two women and two girls near Yosemite and now is jailed, near Peterson, on death row.Also allegedly approved for an unemployment debit card: Isauro Aguirre, sentenced to death in 2018 for the torture and death of 8-year-old Gabriel Fernandez.Nine district attorneys across California and a federal prosecutor on Tuesday made these allegations and called for Gov. Gavin Newsom to intervene to stop such unemployment swindling in California jails and prisons – which may involve tens of thousands of questionable claims totaling hundreds of millions of dollars – though they said they were uncertain if the high-profile claimants were victims of a scam or participants.Pat Harris, Peterson’s attorney, said he was “absolutely certain Scott was not involved, and any investigation will clear him.”The district attorneys called the situation “the most significant fraud on taxpayer funds in California history,” according to a letter obtained by The Times, describing crimes that involve identity theft of prisoners as well as alleged conspiracies by individual inmates and organized gangs to game the state system.”It is a manifest problem that cannot be ignored, and the governor needs to take steps to address it,” said McGregor Scott, U.S. attorney for the Eastern District of California. The prosecutors contend that the fraud is preventable with systems such as those used by other states that check inmate data against unemployment claims. They asked Newsom to step in to “turn off the spigot” of payments to incarcerated people, contending that EDD’s response to their investigations has been “slow to nonexistent,” according to Sacramento County Dist. Atty. Anne Marie Schubert, who helped form and lead a task force on the issue.
Splitting 5 to 4, Supreme Court Backs Religious Challenge to Cuomo’s Virus Shutdown Order – The Supreme Court late Wednesday nightbarred restrictions on religious services in New York that Gov. Andrew M. Cuomo had imposed to combat the coronavirus. The vote was 5 to 4, with Chief Justice John G. Roberts Jr. and the court’s three liberal members in dissent. The order was the first in which the court’s newest member, Justice Amy Coney Barrett, played a decisive role. The court’s ruling was at odds with earlier ones concerning churches in California and Nevada. In those cases, decided in May and July, the court allowed the states’ governors to restrict attendance at religious services. The Supreme Court’s membership has changed since then, with Justice Barrett succeeding Justice Ruth Bader Ginsburg, who died in September. The vote in the earlier cases was also 5 to 4, but in the opposite direction, with Chief Justice Roberts joining Justice Ginsburg and the other three members of what was then the court’s four-member liberal wing. In an unsigned opinion, the majority said Mr. Cuomo’s restrictions violated the First Amendment’s protection of the free exercise of religion. In a concurring opinion, Justice Neil M. Gorsuch said Mr. Cuomo had treated secular activities more favorably than religious ones. “It is time – past time – to make plain that, while the pandemic poses many grave challenges, there is no world in which the Constitution tolerates color-coded executive edicts that reopen liquor stores and bike shops but shutter churches, synagogues and mosques,” Justice Gorsuch wrote. The court’s order addressed two applications: one filed by the Roman Catholic Diocese of Brooklyn, the other by two synagogues, an Orthodox Jewish organization and two individuals. The applications both said Mr. Cuomo’s restrictions violated constitutional protections for the free exercise of religion, and the one from the synagogues added that Mr. Cuomo had “singled out a particular religion for blame and retribution for an uptick in a societywide pandemic.” In a dissenting opinion on Wednesday, Chief Justice Roberts said the court had acted rashly. “Numerical capacity limits of 10 and 25 people, depending on the applicable zone, do seem unduly restrictive,” he wrote, adding, “It is not necessary, however, for us to rule on that serious and difficult question at this time.” In a second dissent, Justice Sonia Sotomayor, joined by Justice Elena Kagan, said Mr. Cuomo’s restrictions were sensible. “States may not discriminate against religious institutions, even when faced with a crisis as deadly as this one. But those principles are not at stake today,” she wrote.
Coming utility bill problem will impact (as in, raise bills for) everyone –For years, residents who have struggled to pay their utility bills have turned to the state’s low-income heating and electric assistance program, known as LIHEAP.Considering the COVID-19 pandemic has led to widespread economic suffering, there could be an assumption that applications to the program would have increased tremendously since March. In reality, the opposite is true.Ralph Izzo, the chair and CEO of Public Service Enterprise Group, said application to LIHEAP are way down – a scenario that will have far-reaching financial implications for all residents in the state. The situation has become dire enough that state Sens. Steve Oroho (R-Sparta) and Joe Pennacchio (R-Montville) have sent a warning letter to Joseph Fiordaliso, the president of the New Jersey Board of Public Utilities, urging the BPU to take preemptive measures.”If these payments aren’t made, it will fall on the backs of ratepayers, and we don’t want them stuck holding the bill,” they wrote. “We need to come up with a plan now.”Izzo said he can only assume that many customers are confusing a moratorium on utility shutoffs with a feeling that those bills will be forgiven. Why else, he said, would residents pass on a chance for help? “I can’t figure any other reason why they would – because, if I thought a bill was going to come through, I would do all I can to keep it as low as possible,” Izzo told ROI-NJ. “We have tremendous empathy for people who are out of a job or had their hours reduced, and we’ll work with them to manage the situation. But don’t drop one of the most important mechanisms you have been using in the past.
Layoffs leave New York City-area nursing homes unprepared as the pandemic intensifies – As the daily numbers of new coronavirus infections surpass their springtime highs, nursing homes in New York City and in the broader tri-state area are cutting staff. The Hebrew Home in the Riverdale neighborhood of the Bronx, one of the biggest facilities in the state, laid off 56 workers during the first week of November. A reason given for the layoffs is that 124 of the home’s residents had died during the spring. A decline in elective surgeries has also reduced the number of patients who come to the facility to recover. Clove Lakes Health Care and Rehabilitation Center in Staten Island was among the worst affected facilities in New York City during the pandemic’s previous peak. In a single month, 40 of the home’s residents died. Now, as the pandemic resurges in the New York City area, Clove Lakes has laid off more than 40 workers. The remaining employees worry that they could lose their jobs as well because of the continuing economic crisis. The situation at the Hebrew Home and Clove Lakes reflects regional and national trends. By May 20, the vacancy rate in New York’s nursing homes had increased from 8 percent to 21 percent. In neighboring New Jersey, which was another hot spot during the peak of the pandemic, about 33 percent of nursing home beds are unoccupied. Before the pandemic began, only 18 percent of beds were vacant. Many families are avoiding nursing homes now because they allowed so many residents to become infected and die during the spring. Owners have used the reduced occupancy rates to justify laying off workers. Even considering the lower occupancy rates, these nursing homes are understaffed, according to workers. An industry survey conducted in mid-November reveals that staffing is a major concern for most nonprofit providers of services to the aging. Approximately 73 percent of respondents have difficulty finding enough staff to cover scheduled shifts, according to the survey. In addition, 71 percent of providers are having difficulty recruiting new workers, and 65 percent have problems covering for workers who are on sick leave. Survey respondents included nursing homes, assisted living facilities, home health providers, and hospice and affordable housing communities. Across the country, nursing homes are in dire financial straits. In April, an industry-commissioned analysis delivered to Secretary of Health and Human Services Alex Azar estimated that the senior living industry is facing costs of between $40 billion and $57 billion during the next year. To maintain profits for their owners and shareholders, nursing homes will seek to reduce costs through merciless staff cuts. Workers will be thrust into the ranks of the unemployed, and facilities will be ill equipped to prevent or mitigate the forecast rise in infections and deaths.
San Antonio Food Bank Doubles Amount Of People It Serves – Two Americas were visible on Tuesday as the Dow Jones Industrial Average crossed 30,000 for the first time. Simultaneously, hundreds of vehicles were snaked around a parking lot in Albuquerque, New Mexico, waiting in line at a local food bank. This suggests the K-shaped economic recovery, one where the rich grow richer and the working-poor are crushed with job loss and insurmountable debts, is getting much worse by the month. For more on the rapid reemergence of food bank lines, or what will be the new normal in a severely broken economy that is in desperate need of structural reform, Eric Cooper, CEO of the San Antonio Food Bank in Texas, on Tuesday, told CNBC’s Shepard Smith that demand at his food bank has more than doubled this year. “Pre-pandemic we fed about 60,00 people a week and now we’re seeing about 120,000 per week, and most of those are new to the food bank, and have never had to ask for help before,” Cooper told Smith during an interview on Tuesday evening. He said, “today, we had a distribution that fed 2,000, and we have these distributions all the time.” “Food banks around the country have seen this unprecedented demand, and we’re just working as hard as we can to balance the private donations we get, with the public assistance to try to make sure people are fed,” he explained. Cooper continued: “A child would miss ten meals in a week, and if a mom has two to three kids in school, she’s now feeling the impact of the cost of that food at home, and without employment, kids are going hungry. We hear from schools that kids struggle with their education because they don’t have access to good nutrition.”
‘No end in sight’: hunger surges in America amid a spiraling pandemic — Millions of Americans must rely on charity to put Thanksgivingdinner on the table this year, as hunger surges amid a devastating spiraling of the Covid-19 pandemic which the Trump administration has failed to get under control. In what is traditionally a season of celebration, less than half of US households with children feel “very confident” about having enough money to afford the food needed over the next month, according to the US Census Bureau’s latest pandemic survey. A staggering 5.6m households struggled to put enough food on the table in the past week. Families of color are suffering disproportionately with 27% of black and 23% of Latino respondents with children reported not having enough to eat sometimes or often over the past week – compared with 12% of white people. Now, as states across the country contemplate new lockdowns to slow down the rampant spread and record hospitalizations, the unprecedented demand for food aid is on the rise, according to the Guardian’s latest snapshot survey:
- In Cleveland, 5,000 families showed up last Thursday for the pre-Thanksgiving drive-in distribution compared with 3,300 a week earlier and an average of 1,600 over the summer. Some 54% of the food distributed was for children and seniors. “We’re now seeing families who had an emergency fund but it’s gone and they’re at the end of their rope. We’re going to be doing this for a really long time, and that’s frankly terrifying given the impact hunger has on physical health, learning and development for children and parents’ stress,”
- Earlier this month, there were long lines in Dallas as the North Texas Food Bank provided groceries to just over 25,000 people – its busiest day on record. The food bank distributed 7,000 whole turkeys that day, and a total of about 600,000 pounds of food. “Hunger isn’t hidden any more,” said Trisha Cunningham, CEO of the food bank. “If it isn’t you, then this is your neighbor, this is your child’s classmate, this is your hairdresser.”
- In central Alabama, demand at the Grace Klein food pantry is up 20% since last month. “It could be the rumours of civil unrest or the rise in Covid cases driving demand, but people are living off this food,” said director Jenny Waltman. The pantry is currently serving about 12,000 people each week, compared with 2,500 a week before the pandemic. The 200 volunteers and staff are exhausted, said Waltman.
- The Food Bank of New York was forced to start doling out the Thanksgiving frozen turkeys well before the holiday. Demand had dipped slightly in August as public health restrictions were loosened and folks returned to work, but another lockdown is looming, and the lines are growing.
- In Chicago, the Lakeview pantry has provided groceries for 237% more people so far this year compared to 2019, with demand “ramping up again” after leveling off slightly over the summer, according to CEO Kellie O’Connell. “The pandemic has brought to light how normal wasn’t working for so many people, especially black and brown communities.”
Honestie Hodges, Whose Handcuffing Changed Police Policy, Is Dead at 14 – NYTimes -Honestie Hodges, who was handcuffed by the police outside her home in Grand Rapids, Mich., when she was 11, a frightening incident that drew outrage and national headlines in 2017, died on Sunday. She was 14.Her death, at the Helen DeVos Children’s Hospital in Grand Rapids, was caused by Covid-19, her grandmother Alisa Niemeyer wrote in a post on the website GoFundMe.The incident occurred on Dec. 6, 2017. Honestie had stepped out the back door of her home with her mother and another family member to go to the store when they were confronted by police officers with their guns drawn.”Put your hands on top of your – ,” an officer ordered them before he was interrupted by Honestie’s mother screaming, “She is 11 years old, sir!””Stop yelling!” the officer responded, as recorded by an officer’s body camera. He ordered Honestie to walk backward toward him with her hands up. A second officer grabbed her arms, pulled them behind her back and handcuffed her. Honestie shouted, “No, No, No!” pleading with the officers not to place the cuffs on her. The police, who said they had been searching for a 40-year-old woman in connection with a stabbing, removed the handcuffs after several minutes. The incident caused a widespread uproar that led to a soul-searching within the Grand Rapids Police Department. In a news conference, the police chief at the time, David Rahinsky, said that “listening to the 11-year-old’s response makes my stomach turn; it makes me physically nauseous.” He retired in 2019. None of the officers were disciplined because they had not violated any departmental policies, Mr. Rahinsky wrote in a statement at the time. Nonetheless, the department acknowledged that the officers had made a mistake in how they handled the child.
Massive spread of COVID-19 in Kentucky schools and death of 15-year-old girl prompts statewide school closures – The death from COVID-19 of a 15-year-old girl in Ballard County, Kentucky, coinciding with a massive spread of the pandemic, has prompted the closing of in-person instruction in all of the state’s public and private schools. Kentucky’s Democratic Governor Andy Beshear issued the executive order to close schools last week, as the number of COVID-19 cases statewide is growing exponentially, with 3,869 new cases Thursday. Beshear admited that almost 10,000 K-12 students and 2,000 faculty members are presently in quaratine or isolation across Kentucky. At a press conference announcing the closures, he said, “This virus at its level right now is and will overwhelm each and every one of our schools if we do not take action.” The belated decision could not save Alexa Rose Veit, 15, who had Down Syndrome and just last year had been successfully treated for leukemia. Alexa died November 15 after first feeling ill at Ballard County Memorial High School. All Kentucky middle and high schools will move to remote learning until at least January 4, and only elementary schools in counties that have experienced fewer than 25 cases per 100,000 people and are following health guidelines will be able to reopen December 7, according to the Governor’s executive order. The COVID-19 surge that claimed the life of Alexa also impacted many of her close relatives, with her mother testing positive for COVID-19 at the same time and being hospitalized. Alexa died the day her mother was released from the hospital. Her older sister had previously recovered from COVID-19, and both her grandparents have since tested positive and been hospitalized, according to media reports. The death of Alexa and the massive spread of the virus through Kentucky schools underscores the reality that schools are major vectors for the spread of COVID-19. A report by the American Academy of Pediatrics (AAP) found that as of November 12 there have been 1.04 million confirmed COVID-19 cases nationwide among children, accounting for 11.5 percent of all infections in the US. “We have got to come to the realization that this is real. This isn’t political, it’s not something that ‘has always been here’ it is real. We must start taking the precautions seriously.”
Two Alabama teachers die from COVID-19 as governor vows to keep schools and businesses open – Over the past two weeks, the rate of COVID-19 infections across Alabama has increased by over 50 percent, with teachers and other school employees representing a significant number of these cases. In one Alabama school district, Hoover City School, two district employees have died within the past week after contracting the virus. On November 21, Hoover City Schools Superintendent Kathy Murphy announced that two district employees had died after being diagnosed with COVID-19. Like most public education officials in the state, Murphy refused to name the employees or even the schools in which they worked, citing phony concerns for privacy. Hoover City Schools is one of many school districts in the state that have witnessed a sharp uptick in COVID-19 cases in the past several weeks. Many Alabama school districts all but scuttled remote learning efforts after the first nine-week grading period, during which staffing inadequacies and subpar technology strained students, parents, and educators alike. Meager and non-standardized mitigation efforts, such as staggered school weeks or shortened days, were abandoned. According to Alabama’s K-12 COVID-19 Dashboard, which lags by about a week, at least 48 cases of COVID-19 were reported in Hoover City Schools as of November 20, adding to a total of over 2,261 cases in schools statewide for the same time period. Hoover City Schools is not the only district where Alabama teachers have died after contracting COVID-19 since August. In September, 47-year-old special education teacher Leo Davidovich, of the St. Clair County School District, died after a month-long battle with COVID-19 and an opportunistic bacterial infection. The administration of Odenville Middle School, where Davidovich worked, announced his death on Facebook “with great sadness.” However, the administration’s professed sadness over Davidovich’s death did not translate into meaningful efforts to protect other teachers or switch to fully remote learning. The back-to-school policies implemented across Alabama have not just affected teachers, but also their extended families. In October, two Alabama public school teachers anonymously told Alabama Political Reporter that they lost elderly family members to COVID-19 after coming down with the virus themselves. Both teachers emphasized that they brought the virus home to their families from schools where there are no viable sanitation or mitigation policies.
Thousands of US college students return home for Thanksgiving amid surging pandemic – Hundreds of thousands of college students have returned home for Thanksgiving this week as new cases of COVID-19 continue to surge in nearly every state. Only three states – Vermont, Maine and Hawaii – remain below 20 new cases per 100,000 daily and several states are pushing the limits of their hospital capacities. After the disastrous decision by administrators at more than 1,900 colleges to reopen their campuses to in-person learning this fall led to hundreds of thousands of confirmed cases, countless students are bringing the coronavirus back home with them. Health officials are warning that even with a negative test, travelers may still transmit the virus. As the US set a record for hospitalizations for the 16th day in a row, Dr. Jonathan Reiner, a former White House medical advisor, has warned that Thanksgiving could be the “mother of all super spread events.” More than 2,200 COVID-19 deaths were reported in the US on Wednesday – making it the highest one-day coronavirus death toll the country has reported since early May. The rampant spread of the virus in all parts of the country poses a serious threat to the health and safety of students and their families. While many schools have planned to switch to remote learning after the Thanksgiving holiday, even this minor provision will be inadequate. A survey by the New York Times has found that there have been 321,000 cases at 1,900 colleges and universities and at least 80 deaths since the beginning of March. Even this considerable number of infections is likely an understatement considering the propensity for young people to be asymptomatic and the chronic lack of testing at many schools. Schools across the country brought hundreds of thousands of students together in densely populated campuses this fall, hundreds of which have recorded cases numbering over 100. Now students are rushing to make it back home for the holiday as their campuses close amidst major outbreaks. Thousands of University of Wisconsin students rushed to get tested before flying home to be with their families for the next several weeks. Many have no choice but to go home. At Ohio State University, where more than 4,700 students have tested positive this fall, thousands more will return home for Thanksgiving before returning for in-person classes on January 18. Leading public health officials have warned against traditional Thanksgiving celebrations in the US, instead urging people to stay home and celebrate only with members of the same household. The US Centers for Disease Control and Prevention (CDC) also recommended last week that people should not travel for Thanksgiving. In this context, colleges which are sending students home for the holiday will be going against every guidance from health officials.
College Presidents Fail to Mobilize to Protect Students from Covid-19 – America’s Covid-19 debacle can be, in one telling, traced to a failure of leadership, as for example in The New York Times headline: “Inside Trump’s Failure: The Rush to Abandon Leadership Role on the Virus,” with the deck: “The roots of the nation’s current inability to control the pandemic can be traced to mid-April, when the White House embraced overly rosy projections to proclaim victory and move on.” The nation’s failure, then, is Trump’s failure. (As a corollary, all we need do to succeed is replace Trump). But could leadership failure be more general? To find out, I thought I would examine mobilization by university leadership in the Covid-19 crisis; specifically, University Presidents. University Presidents are by definition leaders[1], andvery well paid to be. University Presidents, or at least administrators, are also, at least if conservative commentary is to be believed, are more liberal than average. Hence, they would be the least likely to be swayed by Trump, and therefore likely to exercise leadership collectively to protect students from covid[2] regardless of what Trump said or did. University Presidents collectively also have, if not in their gift, at least under their influence, enormous resources of every kind: scientific, engineering, medical, business. If ever there was an opportunity to mobilize, it was here. I won’t assess the success or failures of university leadership; I am simply asking whether or not they mobilized[3]. In fact, university Presidents – leaders, let us remember – did not mobilize to protect students from Covid. Frankly, I never thought they did, because I do try to pay attention to these things, but to prove it to myself, I went through 33 pages of headines for the Coronavirus tag in the Chronicle of Higher Education, all the way back to the first entry on February 24 (“Coronavirus-Themed Party at Albany Draws Criticism“). No headlines like “University Presidents form Task Force to Address Covid Crisis,” or “Ivy League Presidents form Testing Consortium for Student Health Centers,” or even “Land Grant University Presidents Sponsor Webinar on Covid and Partying.” Nothing. As it turns out, protecting students from Covid was never a top priority for University Presidents. The American Council on Education (“a membership organization that mobilizes [ha] the higher education community to shape effective public policy and foster innovative, high-quality practice”) has published periodic surveys on what University Presidents consider pressing issues.
Zoom cancels meetings at several universities on Zoom censorship – Over the last month, Zoom, the widely-used online conferencing platform, has been facing tremendous backlash against its recent censorship of online meetings at several prominent universities. In late September, the company shut down an online seminar at San Francisco State University (SFSU) titled “Whose Narratives? Gender, Justice and Resistance: A Conversation with Leila Khaled,” featuring Palestinian rights activist Leila Khaled. This was followed in late October by the company’s termination of three online events, organized in solidarity with SFSU, at New York University (NYU), the University of Hawaii at Manoa (UH), and the University of Leeds in the United Kingdom. Zoom removed the SFSU seminar from its platform the day before it was scheduled to take place, responding to mounting pressure from various pro-Israel and Zionist groups. The company argued that the meeting was “in violation of Zoom’s Terms of Service” because it may violate federal laws by providing “material support” for terrorism. This is referring to Khaled’s long-time membership in the Popular Front for the Liberation of Palestine (PFLP), which was added to the US Department of State’s list of “Foreign Terrorist Organizations” in 1997. In an email to The Intercept, Zoom Spokesperson Andy Duberstein made it quite clear that the company can bar anyone from using its services. In his email, Duberstein notes a section of the company’s terms of services that states, “Zoom may investigate any complaints and violations that come to its attention and may take any (or no) action that it believes is appropriate, including, but not limited to issuing warnings, removing the content or terminating accounts and/or User profiles.” Zoom’s cancelation of SFSU’s seminar was followed by Facebook’s removal of the event’s livestream link and promotional material from its platform. Facebook also issued threats to shut down the online pages of the event’s sponsors. YouTube shut down the livestream of the seminar on its platform 23 minutes after it had started. The ludicrous arguments put forward by Zoom, Google and Facebook that the event was providing “material support” for terrorism is invalidated by the fact that not only was Khaled participating in a personal capacity, not as a representative of the PFLP, but she was not getting paid to speak at the event. Zoom’s blatant act of political censorship was met with widespread denunciations by educators and students around the world, and at least a dozen major universities planned to hold online meetings in solidarity with SFSU on October 23. Zoom, acting on information provided to them by “third parties,” shut down three of these meetings the day that they were scheduled to take place. Numerous organizations, including the NYU chapter of the American Association of University Professors (AAUP), have strongly denounced the censorship by Zoom as a flagrant attack on free speech on campuses.
Student Loan Losses Seen Costing U.S. More Than $400 Billion – WSJ -The U.S. government stands to lose more than $400 billion from the federal student loan program, an internal analysis shows, approaching the size of losses incurred by banks during the subprime-mortgage crisis. The Education Department, with the help of two private consultants, looked at $1.37 trillion in student loans held by the government at the start of the year. Their conclusion: Borrowers will pay back $935 billion in principal and interest. That would leave taxpayers on the hook for $435 billion, according to documents reviewed by The Wall Street Journal.The analysis was based on government accounting standards and didn’t include roughly $150 billion in loans originated by private lenders and backed by the government. The losses are far steeper than prior government projections, which typically measure how much the portfolio will cost the government in the next decade, not the entire life of the loans. Last year the Congressional Budget Office estimated that the student-loan program would cost taxpayers $31.5 billion, including administrative costs.After decades of no-questions-asked lending, the government is realizing that it has a pile of toxic debt on its books. By comparison, private lenders lost $535 billion on subprime-mortgages during the 2008 financial crisis, according to Mark Zandi, chief economist at Moody’s Analytics.The effect this time is different. The government, unlike private lenders, can borrow trillions of dollars at low rates to absorb the losses, without causing a panic. But taxpayers will end up paying a price because Congress will have to raise taxes, cut services or increase the deficit to cover the losses. The absence of a cataclysmic event like the financial crisis is removing the impetus for the federal government to change its lending practices, which analysts said have enabled colleges to raise tuition far above the rate of inflation.”There’s no market discipline here,” said Constantine Yannelis, a former Treasury Department official in the Obama administration who now teaches at the University of Chicago. “In 2007-2008, we saw a lot of lenders who were making risky bets going under. There’s no force like that in the student-loan market.”
Mexico Confirms Its Economy Rebounded in Third Quarter – WSJ – Mexico’s economy bounced back in the third quarter, led by increases in industrial output as business reopened from shutdowns to slow the spread of the coronavirus, but activity remained well below its year-earlier level, revised data show. Gross domestic product, a measure of output in goods and services, expanded a seasonally adjusted 12.1% in the July-September period following a record 17% contraction in the second quarter, the National Statistics Institute said Thursday. The revised reading was little changed from the advance estimate of a 12% expansion reported at the end of October. Compared with the third quarter of 2019, economic activity was down 8.6%. The increase in output snapped a string of five consecutive quarters of economic contraction. Industrial production rose 21.7% from the second quarter, boosted by the reopening of key sectors like auto production and construction, which had been at a virtual standstill in April and May. Services grew 8.8% from the second quarter, and agricultural production was 8% higher. Despite the quick recovery in the quarter, the economy remains on track for its deepest full-year contraction since the Great Depression of the 1930s. The Bank of Mexico said Wednesday that it now expects GDP to shrink 8.9% this year, when previously it had predicted a contraction between 8.8% and 12.8%. The central bank forecasts growth of 3.3% for 2021. “This assumes a gradual recovery, with caution by consumers and investors because of the pandemic,”
What Would a State-Owned Amazon Look Like? Ask Argentina – In October, a historic US Congressional investigation into big tech published a report which proposed a raft of new regulations to rein in the power of tech giants like Amazon. But what if instead of relying on regulations, the US introduced a new online marketplace that delivered low prices to consumers, lower costs for merchants and living wages for workers in e-commerce? Last October, Argentina announced the creation of an online marketplace called “Correo Compras”. The platform is to be run by a state-owned company, Correo Argentino, which is also the country’s official postal service. Argentina has been severely hit by the Covid-19 pandemic, and its lockdown has been among the longest. Even before the pandemic internet penetration in Argentina was already high (74%), and since the lockdown e-commerce and other digital services thrived in the country. Through its publicly owned option, the government aims to offer an alternative to Latin America’s current e-commerce private octopus. Though you may never have heard of it, the Amazon of the Amazonian continent is not Amazon.com – the global behemoth whose market capitalization grew 75% this year. Rather, Latin America’s amazonian e-commerce honors go to MercadoLibre, or ‘FreeMarket’ in English. Born in 1999, the company quickly adopted the business models first of eBay and then of Amazon and China’s Alibaba. The absence of foreign platforms in the region allowed MercadoLibre to develop a profitable business. The company now has the largest e-commerce platform in Latin America, operating in eighteen countries, with 51.5 million active users.Far from the image of a ‘national champion’ that contributes to other businesses’ catching-up and, eventually, the region’s development, MercadoLibre simply copied Amazon‘s business model. It is an e-commerce marketplace that squeezes value from third-party sellers.Just like Bezos’s giant, MercadoLibre imposes transaction conditions: from fees to be listed higher when people search for goods, to advertising campaigns inside the marketplace. MercadoLibre also forces sellers to offer free shipping when the purchase is above USD25.Once again copying Amazon, MercadoLibre’s delivery network mobilizes an Uber-like army of drivers seeking out a living through the sharing economy, and its fulfillment centers are beset by low pay and stressful working conditions. Though MercadoLibre technically is a union shop, it has implemented a new flexible employment contract that basically optimizes profits and minimizes pay. In comparison, the government’s “Correo Compras” will not outsource shipping (which is in fact its core business) and promises to create quality jobs with a living wage for its employees.
Global Trade Stages Rapid Recovery – WSJ -Global trade flows bounced back strongly in the summer, marking the largest rise in two decades as air and sea transport channels reopened while demand for consumer goods surged.The rebound has been led by China, which has increased its share of total exports, and left trade volumes in September less than 2% below their levels at the end of 2019.The flows of goods across borders were 12.5% higher in the three months through September than in the second quarter, when flows fell by 12.2%, the CPB Netherlands Bureau of Economic Policy Analysis said Wednesday. That was the largest rise since records began in 2000, following the largest fall.More timely indicators suggest the rebound in trade has continued since the end of the third quarter. Surveys of purchasing managers at factories around the world point to a continued rise in export orders in October, while a measure of container traffic compiled by Germany’s Leibniz Institute for Economic Research and the Institute for Shipping Economics and Logistics hit a record high in the same month.”The first slump due to the corona crisis seems to have been overcome,” said Torsten Schmidt, director of economics at the Leibniz Institute.The strength of the trade revival has varied, with China and other developing countries in Asia leading the way, while the U.S. has lagged behind. The CPB’s figures indicate that while exports from China and other developing countries in Asia had already surpassed their pre-pandemic levels in September, exports from the eurozone were still down 2.6%, and exports from the U.S. down almost 9%.That pattern partly reflects the fact that China was the first major exporter to suffer from a surge in infections, and emerged from its lockdown just as Europe, the U.S. and much of the rest of the world were entering theirs.It was therefore in a strong position to meet surging demand for protective medical equipment and electronic devices that helped people work from home in other parts of the world. Economists at UBS estimate that by July, China’s share of world exports had risen by 11%, while the U.S.’s share had fallen by 4% and France’s share by 12%.
The Prosperity Hoax – In recent years, a spate of articles in the anglophone press and academia have suggested that global poverty has entered terminal decline – all thanks to capitalism. The World Bank has churned out a series of reports over the last six years promoting this cheery story. “The world has made tremendous progress in reducing extreme poverty,” the Bank declared in its “Poverty and Shared Prosperity 2018” report. Over a quarter of humanity had escaped indigence in the past twenty-five years, its research showed. Where once the majority of the world population lived in poverty, now the figure was just 10 percent. Just a decade earlier, it had seemed like hard times for free-market triumphalists, particularly in America, as the financial crisis rudely discredited their fantasies of ineluctable progress. Against this, the World Bank offered a redemptive story. Whatever the injustices and corruptions of globalized capitalism, it had lifted millions out of destitution. The spread of privately owned capital and free trade would see extreme poverty disappear by as early as 2030. With that, the most basic form of human suffering would be consigned to history. It was clear to those who lived in poor countries that there were problems with the World Bank’s data. Consider only the Middle East. Anyone who visits Egypt for even a short time will not fail to notice that at least half of the country’s one hundred million people live in terrible penury. Egypt’s military regime, which had every reason to downplay the problem, pegged the official poverty headcount at 33 percent in 2019. Yet the World Bank announced in 2015 that poverty had been all but eliminated in Egypt. Not nearly a third, but only 1 percent of the Egyptian population were deemed to be living in extreme poverty by the Bank’s calculations. In Algeria it was zero percent. The scavengers who scrape a living from the edges of the Diyarbakir garbage dump in southeastern Turkey were not living in extreme poverty either. According to the Bank, no one in Turkey was.
Greek government bans protests, imposes authoritarian measures utilising pretext of pandemic – Greece’s conservative New Democracy (ND) government is imposing dictatorial measures, using the COVID-19 pandemic as justification. Last week it mounted a huge police mobilisation in the run-up to the November 17 anniversary of the 1973 Athens Polytechnic student uprising against the military junta that ruled Greece from 1967 to 1974. Using the pandemic as a pretext, Chief of the Hellenic Police Michalis Karamalakis banned all public gatherings of four or more people between November 15 and November 18, which is the period during which commemoration events traditionally take place. On November 17, the police deployed 5,000 officers in the capital. Despite the ban, protesters attended commemorations, only to be met with water cannons and tear gas, with the police utilising overhead drones to transmit live footage to police headquarters. The claim that the right to assembly was banned on public health grounds does not hold water. Cases in Greece have been steadily rising since the summer following the government’s decision to prematurely lift restrictions to kickstart the economy. With no significant resources allocated to counter the dire effects of this reopening, Greece’s advantage of having had relatively few deaths in the first wave of the pandemic – the result of going into lockdown earlier than other European countries – has now been undone. People are routinely crammed into public transport with only a mask as protection. The current death toll, as of November 24, stands at 1,815. This compares to 192 registered deaths on July 1, when the tourist sector was recklessly flung open for business. The health care system, decimated over the past decade by European Union-mandated austerity – carried out by social democratic, ND and SYRIZA governments alike – is already struggling to cope, with 85 percent of intensive care beds currently occupied.
Spain’s PSOE-Podemos government builds migrant concentration camps on Canary Islands – The Podemos-Socialist Party (PSOE) coalition government is erecting prison camps for migrants on the Canary Islands, a Spanish territory 1,000 kilometres off the coast of Morocco. Last Friday, PSOE Minister for Inclusion, Social Security and Migration Jose Luis Escrivfl announced that the PSOE-Podemos government aims to have built tent camps capable of holding 6,000 migrants on the island chain by the end of 2020. A further 7,000 places will be made available to imprison migrants in more permanent buildings. Thousands of migrants currently being housed in hotels or other makeshift accommodation across the archipelago will be relocated to these internment camps. These brutal and anti-democratic measures are part of a murderous European Union campaign against refugees. At the EU’s instigation, concentration camps have been erected across Europe, one of the most notorious of which is on the Greek island of Lesbos. Thousands of desperate refugees continue to be interned in these overcrowded and unsanitary camps, which have become death traps with the outbreak of the coronavirus pandemic. Refugees are indefinitely detained in these facilities, with next to no chance of their asylum applications being heard by European authorities, in flagrant violation of international law. The Lesbos model is now being implemented on the Canary Islands by the PSOE-Podemos government. Many of the new prison camps being created across the Canary Islands will be set up in former barracks or other sites belonging to the Spanish military. In Gran Canaria, a tent camp to house 650 migrants will be constructed in the Canarias 50 army garrison, with the first migrants expected to be detained there by December. This site will ultimately house another 1,150 people in prefabricated shacks. A tent camp for a further 300 prisoners will be erected on the grounds of a former school on this island, the Colegio Leon, while an additional 400 migrants could be incarcerated in the school building itself. The Spanish bank Bankia has also “donated” a 7,000-metre-squared ship to serve as a prison for a further 500 migrants off the coast of Las Palmas, Gran Canaria. Between 200 and 250 migrants were already transferred to a tent camp at the Barranco Seco military site from Arguinegu’n port last week. Last Tuesday, Spanish police evicted more than 200 migrants from a temporary camp in this port, leaving them with nowhere to go and no food or other resources. The migrants were eventually transferred to a complex in the town of Maspalomas, 12 kilometres from the port.
Strikes and protests across Germany against regular school operations– The incidence of infections in German schools has long since run out of control. Often, dozens of students and teachers are infected at a single school. But the federal and state governments have made clear that they want to keep schools fully open at all costs and are systematically covering up coronavirus cases. Under these conditions, students throughout Germany are beginning to take the protection of their health and their families into their own hands. After student strikes in Greece and Poland and strikes by teachers in France, students in Germany are also organizing school strikes and protests in more and more cities. They are no longer prepared to be sacrificed for a policy that puts the profit interests of billion-dollar corporations before the most basic needs of the population. Last Monday, students at the Hugo-Kukelhaus-Berufskolleg (HKBK) in Essen went on an “indefinite strike,” calling for hybrid teaching, i.e., a mixture of classroom and distance learning in which classes are divided up and taught in rotation. The WSWS has reported on this. “We are afraid,” the HKBK student council wrote in a statement on the strike. “Fear of infecting grandma and grandpa. Fear of infecting ourselves. Fear of losing people who mean a lot to us.” While “outside of schools [safety] measures were being intensified,” they continued to sit “day after day, for hours together in close quarters.” The Essen students appealed to their classmates at all “secondary and vocational schools in the country to do the same as us!” The WSWS spoke with Luisa Maria Cagnazzo, the HKBK student spokesperson, who reported many confirmed cases at the school. She said she had had personal contact with one person. “If classes continued to run as they have, I think it is inevitable that you become infected,” says Luisa. “Classes have divided themselves independently into A and B groups according to individual class size. They are now alternating between distance and in-person classes to halve the number of contacts.” Luisa reports that students are being put “under enormous pressure” by the authorities, the Education Ministry and the government, and explains, “Many are afraid of getting a six [bad mark] if they go on strike. I don’t think that’s right. It’s not acceptable that our education system punishes students for taking responsibility for the health of their fellow human beings.”
Boris Johnson announced end of national lockdown, prepares surge of COVID-19 UK prime minister Boris Johnson revealed yesterday the government’s plans for ending its one-month “lockdown” on December 2 and for allowing gatherings over Christmas. Thousands more will be allowed to die in the coming weeks to secure the corporations’ holiday season profits, with a renewed surge of the virus coinciding with the typical peak of the flu season. From Wednesday next week, all non-essential shops, gyms, hairdressers and other personal care businesses in England will be allowed to reopen, along with places of worship. The “Tier system” will be reintroduced with some modifications. Pubs, restaurants and cafes can now only act as takeaways in areas under Tier 3 restrictions and pubs and restaurants can only reopen fully in Tier 2 areas if they serve “substantial meals”. Reduced numbers of spectators will be allowed into indoor and outdoor sporting events. The so-called “rule of six” will be reinstated, allowing up to six people from different households to meet indoors or outdoors in Tier 1 areas, only outdoors in Tiers 2, and in limited outdoor settings in Tier 3. But even these limited restrictions will be scrapped for a period over Christmas. The Telegraph reports that up to four households will be allowed to come together in one home for December 24-28. The paper suggests that restrictions on pubs and restaurants will also be lifted for those five days. These measures confirm that Johnson is proceeding with its “herd immunity” policy. His partial lockdown was never intended to save lives, but to prevent a politically catastrophic overwhelming of the National Health Service (NHS) this December and provide a pretext for loosening restrictions in the commercially critical Christmas period. Now households will also be allowed to travel across the country and spend multiple nights under one roof. Business interests and their mouthpieces in the media have already taken their cue. The Daily Mail cheered yesterday, “Brace for Christmas shopping! The High Street re-opens next week with the end of national lockdown as Boris Johnson draws up plan for family ‘bubbles’ to gather for Christmas”. The Times likewise nodded its approval with the headline, “Boris Johnson to ease Covid lockdown with Christmas shopping spree”. Scientists warning of the disastrous impact of these decisions have been sidelined. Andrew Hayward, a professor of infectious disease epidemiology at University College London and a member of the Scientific Advisory Group for Emergencies (SAGE), told the BBC last week: “My personal view is we’re putting far too much emphasis on having a near normal Christmas. We know respiratory infections peak in January, so throwing fuel on the fire over Christmas can only contribute to this.
UK universities expose thousands of international students to raging pandemic – Universities have played a major role in the UK’s second wave of COVID-19 infections. Daily infections almost doubled over the first week of October as campuses reopened. This was the entirely predictable result of the reckless drive to encourage students back to the campuses for in-person teaching this term, with lies about “COVID-secure” campuses and a normal “university experience”. The marketised universities, increasingly dependent on private loans, feared that a move to fully online teaching would lead to masses of students deferring their entry, not taking up places in rent-racking student accommodation blocks or paying into the network of private interests with a place on university campuses, and demanding reductions in tuition fees. One of their primary concerns was that international students would view coming to the UK as too risky. International students have long been viewed by universities as “cash cows”, with their financial strategies based on ever more aggressive international recruitment strategies and on increasing the fees charged to international students. According to the Times Higher Education, international students now often pay between Pound Sterling10,000 and Pound Sterling26,000 per year for undergraduate study. In April, there was widespread panic among UK universities as the pandemic looked likely to deter students from abroad travelling to the UK for study in the coming academic year. A briefing from the House of Commons library observed in April that international students paid Pound Sterling7 billion in fees alone in the academic year 2018-19 (17.3 percent of the income of the university sector). However, the threat of an exodus of international students failed to materialise. The number of international students accepting offers from UK universities in fact increased by seven percent over the previous year. This was in large part due to lies promoted by the government and universities that a safe return to campuses was possible. They sought to capitalise on the huge importance of UK university degrees for the life chances of many international students – whose families often save for years to meet the extortionate fees.
Tens of thousands made homeless in UK as winter looms and temperatures plummet – Tens of thousands in the UK have been made homeless since the emergence of the COVID-19 pandemic despite an ostensible government ban on tenant evictions. Since April this year, only eight months ago, over 46,000 people have been thrown out on the streets and another 45,000 left facing the same fate. These devastating figures were revealed by the Guardian through a Freedom of Information request. Responses from 204 local councils showed that 36,359 people had been threatened with homelessness since the pandemic started, 6,184 people had received Section 21 eviction notices, and a further 46,894 people had already been made homeless. A Section 21 allow landlords to remove tenants with two months’ notice once their fixed-term contract has ended, without giving a reason. During the first pandemic lockdown in March, Boris Johnson’s Tory government falsely claimed it had eradicated rough sleeping through its “Everyone in” scheme. Even this limited measure minimised to a degree the risk of contracting coronavirus and saved an estimated 266 lives, according to a recent study in The Lancet medical magazine. But thousands of newly homeless have been created since then. Writing in the Independent, London GP Tom Gardiner points out how “Winter night shelters normally provide a vital lifeline for rough sleepers, but the risk of coronavirus transmission in these communal areas is just too high, despite the best efforts of staff to make them Covid secure.” The doctor referred to figures from a study in New York which showed the mortality rate from COVID-19 for those staying in shelters was 61 percent higher than the rate among the general population. Homeless charities are demanding that the government relaunch the “Everyone in” scheme and halt all plans to deport foreign-born rough sleepers. By some estimations as many as half of London’s rough sleepers are migrant workers. New post-Brexit immigration measures announced last month mean that officials can refuse a person permission to stay in the UK if they believe they have been sleeping rough. A number of housing charities including Shelter, St Mungo’s, Crisis and Homeless Link believe such moves will drive workers into modern slavery-style exploitation in order to avoid being rendered homeless and deported forthwith. These organisations are demanding ministers reopen hotels to rough sleepers as winter approaches. Epidemiologists have warned that failure to take action by the government will kill hundreds of those sleeping rough.
Assange’s life in danger as major COVID-19 outbreak hits Belmarsh Prison – Reports from Julian Assange’s closest relatives have confirmed that the British state is playing Russian roulette with the imprisoned WikiLeaks founder’s life. The authorities are exposing him to the danger of COVID-19 infection even though leading medical experts have warned that he would be at a high risk of succumbing to the virus as a result of a chronic lung condition, and a host of other medical issues. Last week, WikiLeaks announced that Assange and all other inmates in his house block at London’s Belmarsh Prison had been placed under an indefinite lockdown, triggered by the discovery of at least three COVID-19 cases. In addition to detaining prisoners in their cells 24 hours a day, Belmarsh authorities began a mass testing program. The results, as they have been reported to prisoners, show an outbreak that is out of control. This morning, Stella Moris, Assange’s partner, wrote on Twitter: “Today I’ve been told the number of people infected with #COVID on Julian’s house block is 56, including staff.” The breakdown of cases, between inmates and staff, remains unclear, but a previous post by Moris yesterday indicated that the vast majority of infections were among prisoners. Moris noted that there are fewer than 200 inmates in House Block One, indicating an infection rate of more than 25 percent. If the cases are confined to Assange’s wing, where there are just 70 inmates, the proportion of infected prisoners could be as high as 70 percent. The figures suggest widespread transmission within the block. Throughout the pandemic, prisons have acted as virtual incubators of the virus. The inherent risks of a large population in continuous close confinement have been compounded by overcrowding, poor ventilation, the rundown state of the penitentiaries and the failure of the authorities to take any but the most minimal precautions against COVID-19. The outbreak in Belmarsh coincides with a major increase in cases across the British prison system. Official figures from the Ministry of Justice revealed more than 600 infections from the end of September to the end of October. Since March, there have been some 1,600 confirmed cases and at least 32 deaths. In addition to the willful negligence of exposing tens of thousands of prisoners, most of them poor and working class, to a potentially deadly virus, there is a specific political criminality in the prison’s treatment of Assange. He is being detained in a maximum-security prison, despite the fact that he has not been convicted of any offense. Assange’s detention is solely to facilitate proceedings from his extradition to the US, where the WikiLeaks founder faces 17 Espionage Act charges and 175-years imprisonment, for publishing true and newsworthy documents exposing war crimes, human rights abuses and political intrigues affecting millions of people.
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