Trump Imitates Putinism

Popular Economics Weekly

“Russian mathematician and Putin critic Andrey Piontkovsky characterized Putinism as "the highest and final stage of bandit capitalism in Russia; and also as a war, 'consolidation' of the nation on the ground of hatred against some ethnic group, attack on freedom of speech and information brainwashing, isolation from the outside world and further economic degradation". Wikipedia

Medium.com

The latest Ukrainian peace proposal was negotiated between President Trump and Vladimir Putin without Ukraine’s involvement. This is another example of Donald Trump’s attempt to curry favor with Vladimir Putin by literally allowing Putin to dictate the terms of the peace proposal.

Why has Trump turned into Putin’s messenger, whose policies mirror Putinism? Why has the oldest liberal democracy in the world, a nation of immigrants founded on the principle of every member’s inalienable right to be free become the “bandit capitalism” of Vladimir Putin, a dictator who allows no freedoms and kills his own people?

Late-stage capitalism doesn’t fully explain why Donald Trump, a real estate developer with no political experience, could convert a weakened American Democracy into a version of capitalism that concentrates power and wealth in the hands of his oligarchic supporters blatantly ignoring America’s founding principles and laws of the land.

But epidemiologic disease models studied by medical researchers can explain how capitalism could morph into Putinism and bandit capitalism. Such models have shown that there are predictable paths that all epidemics, pandemics, or other contagious disease outbreaks follow from beginning to end.

The body politic of countries and regions (i.e., “the people of a nation, state, or society considered collectively as an organized group of citizens) have endured political outbreaks with similar characteristics. Even civil wars fit this infectious disease model, because they originate internally—brother or sister against each other—and may last longer than years, and suddenly end in unexpected ways.

How do diseases infect? The Black Plague epidemics usually infected people that had been weakened by famines or dysfunctional governments, and the more recent Spanish Flu and COVID-19 pandemics as well that infected and killed millions.

When do such pandemics wane or disappear? They run a recognizable course from inception to a maximum infection rate, then subsided when disease-infected populations eventually found ways to cause their decline. It was quarantines in early times, and vaccines in modern times.

Trumpism, Putinism, and like autocracies or dictatorships have captured weakened political systems. In Russia it was breakup of communism and the Soviet Empire that fostered a Vladimir Putin. In Trump’s case, he took advantage of a democratizing order that had united to win World War II but no longer served many Americans.

Oligarchism, or the Gilded Age model has supported Trump’s version of bandit capitalism with his illegal tariffs that are creating the worst income inequality in the developed world. Trump is promoting a similar hatred of immigrants as Putin, also non-white ethnic and religious groups, attacks on freedom of speech in universities, and Depression-level tariffs that is isolating America from the “outer world”.

The AP just reported that President Donald Trump says he wants to “permanently pause migration” from poorer nations and is promising to seek to expel millions of immigrants from the United States by revoking their legal status. He is blaming immigrants for problems from crime to housing shortages as part of “social dysfunction” in America and demanding “REVERSE MIGRATION.”

He has also followed Putin’s strategy by weakening foreign alliances such as NATO, and breaking up long held foreign trade alliances, all to centralize his power.

But the MAGA movement itself may be in a late-stage decline, as it is slowly disintegrating from internal divisions, with the resignation of major leaders such as Marjorie Taylor Green, growing disputes over policies including tariffs and the treatment of immigrants.

And Donald Trump, its leader, is showing signs of declining health—with fewer public appearances (that also afflicted former president Biden), irrational outbursts and making sudden policy changes without explanation. The MAGA movement has blindly followed him, believing in totally irrational conspiracies until the conspiracies are debunked or and fade away (just as did the flu and COVID-19 pandemics).

The first Gilded Age was defeated by the election of President Teddy Roosevelt riding on the wave of a progressive movement that uncovered the corruption and concentrated wealth of the time.

Trump doesn’t even attempt to hide his blatant corruption nor his promotion of the disease of Putinism that is attempting to destroy American Democracy. So it will take constant vigilance to identify and combat such a widespread contagion, as we have defeated past diseases of the 'body politic', and bring Americans together once again in common purpose to preserve our democracy.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

 

Another Roaring Twenties?

 Financial FAQs

BEA.gov

The advance estimate of third quarter U.S. economic growth was 2.8 percent, slightly less than the 3 percent growth in Q2 but is showing few signs the post-pandemic recovery is slowing. It has defied the odds of a Federal Reserve engineered slowdown that made the cost of borrowing higher, jacking up the Prime Rate to an 8.5 percent high.

The manufacturing sector slowed down, but that hasn’t slow overall economic growth because consumers kept spending on consumer goods, dining out, travel and other leisure activities.

This has all the signs of another Roaring ‘20s that occurred after the Spanish Flu pandemic in the 1920s. I don’t mean it literally, of course, because the first Roaring Twenties of jazz and the Flapper era for women occurred after World War I. Yet the recovery from WWI and the Spanish Flu pandemic that killed an estimated 650,000 Americans also unleashed a spending and investment spree that is happening after the COVID-19 pandemic.

I’m using the analogy because this roaring 2020s could also last a decade due to the pent-up demand from government spending that is seeding so much private investment, with the U.S. economy still fully employed infrastructure and technology investments just beginning to kick in

Consumer spending surged 3.7 percent, and domestic investment grew 11 percent in the Bureau of Economic Analysis (BEA) report. This was mainly because consumer spending was holding up for the holidays and consumers had extra savings. The personal savings rate is holding at 4.8 percent.

Inflation also continues to decline. The price index for gross domestic purchases increased 1.8 percent in the third quarter, compared with an increase of 2.4 percent in the second quarter (table 4). The personal consumption expenditures (PCE) price index increased 1.5 percent, compared with an increase of 2.5 percent. Excluding food and energy prices, the PCE price index increased 2.2 percent, compared with an increase of 2.8 percent.

Now that inflation is back to the Fed’s target rate of 2 percent, Fed officials can concentrate on continuing to bring down their short-term Fed Funds rate, which will bring down the Prime Rate further, causing consumers to be even more confident about their future.

That is why, “Consumer confidence recorded the strongest monthly gain since March 2021, but still did not break free of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board.

“In October’s reading, all five components of the Index improved. Consumers’ assessments of current business conditions turned positive. Views on the current availability of jobs rebounded after several months of weakness, potentially reflecting better labor market data. Compared to last month, consumers were substantially more optimistic about future business conditions and remained positive about future income,” said Peterson.

ConferenceBoard

Much will depend on Friday’s official U.S. unemployment report but the independent ADP’s private-sector jobs report showed businesses added 233,000 new jobs in October, the biggest gain in 15 months. The report is not as accurate as the government’s nonfarm payrolls report, which comes out on Friday.

The Trade/Transportation, Education/Health sectors added 104,000 jobs, construction added 37,000 jobs (infrastructure), while manufacturing lost 19,000 jobs in the ADP report.

One historian wrote that after the devastation of World War I and the Spanish Flu pandemic, “Incredibly, the dire post-war economic predictions didn’t come true. At least not immediately. American consumers, who had patriotically scrimped and saved during wartime, began to live it up. Europeans also joined in, purchasing $8 billion in exports from America. Inflation ticked upward, and so did prices, but consumers were willing to pay anything for a taste of freedom.”

Sound familiar? Only this time the Fed’s inflation fight didn’t cause a recession, on the contrary—at least not yet. It’s a good place to be, just in case there might be other surprises in the future.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Where's the Recession?

 Financial FAQs

The most recent Harris-Guardian poll found 56 percent of those surveyed thought the US was in a recession. And 49 percent believed unemployment was at a 50-year high.

How is that possible when the economic facts are exactly the opposite? Unemployment is at a 50-year low, and there hasn’t been a recession since the short-lived 2-month COVID-19 recession in March-April 2020.

The Harris poll said:

· 55% believe the economy is shrinking, and 56% think the US is experiencing a recession, though the broadest measure of the economy, gross domestic product (GDP), has been growing.

· 49% believe the S&P 500 stock market index is down for the year, though the index went up about 24% in 2023 and is up more than 12% this year.

· 49% believe that unemployment is at a 50-year high, though the unemployment rate has been under 4%, a near 50-year low.

"What Americans are saying in this data is: ‘Economists may say things are getting better, but we're not feeling it where I live,'” said John Gerzema, CEO of the Harris Poll. “Unwinding four years of uncertainty takes time. Leaders have to understand this and bring the public along.”

There may be a lot of confusion over what exactly defines a recession, but I believe there’s a better explanation for the pervading pessimism among those surveyed. Many polls have found that most Americans do in fact feel good about their own financial circumstances, but not so good about where the US economy is heading.

Then what must those surveyed compare today’s economy to, since public news reports document that the US has recovered the quickest from the pandemic with the fastest growing economy among developed countries in the world?

FREDcpi

Maybe they remember the pre-pandemic economy of the prior decade when both the unemployment and inflation rates (see cpi graph) were at or below 3 percent. It was a goldilocks time, while choosing to forget the severe trauma from two years of lockdowns that began in 2020 with images of refrigerator trucks lined up in the larger cities to hold many of the one million dead that mortuaries couldn’t hold.

Such a collective amnesia has happened before, more than 100 years ago during the Spanish flu pandemic. The Roaring Twenties excess that followed may have helped to erase those horrific memories when more than 675,000 died, say historians.

A Smithsonian Magazine article highlights some of the Roaring Twenties’ history of the 1920s that could confirm my thesis.

The Smithsonian article mentions Harper’s editor Frederick Lewis Allen’s 1931 account of the previous decade, Only Yesterday. Allen labels the Twenties as the “post-war decade” (of World War One) and mentions the pandemic a grand total of once.

“My guess is it did not sit with the story that Americans tell about themselves in public. It’s not the story that they want to put in fifth-grade U.S. history textbooks, which is about us being born perfect and always getting better,” says Bristow, who wrote American Pandemic: The Lost Worlds of the 1918 Influenza Epidemic.

“Americans believed themselves “on the verge of putting infections disease to rest forever,” she explains, and instead, “We couldn’t do anything more about it than anybody else.” Indeed, President Woodrow Wilson, who held the office throughout the multi-year pandemic, never once mentioned it in his public comments,” said Allen.

The Smithsonian also cites Yale sociologist and physician Nicholas Christakis who hypothesizes that the 1918 pandemic falls into an ages-old pandemic pattern, one that our Covid-19 present may mimic, too.

In his 2020 book, Apollo’s Arrow: The Profound and Enduring Impact of Coronavirus on the Way We Live, he argues that increasing religiosity, risk aversion and financial saving characterize times of widespread illness. Christakis expects the Covid-19 crisis to have a long tail, in terms of case numbers and social and economic impacts.

“People are going to want to make sense of what happened,” he says, positing that “we’ll likely see an efflorescence of the arts” post-pandemic. That’s not to say our A.C. (After Covid-19) reality will be all rosy. “We’ll be living in a changed world.”

A majority of Americans polled also believe Republicans are better stewards of their wealth. Yet the COVID-19 pandemic occurred during the Trump administration, and its one million death toll might have been lower if Trump hadn’t denigrated scientists and encouraged anti-mask and anti-vaccine doubts among his followers.

Certainly many Republicans might then want to dwell on the years just before the pandemic and erase their memories of the ineptness of the Trump administration when their President suggested injecting chlorine into their veins as a cure.

My thesis is up for discussion as are all theses, of course. I welcome comments on what is still a puzzle to most economists. How can opinions differ so much from public facts? Maybe lasting memories of a more peaceful decade still dominate over our vastly changed, post-pandemic world?

Harlan Green © 2024

Harlan Green on Twitter: https://twitter.com/HarlanGreen

This Recovery Could Spawn Another 'Roaring Twenties'

 Financial FAQs

AtlantaFed.org

I wonder if our recovery from the COVID-19 pandemic could repeat the ‘Roaring Twenties’ jazz era of F Scott Fitzgerald. Why not? There are some surprising similarities.

The Roaring Twenties were named for the era that followed the Spanish Flu pandemic of 1920. It was a truly unique history. World War One was over and women had just won the right to vote with passage of the 19^th Amendment.

The COVID-19 pandemic wreaked as much havoc as World War One, with many more casualties. It resembled the Spanish flu epidemic in many ways—mask-wearing, business shutdowns, and more the 650,000 Americans dying then vs. the one million estimate of American deaths from COVID-19 and its variants.

And there was a very strong recovery as from today’s pandemic.

“By the dawn of the 1920s, the second Industrial Revolution had transformed the United States into a global economic power and drawn millions of Americans to cities,” said Britannica.

There is a growing chorus that suggests Americans could have a similar result from the COVID pandemic because of $ trillions poured into the U.S. economy as recovery aid as well as future economic growth.

Christopher Smart, a former Senior Treasury official writing in last week’s Barron’s Magazine, estimates that the Biden administration will mobilize a stunning $3.5 trillion in public and private money over the next decade that I believe could spur a ‘Roaring 2020s’ (my term) over the rest of this decade.

He reports that communiqués coming out of the just finished G-7 economic summit in Japan “confirm a rare moment in which leaders gather with both mandate and money to launch a golden age of industrial policy.”

Could it spur a third Industrial Revolution? No, but it will certainly give a boost to the current Information Age that is spawning its own Digital Revolution with $ billions being poured into chip manufacturing and modernizing the U.S. infrastructure.

This is already happening, even in the face of debt ceiling negotiations that could crimp the next fiscal year budget.

For instance, the Atlanta Federal Reserve just announced it had upped its estimate of second quarter GDP growth to 2.9 percent q/q, while other prognosticators have been more cautious, such as Goldman Sachs (2.0 percent q/q) and B of A (1.2 percent q/q)

GDP grew 1.1 percent in Q1 down from 2.6 percent in Q4 2022, according to the US Bureau of Economic Analysis (BEA)., but some indicators are showing stronger growth ahead, rather than a recession.

“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2023 is 2.9 percent on May 17, up from 2.6 percent on May 16. After this morning's housing starts report from the US Census Bureau, the nowcast of second-quarter real residential investment growth increased from -6.3 percent to 0.6 percent.:”

The real estate sector has traditionally been a leading indicator of growth, and it is feeding an extreme housing shortage.

For instance, "Sales in the second half of the year should be notably better than the first half as job gains continue and more favorable mortgage rates are expected," said NAR chief economist Lawrence Yun. "Sales of new homes are already matching 2019 pre-COVID activity and are expected to increase in 2023, largely due to plentiful inventory in this segment of the market."

Much of the coming industrial growth touted by the G-7 is already baked into the cake of future spending because the Ukraine war and Chinese belligerence has caused a large increase in military spending, with many countries expending more money and resources on mitigating global warming as well.

In fact, the Ukraine war is also causing a faster switch to alternative energy sources and away from fossil fuels. Who knows what may happen next, but with the West now united in purpose, a younger, energetic generation of Americans wanting to be seen and heard, the future has never looked better.

Harlan Green © 2023

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Strong Retail Sales Continue 2020's Recovery

 Financial FAQs

FREDretailsales

Sales at U.S. retailers rose 9.8 percent in March, the government said Thursday, in part because of the additional $1,400 stimulus checks for consumers from the federal government that is accelerating economic growth.

This confirms the 2020’s economic recovery has begun, as more businesses open and consumers grow confident that the worst of the pandemic is over. The sales gain was the second largest on record, exceeded only by an 18 percent spike last May when the U.S. lockdown was first lifted.

Stock market indexes also reached new highs, which does bring back hints of the original roaring 1920’s—excessive exuberance in the financial markets and eight years of prosperity—but then came the 1930s when outmoded economic verities (and few regulations) turned it into the Great Depression.

However, I would compare this recovery to that after World War Two, which necessitated programs enabling government to invest heavily in the future—in infrastructure, education, and housing, as is being proposed today.

We achieved much higher annual GDP growth rates post-WWII, as high as 14 percent (see below graph dating from 1948), which can happen again with the right public and private investments.

FREDgdpgrowth

Retail sales revved up 15 percent in March at car dealers even as automakers struggled to procure enough computer chips to maintain production, per MarketWatch’s Jeffry Bartash. Auto sales account for about 20 percent of all retail sales.

Sales at gas stations also rose nearly 11 percent, reflecting rising oil prices and more Americans taking to the road as government coronavirus restrictions are lifted. If autos and gas are set aside, retail sales still jumped 8.2 percent.

Almost every major retail group shared in the benefits of the federal aid payments. Receipts leaped 13.4 percent for bars and restaurants, 18 percent for clothing stores, 23.5 percent for sporting goods and other recreational items.

What about COVID-19 and future viruses that must be vanquished to continue this recovery? Better public health care spending is also needed and is contained in the just passed American Jobs Act. Hospitalization rates have plateaued at too high a level. The current 7-day average is 36,941, up from 36,257 reported yesterday, and well above the post-summer surge low of 23,000.

So we do need post-WWII-size investments in the future to create a real recovery.

Harlan Green © 2021

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Employment Surge Boosts Recovery

 Popular Economics Weekly

MarketWatch

Another sign of a roaring 2020’s economy just came out, per the Bureau of Labor Statistics (BLS) today. The February employment report added 355,000 jobs just to payrolls in leisure and hospitality — restaurants, hotels, casinos, theaters—all in the service sector.

These industries had lost 500,000 jobs during the pandemic. A total of 379,000 jobs were created with manufacturing, wholesale trade and retail sales adding to the total.

“The rebound in job creation in February is likely the start of a major new cycle of hiring. Warmer weather, falling coronavirus cases, rising vaccinations and another massive increase in federal stimulus are likely to act as jet fuel for the economy in the spring and summer,” says MarketWatch’s Jeffry Bartash.

A rebound in the service sector is what economists have been waiting for. It means more consumer spending on travel, dining out, and visits to public venues like sports and museums.

There is one caveat, however. Dr. Fauci and other health experts are warning that the pandemic fight isn’t over. There could be an infection surge in the spring with new variants of the virus beginning to appear for which the current vaccines are not as effective.

COVIDTrackingProject

CDC head, Dr. Rochelle Walensky, has repeatedly warned that declining case numbers have stalled at a high level, and urged Americans to stick with the recommended safeguards — frequent hand washing, social distancing and wearing a face mask in public — until it’s their turn to be vaccinated.

"Things are tenuous," Dr. Rochelle Walensky said at a White House briefing. "Now is not the time to relax restrictions." The U.S. is still averaging about 70,000 cases a day and the seven-day average is higher today than it was earlier in the week, she said. "This recent shift in the pandemic must be taken seriously," she said. If the infection rate remains at such a high level, the virus, and new variants of the virus, will continue to spread, she said. "We may be done with the virus, but the virus is not done with us,"

This happened with the Spanish flu pandemic of 100 years ago, which prolonged the original ‘roaring 20’s’ recovery for another year. It is literally a race to vaccinate as many people as possible to limit the spread of these new variants.

Harlan Green © 2021

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Recovery Slows As Pandemic Spreads

 Financial FAQs

ChicagoFed

This Chicago Federal Reserve graph of national activity starkly portrays the present state of the US economy. The multi-colored bars represent deviations from the historical growth average, which is the zero line on graph. It is still barely positive though down sharply from May and June when the business lockdown ended.

“Led by slower growth in employment- and production-related indicators, the Chicago Fed National Activity Index (CFNAI) declined to +0.27 in November from +1.01 in October. Three of the four broad categories of indicators used to construct the index (production and income, employment, sales and inventories) made positive contributions in November, while personal consumption and housing declined slightly, but all four categories decreased from October. The index’s three-month moving average, CFNAI-MA3, decreased to +0.56 in November from +0.85 in October.”

COVIDTrackingProject

This is because successive surges in infections have had consumers saving more and spending less, while manufacturing continues to chug along. The pandemic is just not manageable at the current infections rate with more than 200,000 per day (blue line in graph) now testing positive and more than 100,000 per day (red line) being hospitalized with the virus.

It is easy to see the inverse correlation in these graphs. As total infections in cases per day rise (blue line) economic activity in the Chicago Fed bar graph declines.

There is better news coming as more than 144,000 vaccinations have already been administered in 21 states, according to the COVID Tracking Project.

MarketWatch reports that new daily cases of COVID-19 fell to 179,801 on Sunday from 193,947 on Saturday, and down from 251,447 on Friday, according to data provided by the New York Times. The daily death toll was 1,422 on Sunday, down from 2,628 on Saturday and from 2,815 on Friday.

And hospitalizations dropped to 113,630 on Sunday from 113,929 on Saturday and 113,955 on Friday, according to the COVID Tracking Project. That 3-day streak of declines snapped a 12-day streak of record hospitalizations.

But the Christmas holidays have just begun with many more traveling to family and vacation destinations, which will cause another surge in the new year and keep most consumers at home for a longer period.

In looking back at the history of the Spanish flu, there was another infection surge in the spring of 1919, even as the warm weather returned. It actually took several more years for that economy to stutter back to life.

And it will in fact take much more federal aid than the just passed $900 billion coronavirus relief package to bring back any meaningful recovery for most Americans because so many lost jobs; something the incoming Biden administration will have to tackle.

Harlan Green © 2020

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Will We Repeat the 1918-19 Spanish Flu Pandemic?

 Answering the Kennedys’ Call

Early in Bob Woodward’s just released best-seller, Rage, President Trump said he knew by February that COVID-19 could act much like the Spanish influenza pandemic of 1918-19. It was estimated to have killed 675,000 Americans and 50 million worldwide before it was over.

“It’s deadly stuff,” he said to Woodward, “It’s also more deadly than even your strenuous flus…maybe five times as deadly as the flu.”

Yet despite Trump’s confession that he knew early of its horrendous effects, his downplaying of its dangers to Americans and the world may set the stage for a repeat performance.

This is in part because we are not yet at the seasons where it did its greatest damage—the fall and winter. Then combine it with the ordinary flu season that kills from 30,000 to 60,000 every year.

John M Barry’s book, The Great Influenza: The Story of the Deadliest Pandemic in History, first published in 2004 with a 100^th anniversary edition reprint in 2018, details the horrors of the Spanish flu pandemic that broke out in the last year of World War One that no one should want repeated.

In a matter of 12 weeks two-thirds of its victims died, from mid-September to mid-December of 1918, said Barry, in as quickly as 24 hours from the onset of symptoms—some symptoms resembling those of the Black Plague. There was a less-deadly surge in the spring of 1919 that sickened even President Woodrow Wilson while he was in Paris negotiating World War One peace terms with Germany.

"I wanted to always play it down," Trump told Woodward on March 19, even as he had declared a national emergency over the virus days earlier. "I still like playing it down, because I don't want to create a panic."

If instead of playing down what he knew, Trump had acted decisively in early February with a strict shutdown and a consistent message to wear masks, social distance and wash hands, experts believe that thousands of American lives could have been saved, maybe preventing an inevitable repeat of the 1918 horrors that should never be repeated.

Why such a stunning disregard for human life by the Trump administration and Republican Party is now the question that needs to be answered.

President Trump is the last vestige of the conservative counterrevolution documented so accurately in Kurt Andersen’s Evil Genius, the Unmaking of America that has so weakened American values and institutions. We have come to a time when disregarding the laws of nature is the new normal, where race-baiting and the scapegoating of minorities have become official government policies.

Doctors Fauci and Redfield seem to believe 1918 may be repeated when they warned recently that the worst is yet to come this winter with a vaccine not generally available to the public before summer or fall of 2021 and the oncoming ordinary flu season that has historically killed 30,000 to 60,000 deaths per year,

Woodward also revealed Trump’s own National Security Advisor Robert O’Brien labeled the new coronavirus pandemic the greatest national security threat he will face as President.

We also now know the national security costs of electing a “useful idiot” to the Oval Office, in the words of Lt. Colonel Alexander Vindman, a decorated Marine veteran and former Russian analyst on the National Security in a recent Atlantic Monthly article.

“President Trump should be considered to be a useful idiot and a fellow traveler, which makes him an unwitting agent of Putin,” Vindman said recently. Useful idiot is a term commonly used to describe dupes of authoritarian regimes; fellow traveler, in Vindman’s description, is a person who shares Putin’s loathing for democratic norms.

He has also been a “useful idiot” for Republicans that have attempted more than 80 times to dismantle our public health system, including the repeal of Obamacare with its preexisting conditions inclusion, which has increased the risks to Americans’ health and well-being during the COVID-19 pandemic.

Even the separation of children from parents seeking asylum from corrupt Central American governments and drug gangs has been revealed to be government policy implemented by the Department of Homeland Security; as documented by the journalist Jacob Soboroff in his new book documenting the horrific Trump policies with immigrant families, Separated: Inside An American Tragedy.

These costs are no longer bearable because they reveal America has come to be governed by the useful idiots of one political party with no real regard for human life, who are determined to hold on to their wealth and power regardless of the consequences.

Harlan Green © 2020

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Which Letter Will Describe This Recovery?

Popular Economics Weekly

Conference-board.org

The Conference Board’s consumer confidence survey should help to predict the shape of this economic recovery from COVID-19. Economists usually described it as a letter in the alphabet, and I believe it will mirror the degree of “uncertainty” felt by consumers. Looking at past pandemics hints at what its shape might be.

In the words of Lynn Franco, Senior Director of Economic Indicators, “Following two months of rapid decline, the free-fall in Confidence stopped in May…Short-term expectations moderately increased as the gradual re-opening of the economy helped improve consumers’ spirits. However, consumers remain concerned about their financial prospects…While the decline in confidence appears to have stopped for the moment, the uneven path to recovery and potential second wave are likely to keep a cloud of uncertainty hanging over consumers’ heads.”

Economists are therefore trying to determine if the US economy sinks back into recession in a second wave of infections in the fall, or even a third wave nest spring, as in past pandemics. Right now, some economists are predicting a ‘V’ shaped recovery with GDP growth gaining traction after two quarters of negative growth.

Just under half of 45 economists responding to a Reuters poll earlier this month said the U.S. economic recovery would be “U” shaped, which probably means at least two quarters of negative growth, but a very slow recovery. Ten of those polled said it would be “V” shaped, and five said it would be “W” shaped.

Fed Chairman Powell in recent comments at a press conference following the U.S. central bank’s latest policy meeting indicated he sees even more disruption than even the “W” camp. Powell said he believes the economy may go through a series of peaks and troughs for at least a year or more as the world battles to keep the virus under control.

“John Kenneth Galbraith famously said that economic forecasting exists to make astrology look respectable,” said Powell. “We are now experiencing a whole new level of uncertainty, as questions only the virus can answer complicate the outlook.”

This happened with the 1918-20 Spanish Flu pandemic that killed some 700-900,000 Americans. Its fall resurgence in deaths after a summer created an 18-month recession from January 1920 to July 1922. It was considered a mild recession with GNP growth falling approximately 8 percent.

seekingalpha.com

A chart of the Spanish flu combined with the DOW-Jones Index shows how the stock market behaved during that time—the DOW fell with every resurgence of deaths. It wasn’t until the third death rate spike began to subside in early spring of 1919 that the DOW rose, though economic growth didn’t resume until the end of the recession in 1922, and the decade became known as the “roaring twenties”.

Two lesser-known pandemics based on bird flus in 1958 and 1968 caused more than 100,000 deaths in the US.

In February 1957, a new influenza A (H2N2) virus emerged in East Asia, triggering a pandemic (“Asian Flu”). It was first reported in Singapore in February 1957, Hong Kong in April 1957, and in coastal cities in the United States in summer 1957. The estimated number of deaths was 1.1 million worldwide and 116,000 in the United States.

Several short and mild recessions followed the two pandemics; the first in 1958 when GDP growth was a negative -1.54 percent in Q1 1958. GDP growth began to plunge again in Q1 1968 following the second Avian flu pandemic that killed approximately100,000 in the US, and ended with the 1970 recession.

The point is pandemics have always caused a substantial drop in GDP growth, and this pandemic is shaping into another Great Recession lasting at least two quarters, before beginning to recover in the fall or winter.

That is why Dr. Fauci has been so vocal in supporting continued vigilance and preparedness for an additional outbreak.

And Dr. Rick Bright, the recently transferred director of Biomedical Advanced Research and Development Authority director at HHS said, “The mortality of the pandemic could be “unprecedented” and ultimately outstrip the 50 million casualties of the 1918 influenza epidemic without a science-based national response to the pandemic.”

It’s going to be a difficult call, in other words, as to which letter will better describe the length of this recession due to the novel coronavirus.

Harlan Green © 2020

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

In The Age of Anxiety

Popular Economics Weekly

thesocialhistorian.com

We are now in a full-blown “Age of Anxiety”; not the first, of course. There was as much anxiety during the 1918-20 Spanish Flue pandemic that reportedly killed 50 million in a series of worldwide outbreaks lasting more than two years.

If we do not find ways to lessen anxiety in this age due to the novel coronavirus pandemic, we might seriously experience what Dr. Rick Bright, who was recently transferred from his position as Biomedical Advanced Research and Development Authority director at HHS has described as “the darkest winter in modern history.”

“The mortality of the pandemic could be “unprecedented” and ultimately outstrip the 50 million casualties of the 1918 influenza epidemic," wrote Bright in his prepared testimony,“ without a science-based national response to the pandemic.”

There is much more to the current age of anxiety. New Deal economist John Kenneth Galbraith wrote a book called The Age of Uncertainty in the 1970s that attempted to explain the general anxiety brought on by post-WWII institutions that were no longer stable.

“In it we contrast the great certainties in economic thought in the last century with the great uncertainty with which problems are faced in our time,” he said. “Little of this certainty now survives. Given the dismaying complexity of the problems mankind now faces, it would surely be odd if it did.”

This anxiety has been compounded by a record income inequality, the worst since the Great Depression. A 2018 PEW Research survey showed the wage stagnation of American salaried workers over almost two generations.

PEW

Its study found that today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers, the top 10 percent of income earners.

I have frequently cited Robert Shiller, a Nobel Laureate economist who says anxiety has reached such a level that it is becoming a second pandemic, an anxiety pandemic that is contagious because “stories of fear have gone so viral that we often think of them constantly,” which could delay the recovery because of the public’s irrational responses.

“Business closures, soaring unemployment, and loss of income fuel financial anxiety, which may, in turn, deter people, desperate for work, from taking adequate precautions against the spread of the disease…But, unlike COVID-19 itself, the source of our anxiety is that we are unsure what action to take.”

And that is already happening with news pictures of crowded bars and restaurants  in states like Texas and Georgia, where they haven’t met the 14-day requirement of falling infection rates decreed by the CDC.

“Unless we get the virus under control, the real recovery economically is not going to happen,” says Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, in a recent interview. He goes on to say that “even if social distancing standards were relaxed, it wouldn’t restore the health of the economy as some protesters have implied it would.”

It is the economic health of Americans that most concerns Americans, which means remedies must be found to curb the rising anxiety, if there is to be something less than a Great Recession or Depression.

And it has to be a united focus of governing authorities on the scientific message that this pandemic is bringing; we are all in this together.

Harlan Green © 2020

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Collaboration vs. Confrontation—Who Wins?

Financial FAQs

theverge.com

Is the era of trickle-down economics, of Reagonomics that saw so much wealth redistributed to the top 1 percent, finally ending? Yes, if we want to really ‘cure’ the pandemic decimating the U.S. and world economies, because the pandemic has brought out all the weaknesses of an economic system that has boosted the wealth of the top 10 percent of college-educated and left everyone else to the mercies of globalization and a service economy that barely pays living wages.

“For seven decades after World War II, the notion that global trade enhances security and prosperity prevailed across major economies,” said a recent Sunday NYTimes Op-ed by Peter Goodman, et. al.…”But in many countries—especially the United States—a stark failure by governments to equitably distribute the bounty has undermined faith in trade, giving way to a protectionist mentality in which goods and resources are viewed as zero-sum.”

So it turns out that to defeat the ‘novel’ coronavirus we must create a new sharing society and caring world that prevents the hoarding of the resources to defeat it, which will also preserve our democracy that was built in the seventy years after WWII expressly to prevent another Stalin, Hitler and Emperor Hirohito of Japan.

Americans are now staring at the possibility of another Great Depression because of Covid-19. The unemployment rate is expected to soar, as more than 20 million members of our 150 million work force will be out of work for a prolonged time due to COVID-19.

Unless we find a new capitalist model of sharing—that mitigates the record income disparities of rich and poor last seen before the Great Depression—neither a novel coronavirus solution nor a robust economic recovery is possible.

Compounding the problem of returning to economic health is that the ‘cure’ of a prolonged national lockdown will be worse than the ‘problem’ of returning to economic growth to achieve it.There will be incredible suffering at the bottom rung of the economic latter, and it will be the communities and countries that know how to collaborate rather than compete with each other for resources and knowledge that will recover most quickly.

That is because in the words of Robert Shiller, the 2013 Novel Prize recipient, there is a second, anxiety pandemic that we must live through, and that white, non-college educated males, in particular, are still living through.

Princeton economists Anne Case and Angus Deaton, a 2015 Nobel Prize recipient, say such men are dying of drug overdoses, drink-induced liver disease and suicide — what they call Deaths of Despair and the Future of Capitalism—in their best-seller of that title.

“We are feeling the anxiety effects of not one pandemic but two,” said Dr. Shiller in a recent Project-Syndicate article. “First, there is the COVID-19 pandemic, which makes us anxious because we, or people we love, anywhere in the world, might soon become gravely ill and even die. And, second, there is a pandemic of anxiety about the economic consequences of the first.”

And that is what only governments can do—enforce the cooperation needed to defeat the virus and consequent anxiety. It is what President Roosevelt did in the New Deal, because of the necessity of recovering from the Great Depression and a 25 percent unemployment rate.

This is also what a historical study of the other major international pandemic in the past century—the Spanish flu pandemic—has shown. It was those communities and cities that learned the art of cooperation and banded together to help each other, pooled their resources that had the lowest death rates and recovered most quickly.

Like the Spanish flu, this pandemic has no borders that can be shut down, no particular region or ethnic group that is immune. This is a borderless disease that requires a borderless response from every member of humanity to defeat it.

Former Obama UN Ambassador Samantha Power sounded the alarm in a recent NYTimes Op-ed: “…despite Washington’s own bungled domestic response, we nonetheless must immediately begin to build a broad and determined global anti-covid coalition. Such a coalition must create hubs for sharing scientific data in the virus, testing and vaccine efforts, taking advantage of our ability to learn from infection cycles that have peaked earlier…Unless the United States exerts leadership to prevent Covid-19 from raging out of control abroad, the crisis will not end at home.”

So let us jettison the myth of self-reliance that ignores the welfare of others in the name of private ownership of everything, and the government ownership of nothing, except military weaponry.

Richard Geldard, Author of ‘Emerson and the Dream of America: Finding Our Way to a New and Exceptional Age’ titled this chapter “The New Self-Reliance”, “…because it is clear now that since Emerson’s first assertions of this theme 140 years ago, we may have assimilated personally and culturally some of the language and substance of his intention, but what remains is the actual work and its realization to a larger sphere.”

By that larger sphere, Geldard means self-discovery must lead to a greater meaning of life—the recognition we all belong to one species, and only as one family of nations can we survive a worldwide pandemic—whether it is COVID-19, or the lingering effects of overwhelming anxiety—by recognizing our inter-connectedness.

Harlan Green © 2020

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

When Will It End?

Popular Economics Weekly

COVID-19 Tracking Project/Calculated Risk

When will the pandemic end and recovery begin, is the question asked of every expert and non-expert.  Foremost of the experts is former Federal Reserve Chairman Janet Yellen who in a recent CNBC interview commented on just when the U.S. economy might be taken out of its “medically-induced coma” (to use Paul Krugman’s words), and return to growth.

She and other leading economists are saying it will depend on how quickly and thoroughly the novel coronavirus testing and contact tracking (tracing of infected persons back to their source) is done.

Research from the 1918 Spanish flu pandemic has shown that cities and regions with the strictest lockdown protocols, including longer lockdown periods, had the lowest death rates and strongest recoveries.

Los Angeles and Oakland, California were among cities that had the lowest death rates and strongest recoveries in 1918, whereas heavily industrialized Pittsburgh and Philadelphia didn’t follow as strict guidelines and suffered the most, said the study.

Calculated Risk’s above graph portrays the increase in testings from the COVID Tracking Project today, and just how daunting is the challenge to track all infected persons. The total U.S. percent positive over the last 24 hours was 19 percent (red line).  The US needs enough tests to push the percentage below 5 percent (probably much lower), said Calculated Risks’ Bill McBride.

Today’s results also prove the 1918 Spanish flu outcomes. New York, late in calling for a statewide lockdown, is the center of the pandemic with 131,000 that have tested positive, and 190,000 tested negative as of Monday.

Whereas California with the largest U.S. population was one of the first to call for the statewide lockdown and had 14,336 testing positive and 115,364 testing negative. The difference in mortality is also stark: California had 343 deaths, whereas New York 4,758 deaths as of Monday.

Economists are looking at various recovery scenarios for this worldwide contraction that in no way resembles either the Great Depression or Great Recession. In those cases there was a sharp decline in aggregate demand—the collective spending of consumers, investors, and governments—which induced a collapse in industrial production. The unemployment rate had soared to 25 percent, the highest on record—until now.

But today’s pandemic has halted both production (the business shutdown) and consumption (because of stay-in-home requirement) simultaneously when the economy still was fairly strong, hence the induced coma.

Here is the Conference Board’s graph for the three most common scenarios once again. Professor Yellen said she hopes a Fall scenario (per graph) is most likely; or what is called a ‘U’ shaped recovery that needs at least two quarters to return to actual GDP growth.

Conference Board

But that can’t happen until and unless this novel coronavirus is tamed sufficiently to allow our country to return to work. And that is dependent on a better coordinated response that brings down the infection and death rates within months.

But there is the possibility COVID-19 may return in the upcoming winter, as did the 1918 Spanish flu, and even continue to recur annually if a majority of Americans aren’t vaccinated and immunity isn’t built up in at least 75 percent of all U.S. residents.

If this is like a World War, as some have intimated, then we need a Commander-in-Chief who knows how to lead a coordinated strategy, and not be the “back-up” General.

Harlan Green © 2020

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

The Cure Has To Be Worse Than the Problem

Financial FAQs

Federal Reserve

President Trump on Sunday announced that he was extending his administrations guidelines on social distancing to April 30 during the COVID-19 pandemic . He seems to have taken the recommendation of his top scientific advisors Drs. Fauci and Brix to heart, backing away from his assertion that the virus will have diminished enough to be able to celebrate Easter Sunday on April 12 in churches.

Why did he change his tune?  Dr. Fauci said Sunday on CNN’s “Face the Nation” that the novel coronavirus could kill from 100,000 to 200,000 people while infecting millions of others, though he said that the virus was difficult to model this early in the outbreak.

Recent scientific research and mounting anecdotal evidence show the more severe the ‘cure’, including longer social isolation and business closures, the quicker the return to economic growth once it is lifted.

Researchers from the Federal Reserve in a recent study of the 1918 Spanish Influenza pandemic that killed more than 50 million people, cited recently by MarketWatch’s Steve Goldstein, found that the more draconian the ‘cure’ in tamping down the initial spread, the more lives were saved and there was a more robust economic recovery as well.

The 1918 Flu Pandemic lasted from January 1918 to December 1920, and it spread worldwide. It is estimated that about 500 million people, or one-third of the world’s population, became infected with the virus. The number of deaths is estimated to be at least 50 million worldwide, with about 550,000 to 675,000 occurring in the United States.

“Most U.S. cities applied a wide range of NPIs in fall 1918 during the second and most deadly wave of the 1918 Flu Pandemic,” said the study. “The measures applied include social distancing measures such as the closure of schools, theaters, and churches, the banning of mass gatherings, but also other measures such as mandated mask wearing, case isolation, making influenza a notifiable disease, and public disinfection/hygiene measures.”

What are the economic consequences of the 1918 influenza pandemic was the central question of the study. And given that it was a worldwide epidemic, what are the economic costs and benefits of non-pharmaceutical interventions (NPIs), such as social isolation and quarantining of the infected?

“Using geographic variation in mortality during the 1918 Flu Pandemic in the U.S., we find that more exposed areas experience a sharp and persistent decline in economic activity,” said the study.

“(Yet) We find that cities that intervened earlier and more aggressively do not perform worse and, if anything, grow faster after the pandemic is over,” said the study, “our findings thus indicate that NPIs not only lower mortality; they also mitigate the adverse economic consequences of a pandemic.”

And there are increasing signs that the most draconian measures to contain the current COVID-19 pandemic by countries such as China, Singapore, and South Korea shortened the recovery period.
Similar results are also coming in from Germany and the Netherlands that have reacted the quickest to the pandemic and are showing lower rates of infection.

Data from Germany shows just 0.4 percent of people who tested positive for the virus have died from it, much less than the 9.5 percent in Italy and 4.3 percent in France. In the Netherlands growth in transmissions of the virus have also slowed significantly.

The Fed’s Spanish flu study found that while reacting 10 days earlier to the arrival of the pandemic in a given city increases manufacturing employment by around 5 percent in the post period, the researchers said, implementing restrictions for an additional 50 days increases manufacturing employment by 6.5 percent after the pandemic abates.

The vertical line in the Fed’s graph above measured mortality rate, while the horizontal line measured employment changes. And, the lower death rate correlated with higher employment.

“…we find that early and extensive NPIs have no adverse effect on local economic outcomes. On the contrary, cities that intervened earlier and more aggressively experience a relative increase in real economic activity after the pandemic. Altogether, our findings suggest that pandemics can have substantial economic costs, and NPIs can have economic merits, beyond lowering mortality.”

President Trump first intoned “We cannot let the cure be worse than the problem,” at the beginning of the pandemic. The experts are saying just the opposite. Unless we allow a worse cure, the problem of a return to normal economic activity from an almost ground zero of business activity, can be prolonged.

Harlan Green © 2020

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen