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Rapper Ice Cube has turned cold on the Democratic party, complaining in a Saturday rant that the DNC has financially abandoned the black community, and that even if Trump is voted out of office – “then what?”

Translation: where’s our money Nancy?

Cube – who apparently feels he has the moral high ground to demand reparations for a black community he helped destroy with the rest of the violence-peddling 90s studio gangsters, said that Black small business owners were shut out of the trillions allocated by Congress into the Paycheck Protection Program (PPP).

According to the New York Times, businesses owned by blacks had a harder time receiving federal aid, for which they can thank the banks which issued the loans.

“Where’s our fucking bailout?” asked the rapper, who’s launched a COVID-19 fundraiser and a charity clothing line to support Autism, but not blacks.

But what’s in it for us? pic.twitter.com/GOvptKnoF1

— Ice Cube (@icecube) August 22, 2020

“A lot of people getting up [at the DNC] talking and everybody really eating it up, throwing their hands in the air like they just don’t care — but what I didn’t hear was: what’s in it for us?” he said, adding “What’s in it for the Black community? Besides the same old thing we’ve been getting from these parties. What’s in it for us, for real?“

“I didn’t hear anybody mention a contract with Black America — and I don’t know why because it’s one of the most comprehensive reform documents that’s come about in a long time that could really address the problem. But the way it looks, they don’t have a plan,” he continued.

It’s almost as if Democrats went from slave ownership and segregation to promising blacks handouts for six decades in order to maintain power. 

Authored by Wolf Richter via WolfStreet.com,

On Tuesday, August 18, during morning rush hour, I walked through and around the Financial District of San Francisco and took photos to document the spookiness of it all. Pedestrians used to rush to work on crowded sidewalks, balling up at red lights, then stream across the intersection, and disappear into the entries of office towers as they went, and cars used to be stuck in traffic, and thick throngs of people would pour out of the Montgomery BART and Muni Metro station.

I started taking photos at Columbus Street where it ends at Montgomery Street, and then turned south into Montgomery Street and walked through the Financial District to the Montgomery Station at Market Street. Then I zigzagged back through the Financial District.

What you will see are streets and sidewalks and entrances into office towers that were eerily deserted during what used to be “rush hour,” with just a sprinkling of pedestrians, a few cars, the occasional skateboarder, some guys working on construction projects, and curiosities where you might be tempted to think, “only in San Francisco.”

With hindsight, it was the last beautiful sunny morning before the thick acrid smoke from the wildfires moved into San Francisco.

The data of how work-from-home impacts office patterns in a city like San Francisco are grim. According to Kastle Systems – which provides access systems for 3,600 buildings and 41,000 businesses in 47 states, and therefore has a large sample of how many people are entering offices during the Pandemic – office occupancy in San Francisco was still only at 13.6% of where it had been at the beginning of March, meaning it was still down by 86.4%, just above New York City:

What is staring at us now is the haunting shift brought about by work-from-home.

The Financial District is an area of office buildings. There are also shops, cafes, restaurants, and service establishments, such as bank branches and barbers, that workers go to before, during, or after work. There isn’t much else. Other parts of the City are busy, and restaurants that are open (outside seating only) are hard to get into. But this is what office life looks like….

On Columbus Street, looking at the intersection with Montgomery Street, with the Transamerica Pyramid in the background. I’m standing in the middle of the street to take this photo. Why? Because I can:

From the middle of Columbus Street — well, because I can — looking south on Montgomery Street. To the left, the sidewalk under the base of the Transamerica Pyramid:

On Montgomery, getting closer to Clay Street.

Desolate entrance to 456 Montgomery. Note the sign on the right wall. Detail in the next photo:

On the sign, note the “Retail for Lease.” The number of stores and restaurants that will likely never re-open and where landlords will need to find new tenants is astounding:

This is the office tower:

Intersection of Montgomery and California, another main drag, so to speak. The cable car rails have been unused since March, cables turned off. Looking south on Montgomery, across California:

San Francisco without cable cars takes some getting used to. I even miss the noise from the cables and pulleys, which I’d always thought of as somewhat unpleasant — they normally run 24-7. But I get it. There are few tourists, and it’s not worth operating the cable cars for a few stragglers. Looking west on California, and there’s just hardly anyone around:

Desolate entrance to 515 Montgomery:

Montgomery and Pine Street. Where is everyone?

But some people are working because, with the kinds of jobs they have, they can’t work from home:

Montgomery looking toward the intersection with Bush Street. Finally, a few people walking:

Montgomery and Bush, looking west on Bush Street. A crowd of 1 people balling up at the red light, intently studying her smartphone:

Desolate entrance of 100 Montgomery, with our newfangled, solar-powered, wireless-connected “smart meter” in front (amount varies based on demand for parking, and you can pay by credit card because that fistful of quarters doesn’t get you anywhere anymore):

This is the 100 Montgomery tower. It’s a big building, and there should be some people walking in during rush hour, but there are not:

Across the street, 101 Montgomery. Some staff of the building hanging out in front. Otherwise dead.

This is the 101 Montgomery tower, nearly all of it just wasted space:

Looking back (north) on Montgomery, and catching the early sun hitting some of the buildings. Glorious day. Looks like Sunday morning in the Financial District, but it was Tuesday morning during rush hour:

On Montgomery, looking across Sutter Street. Skateboarder waiting at the traffic light. A crowd of one. Catty-corner, another lonesome soul waiting at the light:

From Montgomery, looking east on Sutter:

From Montgomery, looking west on Sutter. Two folks near the intersection, one left, the other right:

Entrance to 44 Montgomery. Practically crowded, with four people visible, three walking by, and a guy in the foreground working-not-from-home, watering the plants. There’s a Starbucks just to the right of the First Republic Bank branch, not visible in the photo. It was open, but I only saw a couple of employees in it:

This is the 44 Montgomery tower. Imagine what it’s like to be at your desk, alone in a huge office, alone on the entire floor, and for all you know, alone in a huge office building, except for the people taking care of the building:

The flower stand at Montgomery and Post Street. Someone is working there, but there is no huge demand for flowers at the moment. By the way the woman on the left is dressed — bare shoulders and carrying her cardigan this early in the morning — you can tell how unusually warm of a morning this was. In fact, it was a heat wave, and Northern California was burning after a large storm of dry lightning had swept through the area, igniting hundreds of wildfires. The smoke just hadn’t arrived in San Francisco yet:

The Montgomery Station, at Market Street and Post. The Muni Metro is shut down, and the turnstiles to it are shut down too. Yellow tape tells you to keep out:

The other side of the Montgomery station, entrance to the BART (Bay Area Rapid Transit). This is normally a beehive during rush hour. BART ridership on weekdays in July was still down 89%, according to BART data. The last thing people want to do right now, those who don’t work from home, is take mass transit:

Here’s finally a lonesome soul going through the turnstile. And there was an employee-guy sitting in the info booth to the right, reading manga or something. It’s a tough job, but someone’s gotta do it:

All mass-transit systems in the Bay Area are in a life-and-death struggle — with CalTrain, which goes from San Francisco down to San Jose and further, likely in deepest trouble of all. They just don’t have passengers.

Entrance to Post Montgomery Center, at Post, Montgomery, and Market. San Francisco has lots of these weird five-street and six-street intersections due to the diagonal streets someone decided to include into the street layout back when dirt was still young. Not a soul:

This is the Post Montgomery Center. So much wasted space:

Walgreens is open. They all look like this in San Francisco now, after they got looted one night, one after the other, by an organized roving group of people in vehicles, including the six Walgreens within 10 minutes’ walk from our place.

So now, I’m zigzagging back through the Financial District. View from Sutter near Market Street. No one:

Sutter and Sansome. If you look hard and hold your tongue just right, you can see on the left the cart and belongings, including two bicycles, of one or more homeless people, with one guy standing there:

Bush and Sansome. In the foreground, an astounding number of people (two, one left, one right):

The famous Ruru smoothies cart. Open for business. Guy doesn’t speak much English, but knew, when I asked him, how to say that business was “dead.” As we were trying to communicate, an apparently homeless guy walks by, pushing two bicycles — the left with the saddle missing, but with inline skates attached to the bike. You might be tempted to think: “Only in San Francisco”:

Here’s a closeup of the situation:

Looking across Market Street — dead, deader, deadest — into South of Market. In the background, the rounded glass corners of the Salesforce Tower, the tallest building in the City:

The Battery, Bush, and Market triangle. Deserted:

But wait… Some guys are not working from home. They must not have gotten the invite to the Zoom meeting. It’s a relief to see people on a mission:

*  *  *

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Three weeks into a fiscal cliff, a large food bank line emerged on Saturday (Aug. 22) in Queens, a New York City borough, stretching for nearly a quarter-mile down the street. 

With each passing day, the failure of Congress and the Trump administration to agree on the next round of stimulus exerts more and more pressure on consumers, who now derive a quarter of all personal income from the government. 

The La Jornada food pantry, located on 133-36 Roosevelt Ave, Queens, usually hands out food packages to 1,000 families per week. Now, according to the New York Post, the number, in recent weeks, has skyrocketed to 10,000. 

“It reminds me of the picture from the Great Depression where a man in a suit and tie is giving another man in a suit and tie an apple. That’s all he had,” La Jornada’s Pedro Rodriguez told The Post, adding that food supplies are running low. 

Rodriguez, a volunteer of the food pantry who is executive director, said, “We feel like we are underwater, drowning in a tsunami of people.” He said the surge in hungry families coming to the food bank is “unbelievable.”

Source: J.C.Rice/NY Post

The Post interviewed Walter Barrera, who arrived at the food bank at 6:00 ET Saturday to pick up groceries for his family. Barrera, 50, has waited in line every Saturday for food as he lost his construction job during the pandemic. He said there are no jobs available; nevertheless, his teenage sons, 19 and 17, also cannot find jobs. 

Barrera said his family is broke, close friends and relatives are helping them pay their $2,300 per month rent in the city: 

“What do I tell my children when they look at me with hungry bellies, especially my 11-year-old son?” said Barrera, who is an immigrant from South America, came to the US two decades, in search of the American dream.

Now the dream is dead as the virus-induced recession has crushed millions of low-income folks into financial doom. 

“It breaks my heart. I’m their father. I’m supposed to feed them.,” he said. 

The Post interviewed others waiting in line, many of whom said they’re jobless and broke. 

We noted, in early August, food bank lines emerged in Ohio County, West Virginia, after stimulus checks ran out in late July. A large food bank in Baltimore County appeared in late July, just days before the fiscal cliff hit. 

The reemergence of food bank lines is evidence the fiscal cliff is hitting low-income consumers the hardest, who are no longer receiving stimulus checks, still jobless, and must seek food pantries to feed families. Even though President Trump signed an executive order weeks ago to extend an extra $300-$400 of weekly jobless benefits for tens of millions of Americans, much of that has been delayed as states struggle to fund their portion of the handout. 

Everyone is convinced the dollar is going to inflate because more dollars are entering the system.

But are they really?

That is the question that sparked a succinct Twitter thread by Travis K (@ColoradoTravis) explaining why inflation is not what happens next (emphasis ours):

Let’s take a look at how dollars are born and how they die.

A dollar is ‘born’ when a loan is made against collateral on a bank’s balance sheet. Banks can issue multiples of dollars for every dollar of collateral they have.

It’s this multiplication effect that expands the amount of total dollars.

Generally, banks are limited in how much they can lend – let’s say it’s 10x their collateral. So for every dollar of collateral they have, they can lend 10 dollars.

By so lending, they ‘birth’ new dollars into the system.

As banks lend more, more dollars are created and the money supply increases. This multiplicative lending is the chief driver of total dollars in the system.

Banks lending a lot → more total dollars and inflation.

When do dollars die?

Dollars ‘die’ when debts are paid back. This reverses the multiplication effect of lending, leading to less total dollars in the system and a contraction of total dollars in circulation.

So what is the Fed ‘printer’ doing – creating dollars, right? Actually no, not really.

The printer only increases the collateral banks have to lend against. It does not directly ‘birth’ dollars, only *potential* dollars.

Banks are still the midwives, and the only ones who birth dollars into the system by lending.

The Fed can increase collateral by 1000x but unless the banks lend against that collateral, dollars will not enter circulation for you and I to interact with.

Assume for a moment bank collateral was infinite – then what would drive total dollar amount?

1) Banks’ appetite for lending.

2) Bank customers’ appetite for borrowing.

That’s it.

Now let’s observe that collateral effectively IS infinite, because banks have so much excess reserve capacity they haven’t been near their limits for years.

Total dollar amounts are, right now, only a function of bank and customer debt appetites.

The Fed has made a big show of radically increasing collateral levels, but it doesn’t matter — at least right now.

Not if banks feel weird about lending. Not when people feel weird about borrowing.

Why, then, does it look like inflation out there right now? Two reasons.

First, we just had a brief, manic borrowing pulse as corporates panic-borrowed out of fear. This borrowing was a bit inflationary (more dollars born).

Second, and maybe more important, the government decided people could put debt payments on pause.

This ‘froze’ the dollar death process for a time. Because those dollars haven’t died yet, we have more of them around right now.

But, you see, that dollar death process is beginning to thaw.

Loans need to be paid again soon as the forbearance ends.

A lot of dollars are about to die.

Record numbers of people are losing their jobs, which means in aggregate customers’ appetite for fresh debt is decreasing by a lot.

So the dollar birth rate will decline.

Banks also aren’t really feeling like lending because the economy looks pretty dicey.

This also is not good news for the net dollar birth rate moving forward.

So while, yes, we have just experienced a bit of an inflationary pulse from panic borrowing and freezing the dollar death process that looks like it’s about to reverse in a big way.

When it does there will be less total dollars.

The Fed can’t do anything about this. Banks are already swimming in collateral, more of that won’t do anything at all.

The only thing that can make more dollars now is banks lending more.

So as you watch asset prices go nuts as everyone rushes to get rid of their dollars for fear of inflation, remember – the dollar birthrate looks like it’ll be decreasing for some time to come.

And that means the whole economy will be running on incrementally less of them until banks want to lend and we all want to borrow.

So you might want to hang onto a few of your dollars.

There is a good chance they’ll come in handy here in a bit.

*  *  *

Travis K writes, “this took me a while to understand, and I only got there due to @MetreSteven and @SantiagoAuFund – (thank you both!) “

Readers may recall two tropical depressions (Tropical Depression 13 and 14) were upgraded to Tropical Storm Laura and Marco last week. We outlined how these two storms, traversing the Gulf of Mexico, had to be carefully observed over the weekend, for strengthening and trajectory. 

Long-term tracking models for both storms haven’t significantly changed over the last several days. Spaghetti models suggest the storms will make landfall early next week between Texas and Alabama. 

As of Sunday afternoon, the National Hurricane Center (NHC) declared Tropical Storm Marco a Category 1 hurricane, with maximum sustained winds of 75 mph. The storm is 300 miles south-southeast of the Mississippi River, with expected landfall Monday afternoon. 

“Data from an Air Force Reserve Hurricane Hunter aircraft indicate that Marco has strengthened into a hurricane with maximum winds of 75 mph (120 km/h) with higher gusts,” NHC stated. 

Here’s NHC’s full statement of Marco being upgraded to a hurricane:

NHC’s latest radar of Marco barreling towards the Gulf Coast of the US.

#Marco has become a hurricane, according to data from the Air Force @403rdWing Hurricane Hunters. Maximum winds are 75 mph (120 km/h) with higher gusts. https://t.co/MPtF0KuhE3 pic.twitter.com/o7GbutfMHU

— National Hurricane Center (@NHC_Atlantic) August 23, 2020

A storm surge warning is in effect from Morgan City, Louisiana, to Ocean Springs, Mississippi. 

We coined the term ‘double trouble’ last week with both systems simultaneously swirling in the Gulf, with crosshairs pointed at the Southern US. 

Tropical Storm Laura is causing tropical storm conditions in portions of the Dominican Republic, Haiti, Turks, and Caicos on Sunday. The track and intensity of the storm remain uncertain, but some forecasts indicate it will make landfall in relatively the same area as Marco on Wednesday. 

An Air Force Reserve Hurricane Hunter aircraft is en route to investigate Laura Sunday afternoon. 

We’re off to fly TS #Laura from Keesler before recovering in Charleston, SC with the rest of our WC-130Js ✈️⛈🌪🌊#WeatherReady #ReserveReady pic.twitter.com/0Twd1EJNYs

— Hurricane Hunters (@53rdWRS) August 23, 2020

Aaron Carmichael, a meteorologist with the commercial forecaster Maxar, told Bloomberg that two systems positioned in different locations of the Gulf of Mexico to “make landfall within 24 to 36 hours in essentially the same spot” are “really unprecedented.” 

With Trump expected to make a “major therapeutic announcement” at 530pm “sharp”, and tweeting that the “important White House news conference” will be “very good news”…

Important White House News Conference at 5:30 (sharp) today. Very good news!

— Donald J. Trump (@realDonaldTrump) August 23, 2020

… speculation is rampant what Trump will announce.

One clue comes from the Financial Times which moments ago reported that the Trump administration is “considering the bypassing normal US regulatory standards to fast-track an experimental coronavirus vaccine from the UK for use in America ahead of the presidential election.”

The FT is referring to a covid vaccine trial being conducted by AstraZeneca, and whose fast-tracking “would involve the US Food and Drug Administration awarding ‘emergency use authorisation’ (EUA) in October to a vaccine being developed in a partnership between AstraZeneca and Oxford university, based on the results from a relatively small UK study if it is successful, the people said.”

One problem is that accelerating the AZN study would prompt concerns that it does not comply with US regulations, and that its safety would not have tested on a sufficient large group of people:

The AstraZeneca study has enrolled 10,000 volunteers, whereas the US government’s scientific agencies have said that a vaccine would need to be studied in 30,000 people to pass the threshold for authorisation. AstraZeneca is also conducting a larger study with 30,000 volunteers, although the results from that will come after the smaller trial.

Trump is said to be eager to rush out a vaccine before the elections to allow him “to claim he has turned the tide” on the virus, especially as Democratic criticism of his handling of the pandemic has emerged as one of the main presidential election criticisms of his administration. In his convention speech on Thursday night, Joe Biden said that the US response to the virus was the “worst performance of any nation.”

According to the FT, Mark Meadows, Trump’s chief of staff, and Steven Mnuchin, Treasury secretary, have told top Democrats that the administration was considering fast-tracking a vaccine, according to one person briefed on a July 30 meeting the pair held with Nancy Pelosi. Meadows said in the meeting that “there could be emergency authorization, possibly for the AstraZeneca vaccine, in September. Mr Mnuchin added that the administration expected an EUA for a vaccine before full approval, said the person, who added that Ms Pelosi warned that there should be “no cutting corners” in the vaccine approval process.”

That said, a spokesperson for the Treasury secretary was quick to deny this, saying “Secretary Mnuchin did not make any comments regarding AstraZeneca, nor is he familiar with the specifics of the AstraZeneca vaccine candidate. He is also not aware of any plans the FDA may have regarding any emergency use authorisation for any potential vaccine, beyond what he has heard publicly stated. The secretary believes, and has always believed, that any decision on vaccine candidates and any possible EUA is up to the FDA.”

Also casting doubt on speculation that Trump will announce the fast-tracking of a vaccine is Michael Caputo, a spokesperson for the US health and human services department (which contains the FDA) who said any claim that the administration would issue an EUA before the election was “absolutely false.” Echoing Bank of America’s latest timeline, Caputo said the administration was hopeful that a vaccine would be developed by the first quarter of 2021

“We have always been working towards that goal. I’ve never been told at any point in time that that goal has changed,” he said. “Talk of an October surprise is a lurid resistance fantasy. Irresponsible talk of an unsafe or ineffective vaccine being approved for public use is designed to undermine the president’s coronavirus response.”

A spokesperson for AstraZeneca told the FT that it had “not discussed emergency use authorisation with the US government” and that it “would be premature to speculate on that possibility.”

Of course, it wouldn’t be the first time that Trump has “surprised” his own staffers. In this case, however, an unexpected fast-tracking of a potential covid vaccine will likely lead to another round of resignations (especially since there appears to be a lot of political backroom dealing seeking to promote Gilead’s Remdesivir as the vaccine of choice although doubts have been case after it emerged that Remdesivir may only provide modest benefit against ‘moderate’ COVID-19). As the FT notes, if the FDA, which is led by commissioner Stephen Hahn, were to grant emergency approval to the AstraZeneca vaccine based on the Oxford study, “it could provoke a string of resignations from the agency.”

Earlier this week, Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research — which is responsible for assessing the vaccines — told Reuters that he would resign if the agency were to approve a jab before definitive data showing it was safe and effective.

“I could not stand by and see something that was unsafe or ineffective that was being put through,” Dr Marks said. “You have to decide where your red line is, and that’s my red line.”

He went on: “I would feel obligated [to resign] because in doing so, I would indicate to the American public that there’s something wrong.”

An FT source siad that if Dr Marks were to quit, other scientists in his division of FDA would follow suit.

But while a round of FDA departures may not bother Trump, the lack of uptake of the vaccine by a skeptical public will surely be a major concern.

For one thing, as the FT notes, the relatively small UK trial was not designed to produce sufficient data of the kind that would be required for emergency authorisation in the US. US drugmakers Moderna and Pfizer, which are also trialling vaccines, both plan to enrol 30,000 participants in Phase III studies they started in July. Moderna said it would complete enrollment by the end of September, while Pfizer has said it has already enrolled 11,000.

An FT source briefed on the plan said: “I don’t see a way forward for [AstraZeneca],” based on the 10,000-person trial. “They’re not going to get there. They won’t have the clinical end points.”

Paul Offit, a vaccine expert at the Children’s Hospital of Philadelphia, echoed the skepticism saying it would be “very disappointing” if the Trump administration were preparing such a plan before it had even seen the data because it risked “politicising the science”, although that particular horse has long ago left the barn. He added that even if the study were successful, a 10,000-person trial would not be large enough to rule out rarer side effects. “The job of the FDA is to protect the American public if they see these data as inadequate.”

The FDA’s Hahn already faced criticism earlier this year after the FDA granted emergency approval for hydroxychloroquine – an unproven drug repeatedly touted by Mr Trump – before reversing its decision when multiple studies showed the drug was not an effective treatment for coronavirus.

Others have also chimed in on the importance of following proper procedure:

In June, Francis Collins, director of the National Institutes of Health, told CNN: “Each vaccine needs to be tested on about 30,000 volunteers. We don’t believe that we have enough power in the analysis, to be able to document the vaccine works unless you get to roughly that number.”

Robert Redfield, head of the Centers for Disease Control and Infection, told the FT on Friday: “Although we have talked about doing this at ‘warp speed’, it is not through any cuts in our efforts for vaccine safety or scientific integrity. I am confident there will be all the rigour we have always had for developing vaccines for human requirements.”

The decision over whether to fast-track a so-far unproven vaccine also involves none other than Anthony Fauci, with the FT concluding that the administration’s exploration of ways to circumvent normal procedures “had prompted infighting among the government’s top scientists. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, and Dr Collins are stressing the importance of scientific rigour whereas Moncef Slaoui, the White House’s vaccine tsar, wants to forge ahead, the person said.”

Judging by the tone of Trump’s tweet, those pushing for “forging ahead” have gotten the upper hand.

But even if Trump decides to pursue a fast-tracking, he will face other challenges, not the lest of which is widespread skepticism within the US – and especially among his own core base – toward a vaccine, any vaccine.

As we reported earlier quoting from Bank of America, “even in the best of times, many people refuse to get a flu shot. Americans seem particularly skeptical about public health policy. If masks are unacceptable, what about shots of a brand new drug? A RIWI survey in June and July found big differences across countries (Chart 1). Certainly we would expect the initial take-up to be slow. After all, there have been a lot of confusing public health messages.  Such caution is to some degree warranted, with the vaccines being rushed to market without knowledge of the long-term side effects.”

One final point, also from Bank of America: “It is also important to note that rolling out a vaccine will not immediately end all social distancing behavior. Some people will respond quickly as pent-up demand is released, taking that long-delayed vacation, for example. However, we assume the majority of people will re-engage slowly as they become more comfortable that the health risk is indeed gone. Some activities could take very long to fully recover.”

Authored by Ryan McMaken via The Mises Institute,

The idea that former slaves and their descendants ought to receive reparations for the wrongs committed against them is not new. Having grasped the fact that slavery is nothing less than kidnapping and theft committed against the enslaved, abolitionists long advocated for some form of redress for freed slaves.

The most famous early attempt to create a reparation program of sorts is likely General Sherman’s Field Order #15. Issued as a wartime measure, Sherman’s order—which never became widespread policy—divided plantations along the Atlantic Coast into forty-acre parcels to be distributed to forty thousand emancipated workers. Sherman’s motivation was likely military expediency rather than an attempt to compensate victims.

Nonetheless, the idea that former slaves would receive “forty acres and a mule” became a symbol of an unfulfilled promise to provide compensation for lives of forced servitude. This variety of reparations, of course – as noted by Murray Rothbard – is morally and legally desirable:

On the libertarian homesteading principle, the plantations should have reverted to the ownership of the slaves, those who were forced to work them, and not have remained in the hands of their criminal masters. That is the fourth alternative. But there is a fifth alternative that is even more just: the punishment of the criminal masters for the benefit of their former slaves—in short, the imposition of reparations or damages upon the former criminal class, for the benefit of their victims. All this recalls the excellent statement of the Manchester Liberal, Benjamin Pearson, who, when he heard the argument that the masters should be compensated replied that “he had thought it was the slaves who should have been compensated.”

Demands for this this style of reparations—to be paid to specific victims by specific perpetrators—continued for a time. During Reconstruction, efforts to distribute former plantations lands to victims were proposed by the Freedmen’s Bureau but quashed by President Andrew Johnson.  The first organization devoted specifically to reparations was formed in 1896, when Callie House and Isaiah Dickerson founded the National Ex-Slave Mutual Relief, Bounty and Pension Association. Other early efforts include a plan from Henry McNeal Turner, a prominent African Methodist Episcopal (AME) bishop, calling for $40 billion in reparations.

As time went on, however, it became increasingly clear that this was not going to happen soon enough for the former slaves themselves to enjoy any sort of compensation for labor and freedoms previously stolen. 

Attempts to recover reparations became more geared toward general taxpayer-funded efforts and less reliant on one-time payments as a form of restitution. 

For example, beginning during the 1940s, the Nation of Islam urged reparations for slavery and “called on the federal government to cede several southern states to become the territory of an African American nation” (Biondi, p. 7).

More elaborate plans followed. In 1969, James Forman presented his Black Manifesto to the National Black Economic Development Conference, in which he demanded $500 million in reparations, which would be used to finance the institutional and infrastructural elaboration of a “Black Socialist State”:

Foremost among the proposals of the Manifesto was the use of $200,000,000 to fund the creation of a “Southern land bank” to protect tenant farmers evicted from their homes in retaliation for political activism and to support the efforts of those wishing to establish cooperative farms. There were proposals for the establishment of publishing houses, television stations, and “a Black University in the South.”  

By 1969, more than a century since emancipation, the idea of compensating specific former slaves (or their heirs) had clearly given way to what was to resemble what the National Urban League would call a domestic “Marshall plan for Negro Citizens” as early as 1963. In 1990, for instance, the Urban League again called for this “Marshall Plan” at the end of the Cold War, arguing that the end of the Soviet threat had freed the US up to engage in “rebuilding” its urban centers. In 2018, the the Congressional Black Caucus introduced new legislation deemed a “Marshall Plan for Black America.”

Today, the idea of reparations is geared toward the sorts of policy options that are now quite familiar: more spending on programs that resemble traditional welfare programs of recent decades. Kamala Harris, for example, supports more spending on health programs “as a form of reparations for slavery.”

This April 2020 report from the Brookings Institution suggests that reparations take the form of student loan forgiveness, free college tuition, and down payment grants for potential homeowners. 

This has now become the standard policy formula for reparations. It’s not about payments to specific victims. It’s about increasing funding for the usual package of social programs around housing, cash transfers, and healthcare. In other words, in its form and administration, the “reparations state” is now indistinguishable from the “welfare state.”

But this doesn’t mean the idea of cash payments to specific descendants of slaves has been completely abandoned. 

The idea has been revived in recent decades by new legal and legislative developments. This includes 1988 legislation adopted by Congress in which victims of Japanese internment during World War II received $20,000 each. And in 1994, the State of Florida agreed to pay reparations to the survivors of the 1923 Rosewood massacre.

These events revived interest in the old idea of direct reparation, but naturally complications were immediately apparent. The payments to victims of internment and the Rosewood massacre were to specific individuals. Moreover, their numbers were far smaller than the millions of descendants of formers slaves currently residing in the US today. 

Nonetheless, the Brookings report implies that a grant of more than $100,000 to each household would be necessary to close the “wealth gap” between whites and blacks. Economist William Darity suggests that closing this wealth gap requires transfers of up to $12 trillion. Other proposals claim totals in excess of $16 trillion, a sum approaching the size of the entire US gross domestic product.

Needless to say, a reparations program of this magnitude is exceedingly unlikely to happen. Even in our current era of trillion-dollar bailouts, handing over $10 trillion dollars to satisfy a single interest group is unlikely. Not even New York bankers have managed that feat. 

However, the reparations issue is unlikely to disappear any time soon, because it will remain useful to the debate over taxpayer funding of the welfare state. As such, calls for reparations remain part of a toolbox for demanding that ever greater sums be poured into social programs. That’s an important tool that no savvy fundraiser, politician, or lobbyist is likely to give up.

As Deutsche Bank wrote at the start of August, whereas vaccines normally require years of testing and additional time to produce at scale, amidst the covid pandemic scientists are hoping to develop a coronavirus vaccine within an extremely truncated timeframe of only 12 to 18 months. The reason for that while normally a vaccine takes years to develop using a traditional process, with covid things are far more accelerated…

… with BofA showing how what is typically a 10 year process could – in theory – be compressed to just 12 months:

… and furthermore, there are already no less than 160 covid vaccine candidates currently in process as the following table shows…

… with the top 6 listed below.

Here is what the top vaccine makers have said publicly about the state of affairs courtesy of Deutsche Bank.

Still, there are caveats and there is a distinct possibility a vaccine – which many sellside analysts view as a “magic bullet” to rebooting the economy and renormalizing pre-covid growth rates – may not emerge any time soon as various roadblocks remain. That however did not stop Goldman from boosting its economic outlook and raising its GDP forecast for 2021 for one simple reason: as we reported two weeks ago, the bank now believes that “at least one vaccine will be approved this fall with widespread distribution and positive growth effects felt in the first half of 2021“.

As a result, Goldman now expects GDP growth of +10% in Q1 2021, +8% in Q2 2021, +4% in Q3 2021, and +3% in Q4 2021 (an upgrade vs. +8%, +6.5%, +5%, +4% previously). This raises 2021 growth to +6.2% on an annual average basis (vs. +5.6% previously) and +6.2% on a Q4/Q4 basis (vs. +5.9%).

This renewed economic optimism also prompted the bank’s chief equity strategist David Kostin to raise both his EPS forceast and his S&P price target to 3,600 last weekend (the real reason of course is that the S&P had run far away from Goldman’s prior S&P price target of only 3,000, and the bank had to goalseek a reason to become more optimistic).

Not everyone is that optimistic however.

Countering Goldman’s cheerful outlook, Bank of America last week wrote that it does “not think that it will be realistic to have widespread vaccine availability (hundreds of millions of doses) in the US and Europe sometime in 1Q21. We think that there are considerable vaccine process development and manufacturing risks, which could compromise sufficient and timely vaccine supply, including potential setbacks in process validation, scale up, technology transfer, raw material shortages (e.g., glass vials), etc. Outside of the US and the main countries in Europe, COVID-19 vaccine supply could also be compromised by “vaccine nationalism” (that is, the rich countries of the world prioritizing and hoarding vaccine supply domestically before making vaccine(s) available elsewhere).”

Elaborating on this skeptical timeline view, in a note from Bank of America last week titled “The economics of a vaccine“, the bank’s chief global economist Ethan Harris wrote that it will take a significant amount of time from proving a vaccine is effective to distributing it broadly to the population. The lags include:

1. Production time (unless it is one of the candidates doing production in advance),
2. Distribution (requires setting up drive-throughs and other broad distribution systems),
3. Second shot (a few weeks after the first),
4. Time to determine efficacy (roughly a month) and
5. Time to uncover longer-term side effects and durability (a year perhaps).

Harris then writes that in listening to the experts, including our healthcare analysts, there are a number of potential pitfalls in developing, producing and distributing a vaccine. Three stand out to Bank of America.

1. Partial success. Talking to healthcare analysts, success in finding a vaccine is not a binary outcome. Vaccines can be approved even if they only provide protection for half of the people taking them, they may prevent serious illness rather than prevent infection altogether, immunity may not last long, particularly if the virus mutates frequently, and side effect may be prohibitive for some vulnerable groups. Distributing a vaccine that either doesn’t work or ends up with serious side effects could damage the economy more than having a long delay in finding a vaccine.

2. Vaccine nationalism. There is already a scramble to be first in line for the vaccine, with a number of countries lining up supplies for one or several of the candidate vaccines. Here, BofA worries about history repeating itself. Early in the crisis there was a similar scramble for masks and other supplies, with a variety of efforts to hoard supplies. Will this compromise the efficiency of production and distribution across global supply chains?

3. Vaccine phobia. Even in the best of times, many people refuse to get a flu shot. Americans seem particularly skeptical about public health policy. If masks are unacceptable, what about shots of a brand new drug? A RIWI survey in June and July found big differences across countries (Chart 1). This would suggest that if anything, the initial take-will be very slow. After all, there have been a lot of confusing public health messages, particularly in the US. Yet even BofA admits that “such caution is to some degree warranted, with the vaccines being rushed to market without knowledge of the long-term side effects.”

Why all the focus on vaccine timing? As Harris continues, reading the commentary in the press, he gets the sense that many investors see a vaccine breakthrough as a game changer, quickly pushing the global economy back to full employment.

In Harris’ view, while that may have been the case had there been a miracle cure or vaccine in the Spring, as it would have shortened the shutdown and avoided deep damage to the economy, however, over time the story has shifted and is continuing to shift. Economies have all reopened to some degree. People have learned to function with the virus and have restructured activities accordingly. We can see this in the way countries that have not contained the virus—like the US—can “bend the case curve” with relatively modest changes in behavior. Still, we must also contend with headwinds to growth from second-round  effects: the damage to confidence and balance sheets, businesses slowly (and not so slowly) going under and investment plans canceled.

It is worth hammering home this point. Every recession starts with one or several shocks and yet continues even when the shock abates. Consider two factors that are important in many recessions: central bank tightening to fight inflation and surges in oil prices. Both generally reverse over the course of the recession and yet the downturn continues. A classic example is the recession of 1982.

It is also important to note that rolling out a vaccine will not immediately end all social distancing behavior. Some people will respond quickly as pent-up demand is released, taking that long-delayed vacation, for example. However, the majority of people will re-engage slowly as they become more comfortable that the health risk is indeed gone. Some activities could take very long to fully recover. One final headwind: after pouring stimulus into the economy, developed-market monetary authorities are almost out of ammunition and fiscal authorities will likely pull back a bit, letting the economy wobble along on its own.

So putting it all together, BofA’s baseline remains unchanged (and not in pursuit of goalseeking a narrative driven by the S&P500’s relentless ascent, unlike Goldman), namely that a vaccine is widely disseminated in the developed world in 3Q 2021, but rolls out much more slowly in parts of the developing world. Under a “realistically optimistic scenario” BofA simply assumes the process is accelerated by two quarters so that the roll-out is in 1Q rather than 3Q.

BofA’s “realistically optimistic scenario” for growth,which incidentally coincides with Goldman’s new baseline, is shown below .

Globally, in the event of a vaccine, BofA expects the addition of 70bp to growth in 2021. The stimulus varies across countries. In general, countries that have had the most trouble containing the virus will tend to respond more to a vaccine — hence the US benefits more than Europe, which in turn benefits more than China. As Chart 3 and Chart 4 show, an early vaccine would allow US GDP to return to 4Q 2019 levels by 4Q 2021, although the output gap remains as growth lags potential; Euro area GDP would not quite return to 4Q 2019 levels even with an early vaccine, largely because fiscal stimulus has been too small and too delayed.

China is expected to surge even in the base case as the virus is already largely under control. But GDP should still remain below potential through the end of next year in both scenarios. Similarly, there is limited upside from an early vaccine in most of emerging Asia because so much progress has already been made in staving off the virus. Other emerging markets should benefit more than EM Asia, but less than DM, because broad inoculation will probably happen a little later.

Authored by Chris Martenson via PeakProsperity.com,

One Step Removed

Millions of people are about to enter a financial purgatory, becoming little more than modern-day slaves.

While they’ll be reported by the media as those “evicted” or “foreclosed on”, if we define a slave as someone forced to work for another by existing legal circumstances or approved cultural norms, then that’s exactly what these people should actually be called: slaves.

Too harsh?

Allow me to make my case.

Being ‘One Step Removed’ Is All Evil Needs

Slavery can exist when there’s a system that allows it.  It’s a combination of morals (or, rather, lack thereof) and laws that allow one human to control the daily actions of another.  Neither a slave’s time nor personal freedom belong to them.

I learned a long time ago that most humans, at best, have what we might call ‘shallow’ morals. There are chemical engineers who would never dump a toxin directly into a child’s cereal bowl, because that would be immoral; but they’ll casually and routinely inject toxins into groundwater tables (which may eventually end up in the local milk supply) because they have an EPA permit to do so.

If questioned, these same engineers know that there’s a chance, maybe even a very good chance, that the injected chemicals could end up somewhere unintended.  But because their actions today are one step removed from the consequences of tomorrow, that’s enough to get them off of a moral hook.

In other words, their morals don’t extend past that first action — they stop right there.  They are therefore ‘shallow’ morals.

‘Deeper’ morals would include a sense of responsibility for the entire lifespan of the chemicals in question.

Similarly, mortgage companies are staffed to the gills with people who could never themselves forcibly eject an elderly person and all of their possessions onto the curb outside the home they’d lived in for 50 years.  It would be morally upsetting.

But they routinely submit the paperwork that causes these things to happen nonetheless.

Luckily for the mortgage company workers it’s the sheriffs deputies who actually handle the evictions.  Luckily for the sheriffs involved, somebody else’s decision was responsible for the eviction.  Both the sheriffs and the mortgage company employees are similarly insulated from any moral qualms because neither was directly responsible for Granny or Grampa’s plight. They’re just “following orders”.

One step removed.  That’s all it takes.

The point here is that as long as people have just one degree of separation from their actions, that’s sufficient to dodge any moral qualms that may arise.  What we cannot stomach to do ourselves can be more easily overlooked if someone else is performing the deed.

The Immoral Fed

The largest and most obvious one step removed ‘dodge’ in play right now is the US Federal Reserve’s evasion of moral responsibility for making the wealth gap explode wider, destroying the financial futures of tens of millions of American households.

After printing up a bubble that ruined many in the 1990’s, eventually bursting in the year 2000, the Fed set about blowing an even larger bubble. That burst in 2008. And now they are back at it again.

Every step of the way, the Fed policies resulted in the rich getting richer, the middle classes and the poor being financially eviscerated, and future generations getting hosed.

How do the Fed’s staffers sleep at night?

By delusional thinking like this:

(Source)

The necessary one degree of separation for Jay “pants on fire” Powell to say such obviously flawed things is provided by “the markets”, which is where the trillions of dollars freshly printed by the Fed quickly end up.

That goosed markets then benefit the already-rich is simple to deduce. Those who own lots of stocks and bonds as well as those who operate the most intimate details of the financial machinery are rewarded instantly by higher prices.  They become instantly richer.  Which means they can afford to buy more ‘real’ things like land, buildings, businesses, factories, gold, fine art — you name it.

Well-connected entities like BlackRock are actually in bed with the Fed, getting richly rewarded merely for helping it spend its vast gobs of newly-created currency :

BlackRock Is Bailing Out Its ETFs with Fed Money and Taxpayers Eating Losses; It’s Also the Sole Manager for $335 Billion of Federal Employees’ Retirement Funds

June 4, 2020

Today [June 4, 2020], BlackRock has been selected in more no-bid contracts to be the sole buyer of corporate bonds and corporate bond ETFs for the Fed’s unprecedented $750 billion corporate bond buying program which will include both investment grade and junk-rated bonds. (The Fed has said it may add more investment managers to the program eventually.)

BlackRock is being allowed by the Fed to buy its own corporate bond ETFs as part of the Fed program to prop up the corporate bond market. According to a report in Institutional Investor on Monday, BlackRock, on behalf of the Fed, “bought $1.58 billion in investment-grade and high-yield ETFs from May 12 to May 19, with BlackRock’s iShares funds representing 48 percent of the $1.307 billion market value at the end of that period, ETFGI said in a May 30 report.”

No bid contracts and buying up your own products, what could possibly be wrong with that? To make matters even more egregious, the stimulus bill known as the CARES Act set aside $454 billion of taxpayers’ money to eat the losses in the bail out programs set up by the Fed. A total of $75 billion has been allocated to eat losses in the corporate bond-buying programs being managed by BlackRock. Since BlackRock is allowed to buy up its own ETFs, this means that taxpayers will be eating losses that might otherwise accrue to billionaire Larry Fink’s company and investors.

(Source)

On the one hand, BlackRock is busy buying all sorts of things to stuff on the Fed’s balance sheet.

On the other hand, BlackRock has access to unlimited capital at the most favorable terms/prices in the world.

On a third hand, BlackRock is busy buying up distressed properties from recently foreclosed Americans who couldn’t manage to stretch a $1,200 stimulus check across 8 months of being out of work.

Add it all up and these recently dispossessed Americans will find themselves no longer owning a home. Instead, they’ll rent one from the no-bid contract winners like BlackRock, who were literally hand-picked by the Fed.

When there’s no money to be found to help working-class families, you can be certain there are still unlimited billions available to keep outfits like BlackRock supremely well incentivized to… uh, keep doing what they already were doing anyways: Getting obscenely rich.

Now, instead of working for themselves to pay off their own homes, these newly dispossessed Americans will still have to live somewhere. Many of them will end up renting from Wall Street entities like BlackRock.

How do I know this?  Because that playbook page already exists.  It’s an observed reality.  It’s been done before and it will happen again.

We saw this in the aftermath of the housing crash/Great Financial Crisis:

When Wall Street Is Your Landlord

Feb 2019

[T[he government incentivized Wall Street to step in. In early 2012, it launched a pilot program that allowed private investors to easily purchase foreclosed homes by the hundreds from the government agency Fannie Mae. These new owners would then rent out the homes, creating more housing in areas heavily hit by foreclosures.

Between 2011 and 2017, some of the world’s largest private-equity groups and hedge funds, as well as other large investors, spent a combined $36 billion on more than 200,000 homes in ailing markets across the country. In one Atlanta zip code, they bought almost 90 percent of the 7,500 homes sold between January 2011 and June 2012; today, institutional investors own at least one in five single-family rentals in some parts of the metro area.

I talked with tenants from 24 households who lived or still live in homes owned by single-family rental companies. I also reviewed 21 lawsuits against three such companies in Gwinnett County, a suburb of Atlanta devastated by the housing crash. The tenants claim that, far from bringing efficiency and ease to the rental market, their corporate landlords are focusing on short-term profits in order to please shareholders, at the expense of tenant happiness and even safety. Many of the families I spoke with feel stuck in homes they don’t own, while pleading with faraway companies to complete much-needed repairs—and wondering how they once again ended up on the losing end of a Wall Street real estate gamble. 

(Source)

In today’s reality, the Federal Reserve is deciding, unilaterally and without any effective oversight or requiring a single vote from a single American, who should be the winners and who should be the losers.

Should we be surprised that the big institutions are the winners and ‘we the people’ the losers?

To be fair, this isn’t BlackRock’s fault, right?  It’s simply how the system is currently set up.  It’s just the prevailing legal and moral framework, right?

What do they say on Wall Street to point out the one step removed angle: “Don’t hate the player, hate the game”?  Well, maybe that works in pro basketball. But in finance, where the players have a strong say in writing the rules, I don’t think that saying provides much air cover.

Here in August 2020 after the coronavirus (combined with a desperately poor series of managerial decisions by politicians and career health ‘authorities’) laid waste to the economy, it’s perfectly clear that much actually was learned from the 2008 crisis.

The wealthy learned that you can pretty much get away with anything you want. And so they’re at it again.

Corporations learned to hoover up the free money as fast as possible.

Speculators learned that the Fed would always cover their losses and to ‘buy the dip.’

Nowhere along the way did anybody seem to learn the importance of community, watching out for your fellow citizens, having integrity, or caring about the future.  Savers and the prudent alike have been literally punished for being responsible.

Finding The Way Out

Once you see through the ‘one step removed’ lens, you’ll begin to see it everywhere.

Too many people do things that aren’t even remotely justifiable (let alone moral) once the totality of the actions are taken into account.

A corollary to this is that the measure of a person can be observed in their actions when nobody is looking.

Far more impressive than the thousands YouTube clips showing a supposed samaritan help an unfortunate soul (while a camera just happens to be recording from a perfect angle followed by a quick upload to 8 different social media channels) is the person who helps another when no one else is there to watch.

“The system” is providing the necessary legal and moral cover for BlackRock and other similarly fabulously wealthy parties to sweep in and take advantage of current circumstances to make a few billion extra bucks.

When the dust settles after the pandemic subsides, we’ll find that another large fraction of the assets of our nation – it’s houses, soil and productive enterprises – will have been transferred (again!) to the tiny minority already at the top of the wealth pyramid.

The process used will continue to be simply this: the Fed prints new currency out of thin air, hands it to Wall Street, which in turn buys up the productive assets of the country. If challenged, each party has its own ‘one step removed’ cover story ready to go.

Once upon a time, our cultural and legal principles sadly allowed the productive output of people called slaves to belong to people we called slave owners.

Today ,there’s a codified system of financial rules and a supporting legal framework that assigns the productive output of the poor and middle classes to corporate owners.

The former process was direct.  The latter process has the same outcome; it’s just simply one step removed.

So how do we free ourselves from the shackles the system is trying so hard to place us in?

In Part 2: The Way Out, I share the strategies I’m implementing in my personal life/homestead/community to build wealth that can’t be easily stolen by the printing press or over-reaching authorities.

The truth is we live in an exceptionally challenging time: for our wealth, our civil liberties, and our ability to pursue happiness.

There are no guarantees except this: to do nothing is to walk willingly into the trap being set for you.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access).