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Authored by Daisy Luther via The Organic Prepper blog,

Lots of folks have mentioned that their grocery stores never fully restocked after the rush on food and supplies back at the beginning of the COVID-19 lockdown. And with the current news stories about spiking COVID numbers, it may not be long until we’re locked down again.

Work on what’s within your control

It’s important to note that even if you are unconcerned about the virus, there are a lot of things that could be out of your control in the event of another governmental series of actions:

• Workplaces may close back down

• Supply chains may be further damaged

• The economy will take another hit

• You may not be able to go where you want

Real, or not real; dangerous or not, the end result for us is the same.

It’s just like the debate over whether a terror attack in the news is a false flag or an actual terror attack. Every time I write about surviving one of these attacks, people flock to the comments to tell everyone that it was all crisis actors, the whole thing is a hoax, or our own government did it to take away our guns.

But we’re talking about survival. If you’re there when the bullets are flying or the bombs are going off or the planes are crashing, it doesn’t matter who’s behind it. Your only goal at that point is to survive it.

With COVID, does it even matter if the numbers are accurate or not? Because the government is using it as an excuse to exercise rigid control over all of us – telling us when we can go to work, when we can visit with loved ones, keeping us away from hospitals and leaving our ailing relatives to die alone, and enforcing laws about masks and appropriate distances.

Whether or not there’s another lockdown isn’t within our control. There are those who believe the entire thing is baloney and that we locked down for no reason. There are others who believe the lockdown saved countless lives. As it’s impossible to prove a negative, we really have no way of knowing if our lockdown worked or not.

If stores aren’t open or supplies aren’t available, the end result is the same whether the virus is as deadly as it’s portrayed or not. You may not be able to get what you need.

This article is about what you CAN do – you can be prepared. With that, at least, we have some control.

Things to buy every time you go to the store

We can reasonably predict that some of the things which were out of stock during the last run on the store will be low again. People will remember the things they couldn’t find and they’ll be determined to get them this time. Most stores still have limits on certain products, so I suggest that every time you go to the store, you add the following items to your stockpile:

• Toilet paper (or you may be stuck with one of these TP alternatives)

• Bleach

• Hand sanitizer

• Canned goods

• Yeast

• Baking supplies

• Powdered milk

• Rice

• Beans

• Meat

And if you have a baby in the house, don’t forget to grab:

• Infant supplies like diapers, wipes, formula, etc., if applicable

You may not need to get these items every time but definitely pick up a few extras:

• Paper towels

• Disposable plates and cutlery

• Disinfecting wipes

• Disinfecting sprays and cleaning products

These were some of the most common things that people ran out of or couldn’t purchase the last time around. Allocate some of your budget to purchasing some of these items to put back every time you see them. This will help to replenish your stockpile, which isn’t necessarily an easy task in these days of purchase limits.

Other things you may want to do

A lot depends on whether or not you are considered an “essential worker.” If you are, your life may feel somewhat normal. If you’re not, being home all the time could feel like a pretty big change.

• Save some money – another stimulus check and another round of unemployment + $600 are not guaranteed.

• Gather the supplies needed for projects to stay productive – organizational containers, paint, hardware, fabric, etc.

• Get what you need to work comfortably from home – laptop, office chair, headset, etc.

• Take a look at different homeschool programs for your kids – here are some suggestions for places to start.

Check out this article – it’s a thorough guide to preparing for the second lockdown.

Now is the time to prepare

If you prepare little by little, it’s a lot easier on your budget than buying your entire lockdown inventory all at once. And keep in mind, everyone is thinking the same thing – “I’m not going to run out of toilet paper this time.” You may not even be able to find what you need if you wait until another series of lockdowns are announced.

By adding an extra $20 or so of supplies each time you visit the store, you’ll be better prepared next time around.

Nearly 40% of voters think former Vice President Joe Biden has dementia, including 20% of Democrats, according to a new Rasmussen poll.

Their latest national telephone and online survey found that “38% of likely US voters think Biden is suffering from some form of dementia,” while 48% disagree and 14% are not sure.

And Given Biden’s recent gaffes – suggesting that 120 million Americans have died from COVID, just months after he said that 150 million Americans have died from guns – it’s no surprise that 61% of those polled believe it’s important for Biden to address the dementia issue publicly, 41% of whom say it is “very important.”

Joe Biden is very confused.

He just falsely claimed 120 million Americans (more than one-third of the country) died from the coronavirus.

This is after he previously claimed 150 million Americans died from guns.

He’s not playing with a full deck, folks. #BarelyThereBiden pic.twitter.com/GwKgdiFjdb

— Trump War Room – Text TRUMP to 88022 (@TrumpWarRoom) June 25, 2020

And as the Washington Examiner‘s Paul Bedard notes, a recent Zogby Poll found that 55% of voters think Biden is in the early stages of dementia.

“Right now voters have questions concerning Biden’s mental health and stamina,” according to Zogby.

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

China is building a buyer’s group (or cartel) comprised of its major state oil companies. I’m frankly surprised that this wasn’t already the case, since everything else is tightly controlled in China.

A report from Bloomberg (via Investing.com) states that:

Senior executives from China Petroleum (NYSE:SNP) & Chemical Corp., PetroChina Co., Cnooc Ltd. and Sinochem Group Co. are in advanced talks to iron out details of the plan, said people familiar with the initiative, who asked not to be identified as discussions are private and ongoing. The proposal has won the support of the Chinese central government and relevant industry watchdogs, the people said.

Since China is now the world’s largest importer of oil it only makes sense they would flip the switch and act as price makers rather than be price takers.

This makes perfect sense, economically, in the current environment as troubled oil exporters like Saudi Arabia continue to try and exert influence over the oil market.

The Saudis refuse to admit to themselves that their era of dominance over oil prices is, itself, over. As I noted in my blog from last week their attempt to gain market share through price slashing did nothing more than slash their own revenue to the bone, while making no new friends.

They shipped out 50% more oil and revenues plunged by 65%. They practically gave the stuff away in April. They had to. With the Riyal tied to the dollar they had to undercut Russian oil which trades in freely-floated rubles.

Because while China is certainly happy to pay less for oil, the knock-on effects of undermining its capital markets were and are far greater than the savings per barrel.

And that made them no new friends in the Poliburo.

That Crown Prince Mohammed bin Salman (MBS) acted to rashly in March I’m sure did not sit well with Chinese leadership. They clearly have no use for such an unreliable partner who refuses to take anything other than the U.S. dollar for its product.

To remind everyone, MBS threw his tantrum which locked up global markets after Russia’s refusal to agree to further OPEC+ production cuts in March. That precipitated the massive drop in oil prices which started the financial crisis.

So, it’s pretty obvious to me now that China seeks to further marginalize Saudi Arabia and the U.S. in the oil space.

The proof? Back to the Bloomberg article:

For a start, the group is set to collectively issue bids for certain Russian and African grades in the spot market, they said. While it’s unclear how the cooperation will evolve, the group represents refiners that import more than 5 million barrels of oil a day. That’s nearly a fifth of OPEC’s total output, which would make it the world’s largest crude buyer in theory. 

Because here’s the rub, as always, China is looking for ways to deepen international use and liquidity of the yuan. Saudi Arabia and the U.S. want to continue use of the dollar as the main settlement currency for oil trading, the so-called petrodollar.

It is the petrodollar that provides the most inertia the world fights against to allow the rise of other currencies as settlement. Dollars are cheap to use, freely accepted and, for now, still a good store of (at least) medium-term value.

The petrodollar was created by the relationship between the U.S. as the biggest importer and Saudi Arabia the biggest exporter. As long as that relationship held the petrodollar flowed into foreign central banks, deepening everyone’s trust in it.

Now China is saying things have changed. Europe and China are willing to pay a little more for Russian Urals grade (per my article from Friday) after MBS’s tantrum.

Moreover, China wants its oil futures contract in Shanghai more dominant in the global market. That contract is a key piece to deepening Yuan liquidity.

Shifting the oil trade where it can trade in real time versus would be a boon to the market. Most of the Arab states set their tender prices at the beginning of the month and they don’t change.

Back to Bloomberg:

Importers … have struggled this year to manage the amount of crude received each month amid fluctuating domestic demand, refining margins and swelling stockpiles.

Volumes can only be adjusted slightly from earlier-agreed liftings, and final decisions lie with the seller. Saudi Aramco, Iraq’s SOMO and Abu Dhabi’s Adnoc all sell their crude at official prices announced early each month.

Indian processors and ports went so far as to declare force majeure in attempts to back out of crude liftings after the world’s biggest lockdown slashed demand.

What this cartel will do is create the opposite dynamic than has existed previously. Buyers will dictate terms to the sellers, which is the way the market is supposed to work.

And it’s goal, I think, is to break the monthly price tender system and put more volume up for open bid in Shanghai.

Cartels are inherently unstable but, at times, under extreme circumstances, they can be very effective at creating change to a sclerotic system. I think this is exactly what China is looking to do here.

Watch to see if this cartel comes together. If it does then in order to save itself, Saudi Arabia will have to come to Chinese importers head scarf in hand looking for business.

At the same time, because they accept other currencies for their oil, Russia stands to take more market share. They can always grind out the arbitrage in currency terms between the Saudi monthly tender price and their own COGS.

Lastly, don’t think for a second that China isn’t willing to pay a little more here or there to deny MBS and President Trump a few billion in much-needed export revenue and hand it to their partners in Russia.

Especially when you factor in the real arbitrage that neither country can offer better terms on, that of the real yield on a Russian government bond and a U.S. bond.

*  *  *

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Scientists have been hard at work unraveling the mysteries of SARS-CoV-2 since January, when Beijing finally shared a mapped genome with the global scientific community (though early research also filtered out via the British journal “The Lancet”). At this point, scientists around the world have examined hundreds of thousands of viral samples from around the world. They’ve compared and contrasted their genetic code, and they’ve identified what appears to be an important pattern. That is: the earliest version of the virus that spread in Wuhan is not genetically identical to the iteration that went on to conquer Europe and the US.

According to a Bloomberg report comparing the findings from four non-peer-reviewed studies, it appears that a notable mutation of the virus that emerged broadly and early during its global campaign helped render COVID-19 more infectious in later iterations than it was during the early weeks of the outbreak, raising fears that the virus could continue to evolve in a way that eludes scientists working on a vaccine, or simply makes the virus more deadly.

At least four laboratory experiments suggest that the mutation makes the virus more infectious, although none of that work has been peer-reviewed. Another unpublished study led by scientists at Los Alamos National Laboratory asserts that patients with the G variant actually have more virus in their bodies, making them more likely to spread it to others.

The mutation doesn’t appear to make people sicker, but a growing number of scientists worry that it has made the virus more contagious.

“The epidemiological study and our data together really explain why the [G variant’s] spread in Europe and the U.S. was really fast,” said Hyeryun Choe, a virologist at Scripps Research and a lead author of an unpublished study on the G variant’s enhanced infectiousness in laboratory cell cultures. “This is not just accidental.”

Another team of researchers described the feeling of shock when they realized just how much more effective this mutation made the virus in terms of its ability to break into human cells.

Neville Sanjana, a geneticist at the New York Genome Center and New York University, was trying to figure out which genes enable SARS-CoV-2 to infiltrate human cells. But in experiments based on a gene sequence taken from an early case of the virus in Wuhan, he struggled to get that form of the virus to infect cells. Then the team switched to a model virus based on the G variant.

“We were shocked,” Sanjana said. “Voilà! It was just this huge increase in viral transduction.” They repeated the experiment in many types of cells, and every time the variant was many times more infectious.

The mutation in question is known as D614G, or just “G” for short. So far, the “G” mutation has been found in roughly 70% of the half a million or so samples that have uploaded to a shared database for scientists around the world. This has convinced many scientists of its significance, especially because the mutation occurs in a part of the genome that governs the infamous “spike” protein that gives the virus its name (“corona” = crown in Latin) and is believed to enable it to infiltrate human cells.

“I think that slowly we’re beginning to come to a consensus,” said Judd Hultquist, a virologist at Northwestern University.

And although it won’t help the quest for a cure, understanding the role of these mutations is critical for understanding how the virus works. This, in turn, would allow scientists to track mutations and help them discern which might enhance the virus’s capability to destroy human life.

“Understanding how transmissions are happening won’t be a magic bullet, but it will help us respond better,” Sabeti said. “This is a race against time.”

Though, to be sure, even with all the research that’s been done so far, scientists can’t say much, if anything, for certain about the mutation. There may be other explanations for the G variant’s dominance in the global pandemic: perhaps biases in where genetic data are being collected has led it to be overrepresented in samples, or quirks that led the “G” variant to dominate in particularly susceptible populations.

“The bottom line is, we haven’t seen anything definitive yet,” said Jeremy Luban, a virologist at the University of Massachusetts at Amherst.

Remember that the next time you hear Trump, Dr. Fauci or the White House “vaccine czar” discuss the possibility of having a vaccine available by year end, or next time you see a country contract to buy millions of doses of Gilead’s remdesivir, just keep this in mind.

Forbes has decided to unpublish an article by award-winning climate activist Michael Shellenberger, in which he apologizes “for the climate scare we created over the last 30 years.”

Schellenberger, a progressive, was named one of TIME‘s “Heroes of the Environment,” while his book Break Through was heralded by WIRED as potentially “the best thing to happen to environmentalism since Rachel Carson’s Silent Spring.”

His book Apocalypse Never was widely praised as an ‘eye-opening, fact-based approach’ to climate science and ‘engaging and well-researched.’

Now that he’s apologized for three-decades of climate alarmism, Forbes has now blocked Shellenberger’s article without explanation.

So, here it is:

* * *

Authored by Michael Shellenberger via Environmental Progress  (emphasis ours)

On Behalf Of Environmentalists, I Apologize For The Climate Scare

Update (1800ET): As expected, Joseph James DeAngelo, 74, pleaded guilty on Monday to the first of 13 counts of first-degree murder charges against him.

As Reuters reports, DeAngelo, dressed in an orange jail garb and seated in a wheelchair between his two attorneys, answered “guilty” in a raspy voice when the judge asked how he pleaded.

*  *  *

The former police officer who was finally arrested in April 2018 in Sacramento County and accused of being the Golden State Killer, a serial rapist and murder who terrorized northern and southern California during the 1970s and 1980s, is facing a major hearing on Monday where he will plead guilty in a deal that will spare him the death penalty, but land the elderly suspect in prison for the rest of his natural life.

Joseph DeAngelo, the suspect, will appear before a state judge on Monday, for a preliminary hearing where he’s expected to plead guilty in a deal to avoid the death penaltyy.

But instead of being in a courtroom, DeAngelo will be in a California State University–Sacramento ballroom, standing before a large group of socially-distanced victims and family members. With more than 150 victims and relatives prepared to attend, prosecutors secured a room large enough to accommodate everybody while ensuring social distancing would be possible. The ballroom can hold a total of 2,000 people.

The “Golden State Killer”, as he eventually became known, DeAngelo may be better remembered as the first criminal suspect to be captured due to the use of a new technique called “genetic genealogy.” American law enforcement keep a database of DNA for Americans and criminal suspects. This database is known as CODIS.

However, the new technique allows police to find a suspect by triangulating people who might be related to the suspect. That technique turned up several of DeAngelo’s relatives, then a closer look into his profile led to his apprehension. Since his arrest, 150 other suspects have been identified using the technique.

The Golden State killer had many nicknames over the years, including the original Night Stalker, and East Area Rapist. His MO was breaking into sleeping couples’ suburban homes at night, binding the man and piling dishes on his back. He would rape the woman, threatening to kill them both if he heard the plates fall.

It’s not a guarantee that DeAngelo will plead guilty on Monday, but such a plea would avoid a trial and preliminary hearings, sparing the victims and their families some grief. Regardless of what happens today, victims are expecting to confront DeAngelo at his sentencing in August, where it’s expected to take several days to tell DeAngelo and Sacramento County Superior Court Judge Michael Bowman what they have suffered before the formal sentence is handed down (unless he somehow gets off between now and then, or commits suicide).

GSK’s alleged crimes spanned 11 counties in California from 1974 through mid-1986, and he eluded investigators for years.

Authored by Charles Lipson via RealClearPolitics.com,

In the early 1950s, at the nadir of McCarthyism, the Cincinnati Reds baseball team was so fearful of anti-communist crusaders that it actually changed the team’s name. Overnight, they reverted to their original name, the Cincinnati Red Stockings, and then for several years became the Redlegs. The anti-communism was justified; the mob mentality was not.

Today, we are all Redlegs. This time, the repression is coming from the left.

It’s not just that a careless word can cost your job, it’s that people tremble in fear that they might say the wrong word. Today, as in the past, the loudest, most extreme voices claim the right to control speech and judge whether it is worthy of being heard at all. The giants of technology and media have either bowed to these demands or embraced them enthusiastically. The result, as in the early 1950s, is a shriveled, impoverished public square. Genuine debate is suppressed, even in classrooms, which should nurture informed discussion with multiple viewpoints. All too often they have become pipelines for indoctrination.

What’s wrong with this rigid groupthink?

First, it takes real problems, such as police misconduct or Confederate statues, and inflates them for political purposes. It vastly exaggerates their extent and gravity, mistakenly generalizes them (Ulysses Grant is not Stonewall Jackson), ignores significant progress in correcting old errors, calls any disagreement “racist,” and relies on intimidation and sometimes violence, not democratic procedures, to get their way.

The loudest voices say America and its history are fundamentally evil, that its institutions need to be smashed so they can be reestablished on “socially just” foundations. The mob and their fellow travelers will determine what is just. Who gives them that right? This arrogation of power and attack on public order will not end well.

The second problem is that America’s major institutions have been overwhelmed by these demands and have bowed down to them. Public trust has eroded in all America’s major institutions since the late 1960s. We now see the supine results. Instead of standing up to this swelling irrationalism and intimidation, they have appeased it—and sometimes embraced it. Predictably, appeasement has only fueled more extreme demands.

The rot began in America’s universities before spreading to mass media, cultural magazines, philanthropies, museums, and corporations. More and more parents are concerned that it now suffuses K-12 education. They don’t want a Pollyanna history, but neither do they want their children indoctrinated with a grim, doctrinaire view that America is an evil nation, incapable of reforming its own defects.

Universities have led this parade of self-flagellation. One reason is that so many administrators and professors agree with the mob demands. The second is that prudent faculty and staff know where the risks lay. Their careers would be endangered, perhaps terminated, by resisting the bullhorns and barricades. The smart career move is to affirm the most strident cries, publicly renounce your old (and now wrong) views, apologize on bended knee, and hope you will not be sent to the rice paddies to learn from the peasants’ wisdom.

Can anything be done?

Yes. And it should begin in universities, where so many of the problems began.

First, universities must publicly reassert the first principle of academic inquiry: free and open debate is essential to research and learning. Bad arguments should be rebutted with better ones, bad data and methods with better ones. How do we know which arguments, data, and methods are bad? Only through vigorous debate.

To understand why this approach is so crucial, ask yourself: Why is social science so dreadful in the People’s Republic of China and other totalitarian states? Because the “wrong” answers lead to dismissal, dishonor, and even death. Knowing that, the best scholars avoid those fields altogether. Even if their current views are approved, they might be forbidden tomorrow and these scholars will inevitably face political restraints in searching for answers to important questions. Those restraints and their consequences are well known. It is madness to impose them on ourselves.

In the midst of this full-scale assault on free speech, have universities issued full-throated defenses of open inquiry as the foundation of education? No. Hillsdale College in rural Michigan has done so, and perhaps a handful of  “Bible schools,” but they are rarer than Republican professors of English literature. What almost all universities have issued are vapid letters, reaffirming their commitment to “diversity and inclusion.” Many have said they will pump more money into those projects, which they have already sustained for decades. They say nothing about intellectual diversity, which they don’t consider diversity at all.

Stating principles of free speech and free inquiry is essential, but it is not enough. Sound principles must be reiterated, and they must be reinforced with best practices. Students, faculty and staff need to know the university’s commitment is more than an empty gesture. Before freshmen arrive on campus, they need to be told their university supports free speech and free inquiry and will not tolerate their suppression. These crucial points should be emphasized during Orientation Week. So, too, should the university’s commitment to enforcing the rules. Students accused of suppressing others’ speech should be accorded due process (which has long been missing on campus), but they also need to face consequences if they are found guilty. Otherwise, the principles are vacuous. Deans of students who don’t enforce these rules should become ex-deans.

There is a role here for university boards of trustees. They should not intervene in day-to-day academic decisions, such as tenure, but they should insist on basic rules supporting free speech and effective procedures to punish violations. Insisting on these rules and procedures is well within the scope of the university’s governing board. Indeed, it is their duty.

Second, individual teachers should be told they will be protected if they encourage debate and free inquiry in class. They need a “safe harbor,” even if some students don’t like what they hear, see, or read. University administrators need to give them that protection. You and I might be offended by D.W. Griffith’s “Birth of a Nation” or Leni Riefenstahl’s “Triumph of the Will,” but they are important movies and perfectly appropriate to screen in some classes. Of course, students should be prepared for them and told why they matter. If some students would be traumatized, teachers should try to find ways to accommodate them. But it is no better to exclude important films for fear of political objections than to exclude Robert Mapplethorpe’s photographs for fear of religious ones.

As an alternative to the malleable and weaponized “trigger warnings,” faculty could add to their self-protection (and students’ education) by including a statement of principle to their reading lists. They ought to say—and mean—that they never intend to hurt, insult, or denigrate any student or belittle any group. Rather, they intend to use their scholarly skills to illuminate these issues as best they can. They should add that, if some students disagree with a reading or interpretation, that is exactly what critical thinking plus free speech allows–and what indoctrination prohibits. What students cannot do is shut down legitimate class discussions, however strongly they might disagree. They cannot substitute feelings, epithets, or personal attacks for substantive arguments. Serious academic discussion is based on empirical evidence and theoretical conjectures, presented coherently and debated openly. Students should know these rules when the semester begins and told why they matter. If they disagree in principle, the university should have warned them not to come in the first place.

Third, state legislatures should insist that public universities adhere to the First Amendment’s protections for free speech and peaceful assembly, with the normal restrictions that apply to those freedoms. (No bullhorns in the dorms at 2 a.m., and no shouting down of invited speakers at any hour.) Like boards of trustees, they should not intervene in day-to-day university activities; that, too, would threaten academic freedom. But they should insist that university presidents and deans of students reiterate the importance of freedom of speech, explain its role in higher education, and avoid watering it down with qualifying statements implying “social justice” can override free speech. Social justice, like other important concepts, must be debated, not used as a “cone of silence” for discordant views. Legislatures, governors, and state boards of higher education have every right to demand clear principles of free speech and effective procedures to punish violations.

Whether the federal government should insist on similar principles and enforcement, and use federal funding as a lever, is a more complex issue. Worthy as the goal is, it is yet another step toward centralizing all decision making in Washington, crushing both federalism and civil society. That trade-off is worth a serious debate in its own right.

Whatever role Washington plays, universities need to act now, on their own, to reassert the core value of free speech in education. Free inquiry depends on free speech. These values are the bedrock of liberal education in democratic societies. Right now, that bedrock is being washed away in a tidal wave of irrational outrage.

One look at the latest economic data, conveniently summarized by the exploding Citi US econ surprise index, should be sufficient to convince most that the US is well and truly following a V-shaped recovery path.

Alas, nothing could be further from the truth because the current economic sugar rush is almost entirely a function of the massive government spending spree, a spree which in just over a month will be effectively over. As a result, as Bank of America writes, the economy is facing fiscal cliffs which could cause the recovery to disintegrate, with four particular areas of focus:

1. expiration of extended unemployment insurance,
2. the fading support from stimulus checks,
3. exhaustion of PPP
4. stress from state and local aid gov’ts.

In response, BofA expects another stimulus bill to be passed in late July to address some – but not all – of these concerns, and “instead of a cliff, we will likely be facing a hill.” That may be optimistic, because any stimulus would need to be bipartisan, and if the Democrats wish to crush Trump’s re-election chances, now is the time for them to push the economy into a depression with elections in just 4 months.

Will they do it? We’ll know in a few weeks, and certainly once the July 31 benefits cliff hits.

Until then, here is BofA on the likely fiscal cliff outcomes:

Fiscal: look out below

In the face of the shock from the COVID-19 pandemic, fiscal stimulus has poured into the economy. Washington has pushed in roughly $2.8tr of stimulus, equaling 13% of GDP while the Fed has expanded its balance sheet to $7.1tr. The rapid and forceful support on the policy front likely limited the downside during the recession and has helped to support the ongoing recovery. But we are now approaching a few “cliffs” which would prove painful if unaddressed. We see four areas of concern:

• Unemployment insurance (UI): the incremental $600/week is set to expire on July 31st. To put some numbers around this, at the current level of nearly 20 million people receiving unemployment insurance this would equate to a reduction in personal income of $48bn ($576bn annualized) or 2.7% of GDP.
• Stimulus checks are no longer rolling in: the majority of the tax rebates / checks were distributed in mid/late April. To date, around $270bn of the $290bn has been pumped in. We find that consumers quickly spent the additional cash which means a diminishing support to spending.
• Payroll Protection Program (PPP): of the $670bn allocated to the PPP, around 77% has been approved. The new legislation allows small businesses until the end of the year to allocate the funds (vs end of June previously) which prolongs the support from the program. However, the magnitude of the support is lessened given that the size of the program has not changed and it was initially designed to help small businesses get through a shock lasting roughly two months.
• State & local aid: the CARES Act allocated $150bn to state & local governments to be used for unexpected coronavirus-related costs. But this did not address the revenue shock state and local governments have experienced. According to the National Conference of State Legislatures (NCSL), 29 states and DC expect FY 2021 general fund revenues to be lower than their pre-COVID projections. Without aid, these governments will be forced to make further cuts to employment and services.

Quantifying the impact

In Table 1, BofA groups the stimulus programs to date into major sectors. About 23% of the funds have been directed toward households to offset the significant strain on household incomes from massive job cuts. Moreover, if you include the required wage portion of the PPP loans, the household share of stimulus is over 40% of funds.

The good news is that these measures have worked. Personal income jumped 10.5% mom SA in April. An $879bn annualized decline in compensation was offset by a $2,999bn increase in transfer payments, of which $361bn was from unemployment insurance. Given that PPP was first getting underway in April BofA assumes it had little/no impact on labor income in April. If one nets out the boost from stimulus checks and unemployment insurance, personal income would have declined by 5.6% mom SA in April vs. the 10.5% reported increase.

In line with expectations, and the fading of a fiscal impulse, last Friday we observed a sizeable decline in personal income given that the boost from stimulus checks declined substantially compared to April. Looking ahead to June, BofA expects another drop in income as people shift back into the labor market from unemployment insurance. Given that the majority of those on unemployment insurance earned more from benefits than when they were working, the move back to employed will actually be a net negative for overall income. Indeed a recent paper (Ganong et al. 2020) found that roughly two-thirds of UI recipients are earning more than their lost wages.

The big question is what happens in August?

This will be the first month following the “cliff”. The current law calls for the additional $600/week to expire. Based on BofA’s forecast for the labor market, continuing claims in August could still be running around 16mn, up by nearly 15mn from the pre-COVID February levels. Assuming it is 16mn, the loss of the $600/week benefit would translate into roughly a $36bn drop in income in August, or a 2.3% mom decline.

The Payroll Protection Program (PPP) has also underpinned labor income. The Small Business Administration (SBA) has approved $516bn in PPP loans. Under previous rules, 75% of those funds had to go to payrolls over an 8 week period in order for the loan to be forgiven. As such, this would translate to $387bn in support for labor income, mostly in May and June. The law has since been amended such that businesses only need to use 60% of the funds for payroll costs over a 24 week period. However, no changes were made to the maximum size of the loan, which is the lesser of $10mn or 2.5x 2019 average monthly payrolls. While the changes will help businesses stay afloat as they deal with reduced demand, it also means that the support for labor income has been substantially reduced and spread out.

From income to spending

Clearly there has been a significant boost to personal income from stimulus. But now it is time to consider how this filters into the real economy via consumer spending. The biggest jolt to spending likely came from the stimulus checks. A paper from the Chicago Fed (Karger et al. 2020) found that in the two weeks after households received their stimulus check, they spent roughly 48% of it. Then spending fell back to normal levels. Based on analysis with aggregated BAC card data, the bank similarly found that the bulk of the incremental spending from the stimulus checks occurred over a 5-day period following receipt of the money.

Meanwhile, the path of consumer spending will be impacted by the trajectory for unemployment insurance. A paper from Ganong found that spending on nondurables declined by less than 1% while people were receiving UI, but at exhaustion dropped by 12%. Not extending the program would mean a 2.3% decline in personal income in August. Given the high propensity to consume out of unemployment insurance this would be a similarly sized hit to consumer spending in August.

However, by extending the program, the unemployment rate is also likely to be stickier as people have an incentive to stay out of work. Indeed, a recent analysis from the CBO found that if the program was extended as is through the end of the year then 5 out of 6 recipients would earn more on unemployment than they would if they were to return to work. They estimate that while this may boost GDP this year it would be a drag on growth next year. If the program was instead allowed to expire, presumably the unemployment rate would fall faster and more people would return to work. However, even with greater engagement in the labor market, income would still decline given that unemployment insurance is more generous and many workers will find challenges returning to the workforce.

The state and local stress

In addition to the impending “cliff” for household income, many state and local governments are facing a concerning revenue outlook as they move closer to the start of FY 2021. According to CBPP (Center on Budget and Policy Priorities), initial estimates of the revenue impact from the COVID-shock indicate that state revenue could drop in FY 2021 by more than it did during the Great Recession. States will be forced to tap into their rainy day funds first before ultimately making cuts to spending to offset the revenue shortfalls, as they are required to balance their budgets. Indeed, governors in Ohio, New Jersey and Georgia have already asked state agencies to prepare for sizeable cuts to spending. Indeed state & local government have already started to cut jobs – in the April and May employment report, state and local governments shed nearly 1.6mn workers.

Congress to take action in late July/early August

Republicans and Democrats are at odds over whether to extend the expanded unemployment insurance program for obvious reasons. The Democrats in Congress generally advocate for a full extension as was passed in the HEROES Act but Republicans are resisting, arguing that the generosity of the program has discouraged a return to work. A middle ground may be a smaller dollar amount (perhaps $250-300/ week) with back-to-work bonuses that will create an incentive to return to the workforce.

On state & local aid, the HEROES Act called for close to $1tr in relief. While this number is unlikely in our view, a bipartisan bill proposed by Senator Cassidy (R-LA) and Senator Menendez (R-NJ) proposed in May would allocate $500bn in aid to state and local governments. The ultimate number will likely be nearer to that number than the amount from the HEROES act.

There has also been some talk of another round of stimulus checks with President Trump affirming “Yeah, we are” [going to do another stimulus check], and White House Economic advisor Larry Kudlow saying that a second round would likely happen but be more targeted. While this also showed up in the Dem’s HEROES Act, some Republicans in the Senate (Sen. Toomey (R-PA) and Sen. Cornyn (R-TX)) have voiced opposition to another round recently. Republicans have generally raised concerns that stimulus checks are not the most efficient way to target those who are most in need.

The White House has also been calling for other measures such as a payroll tax cut and an infrastructure package, although neither of these are likely as the payroll tax cut would only help those who still have a job while an infrastructure bill is unlikely to be tackled until after the election.

In summary, after July 31 the US economy is set to fly off a fiscal cliff that could be just as painful as what happened in late March/April unless there is a bipartisan agreement in Congress on trillions more in fiscal stimulus. The clock is now ticking.

Editor Max Wiethe joins managing editor Ed Harrison to discuss the latest developments in markets, macro, and coronavirus. Max and Ed examine how the US is currently dealing with the virus and whether that means the nation is par for the course or has “gone off the reservation” as compared to other countries. They also talk about the risk factors that could put a highly volatile market over the edge, consider the longevity of US outperformance, and explore the current market rotation. They wrap up their discussion by sharing their thoughts on the latest video on Real Vision Essential and announce a special edition of the Daily Briefing on Friday as the U.S. observes Independence Day.

Authored by Veronique de Rugy via The American Institute for Economic Research,

I am always amazed by the faith that people have in government. Scour the newspaper any day of the week and you will read stories detailing the many failures of the federal, state, and local governments or agencies, and of their stupendous ability to commit the same mistakes over and over again. Yet these agencies are the one that people turn to in times of troubles or needs.

Astonishing.

Take the June 26th edition of the Wall Street Journal. There you’ll find a piece on how the Small Business Aid program has a significant fraud risk, according to the Government Accountability Office. That’s unfortunate for a program riddled with implementation problems that leave many small businesses unable to apply, while many large ones had no problems getting one of the available small-business loans.

And then there’s the report about how the IRS paid $1.4 billion in stimulus payments to dead people. That’s correct: dead people. According to the report, “The IRS, which was trying to get the money out quickly, didn’t use death records from the Social Security Administration as a computerized filter in the first three rounds of payments, according to GAO.”

One common reaction to these two stories is that Congress was rushing, everyone was panicking, and pundits were clamoring that we must go big or even bigger than big. But if that’s the problem, how to explain the $137 billion in improper payments made in 2018? For the record, this staggering level of improper payments happens every year. And then there’s the fact that we can’t even measure how many improper payments take place in the Department of Defense because that agency fails its audits on a regular basis—hence no one really knows where all the money goes. Yet here we are, always trusting the same government to somehow do better this time around.

On that same page in the Journal you can also read how “Battered U.S Wine Importers Brace for Higher Tariffs.” As the Journal reports, “The U.S. Trade Representative’s office, which imposed 25% tariffs on wine, cheeses, olives and other products from the European Union in October, is now considering raising levies to 100%, citing a lack of progress in negotiating a settlement and eliminating subsidies for Airbus SE.” Never mind that the president has finally hinted that he knows full well that Americans—the same Americans who have nothing to do with the Boeing-Airbus dispute—are paying the tariffs.

Yet, President Trump, and pretty much everyone in the Democratic Party, happily contributes to this new protectionist wave. Sadly but predictably, barely anyone in the Republican party is pushing back against the president and his protectionism sidekicks, Peter Navarro, Robert Lighthizer, and Wilbur Ross.

Scanning further down the page of the Wall Street Journal report you learn that thanks to government-imposed lockdowns, “140,000 Businesses Listed on Yelp are still Closed Because of Covid-19 Pandemic.” Depressingly, you read, “A large minority of that set, 41%, has shut for good, according to Yelp.” 

It is not surprising: businesses cannot be kept closed for months and then survive having done nothing. Yet many states haven’t reopened fully in order to allow businesses to survive by reorganizing their activities to keep consumers and employees safe. 

That’s in spite of the academic evidence that lockdowns were a mistake. In fact, upon hearing that the number of cases—which as Don Boudreaux points out is quite different from the number of deaths— is increasing, some states are now announcing that they’ll pause reopening. 

Yet, the fact that the number of cases will go up as the economy reopens was fully expected since as a share of the population few people have actually been exposed to the virus. If a rising number of cases is reason enough to stop everything – reason enough to again coerce the economy and life into deepfreeze – while we await a vaccine quickly that might, or might not, arrive, what do we think is going to happen?

Governors around the country should end the lockdown and give businesses a shot at saving their businesses by reinventing some of the ways they serve their customers. Full reopening is no guarantee at all that consumers will come back quickly, of course. 

New data confirm what we already knew; namely, that many people did not wait for the governments to lock down the economy to stay home and shelter in place. Such fear-based behavior contributed much to the economic collapse. That means that most consumers will be careful and watch out for their health and that of others without government decrees telling them to do so this time around too. But at least give consumers and businesses a chance to find what works for them once the economy is reopened.

I conclude with a report from the Washington Post. One is about Trump’s refusal to encourage people to wear masks. This, of course, comes on the tail of Dr. Fauci’s admission that he had intentionally misled the public about the usefulness of wearing masks so that they could be directed to health-care professionals.

And here is Fauci explaining how and why he lied:

“He also acknowledged that masks were initially not recommended to the general public so that first responders wouldn’t feel the strain of a shortage of PPE. He explained that public health experts “were concerned the public health community, and many people were saying this, were concerned that it was at a time when personal protective equipment, including the N95 masks and the surgical masks, were in very short supply.” 

It’s interesting that Americans started wearing self-made masks long before this Fauci admission showing that maybe they were buying it. However, for the most part, Americans continue to trust Fauci. David Henderson, though, does not.

Seriously, reading the newspaper on a daily basis should make everyone question government’s intervention in our lives. But based on the support for both a populist protectionist Republican like Trump and his Democratic opponent for the presidency, Joe Biden, it doesn’t. So what are we to do?

I believe we should continue fighting the battle of ideas because when we are deep into the mess that both parties, and their underlying ideologies, are creating, some people will look for answers and for solutions outside the state. As Milton Friedman once said, “That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.” 

I take that task seriously.

Finally, I certainly feel obligated to intellectuals of the past who have fought for our freedoms in what were arguably even more depressing times. For that reason, I dedicated my professional life to answering Friedrich Hayek’s call to action that

“We must make the building of a free society once more an intellectual adventure, a deed of courage…. Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in the power of ideas which was the mark of liberalism at its best, the battle is not lost.” 

This, I believe, is why we continue fighting.