The new wingnut narrative is coalescing. Since the “let them drink Lysol” narrative did not work, they are going to a new multi-pronged attack:
1) The governors are stifling pent up demand. The economy is ready to come back if it were not for this pesky emphasis on saving lives and protecting doctors and nurses.
2) The virus only affects older people. 250,000 Americans dying needlessly in a year are “acceptable.” ( A morally bankrupt idea). To back this up, they will find doctors who will justify this with any number of manipulated statistics. ( See Redstate for proof of this). They will also deploy loads of “underutilized hospital stories.” The “example” of Sweden will be trotted out – even though they probably shouldn’t.
3) It’s all China’s fault. The President of the United States bears no responsibility at all for disregarding intelligence, public health recommendations, and indeed no responsibility for not preparing and interfering with state relief efforts. Shitty people like Dan Crenshaw and Tom Cotton will be tapped to lead this effort.
4) The “experts” lied to us. The attacks on Fauci et al. will escalate, especially if there ends up being no second wave. And if there is, they will point blame at the experts anyway – because that is who they are.
5) No Republican will speak up against Trump, and anyone else who does will be branded as unAmerican or communist. They will reach back to Bush’s Iraq war playbook or the teabagger’s greatest hits for this.
It’s in the end, a self-defeating narrative because one of two things will happen:
- There will not be a second wave in which we will hear how overhyped the predictions were ( see paragraph 3 above).
- There will be a second wave and there will be a concerted effort by Republican governors to hide or manipulate the statistics to make it look less severe than it really is.
Being the optimist that I am, I am expecting option 2. In fact, in Florida, Texas and Georgia we are already seeing this trend emerge.
Look, I get it. The economy cannot stay quarantined forever. However, the fact that it collapsed so quickly when a host of American corporations were sitting on tons of cash should give you pause. It reveals what many of us more astute observers knew all along. Trump’s economy was not so great, to begin with. And it is not like the warning signs were not already there:
But it’s important to divide up responses to the pandemic into shocks to the system that are a necessary result of an unexpected catastrophe, and preexisting problems that we never addressed that are made worse by the outbreak. Seen in that light, what the Fed is doing looks much riskier than it first appears. While the scale of the Fed’s announcement dwarfs its preceding interventions, this was the third of its kind in just the last six months.
Before fears of a recession-driven by the impact of COVID-19, there were funding squeezes in the fall and winter of 2019, caused by as-yet-unidentified factors. What we do know is that we never fixed the plumbing of the financial system after the 2008 financial crisis, because it’s more profitable for certain financial actors to rely on the Federal Reserve’s balance sheet than to force them to act responsibly. Defenders of the status quo ignore the fundamental questions raised by the fact that shocks, both large and small, have required the Fed to repeatedly prop up short-term credit markets.
Without getting too technical, here’s what’s going on. You and I deposit and borrow money in a simple, regulated system. We get loans through a bank or credit card company, and deposit money in banks guaranteed by the Federal Deposit Insurance Corporation. If our bank goes under, our bank account is guaranteed up to $250,000 by the government.
But hedge funds, brokerages, and big corporations operate in a different banking system. They essentially deposit and borrow money using instruments called “repurchase agreements,” commercial paper, and money market funds, all of which are key parts of what is called the “shadow banking” sector. These instruments are mostly unregulated, which means they can cause bank runs. Indeed, the government agency charged with investigating what caused the 2008 crisis found that the lack of regulation in this shadow banking sector was a key cause of the crisis.
Welcome to 2008 on steroids.
And in the end, we will have no one to blame for it, but ourselves.
There is an economist I have been reading for a while, named Umair Haque. He’s a London based author and consultant. His recurring theme is that the economies of Britain and the United States have been driving their countries into “failed state” status for a long time. Now, after COVID-19 other outlets have been picking up the same theme.
America and Britain are in an austerity-poverty death spiral. Austerity causes poverty which causes more austerity which causes more poverty. It goes like this.
- Underinvesting in public goods and social systems led to fresh poverty
- As profit-seeking corporations lowered wages and raise prices.
- The result was that the tax base itself shrank — and now the average American or Brit will tell you they’re “too poor” to afford a functioning society. They’re not kidding. They are. They don’t have the money to invest in public goods or social systems anymore. They can’t make ends meet as it is.
- But without those very things, all that’s left is permanently, perpetually lower wages and higher prices…into oblivion, because that’s what a profit-seeking system demands.
- Bang! Game over. Your economy dies, and your society goes with it, pursuing follies like Brexits and Trumpisms, instead of solving its real problems.
Do you see the death spiral? Let me flip it on it’s head so it’s even more crystal clear. What’s the lesson here for other societies?
The less that we invest in public goods and social services as nations, the more that our economies corrode and our societies disintegrate.
If we had a more enlightened citizenry we could actually rebuild from this disaster in a constructive way. But the US gave that up a long time ago.
Tomorrow, I’ll offer some insights into that alternative path, however.