The Coronavirus Stimulus Bill Is a $2 Trillion Slush Fund for Washington Cronies

Yves here. The financial crisis was such a successful exercise in looting the public purse that our oligarchs are at it again, this time via the “stimulus” bill.

By Marshall Auerback, a market analyst and commentator. Produced by Economy for All, a project of the Independent Media Institute

When historians look back on our current government’s response to a public health emergency and resultant economic depression, there won’t be many paeans to profiles in courage. It may seem impressive that Congress has approved legislation worth $2 trillion to help sustain the American economy, but it’s no New Deal. Rather it’s a massive economic slush fund that does its utmost to preserve the old ways of doing things under the guise of masquerading as a response to a public health emergency. In reality, the relief provisions are barely adequate.

Had this been another financial crisis like 2008, it is doubtful that America’s oligarch class would be able to secure such huge provision for themselves again. Under the guise of a public health emergency, though, serial corporate predators are being given dollops from this massive public trough with no means of engendering the kind of economic reconstruction that is truly needed right now, or even preventing a sufficiently robust response if this virus comes back in a second or third wave.

As one might expect in a massive bill (representing around 10 percent of U.S. GDP), there are some decent scraps in this dog’s breakfast, but overall the Coronavirus Aid, Relief, and Economic Security Act represents yet another sad indictment of the American polity, even as it provides an excellent civics lesson in teaching us where power truly lies. There’s $150 billion allocated to hospitals, many of which are already stretched to capacity, but that’s nothing compared to the trillions directed to corporations with minimal disclosure on how those sums are to be allocated, or any conditionality attached. In fact, we appear not to have learned some lessons from 2008, when at least some members of Congress made efforts to scrutinize how we were spending the money. Pam and Russ Martens’s superbly informative digging into the more than 800-page-long bill reveals that:

a) The Fed will leverage the bill’s $454 million bailout slush fund into $4.5 trillion, and will hand it out through the New York Fed.

b) To ensure that they don’t have to answer embarrassing questions about which of their cronies got the money, the bill suspends the Freedom of Information Act for the Fed.

Bloomberg has also confirmed that the NY Fed has outsourced picking the lucky recipients for this slushy cornucopia to a private contractor, BlackRock, the world’s largest asset manager (Goldman Sachs apparently has done enough of “God’s work” this time). The more things change in Washington, the more they stay the same.

By contrast, the relief provisions are barely adequate. They expand unemployment insurance (an additional $600 per week for up to four months), feature one-time direct payments to Americans of $1,200 per adult making up to $75,000 a year, and $2,400 to a married couple making up to $150,000, with $500 payments per child. However, the bill neither addresses the chronic inequality that now characterizes the U.S. economy, nor is there provision for the self-employed or the millions of independent contractor workers who have no employee benefits.

A better template would have been something along the lines of what was legislated in Norway, although it is unrealistic to expect a U.S. Senate dominated by hardline Republicans to acquiesce to something proposed by a Scandinavian social democracy. But highlighting the contrast, Norwegian journalist Ellen Engelstad writes: “Workers put on leave will now get full pay for twenty days (an improvement even on the pre-coronavirus situation), but employers will only cover the first two days, while the rest will be paid by the state. After that period, a worker on leave will receive 80 percent of their previous salary, up to [about $29,000] a year, and 62.4 percent of everything they received on top of that.”

So long as we continue to embrace a lockdown strategy, generous relief is key to securing widespread support for its maintenance. It will become politically impossible to sustain a government-mandated lockdown where workers are forced to stay at home, absent some income support to facilitate compliance with that order. So it is good that the government has also recognized that this relief had to take the form of grants, not loans, because additional private debt assumption would exacerbate long-term economic distress. The provision of $350 billion in “forgivable loans” to businesses are in reality grants, as these “loans” will be forgiven if the businesses targeted maintain payroll. That’s precisely the kind of conditionality that should be attached to the relief provisions.

There will undoubtedly be other measures required once the scale of the economic fallout becomes clearer. But when we get past relief packages and move toward taking the economy out of its current cryogenically frozen state, the U.S. government must engage in a broader effort of reconstruction so as to finally make this an economy that works for all. Policy should not simply be about getting people back into resorts, malls or restaurants, or exhorting mass consumption as a patriotic duty (as George W. Bush suggested after 9/11). Rather, we should be focused on ramping up mass-production essential goods such as food, as well support for the health care systems via expansion of testing kits, surgical masks, ventilators and palliative care, not only for this crisis, but also to ensure that the system is not overwhelmed in the event of future pandemics (or a possible recurrence of this one as we return to work and reintegrate with one another). It also goes without saying that we should also expend vast sums on research and development to find treatments and a vaccine, as well as rapid training of new medical workers. Substantial increases in funding to the National Institutes of Health would be a good place to start.

As for conditionality, a case has been made that a force majeure “Act of God” is not the time to play a “game of chicken” and impose major conditions for aid, especially as it is government policy itself that has precipitated the crisis. On the other hand, political realities and historic precedent suggest that crisis conditions are the only time one gets dramatic reforms; otherwise the elites regain their balance and suppress them (as occurred after 2008). Plus, there are corporate bailout recipients in this bill, such as Boeing, that were heading toward a death spiral, even before the epidemic.

Let’s also make clear distinctions here: An “Act of God” argument was invoked in 2008. That financial crisis was described as a “once in a 50-year event,” something that couldn’t have been planned for or insured against, etc. This was a lie. The banks were not blameless, and there was causation between the crash and their behavior. But Wall Street’s bad actors weren’t punished. There were, however, a lot of blameless victims who were and are still paying a price. They didn’t receive compensation and received pain and punishment as if they were responsible, when they were in fact collateral damage.

In many respects, this crisis is even worse. We may not have a financial contagion, but we have a physical contagion that is literally exposing us to conditions comparable to the 1930s. But unlike the 1930s or, indeed, the 2008 global financial contagion, policymakers have a twin task with seemingly incompatible goals: stopping the spread of the virus in many ways exists in tension with the need to arrest the indirect economic fallout from the pandemic. The longer the economic restrictions apply to eliminate the health risk, the greater the economic fallout, which is precisely the dilemma President Trump exposed (in his typically inelegant way), when he signaled his desire to restart the U.S. economy by mid-April.

Trump’s public musings were rightly denounced. His moral calculus is skewed; this president is transparently consumed by the desire to safeguard his narrow economic interests and the presidency (along with the fact that he stripped public health agencies of the staffing, resources, and authority they needed to function). A serious president would send teams of epidemiologists to study other countries’ success models, and adopt them. Instead, Trump is literally gambling with the lives of potentially millions of people as he tries to place this bet on an Easter miracle. Unlike Jesus, those lives lost won’t be resurrected, even if the economy ultimately revives.

Beyond that is the question of how best to assist businesses paralyzed for the sake of public health. This is perhaps the most politically loaded part of the process when it comes to assessing how far we go in terms of changing the behavior of our corporate sector versus the notion of simply compensating businesses for losses sustained by an action deemed to be a public health emergency.

Oren Cass, executive director of the soon-to-be-launched think tank American Compass, has made the case for compensating businesses on the basis of the takings clause of the U.S. Constitution, which states that “private property [shall not] be taken for public use, without just compensation.” Establishing “just compensation” is often in the eye of the beholder, and Cass suggests that a just principle is compensating businesses for the fixed costs they would normally incur in the event that they were able to function as normal operating concerns (as opposed to making estimates of likely profitability and compensating on that basis). The goal is clearly to avoid providing unfair windfalls but to keep businesses solvent until they reopen.

On the other hand, one of the principal complaints directed against the bailouts granted (especially to the banks) in 2008 is that bad corporate actors who were responsible for creating the crisis were given money with no strings attached. In that regard, the bailouts not only allowed them to revive profitability quickly (as the status quo ante was restored), but also actively lobbied against any kind of regulation to prevent a recurrence of the activities that created the crash in the first place.

The lessons many drew from the experience was that the only time to extract concessions and induce changes in behavior from bad corporate actors is at a time when they are economically vulnerable, even if the precipitating cause of that vulnerability was the government-mandated shutdown of the economy. It is impossible to remake an economy if, for example, corporate bailouts are used to perpetuate behavior that undermines economic prosperity. While the Coronavirus Aid, Relief, and Economic Security Act does introduce some restrictions on buybacks and limiting stock dividends, it “avoids the more restrictive language that was included in the House version of the legislation,” according to Defense News.

Many are trying to distinguish this bailout from 2008 (i.e., this time is a non-economic shock, something that couldn’t have been planned for or insured against; businesses that are failing right now are doing so through no fault of their own and they’re still good/healthy businesses), because saying “this is just how creative destruction works” is clearly untenable right now. In reality, the collapse in aggregate demand caused by the 2008 financial crisis arguably was just as exogenous to the consumer economy. Fatuous distinctions to justify further corporate predation simply provide another illustration that what we had before the coronavirus pandemic clearly was not working for most people. The truth is that for decades we’ve had a hollowing out of democracy, and a massive expansion of wealth inequality accompanied by Mussolini-style crony capitalism.

During the Great Depression, legislation was implemented to prevent a recurrence of the 1920s bubble. Roosevelt’s New Deal did not legislate to restore the status quo ante but rather to create a very different sort of economy.

Under the cover of a public health emergency, however, the so-called “new normal” is looking a lot like the old normal. This bill gives the pigs yet another big feed at the public trough, and Congress is happily ladling out the goodies. Much like the 1930s, then, the very legitimacy of liberal capitalist democracy is at stake. Unfortunately, there does not appear to be an FDR ready to lead us in this acute moment of need.

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76 comments

  1. Nicholas Crowley

    Aloha,

    Last week I was unable to apply for unemployment in my state, Hawaii, because I am self employed. I get kicked out of the application process after the first few qualifying questions in the online application process. Today, it went straight through. You make yourself your own ex employer and that’s it. I’m assuming this has to do with this federal package. On a side note I am one of many self employed registered legal tour guide operators in the state that rely heavily on visitors and all of us are up in arms that somehow this bill is also going to give money to Uber and Lyft drivers who are not even legal in the state. Only partially in the county of Oahu.

    Reply
    1. Michael

      I did something similar during the GFC.
      I have a C Corp in Calif with myself as the only employee.
      I applied for UI and received it for about a year.
      However, my contribution rate ramped up and my rating declined to F. Still worth it.

      Calif also borrowed a lot of money from the Feds last time and had to pay it back.
      Employers were assessed a portion each year. Finally repaid after 5 or so years.

      Reply
  2. john bougearel

    Rep Thomas Massey did some math. $2T from congress, and $4T from Feds so far = $68,000 per family of new Nat’l debt and dollar devaluation. Yet each household is likely to see only about $3000 of that $68000. Massey may have a point, perhaps there is just a tinge of maldistribution afoot here. And isn’t that always the case in Crisis Capitalism, to never let a good crisis go to waste? Just maybe they could be doing a better job in the distribution of this package?

    While many things were discussed about Covid and the Covid Recovery plan on Friday, what struck me was a reference to this stimulus bill that this is our Marshall Plan. While that sounds good, is it really? And another thing that struck me was how many striking similarities there are.

    The final striking observation was Pelosi et al reminding us, that this is not the last stimulus bill that will be related to stimulating an economic recovery. In short, what Pelosi’s telling us this is the prefatory Helicopter monies from our new “Helicopter Avenging Angels.” Economist Murray Rothbard told a story about an angel looking down at the woes of mankind and decided that everyone would feel better if they all had an extra $1000. So, that is what the angel did, deposited $1000 into everyones bank account one night. Next morning, everyone woke up to an extra $1000. Those that spent it first on goods benefited most. Those that waited to spend it, got less bang for their buck bc the cost of goods rose.

    So, it is with this stimulus story littered with maldistribution. Velocity of money in an economy increases most and therefore GDP or gross output if it is in the hands of households and consumers.

    Over the past 12 yrs or so, fiscal and monetary stimulus packages have been referred to as bazookas. Today, they have mushroomed into “Nukes.” And the Nukes, themselves, are mushrooming.

    If Pelosi is right, this will not be the last stimulus bill relating to coronavirus, then this is not far from what happened with the Marshall Plan. The 1947-48 Marshall Plan was replaced by the Mutual Security Plan in 19951. The MSP plan was extended from 1951-1961. The MSP plan gave away about $7.5 billion annually until 1961 when it was replaced by yet another program – he United States Agency for International Development (USAID). The USAID is now one of the largest official aid agencies in the world, and accounts for more than half of all U.S. foreign assistance—the highest in the world in absolute dollar terms.

    In short, the Marshall Plan kept transmuting itself into something new. Until it became a “perpetual entity.”
    And it is not so different than the Federal Reserve’s QE programs or other so-called “temporary” facilities that somehow are resurrected, transmuted or whatever. But somehow, these programs mange to live on like zombies.

    Zombie, Zombie, Zombie. They are fighting, With their tanks and their bombs, And their bombs and their guns.

    It’s the same old theme since the 1947 Marshall Plan
    In your head, in your head, Their still fighting,
    With their tanks and their bombs And their bombs and their guns

    But I digress.

    The question then becomes, how well did the Marshall Plan work to generate economic growth. According to Marshall Plan’s own accounting, the MP only accounted for an increase of less than ½% of GDP growth a year. That ain’t much folks! So be prepared to be underwhelmed! Very underwhelmed.

    And this is precisely why our policymakers will be back with more and more stimulus…..mushrooming their bazookas into Nukes, and Nukes into what? Death Stars next?

    The cost of the Marshall Plan (officially the European Recovery Program, ERP) resulted in the United States transference of over $12 billion (equivalent to over $128 billion as of 2020)[1] in economic recovery programs to Western European economies after the end of World War II. During the four years the plan was in effect, the United States donated $17 billion (equivalent to $202.18 billion in 2019)

    Despite the billions of dollars each year thrown at the EU recovery the Marshall Plan which transmuted into the Mutual Security Plan, these plans have apparently contributed little to the EU economic recovery.

    Over the past 12 years, central banks and gov’ts have thrown trillions of dollars at the fiscal system, and yet our financial and monetary system still doesn’t function properly. Their solution: throw trillions more at the most recent crisis du jour. TINA baby! Surely with their Nuclear-sized Stimulus Package, this will solve and repair everything.

    But perhaps, under a crisis capitalism, the aim is to ensure a crisis never goes to waste. So perhaps, the aim of these stimulus programs is never to fix the broken window. Only to give the appearance the window is being fixed. If you actually fixed the broken window, then there would be no need to perpetually repeat these stimulus programs that can be so damn self-serving to those closest to the monies. Then where would Nancy and her Cohorts be?

    The Covid Bill our Marshall Plan are fiscal responses to disasters. To this extent, they both that into the context of French Economist Frederic Bastiat’s Parable of the Broken Window.

    “Ce qu’on voit et ce qu’on ne voit pas” (“That Which We See and That Which We Do Not See”) to illustrate why destruction, and the money spent to recover from destruction, is not actually a net benefit to society.The parable seeks to show how opportunity costs, as well as the law of unintended consequences, affect economic activity in ways that are unseen or ignored. The belief that destruction is good for the economy is consequently known as the broken window fallacy or glazier’s fallacy. And yet, destruction of the economy can be quite beneficial to the “first financial responders” to the destruction of the economy.

    My apologies Yves, I should have forwarded this to you as a separate post. Feel free to post if you like

    Reply
    1. Oh

      Thanks for the informative comment. I’m not surprised to know that the Marshall Plan resulted in an increase of less than 1/2 % of GDP growth. I assume that you’re referring to the GDP of Europe.
      I contend that the billions doled out via the Marshall Plan helped the FInancial institutions and later, since we had destroyed all of the manufacturing facilities in Europe, it helped all large US corporations who had a ready made market in Europe.

      Reply
    2. Susan the other

      What an interesting comment. From my perspective – long time observer of things never working properly – I think the Covid Crisis is just another example of the pointless but dedicated pursuit of profits – unless of course there is a “Treasury” willing to provide any and all shortfall to each and every private profiteer. Then it works… in a very wasteful and illogical manner. It requires also bailing out the hapless consumers occasionally. Somehow I think we could do better.

      Reply
      1. john bougearel

        Susan,

        I don’t see the powers that be as anxious to fix the broken windows. They want the broken windows to remain broken so they can continue to throw bazookas and nukes through them.

        And I wonder,. and I think you too need to wonder why the Marshall Plan became the Mutual Security Plan after 1951. Presumably, the rapid EU economic recovery no longer necessitated the Marshall Plan. Facing an existential crisis as such, the Marshall Plan had to morph into some other purpose, such as “Mutual Security” to keep access to those slush funds alive and well.

        Reply
        1. Susan the other

          I’d say off the top it is because neoliberal capitalism cannot withstand competition from democracy – good social democracy. So we morphed into the policeman of the world and pretended like we were critical to the cause… of a failing economic ideology. It has never worked and it has gradually become nonsense because we are continuously forced to save society. No matter that we never to a good job of it – we still do it to insure profits. I’d be more upset about it except for the fact that it is so transparently absurd… and I like to think it proves it own uselessness. What more do we need?

          Reply
        2. Grebo

          I’m no expert on the Marshall plan but as a European I get the impression it was much appreciated. From the US’ point of view though it had a geopolitical purpose. By getting Europe on its economic feet again it fended off the threat of Communism and created a customer for US exports. The Plan’s successors are also primarily aimed at maintaining and extending US hegemony, they are merely dressed up as charity.

          Reply
    3. rd

      I think the primary problem over the past decade is the assumption that the wealthy need to be returned/maintained to their wealthy to trickle the wealth down. That clearly has not been working efficiently.

      So I am a fan of saving companies that are stable in the absence of major crisis, but require large-scale management changes, and dramatically scale back executive compensation for several years. If the executives can find a better job with better pay in an un-bailed out company, they should take it. If the company would clearly have gone under due to massive debt-loads, then a pre-package bankruptcy like GM with the government holding equity in the final company should be the route.

      The financial cries are simply creating bigger and bigger TBTF companies that can build up debt again to fund shareholder buybacks until they get bailed out by the Fed and Treasury. That cycle needs to stop. The country worked fine when there were many companies competing with each other.

      Reply
      1. michael99

        This coronavirus relief act expands TBTF. It’s not just the big banks and other finance/insurance/real estate corporations anymore. It seems to be about protecting financial wealth wherever it resides. It’s moral hazard writ large. Why behave prudently if the Fed has your back?

        I agree with “saving companies that are stable in the absence of major crisis, but require large-scale management changes, and dramatically scale back executive compensation for several years”, and “if the company would clearly have gone under due to massive debt-loads, then a pre-package bankruptcy like GM with the government holding equity in the final company should be the route.”

        The government could enact an automatic stabilizer program to cover furloughed worker wages during economic crises while employers continued to cover fixed costs and worker benefits such as health insurance. Large corporations could be managed to cover theses things if required to.
        Even better, pass M4A and take employee health insurance off their books.

        Reply
    4. Adam Eran

      Sorry, this comment covers a lot of ground, so I’m not sure I can find a narrow group of specifics to which I’ll object. For one example: the “inflation-generating angel” was somehow absent when the Fed extended $16 – $29 trillion in credit to the financial sector in 2007-8. (The figures come from the Fed’s own audit). This was a lot more money “issued” (actually overdrafts permitted in Fed accounts) than the currently contemplated spending. Where was the surge of inflation we can expect that angel to produce? If there was, I can’t detect it.

      A better understanding of inflation is here. It ain’t so simple as “spend money = generate inflation.” In fact, most MMT economists point to shortages of goods (“cost push”) rather than surplus demand as the source of inflation. Stephanie Kelton is on record as cost push was the origin of hyperinflations.

      So…can we expect inflation from giving lots of people money? Maybe. It depends on whether they spend it on goods and services in limited supply, or pay their existing rent / loans. In the former case, there’s a possibility of inflation (perhaps in face masks), in the latter, not so much.

      The mention of the Marshall Plan omits mention of the debt jubilee granted the Germans and Japanese. Oddly enough, no such jubilee occurred in Vietnam, an ally in the fight against Japan. White man’s gratitude! Anyway, I’d call the Marshall Plan an example of enlightened self interest, even if it returned capital that fled to the U.S. back to Europe.

      Why is a debt jubilee important? Geoffrey Race (War Comes to Long An) suggests the continuation of the colonial creditors’ oligarchy was enough of a persistent motivation for the Vietnamese to throw off the shackles of both French colonialism and U.S. imperialism. Race is an interesting fellow. He learned Vietnamese on the boat over to that country, and proceeded to interview defectors and prisoners rather than hudding behind the walls in some fortified hamlet. Anyway, a clean slate certainly was a precondition for a better economy, eventually, in Germany and Japan.

      Will the proposed U.S. bill lead to an economic recovery? I have my doubts. Considering the source, I’d say it’ll likely prop up the financial markets first, and dribble a few benefits to the general population.

      But…inflation…? Not a slam dunk, IMHO.

      Reply
  3. Charles D Myers

    Why does the Uber/Lyft bailout have to be funded by workers who have put money into unemployment insurance?

    If they want to bail out the gig economy they should have said straight up we are bailing them out.

    The States have to come up with the funding for the unemployed. So you can bet there will be a shortfall.

    Why does the gig economy always takes but never give?

    The biggest problem is laid off employees getting thru to the unemployment agencies.Then they throw millions of Uber/Lyft drivers to clog up the Queue.

    Reply
  4. Brooklin Bridge

    I’m wondering what AOC did or didn’t do re this package? A lot has been said about Sanders, but I’m fuzzy on AOC. I can’t imagine she liked the thing. Did she have any way of throwing a stick in in it?

    Reply
      1. Kiers

        that would “explain” her previous incumbent, a most malignant connected big money DNC machine pol, “stepping aside” for her. Watch out. Likely future Manchurian afoot. (Like showbama).

        Reply
    1. flora

      Pelosi ordered a voice vote, not a recorded vote. There’s no way to know how any Rep. voted. They can say they voted yea or nay, but there’s no proof.

      Reply
      1. John Wright

        Here is a definition of a voice vote:

        “A vote in which the presiding officer states the question, then asks those in favor and against to say “Yea” or “Nay,” respectively, and announces the result according to his or her judgment. The names or numbers of senators voting on each side are not recorded.”

        If this bill was so G*d d**n important and potentially costly for the country it would seem that courageous politicians would have WANTED their wise and considered yea/nay votes known to their constituents.

        I can see a voice vote for something trivial like a Proclamation of National Highway Appreciation Day, but not something this consequential.

        Preserving the option of telling constituents in the future “I (voice) voted against this package” is hardly a profile in courage.

        Reply
        1. Robert Gray

          The corporate rescue package is a nightmare. The system is totally corrupt. We are in a world of shit. Without hesitation I stipulate to all of the above. However, that said … with this voice vote, presumably there are videos on C-Span or wherever that show the process and presumably no one disputes that the yeas were in fact louder than the nays. In that regard, at least, we can see where the blame lies, i.e., with the members and not only with the leadership. I remember a scene in an old (Ken Loach?) film where the rank-and-file are voting at a (miners?) local meeting. The NOes are thunderous in their majority but the corrupt chairman announces ‘the AYEs have it!’ Is the US Congress just more subtle? (But, then, there are those stories about Lyndon Johnson, when he was Senate majority leader, standing on the floor like the conductor of an orchestra openly directing individual members to change their votes, when he wanted the outcome to conclude in some particular way.)

          We are living in interesting times.

          Reply
    2. hermeneut

      https://thehill.com/homenews/house/489863-ocasio-cortez-blasts-22t-coronavirus-stimulus-package-as-shameful-on-house

      “What did the Senate majority fight for?!” Ocasio-Cortez asked. “One of the largest corporate bailouts with as few strings as possible in American history. Shameful! The greed of that fight is wrong for crumbs for our families.”

      Pelosi dallies on instituting remote voting, thereby strengthening her own powers and that of the House leadership. AOC, like everyone else in the House, had to participate in a “voice vote”.

      Reply
    3. Yves Smith Post author

      She gave a great speech. As a freshman rep with only a very few reliable allies, she can’t do much save make noise from her bully pulpit. This massive bill went through at freight train speed so as to prevent any effective public opposition.

      Reply
  5. human

    I simply can not understand where $4T is going to go! As we here know, inanimate objects do not have agency. I demand to know whose pockets are about to be lined.

    Another observation: As each “crisis” becomes more expensive, there appear to be additional lined pockets.

    Reply
    1. urblintz

      first and foremost they saved the bond market i think…. Powell has already used 4 trillion for “liquidity” whatever that means… I have no working knowledge of economics so I don’t begin to understand what any of it means… except that we got family-blogged again.

      Reply
  6. JR

    You know, there is common ground amongst and between the AOCs and Massies of the world. It is time to build those bridges.

    Reply
  7. Edr

    The flu kills between 12,000 to 30,000 a year in the U S. Every year. In 30 some years of adulthood, I know 1 person that died of pneumonia in their 60s. When the confinement is over and people look around and ask around and can’t name anybody they personally know who was affected with anything more than a cold????

    I hope this whole thing isn’t just hysterics because that would not be a positive sign of anything.

    Reply
    1. Oh

      Knowing our politicians it’s probably a lot of hysterics. The DimRats have been fooling their diehards with Russia! Russia! Russia! Now it’s time to use CV to pay back their corporate supporters while throwing a few crumbs to their loyal followers with the chant Econmy! Economy! Economy!

      Reply
    2. Bob

      What are you talking about? Have you not been reading all the experts’ reports on exactly how dangerous this disease is? Have you not seen the pictures and stories coming from Spain and Italy with morgues and trucks full of bodies? Have you not read the stories of medical personnel and hospitals being overwhelmed by this pandemic? How many have to die for this to matter to you? Sorry to be blunt but you lack of concern is frankly shocking. (P.S. I have a kid on the front line of this disaster and we are very very worried for him)

      Reply
    3. jonboinAR

      I keep hearing, mostly from people I know, how the CV is not much more than a way over-publicized version of the common cold or flu. I would counter that the common cold or even the annual flu pandemic does not threaten to entirely overwhelm the health care system of the countries and regions it infects. See Lombardy and New York, for example. Clearly, in terms of the seriousness of its symptoms anyway, the CV is pretty far beyond the flu.

      Reply
    4. Kurtismayfield

      https://www.cbsnews.com/news/new-york-coronavirus-andrew-cuomo-728-deaths-covid-19/?intcid=CNI-00-10aaa3a

      It’s up to 700+ deaths in NY.

      When do you think we should have taken these measures to slow the virus? When it hit 1000? 5000? 30,000? Tell me a number that you will be ok with so that we can hit that, then we can hit the emergency button.

      The problem with this virus is that it hits the healthcare system all at once, and they have to choose who lives and dies Would you like to be chosen to live or die based upon an algorithm?

      Reply
    5. Kiers

      I don’t think it’s hysterics, but “was it planned” is a good question: operation covfefe.
      “They” are not done with it yet, a mass fear op like this is too good to leave without milking further. THIS will be “THE” anchor event for the NEXT 20+ years of “policy”. Mark my word. The top can not leave this gold.

      Reply
    6. The Rev Kev

      Hmmm. Good point that. Why don’t you go down to your local hospital and volunteer for a few weeks there and find out.

      Reply
    1. Susan the other

      Could we ask for better proof that neoliberal capitalism not only doesn’t work, it’s a catastrophe all by itself. And nobody is saying a word about it. That will come later in disguised language just as the money is going out now in disguised give-aways.

      Reply
      1. tegnost

        And nobody is saying a word about it
        Rule #1. Don’t mess with a dog that’s not barking

        There will be a price to pay for this, and I don’t think the robot dogs will be up to the fight…

        Reply
  8. steven

    The population of Italy is (or was) 60.8 million. As of this morning, 9,134 Italians have died – and the disease hasn’t crested yet. The population of the United States is 327.2 million. If our experience is similar to theirs (and with the ‘leadership’ exhibited by Trump and the US Congress it looks like it might be worse), we can anticipate ‭49,155 deaths.

    That sure doesn’t sound like “just hysterics” to me.

    Reply
        1. DJG

          hermeneut: Thank you. Naked Capitalism has had an informal policy against agnotology, which is culturally induced ignorance or doubt.

          I see it often on the larger WWW, where facts regularly are gummed to death by the self-ignorant among us.

          The coronavirus is producing death rates that are orders of magnitude above the flu’s death rate estimated at 0.01 percent. Coronavirus is wildly contagious compared to the flu. Further, we don’t know its long-term effects on anyone. People think that children may not be affected–until we have a spate of lung disease ten years from now.

          Upthread, there are a couple of agnotologists discussing how they don’t know anyone who has died of the flu or pneumonia. They must not get out much. Pneumonia is a co-factor in many deaths, so much so that doctors call it the old man’s friend, old person’s friend. Pneumonia means falling asleep and not waking up in the morning.

          Reply
          1. human

            I was responding to stevens’ 49K calculation. Please take issue with his comment. I fully expect the mortality rate to increase beyond seasonal averages due to additional and more severe complications.

            Reply
      1. Travis Bickle

        Ah, someone who wasn’t paying attention to their lessons. Unlike flu there is no vaccine and the population is essentially a virgin host. Some people may be able to slough it off, but it’ll be by happenstance, and they’ll still be carriers.

        Hence, the progress of the disease will be exponential, less the temporary suppression and mitigation you can see in countries like China and South Korea. The economic cost of these measures will eventually be too much, they’ll have to ease off, and the disease will take off again. If you want to track the various countries “score” as this inevitability unfolds, go to http://91-divoc.com/pages/covid-visualization/

        As to your “calculations”, this disease will have its way and will need to run its course. It will increase exponentially and circle back in successive waves until the available supply of hosts has been exhausted or developed immunity. In the aggregate, the US will meet its wave in < a week, but every community will be hit at a different time depending on all sort so things; Italy has only really taken a significant hits in a few provinces and the fun for them is yet to come. The infection is just now gaining traction in the rest of Italy due to effective mitigation and the WAVE of casualties is yet to come, as soon as they raise their guard.

        All this money being spent is just buying time and lining pockets. This is not a two hour movie, where Brad Pitt has a blaze of insight and cooks up a cure for the zombie apocalypse in a busy afternoon.

        Reply
        1. cnchal

          > . . . The economic cost of these measures will eventually be too much, they’ll have to ease off, and the disease will take off again.

          I agree and a link from the links page illustrates that.

          China Shuts Down All Cinemas, Again Hollywood Reporter

          On further reflection (I have a comment on this post that is either in moderation or disappeared) it seems that the pittance to workers with the right paperwork is to give the appearance of doing something but ultimately it is to starve people into submission, so that getting back to making money for the billionaires becomes the only alternative.

          Reply
        2. jonboinAR

          It taking off again is what I fear when I imagine what’s likely to occur down the road. Trump is right at least when he points out that eventually we’ll all have to return to work. Otherwise the economy will collapse completely, leaving us in some kind of Mad Max chaos. Eventually. So, what happens when the voluntary lock-down is lifted, whether that be Easter or a month or 2 or 3 later? If this thing is not completely eliminated by then will it not just roar right back and we’ll be in the same situation we find ourselves in currently, only most of us even more precarious, financially? I can’t seem to puzzle our current strategy out in my mind without finding a horribly disastrous outcome at the end.

          It seems, then, like fairly severe social distancing is mandated by circumstance way into the future. If that’s the case, then our previous ways of living, I mean a great deal of it, all or the casual gathering and traveling around we’ve been accustomed to is dead, whether we realize it now, or not. What the heck does this mean? What do we do with a good part of our work-force and many if not most of our small business owners? I ask these questions without any reasonable or acceptable answers in mind.

          Reply
          1. Travis Bickle

            …..Here’s the deal:

            We are collectively going to have to take our licks here, painful though it will be, sooner or later. Countries which have managed to keep things tamped down, for the moment only, need to use that time to refine their hospital procedures and re-supply to save as many as they can when the lid has to be taken off. That means having triage protocols in place for COVID-19, as well as everyone else who comes in the door. Refer to the graphic in appendix B of the Imperial College forecast for the US. Hospitals are going to be overwhelmed in any of their scenarios, although every locality will have its encounter at at different time and the precise circumstances will vary.

            The initial UK strategy of angling for “herd immunity’ was roundly ridiculed and sheepishly withdrawn, but it was and is the only logical course. The disease simply doesn’t give a whit about the “But, but, but, but……every life is priceless whinning” of those who cannot face the reality. There is a BIG culling on the way, and all those Red State denialisms, and sanctimonious bigots at Liberty University are going to get a big dose of this, along with everyone else. This wave is coming, and all that can really be done is to delay it, which may reduce the pain in a given locality, depending on their unique circumstances and if the local authorities do their job right. This will be a battle fought on a thousand hills (a thousand public health settings), and some will do better or worse than others, even as the timing of the wave will vary for each: take notes on what is only now beginning to happen in NYC, and how events unfold over the next month or two there. This story will not be over by the eleven o’clock news or even next weekend.

            Taking it up-front DOES help preserve the economy, allowing for recovery afterwards, and that’s key. Otherwise, we start drifting toward the Mad Max scenario alluded to above. Even now, how are all the bodies going to be taken care of? Healthcare staff is already dying, and staffs can be expected to desert as events unfold in NYC and elsewhere. All the support people who make things work with their marginal salaries are noble, but stupid, if they stick around those places, which are nothing but huge disease vectors. Then there’s the food supply chain, etc, etc, etc……

            Anyway we go this movie is not going to end well, and it won’t end next week or even next month. The disease will keep on coming back around until there is nobody left for it grab hold of: meaning either there is a vaccine or herd immunity (usually thought of as 60-70% of the population having had its brush with the thing).

            Reply
            1. JBird4049

              As a Californian, “Red State denialisms, and sanctimonious bigots at Liberty University” is an extremely unfair appellation given that I can see the same here in the Uber-Blue San Francisco Bay Area.

              While the improved efficiencies of the medical services are not quite as deep as in the Red areas of California and in other states, the bigotry is just as strong. Only the targets are changed. The deplorables, the poor, conservatives, and, of course, the homeless tend to be fair game.

              An infectious disease like COVID19 doesn’t care about anything except reproduction and is taking advantage of our situation; both political parties have been quite happy hollowing out our nation-state condemning our nation to needless mass deaths and country’s government to possible collapse in fealty to the wealthy and in increasing the size of their personal bank accounts.

              Reply
    1. Eclair

      Here is a link to a paper just made public by the University of Washington, Institute for Health Metrics and Evaluation. It’s predicting Washington’s peak at around April 14th. Also, they evaluate each state, calculate its peak, and list the its available hospital beds and ICU beds and note the estimated shortfalls (as well as shortfalls in ventilators) at peak.

      Looking at their projections for New York State, one can understand Governor Cuomo’s urgency.

      Reply
      1. gc54

        The simulator here has adjustable parameters for the pandemic and resolution down to county level in many states of the US. Of course we can expect patient transport between at least counties if not states until ICUs are saturated. Very sobering to see how long this may play out. Cases and outcomes are plotted too.

        Reply
      2. Kiers

        I ran a regression with Governor Cuomo’s numbers (for NY State); Between March 3rd to March 23rd was the confirmed raw data, before extrapolating; a social isolation program was begun on the March 20th, so the data is pure “natural” “do nothing” dynamics; I fit the curve to the data, and it showed 100% of NY State population affected by April 12th. The data showed a slope co-efficient of 1.46 every day (46% increase in new cases every day). R-squared for the fit: 96% (yes, rather high, which tells me this virus rolls out like clockwork). However, we learn, even in Wuhan, a hard lockdown took two-three weeks to “begin to bend the curve”. We are in for the herd situation no question. It’s been too little too late by far. (but even one day saved from the 100% terminus is still quite a large population: we are talking exponential time, not linear.).

        When “early” (really drastically “late”: being in first weeks of March) estimates from Fauci, and other talking heads said US would likely see ~70% of population infected, that translates to ONLY being able to shave ONE DAY off 100% herd exposure given my regression showing just how contagious this is.

        (It’s my belief they lied to us, it’s not just “droplets” but it is very nicely aerosolized: breathing and exhaling in the wrong quarters is enought to do it; but thats’ just me, however do note, the Covid briefings at the top were state secret, not open to journalists. We only get the vaudeville versions of everything, highly politicized to boot).

        Reply
        1. Kiers

          Here is the simulation of the cases from fitting the regression: (show’s you what “exponential time” is like; US benchmark for stopping this appears to be 50-70% of total population exposed, that’s only one day off 100% at this rate of spread).

          So every day, I listen to the Governor’s press conference, look at total cases and check this table to “see where we’re at”. Even now, (Mar 28) still not bent very much from the early days rate (Mar 3-Mar 23rd). T=0 below is March 3rd.

          T NEW CASES SUM(TOTAL CASES)
          0
          1 1 1
          2 2 4
          3 3 7
          4 5 12
          5 7 19
          6 11 30
          7 16 46
          8 24 70
          9 35 105
          10 52 157
          11 78 235
          12 116 351
          13 172 523
          14 255 778
          15 379 1,157
          16 563 1,720
          17 837 2,557
          18 1,244 3,801
          19 1,848 5,649
          20 2,745 8,394
          21 4,078 12,472
          22 6,059 18,531
          23 9,002 27,532
          24 13,374 40,906
          25 19,869 60,775
          26 29,519 90,294
          27 43,856 134,150
          28 65,156 199,306
          29 96,802 296,108
          30 143,817 439,925
          31 213,667 653,592
          32 317,442 971,033
          33 471,619 1,442,652
          34 700,677 2,143,329
          35 1,040,986 3,184,316
          36 1,546,579 4,730,894
          37 2,297,730 7,028,624
          38 3,413,705 10,442,329
          39 5,071,694 15,514,023
          40 7,534,943 23,048,966 APRIL 12 TH NY POPULATION LIMIT 100%

          Reply
          1. Travis Bickle

            Although only with anecdotal cases, I’d support your idea of aerolsolized versus droplet contagion. There seems to be total contamination of families in every case when someone is sent home to self-quarantine. So, there’s that….along with the business of touching a contaminated surface before picking your nose.

            Despite everything else there are plenty of compulsive shut-ins who may manage to duck contamination in much of the US, where everything is spread out and people can easily manage to be isolated if they try.

            I head Gov Cuomo quoting his experts last week, and the professionals apparently think individual localities in the overall state will vary between 40-80% infection by the time the dust settles (whatever that means). That 80% figure seems to crop-up consistently in the world of epidemiology, so I’m guessing they’re guessing that a certain amount of effect self-quarantining will be maintained.

            Reply
            1. Kiers

              This “corona” spreads TOO readily by air, by sputum, by feces, by surfaces (including they were quick to point out for trade implications: cardboard…they had to bring in the cardboard!)…….nobody told me there’d be days like these….

              Yeah, that 70% to 80% figure is heard again and again. Not a very good containment given the looong lead time we’ve had in the news

              It’s sad to hear people question the virulence of this sickness. This happens because “TV” does a very good job of turning torture into poetry, into young valiant war effort, into awww….the vodka company is making free sanitizer “in the community” all so warm, so cuddly stuff. (I pay $200/per month for this poetry service!)

              Reply
  9. Susan the other

    I agree with MA on everything he is saying. And I’m so tired of this burlesque I’m actually laughing. Went to sleep last nite thinking about why on earth we are publicly infusing 6.5 trillion dollars into our economy and financial system (including “liquidity” for other countries using the dollar) – and the only thing I could come up with was that neoliberal capitalism is over and we are looking at the beginning of a massive transition period. It’s over for no other reason than that it doesn’t work. And this “crisis”, as Lamber says, is not a swan – it’s a goat. I woke up this morning from a dream of frustration that my former insurance adjustor sold me his house without mentioning it was in a flood plain and the very next day the house filled up with muddy floodwaters and I couldn’t get him to admit he deceived me by not suggesting I get flood insurance. I dunno, this seems almost as real as the crisis we are actually in.

    Reply
  10. Dalepues

    Bush/Cheney 2000
    911, Iraq, Afghanistan, Katrina, GFC….

    Trump/Pence 2020
    MAGA
    Make America Grieve Again

    Reply
    1. David in Santa Cruz

      Obama/Biden 2008
      Too Big to Jail
      We Tortured Some Folks
      Foaming the Runway
      — We were hoping for change…

      Reply
  11. Jeremy Grimm

    The Corona flu [I like Corona because it sounds better — more like cholera — as in Love in the time of Corona] is not the pandemic we need to worry about. That pandemic is still coming. The Corona flu is bad but it is only a ‘test’ of our healthcare systems and government, our knowledge, and our Media — a live exercise. The U.S. is failing miserably in all these areas. The CARES package — I can’t think of a more catchy name for this bill and it really deserves a catchy name — will do nothing to remedy the failings of our healthcare systems and government, our knowledge, and our Media … but it reveals how unprepared we are for when the ‘real’ pandemic arrives.

    Reply
    1. Cuibono

      Failing you say?
      well it is true, 2 Trillion is not much…would have liked more.
      and including money for the plebes is problematic, but we have to play with the cards we are dealt

      Reply
  12. Cuibono

    so long as we continue to embrace a lockdown strategy, generous relief is key to securing widespread support for its maintenance. It will become politically impossible to sustain a government-mandated lockdown where workers are forced to stay at home, absent some income support to facilitate compliance with that order.”
    or failing that…

    Reply
  13. Carla

    Auerback says: “nor is there provision for the self-employed or the millions of independent contractor workers who have no employee benefits.”

    But he has just linked to a NY Times piece that says: “Are gig workers, freelancers and independent contractors covered?

    Yes, self-employed people are newly eligible for unemployment benefits.

    Benefit amounts will be calculated based on previous income, using a formula from the Disaster Unemployment Assistance program, according to a congressional aide.

    Self-employed workers will also be eligible for the additional $600 weekly benefit provided by the federal government.

    What if I’m a part-time worker who lost my job because of a coronavirus reason, but my state doesn’t cover part-time workers? Am I still eligible?

    Yes. Part-time workers are eligible for benefits, but the benefit amount and how long benefits will last depend on your state. They are also eligible for the additional $600 weekly benefit.”

    So, Mr. Auerback, which is it? This will be a matter of life or death for millions of people, including some in my own family, so please do clarify. Thank you!

    Reply
    1. Yves Smith Post author

      A Congressional aide is no position to comment. The Administration will interpret the bill language and anything other than an Administration source is useless. And single anonymous sources are crap. I have found repeatedly in my own reporting that a single source, unless it can back up its claims with documents or verifiable data, is not good. They regularly are missing important relevant information.

      Reply
  14. Cat Burglar

    It appears that it will take longer for the Treasury to cut us checks than it did to invade Afghanistan. And the Taliban likely did not even have a TIN on file with the IRS.

    You can see exactly what the system is optimized for.

    Reply
    1. Travis Bickle

      Part of the delay may come from Trump’s insistence that HIS signature be on the checks! You really just cannot make-up the shamelessness of that guy.

      It’s actually kinda predictable: he wants people to think they owe him, and with some it’ll work…

      Reply
  15. attila the hun

    Hard to imagine how the U S A gets through this crisis without major and lasting damage. The Presidency will never look or feel the same after Trump’s ridiculous performance. The forthcoming election will be a joke, with two elderly, incompetent candidates. The bailout will be an exercise in grand theft pulled off in broad daylight, with the help of most of our Congressional Senators and Representatives. The Government’s priorities, which put health care preparedness far behind Wall Street and the military industrial complex, will become obvious even to the simplest Trump fans. Disillusion and demoralization will be the prevalent attitude. Prosperity will be a rapidly fading image in the rear view mirror The good old days of full employment, a distant memory.

    Reply
    1. mowind

      For what it’s worth, I have several friends who are fans of Trump and there is no signs of that abating. Not even now. I’m done with that, they are no longer friends. I used to try to have rational conversations, with little effect. While I am not going to seek further interaction, if it happens my response is going to be simple: you are a dangerous idiot, go f*ck yourself.

      Reply
  16. Trick Shroadé

    > In fact, we appear not to have learned some lessons from 2008

    Depends who “we” is. Is think the fine folks who will be benefiting the most from this slush fund did indeed learn some lessons from 2008.

    Reply
  17. Trou

    Well you guys in the USA do seem to do nothing about it except for crib and complaint . What do you expect?

    Reply

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