Ripple Effect

As I write, over 16 million people have filed for first time unemployment benefits in the last 3 weeks. There will be many ripples from the COVID-19 pandemic, and this is a good place to start.

First, I’d like to point out that at best this is a minimum number, and may in fact be a wild underestimate of the people who have lost their job in the last 3 weeks. Many state systems were slammed by not just 2 or 3 times normal volume, but 20 or 30 times normal volume. Turns out that many of these systems work using an ancient operating system called COBOL. For perspective, my late father used COBOL in the 60s and 70s. As if that’s not bad enough: “Still more people likely won’t qualify for unemployment benefits: parents who have to stay home with school-age kids, people quarantined because they’re at high risk for COVID-19 and new graduates who can’t even look for work.” That number probably doesn’t include most “gig economy” workers either.

Another direct ripple: those 16M+ people now don’t have health insurance. In a pandemic. I talked about this briefly very recently. COBRA is still a joke. If this isn’t a wake up call that we need true universal health insurance — not a patchwork of employer based benefits, not the “mandatory insurance” that Romneycare and Obamacare got us, but true “your citizenship is your insurance” universal health insurance — I don’t know what is. A lot of people are going to get a bill for tens of thousands of dollars just to keep from dying. And unlike diseases that can be traced to lifestyle, you can’t easily blame the victim. Keep that bill in mind, we’ll get back to it later.

A public health ripple: those unemployed people without insurance aren’t going to the doctor. They aren’t getting help for their small medical problem, so it’s becoming a bigger, more expensive medical problem. And if the problem turns out to be a communicable disease, they’re making other people sick. So yeah, the uninsured are a problem to your health.

Another ripple: people without jobs are having a hard time paying their rent or mortgage. Some of the renters who can’t pay in turn mean landlords can’t afford the mortgage. Sure, many areas have placed a moratorium on eviction and foreclosure, but that’s not a permanent solution. The forbearance plans in place still mean someday everything owed must be paid. Not meaning to sound insensitive, but how far do we kick the can down the road?

This ripple exposes another truth: over half of Americans had under a thousand dollars in savings just a few months ago. That hasn’t gotten better. With surging unemployment, it’s about to get worse.

Another ripple strikes the economy. About 70% of our economy is based on consumer spending. Consumers without jobs and without savings don’t spend a lot of money. Expect a drop in GDP.

And here’s where our ripples crash into the rocks. Eventually — not today, maybe not this quarter. Eventually, those rents and mortgages must be paid, or foreclosures and evictions will happen. Eventually the past due bills will grow including the medical debt, and bankruptcies will happen. Eventually we will have to confront the ways our health care system is not working. Eventually we will have to look at whether we can sustain an economy on services. Eventually we will have to come out of our shelters and see what is actually left of our economy.

Good luck, and keep your hands clean.

What is the Long Game?

When WalMart announced it was closing 269 stores, local news included the fact that it was closing one store in Vegas. The closure of this store was no surprise to me. In fact, I was surprised it was still open at all. It was the Walmart where this happened. When there’s a shootout with cops in your store, you really ought to reconsider that location.

Now, it has since been pointed out that there’s not another full grocery store for 5 miles. Think about that for a minute: an urban area, near an Air Force Base, that can’t support one single grocery store. That’s mind boggling.

Even more mind boggling is that WalMart — traditionally, a retailer that would go into rural towns where KMart didn’t want to be — can’t seem to make up its mind concerning small town grocery stores. First, it opened up a bunch of grocery stores in small towns. The local grocers that had been serving those areas could not compete and went out of business. Now that WalMart has an effective monopoly, they are closing those stores!

So does WalMart have some sinister long game? Or is management simply incompetent?

In Closing: return of the Cat Film Festival; a recipe that looks great, but who am I kidding I’ll never make it.

Good Signs?

Yesterday there was a report on jobs and employment in the United States. And the news was good. In fact, the news was better than anybody expected! Unemployment is at a 7 year low. The economy is not just showing signs of growth, but robust economic growth.

Nor was this “growth only an economist could love.” Many things I’ve been harping on for years got better: wages grew faster than inflation; more people are working; there’s growth in more areas; more people are working full time! I’m not ready to say yet that the economy is all healed up — I know too many people who are unemployed or underemployed — but I’m willing to say that the light at the end of the tunnel is probably not a train.

Now all the Very Smart People are talking about how the Fed will now have an excuse to raise the interest rates banks charge one another when they meet next month. Some are saying that’s a bad thing. However, I think it’s long overdue.

 

Hindsight

Apparently, former Fed chief Ben Bernanke has a new book about how he saved Christmas the economy. That means a bunch of econ bloggers and Serious People have to say something about it. The NYT Sunday Book Review likes it, although they called it “a bit of a slog.” You can buy your own copy here.

In Closing: least of our worries; unfortunately I don’t see a way to solve this problem; I bet we laugh at this fashion trend a decade from now; yeah that’s a problem; breaking the rules; maybe you could have educated the patient up front?; and voting.

BAMTOR is Back

Remember that Banks Always Make Their Own Rules?

So then here’s a story that has two sides, after a fashion. On one side, banks know that if there’s a back door to their communications that governments can use, there is by definition a back door that Bad Guys can use*. On the other side, these same banks have a history of not exactly being Good Guys themselves, and some are rightly pointing out that this same security prevents the legitimate government action of rooting out and punishing unlawful actions.

Ha right, like bankers get prosecuted! Now there’s a good one.

In Closing: Def Con; darn math; back to school preview; bunker; fun; not so much fun; more TPP; and LLAP.

* I know, I actually agreed with something That Asshat Michael Chertoff said! Alert the media.

A Whole Weeks Worth of Economy in One Post!

So USA Today has helpful hints for people of my generation towards saving for retirement. Unfortunately they forgot Step 0: have a job with a retirement plan and that pays well enough that you can actually save money.

So then, about jobs. Earlier this week, the jobs report came out. The good news is that there are more jobs. They’re even paying a bit more — by a whole $0.05 per hour (don’t spend it all in one place, kids). Yet still, unemployment claims are up and Very Serious People are speculating about plateaued progress and  The Next Recession.

Just maybe that’s why consumer spending and factory orders are down.

Even so, I am NOT among those calling for the Fed to avoid raising interest rates. For one thing, the Fed doesn’t have as much control as many people think. Second, the last several years should have proven that the interest rates banks charge one another really doesn’t have much to do with whether or not your boss gives you a raise. Third, I’ve been saying for a decade now that super low interest rates don’t actually stimulate the economy. Yeah, we’ve had super low interest rates for a decade now. Maybe if interest rates went up, corporations would spend some of their cash.

Of course, if you are very wealthy, the economy looks just great. Remember that when you listen to the 2-ring circus we’re calling “2016 presidential candidates.”

In Closing: Warren Buffet has single handedly prevented many unwanted pregnancies (and probably a few cases of cancer); The TPP is on life support, but still out there and it still is a no good very bad thing for average people; ain’t nobody but spies like us; more studies tell us the same damn thing; I am still not sure why anybody ever thought this was a good idea; to hell with the H-1B program.

Double Down

The Freakin NSA

The Executive Director of Google says that the NSA is going to break trust in the internet, and thereby break the very internet itself. I don’t think the government cares. The NSA will do whatever it likes, thankyouverymuch. Further, it will do what it likes in whatever country it chooses! Ed Snowden still believes that the whole thing will be found unconstitutional by the Supreme Court. Only problem with that is that by his own admission, none of the felonies uncovered have been prosecuted. A case has to get to the Supremes before it can be heard there. Chalk it up to terror-phobia.

The Freakin Economy

This is why I like Elizabeth Warren: she knows what she’s talking about and she’s not afraid to say it loudly. In this case, she’s willing to say the system is rigged against Joe and Jane Average, in favor Wall Street — a group of institutions almost as untouchable as the freakin NSA. Gee, maybe that’s why Americans are flat-out broke. And for African-American or Hispanic-American families, median assets are worth less than a decent used car. By the way, notice that infographic doesn’t say net assets, just assets. Oversight, or does that not reflect debt owed on assets?

In Closing:  a couple of TSA items; Can we please have more cops like this guy and fewer cops that see the public as a bunch of incipient criminals, please?; “shut the whole thing down“; fight to the death and reap the profits thereof; please be sure to take this quick ebola quiz courtesy of Southern Beale — you’re much more likely to encounter Enterovirus D68; two items on diabetes; and I didn’t get the memo either.

 

A few items on job creation

Ok, by now everybody’s heard that really good job creation and unemployment numbers were announced Friday, right? Good. There were even jobs for people without a lot of education! I don’t think we’re out of the woods yet — I’ve only been talking about job creation numbers for a decade or so — but I do think we are headed in the right direction. That said, the middle class has still lost a lot of ground. Oh, look over there!

In Closing: On bankers; everything old is new again; into the woods; GOP = Rum Tum Tugger; Donner Pass; be afraid!!; compare and contrast; secure the data first; and gird up thy loins.

No kidding….

Only 8% of Americans think the economy is “recovering strongly.” Most think it’s recovering, but not very strongly. Gee, I wonder why!

Despite the fact that poverty seems to be dropping and more people have health insurance, it’s tough out in the real world — that’s the place where people understand that there’s just no way Alibaba has more inherent value than Citigroup. Income is stagnant at best. Politicians seem unaware that there are two applicants for every job opening. Millennials are caught in the middle: worried about their parents and their student loans (which are dragging down the whole economy). People are arriving at the hospital with malnutrition. And artists are being a voice of reason recommending the next generation of artists learn skills and get part time or seasonal jobs when they can.

Things are tough all over. Well, for 92-99% of us anyway.

In Closing: secret laws shouldn’t exist; “get down, he’s got scissors!!!”; just what you need; red flag; in search of real reform; uncool; a stupid fiasco caused by the War on Drugs; a logical corollary of the law of supply and demand is that if prices are too high for demand, other sources and substitutions will come into play; just stop; and please help a no-kill shelter, more here.