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The wealth inequality story is not a complicated one to figure out. In essence, tens of millions of Americans were already suffering from insurmountable debts, no savings, and low wage jobs, even before the pandemic unfolded and crashed the economy.

Now the working-class poor are starting to get angry, sitting on their couches in quarantine, as they have recently been laid off, only to watch President Trump at afternoon press briefings tout about his epic bailouts of corporate America and Wall Street, while everyone else gets a lousy $1,200 check.

A “social bomb” is brewing in America – we’ve been documenting how the next crisis could be a social one. The bottom 90% of Americans are getting smarter by the day as they sit in lockdown, now organizing on the internet, and are plotting their very next big move that could be severely disruptive: rent strikes. 

New York City housing activists are preparing to unleash a “massive wave” of rent strikes in the next two weeks, reported Bloomberg. 

Housing Justice For All hopes to have as many as one million New Yorkers on May 1 participate in a rent strike to pressure Gov. Andrew Cuomo to cancel rent for the duration of the lockdown. 

“With so many New Yorkers unable to pay rent for the foreseeable future, the current crisis is unsustainable and demands action,” Housing Justice for All and New York Communities for Change said in a statement Thursday. “Many tenants have no ability to pay rent, and landlords can’t collect rent from tenants who are broke.”

Lena Melendez, an activist who spoke with Bloomberg, said people in her building have organized and will not pay rent on May 1. 

Melendez said landlords “have gotten taken care of” by the government, making the case that working-class poor do not need to pay rent. 

“They have gotten tax abatements and deferments on their mortgages. And tenants have just gotten a temporary freeze, a pause, on evictions,” she said.

New York City’s Independent Budget Office projects about half a million people will lose their jobs in 2020. The city has been thrown into a recession, if not depression for the 1H20, as a social crisis is brewing…

How long until rent strikes start developing in other large major metros?

 

Authored by Robert Wright via The American Institute for Economic Research,

The title comes from the two movies reviewed below, Idiocracy (2006) and Experimenter: The Stanley Milgram Story (2015). In normal times, neither would merit mention, much less review, at such a late date. But unless you are just coming off six months on a trapline in Alaska, you know that these are abnormal times.

I couldn’t decide which movie better fits our current situation but then it dawned on me that they are mutually reinforcing, not exclusive.

Idiocracy stars Luke Wilson, Maya Rudolph, and Terry Crews. In 2005, soldier Wilson and prostitute Rudolph agree to be cryogenically frozen for a year but through a series of mishaps end up sleeping for 500 years. They awaken to a dystopia where selective pressures have rendered humans dumb and dumber. Americans live surrounded by mountains of trash, watching trash on television, including shows like “Oww My Balls” that make Johnny Knoxville’s Jackass franchise look like high culture. 

POTUS Crews and his fellow Americans speak in a pidgin of grunts and rural, urban, and Valley Girl slang that sounds eerily familiar. Unlike our presidents to date, though, he fires a machine gun, Al Pacino-style, for rhetorical emphasis.

I don’t want to ruin the ending, unsurprising as it is, with spoilers but would like to draw attention to a scene where Wilson tries to explain to Crews’ cabinet that the reason that crops stopped growing was because they were irrigating with Brawndo, a ubiquitous sports drink tagged “The Thirst Mutilator,” instead of water. Everyone was sure that Wilson, though clearly the most intelligent man on earth, was wrong because everyone knows that water is only used in toilets. Moreover, Brawndo is superior to water for irrigation because “plants crave it” because it has “electrolytes.” Nobody knows what electrolytes are but they all know Brawndo has them and that plants crave it.

Somebody with some technical skills ought to dub coronavirus-speak over that scene as it would surely go “viral.” Why do we have to stay inside, even though it is safer outside, and shutter businesses? “To flatten the curve and raise the line.” What does that mean? “Coronavirus craves isolation and economic desolation!” How do you know that? “Flatten the curve, raise the line!” At any cost? Wouldn’t less extreme measures work at least as well at lower cost? “Coronavirus craves isolation and economic desolation!” You get the idea.

Interestingly, after Wilson orders the switch to water, half of Americans lose their jobs because they worked for Brawndo, the stock price of which immediately dropped to “zero” after Wilson’s water-only irrigation pronouncement. That was “good” unemployment, though, because it ended “bad” employment, the creation of an effective herbicide containing “electrolytes.” The unemployment governments are causing today is bad unemployment because it ended good employment for no good reason. There, I said it in terms even a denizen of Idiocracy America could understand.

Where Idiocracy is a semi-funny futuristic dystopian fiction, The Experimenter is a super quirky historical docudrama focusing on the actual experiments conducted by Stanley Milgram in the early 1960s.

Milgram sought to understand why people followed orders during the Holocaust. So he had an actor in a lab coat direct a test subject to administer electrical shocks of increasing voltage to another actor in an adjacent room. The shocks were fake but the screams were real. To everyone’s horror, Milgram discovered that 65 percent of test subjects were willing to administer lethal voltages to another human being, only because an authority figure, in this case a “scientist,” claimed it was necessary.

Test subjects were paid in advance and told during pre-experiment briefings that they could leave at any time, for any reason, with no penalty. In debriefings, some said they were shaken by the experience, which would never pass an IRB today, but none felt coerced in continuing by anything other than the “scientist.”

Milgram played around with variables but time and again about two-thirds of his test subjects, white or black, man or woman, gentile or Jew obeyed the authority figure. He believed that people with an “agentic personality” were susceptible to manipulation because they saw themselves as simply “doing their job” or “playing a role” and hence not morally responsible for their actions.

Again, somebody with some video editing skills could have a field day with that scene by dubbing over something like:

Subject: Why must I press the shock button?

“Scientist”: We must flatten the curve and raise the line.

Zap followed by whimpers.

Subject: The patient sounds like this is hurting him.

“Scientist”: Some must suffer today so that some old people can die of the flu, next year.

Next higher voltage switch, zap, followed by a scream for mercy.

Subject: I don’t know how much more the patient can take.

“Scientist”: What part of flatten the curve and raise the line don’t you understand?

Subject: I don’t understand how torturing this person helps anything.

“Scientist”: How dare you! I am Doctor Fow Chi, M.D., D.O., S.T.A.T.I.S.T., Ph.D. I, and I alone know what is best.

Voltage up, zap, blood curdling scream.

Subject: I still don’t understand.

“Scientist”: And oh by the way you are not zapping just one guy but almost every business owner in America.

Subject: I won’t!

“Scientist”: You will, because I am wearing a white lab coat!

Subject: Do you have a degree in economics? Economic policy? Economic history even?

“Scientist”: Of course not! All irrelevant to flattening the curve and raising the line.

Subject: I don’t know …

“Scientist”: Here is a bunch of money and laws that say you do not have to pay your bills.

Voltage up. Zap. A low moan, then silence.

“Scientist”: Excellent job. You have flattened the economy. The money I just gave you is now worthless and the companies you owed money to are bankrupt anyway. Have a nice life, what is left of it anyway. Now go on social media and brag about what you have done!

Another famous experiment discussed in the movie, conducted by Solomon Asch, showed that one third of his test subjects knowingly chose the wrong answer to a simple question about line lengths when previous respondents, actors instructed to choose the wrong answer, erred. Those test subjects valued conformity over obvious truth. The good news is that when only one other person in the respondent group picked the correct answer, conformists dropped to a mere five percent. 

The correct policy response to COVID-19 is more difficult to discern than judging the length of lines and a lot more is at stake, but there are people, more and more each day, who are no longer blindly conforming to the “shift the curve and raise the line” mantra. They are asking questions, tough ones, and thinking for themselves, which is still technically legal in most states.

While a few courageous governors have refused to order lockdowns or massive business closures, most Americans remain locked in what appears to be a giant Milgram experiment testing how far they are willing to go down an increasingly irrational path, egged on by authority figures whose unconstitutional dictates need not be followed. We will not have to wait half a millennium for an America like that depicted in Idiocracy unless we have the courage to say, “enough!” 

Residents of Wuhan, China –  the epicenter of the global pandemic which has killed more than 150,000 people in roughly four months – are now free to venture out after more than two months of home confinement in the largest quarantine in human history.

Unfortunately for local restaurants, the lifted restrictions haven’t translated to desperately needed customers, as residents are still subject to curbs on their movements such as temperature checks before one can enter a building, and people are still being encouraged to limit travel to essentials – such as work and shopping.

Restaurant owner Xiong Fei says that the end of the lockdown hasn’t brought relief – just a new set of challenges, according to Bloomberg. According to Xiong, people have changed their behavior, perhaps for good.

“People in the past dined out with their colleagues in their lunch hour, now they’re all getting lunchboxes,” he said, sitting in an empty booth at his Sichuan restaurant. “They’re more likely to cook at home than go out.“

Of the 10 restaurants Xiong’s company, Bainianfeng Catering Management Co., operated before the outbreak, none have reopened for dining in. And while three have resumed making food deliveries, Xiong has already decided to shutter three other locations for good because he expects fewer customers. Now the 40-year-old entrepreneur and his business partners are trying to decide what to do long term. Half of Bainianfeng’s restaurants were hotpot joints, where groups of diners cook raw meat and vegetables in communal pots of boiling broth—the sort of places customers now are likely to avoid. “There will be a significant downturn in consumption,” Xiong says, predicting the city’s hospitality scene will see a shakeout. –Bloomberg

“I knew restaurants would be the most heavily affected,” said Xiong, whose restaurants had already been largely closed before the lockdown due to the mysterious new pneumonia which had been circulating since late December. “I also worried about our workers’ health.”

And while perhaps Wuhan residents simply don’t trust their goverment’s “all clear” – Xiong’s experience portends continued pain for restaurants around the world currently shuttered or suffering from a lack of foot traffic due to COVID-19.

Last week, Gallup revealed that more than 80% of Americans will wait to return to normal activities after restrictions are lifted. Of that, 71% will wait to see what happens with the virus, while 10% will wait indefinitely.

What’s more, The Spoon‘s Michael Wolf noted on March 17 – right as the lockdowns went into place, that New York city restaurant traffic was already down 17% before the lockdown.

New York City’s restaurant traffic was down by 69%, while Seattle’s restaurant traffic had dropped by 62%. Despite being two of the earliest hotspots, these were not the biggest drops. San Francisco restaurant traffic was down by 72% on Sunday compared to a year earlier, while Boston’s traffic was down 70%. -The Spoon (Mar. 17)

According to UBS, restrictions in the EU and US will be lifted starting as early as May in the ‘upside’ scenario, and as late as June or July in the ‘downside’ scenario, with consumer activity estimated to rebound – as defined as a “sustained return to a level 20% below the pre-crisis baseline, or higher” – between June 2020 and June 2021.

A lot of the conversations I have been having with traders is about what to watch post peak coronavirus. Here’s a useful table via @UBS on scenario descriptions and criteria for the EU and US pic.twitter.com/EUo9Nr7Fdn

— Anthony Cheung (@AWMCheung) April 16, 2020

Making the best of a bad situation

One of Xiong’s companies, a catering business called Bainianfeng, has sought refuge in meal deliveries – though when the lockdown went into place, it was difficult to safely source and transport ingredients which were spiking in price as supplies dwindled. Meanwhile, his staff was greatly reduced, as most were too afraid to show up to work, or were restricted from leaving their homes.

Before the outbreak, people would stand in line for 40 minutes on weekends to get a seat at Xiong’s more popular spots. But under lockdown, he was lucky to get 20% of the orders he used to receive via delivery apps such as Alibaba Group Holding Ltd.’s Ele.me and Meituan Dianping, another backed by Tencent Holdings Ltd. To draw more diners, Xiong’s three operating restaurants are offering to deliver food to any location in the huge city, even if it takes hours. The online platforms take 20% of sales, but “we don’t dare to increase our prices because people will complain,” Xiong says.

And while his businesses are dying on the vine, Xiong is getting scrappy – importing high-tech food packaging machines from Taiwan to resell to other restaurants, and embarking on a livestreaming channel featuring his cousin cooking in one of his restaurants and eating the food.

“There definitely will be restaurants sifted out,” he said, adding “The market just follows natural selection, and only the fittest will survive.”

Submitted by Mark E. Jeftovic of EasyDNS

Before the current Coronavirus pandemic, the Canadian government took delivery of the Broadband Telecom Legislative Review.  The 235-page report offered 97 recommendations for revamping internet and broadcasting oversight, most of them bad ones. Among them were provisions for requiring all content creators to obtain a license for operating from the government and “discoverability provisions” to force major tech platforms to emphasize “credible sources of news” over others (what the government calls “Approved Media”).

I wrote an article about it at the time and tabled a petition into the House of Commons to call on the government to reject BTLR in it’s entirety (still open, so please sign and share). More recently the Internet Society Canada Chapter (of which I’m a board member) submitted a point-for-point critique of the framework (it’s not on the site yet, will link when it is).

Shortly after that the government-funded CBC marshalled a gaggle of “Approved Media” in Canada (no doubt one of entities who will receive part of that $600,000,000 subsidy package announced in the run up to the last election) to call forth the government to legislate “trusted sources” of news…..

If you’re with me so far, the logic flows like this:

The latest beat in this march toward CCP-style control over the narrative is the federal governments’ latest declaration that “they are open to new laws against spreading pandemic misinformation”

The federal government is considering introducing legislation to make it an offence to knowingly spread misinformation that could harm people, says Privy Council President Dominic LeBlanc.

 

Rex Murphy was quick out of the gate with a scathing criticism of the idea, drawing the quite apt parallel to the similarity any Canadian legislation to control the narrative would be the same as the Chinese Communist Party’s total control in that country, and we see firsthand the horrors that causes.

There is already a government that has that power, and in some cases brutally exercised it. That is the government of the Communist Party of China.

And what did it do with that power? It barred telling the truth about COVID-19, and instead told lies about it. On the where it happened, when it happened, how it happened and how it spread, the Chinese government confounded, confused and lied about a plague that has now hobbled the whole planet. And China “officially reprimanded” the doctor who initially tried to warn people about the coronavirus, and who, with dread irony, actually died from it.

(emphasis added)

The pretense around “preventing misinformation about Coronavirus” is appealing to governments everywhere as they use the age old “never let a good crisis go to waste” to attempt to tighten their control over their respective populations.

Dominic Leblanc cites British MP Damian Collins’ moves in a similar direction in the UK.

LeBlanc told CBC News he is interested in British MP Damian Collins’s call for laws to punish those responsible for spreading dangerous misinformation online about the COVID-19 pandemic.

Collins’ is the impetus behind Infotagion, a new website that purports to be a dispassionate, neutral arbiter of what is and isn’t “fake news” (incidentally, Collins was also a staunch “Remainer”, pushed for a second Brexit Referendum and was calling for an investigation into “Russian Meddling” around the Brexit vote).

What is troubling about this peleton of governments and incumbent mainstream media outlets singing in harmony about the need to control “misinformation” is that in a fast moving situation like this, it is impossible for anybody to say for sure what the truth actually is.

Will Luc Montagnier lose his Nobel for saying COVID-19 came from a lab?

Zerohedge was kicked off of Twitter for investigating whether Coronavirus originated in a Wuhan lab. This line of inquiry has since moved mainstream, with numerous US lawmakers and scientists saying it is possible. Among them is Luc Montagnier, the man who won a Nobel Prize in 2008 for his discovery of HIV, who says that COVID-19 is a man-made virus that came out of a lab. This is largely unreported in mainstream media and French language media are dutifully accentuating the naysayers.

What is more disturbing to me is the pejorative timbre of mainstream media criticisms toward unapproved narratives and conflating them with politically tinged ideology in order to marginalize orthogonal thought.

The hot-button 5G / Coronavirus theories are a good example. Originally that “conspiracy theory” took hold as “5G suppresses immune system, furthering the spread of Coronavirus”. But when I see mainstream media lambasting “baseless 5G conspiracy theories” it is then framed with the added notion that “people think the virus spreads via 5G radio waves”.

I haven’t seen anybody in any tin-foil hats actually making that claim (but to be honest, I haven’t gone looking for that either).

My suspicion, my worry, is that the mainstream media is juicing up the 5G conspiracies to make them more absurd, what’s worse, they are then framing them with other pet boogymen to conflate all non-conformist thought.

The screen grab is from this article in The Guardian, while this Media Matters column about the conspiracy theories around Bill Gates (who did, undeniably, call for a national tracking system to monitor individual vaccination status in a recent Reddit AMA) frames any hysteria over government overreach as exclusively a far right, far white movement:

During this time, conspiracy theorists, anti-vaxxers, white nationalists, and supporters of the QAnon conspiracy theory have spread a baseless conspiracy theory on multiple social media platforms, far-right sites, and message boards claiming that Gates’ effort to help develop a vaccine is some kind of nefarious attempt to control, follow, or even depopulate the world’s population via a “microchip” of some sort

Whenever you see news articles that use words like “baseless” and “unfounded”, without adding contextual data or underpinnings to back that up, they add to a widening suspicion amongst the general populous, one that may explain why nearly all of them are failing financially amid plummeting audiences. It’s the suspicion or realization that mainstream media outlets, especially the government funded ones, are just as agenda driven as the most outlandish shock-jocks in tin foil hats.

They sound like The Pravda.

When a populist like Donald Trump rails about #FakeNews, he isn’t making something up out of the blue and ramming it down the throats of his mindless followers, inducing some undeserved crisis of faith in the venerable integrity of major news outlets, one that otherwise wouldn’t have occurred.

It works because he’s hitting a nerve. He’s tapping into a subconscious pool of distrust and cynicism at an institution that routinely cheerleads monumental lies (like WMD in Iraq) and then enjoys immunity from accountability in doing so.

It is the increasing realization that what we call the mainsteam media today is the essential scaffolding for the hypernormalisation that has set in here in the west (hypernormalisation is the construction of an institutionalized pretext that a failing societal structure is still functioning as expected).

 in the Soviet Union [everybody] knew the system was failing, but no one could imagine an alternative to the status quo, and politicians and citizens alike were resigned to maintaining the pretense of a functioning society. Over time, this delusion became a self-fulfilling prophecy and the fakeness was accepted by everyone as real, an effect that Yurchak termed hypernormalisation.

The above outline is taken from Wikipedia. The term was coined by Soviet dissident Alexei Yurchak  and later made into a documentary by British filmaker Adam Curtis.

In the next installment I’ll tell you about the times mainstream media here in Canada tried to recruit me into participating in the construction of purely fabricated “news stories”. It’s the reason why I stopped giving media interviews after 2010.  And we’re not talking fringe “indie” elements either, in the follow-up post I’ll tell you about two incidents involving the CBC and Global News.

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Public shaming is nothing new, nevertheless, shaming others on social media. Now people have taken it to an entirely new level by shaming those on social media who are violating social distancing rules. 

From Facebook to the community app Nextdoor, people have flooded social media platforms to criticize others who are violating public health orders. Some are complaining about their neighbors hosting wild quarantine parties, while others are disgusted by joggers panting on others.  

Experts fear the rise of the surveillance state is being ushered in by the coronavirus pandemic. And people snitching on others and posting it on social media will become normalized in a post-corona world, reported AFP News. 

“It distresses me greatly to see a few uncaring louts who scoff at the safety rules that are meant for all of us to get through this awful situation,” said one user on a listserv for a wealthy suburb of the capital Washington, which has seen a slew of complaints about people ignoring distancing guidelines.

 “I have a suggestion – if you see such behaviors as mentioned above – why not take photos/videos of the offenders? This could discourage their dangerous behaviors,” said another.

Online shaming has been around for at least a decade or two. What has developed during the pandemic is that some people believe it’s their civic duty to enforce public health orders by shaming those who violate it on social media, which adds a new layer to the police state of your neighbor doing the bidding for Big Brother. 

“There is a sense that if you do it you can save lives… With COVID-19, we’re scared and there is an urgency to enforce the social distancing rules. Shaming is really one of the only tools we have,” says Dr Emily Laidlaw, an associate professor at the University of Calgary who studies privacy law and online shaming.

Most of the shamming is occurring on Facebook, Twitter, Instagram, and Nextdoor, via posts that have names, locations, and or even images or videos detailing how social distancing rules were violated, it can be extremely dangerous and allow the government to conduct unprecedented snooping operations. 

“My neighbors are all drunk and having a party next door. One of them went on a loud tirade near my door that another month of quarantine is stupid and that he wasn’t going to do it,” posted one frustrated resident of a middle-class west Los Angeles neighborhood recently.

“You need to report them when it’s happening because that just means another month for us to be indoors,” another user replied.

As we’ve noted, the government has already taken action to monitor the locations of everyone via their smartphones to make sure social distancing is being followed. In combination with neighbors shaming others on social media where the government can easily see, well, our freedoms and America we use to know will not exist in a post-corona world, as the rise of the surveillance state becomes more evident. 

Wicca Davidson, who manages communications for a municipality in Maryland, said there’s a noticeable increase in social media posts of people snitching on others for violating public health orders as the pandemic unfolds. 

“We don’t want to give a few people the ability to derail the use of the listserv,” she told AFP.

“There’s definitely social shaming. That’s part of what’s working to stay home,” Divya Sonti, an employee of IQ Solutions, which are experts in public health communication. 

But “there is a cost that should be acknowledged — casualties who are taken down by this unfairly, and the normalization of neighborhood surveillance,” Sonti said.

Another social media user around the Washington Capital Beltway fears the rise of the surveillance state: 

“I sympathize with the concern but becoming a police-state type of community isn’t healthy,” the user wrote.

“This is not ok to take picture of people and post them,” another person wrote on a Nextdoor group in Los Angeles, after a user posted photographs of people they felt were walking too closely together. “What is next? Train to Dachau?”

Privacy expert Laidlaw said public shaming on social media started way before the pandemic, noting that “shaming sites are not new, nor are neighborhood watch/surveillance sites.”

What’s even more concerning is when the government starts asking people to snoop for them: NYC Mayor Bill de Blasio told residents on Friday that people should take photos of those who are not wearing masks and report them to authorities. 

When the dust settles, which could be sometime in 2Q21, as per a new report via Morgan Stanley, it will become increasingly evident that a surveillance state in America has been erected, from the community level of people snitching on others on social media, all the way up to mega-corporations and government. 

Authored by Matt Taibbi,

It’s early days, but the Federal Reserve “bazooka” has mostly impacted the 1%…

Take a look at some contrasting sets of headlines.

First, from planet earth:

Weekly Jobless Claims Hit 5.425 Million, Raising Monthly Loss To 22 Million Due To Coronavirus (CNBC)

Worst Case Fears Of 20%-Plus U.S. Jobless Rate Are Now Realistic (Bloomberg)

Then from Wall Street:

Private Equity-Owned Companies Sell New Bonds in Credit Rally (Bloomberg Law)

Fed’s Historic Move Spurs Rally in Junk Bonds: 6 ETF Picks (Nasdaq.com)

As we head into the second month of pandemic lockdown, two parallel narratives are developing about the financial rescue. 

In one, ordinary people receive aid through programs that are piecemeal, complex, and riddled with conditions.

A law freezing evictions applies to holders of government-backed mortgages only. “Disaster grants” are coming more slowly and in smaller amounts than expected; small businesses were disappointed to learn from the SBA early last week that aid would be limited to $1000 per employee.

A one-time “economic impact payment,” reportedly delayed so recipients could experience the thrilling visual of Donald Trump’s name on the check, might help make half a rent payment. Unemployment insurance amounts have been raised, so tip and gig workers can now be ineligible for $600 a week more than before! The cost of a coronavirus test might be free, but you test positive, you could up paying $50,000 or more in hospital costs even with insurance. And so on.

Meanwhile, “relief” programs aimed at the top income levels were immediate, staggering in size and scope, and often appeared as grants rather than loans. One of the biggest layouts of the Covid-19 rescue was a political carrying charge that members of congress extracted just to get the larger bailout out the door – a pre-bailout bailout, if you will.

Although the $2 trillion coronavirus rescue was approved unanimously, a set of tax breaks was stuck in by Republicans, in the original version of the CARES Act put forward by Mitch McConnell.

When Donald Trump signed his whopper Tax Cuts and Jobs Act two years ago, the bill contained clauses to offset the loss of revenue that would entail from shaving down the top individual tax rate relatively a little (from 39.6% to 37%) and slashing the corporate tax rate a lot (from 35% all the way down to 21%).

One of those changes limited the amount of losses that could be used to offset taxable income in any given year. Another limited the amount of losses from so-called “pass-through” businesses (i.e. businesses that don’t pay corporate taxes) that wealthy individuals could use to offset taxable income. These provisions particularly impacted real estate developers (!), hedge fund managers, and other high net worth individuals with volatile revenue profiles.

The second provision only affected people making at least $250,000, or couples earning at least $500,000.

The CARES Act sought to wipe out or alter both provisions. Republicans also tried to include tax relief for multinationals who offshore profits, but that provision was stripped out in favor of these first two loopholes, seemingly reflecting their importance to the caucus.

As Steve Wamhoff of the Institute on Taxation and Economic Policy points out, the changes on the use of “pass-through” losses only benefit a select group. “It has to be stressed that this exclusively helps wealthy people,” Wamhoff says. “It only has an impact on people already making over $250,000.”

Because the CARES Act was rushed to the floor, members didn’t have all of the information they might have wanted before the vote. After the bill passed, Democratic staffers sent these tax provisions in the CARES Act, sections 2303 and 2304, to the Joint Committee on Taxation, to be scored. They were stunned to learn they would cost $195 billion over ten years.

In other words, what seemed like a run-of-the-mill offhand legislative pork provision ended up dwarfing the airline bailout and other main parts of the bill.

“The cost of caring for this small slice of the wealthiest one percent is greater than the CARES Act funded for all hospitals in America,” says Texas Democrat Lloyd Doggett. 

“It’s greater than CARES provided for all state and local governments.”

The JCT analysis found that 80% of the benefit of the bill went to just 43,000 taxpayers each earning over $1 million a year. The average tax break for those 43,000 individuals was $1.6 million, an interesting number when one considers the loudness of the controversy over $1,200 relief checks for everyone else.

Doggett joined Rhode Island Senator Sheldon Whitehouse in sending a letter to the Trump administration, demanding to know the provenance of these tax breaks. “This irresponsible provision must be repealed,” he says. It’s possible we’ll find out someday whose idea it was to insert those breaks. By then, however, other windfalls from the Covid-19 rescue might have rendered the $195 billion bailout appetizer quaint.

With the Fed’s announcement on April 9th of a $2.3 trillion program that includes purchases of junk bonds, the toolkit for support of the financial economy now encompasses nearly every conceivable official response apart from subsidy of stock markets. The sheer quantity of money raining down on the finance sector appears transformational, a “joyful noise” heard around the world. 

“POW!#* @  BAM&$# SMASH! @#$% KABOOM*#!@?% That’s the sound of the Fed’s big bazooka,” reads Forbes in a typical financial news report. 

The Fed deployed many of the bailout tools it used in response to the 2008 crisis at the end of March. These were radical enough, but still confined to the finance version of safe sex: buying investment grade debt, U.S. treasuries, government-backed mortgages, etc.

On April 9th, the Fed took a walk on the wild side, announcing a spate of new facilities that dramatically expand its footprint in the economy.

Some programs are less controversial, like a Municipal Liquidity Facility providing aid to states and localities.

Others however steer money to “fallen angel”companies with declining credit ratings, longshot problem horses at the global racetrack. As a Wall Street Journal editorial put it in awed tones, “the Fed will in effect buy the worst shopping malls in the country and some of the most indebted companies.”

The WSJ went on to dissect the logic of the bailout (emphasis mine):

The Fed may feel all of this is essential to protect the financial system’s plumbing and reduce systemic risk until the virus crisis passes, but make no mistake that the Fed is protecting Wall Street first. The goal seems to be to lift asset prices, as the Fed did after the financial panic, and hope that the wealth effect filters down to the rest of the economy.

The coronavirus rescue is a “trickle-down” plan. Many of the Fed programs don’t appear even secondarily concerned with maintaining employment. The basic idea instead has been to hurl money at “assets,” underscoring the bizarre dualistic nature of this rescue.

If the ordinary person during the crisis dreams of being relieved from market stresses like housing and medical costs, only to receive (at best) one $1200 check, it’s Wall Street actors who are seeing the tyranny of markets fundamentally overthrown, replaced by a giant financial happy face called the Federal Reserve that appears to want to simulate real buying and selling, only with the downside removed. Party on, Wayne!

As Marcus Stanley of Americans for Financial Reform puts it, “the Fed’s perspective on this is, they want to create normalcy” in financial markets. What “normalcy” means, however, at a moment when many businesses are closed or careening toward bankruptcy, is not clear. This heads-I-win, tails-the-Fed-loses economy is resulting in win after win across the financial sector, some more malodorous than others.

In late March, for instance, Citigroup bought nearly $2 billion of AAA-rated securitized commercial loans from PGIM, the investment management business of Prudential, at roughly 90 cents on the dollar.

According to Bloomberg, Citi then turned right around and sold those bonds to the Fed’s Primary Dealer Credit Facility at “closer to par,” i.e. nearer to 100 cents on the dollar, a nearly instant $100 million windfall.

The reader should be able to do the math on who knew what, and when, in that story.

It’s hard to know what is ordinary front-running of this type and what is sincere worship at the altar of the Fed’s new “limitless” purchasing power. Investors are now chasing Fed decisions with seemingly real zeal, causing private money to flow directly into the very risk-laden sectors of the economy they probably would be fleeing absent government intervention.

In one of many hallucinatory headlines from this week, the head of the global allocation team for BlackRock – the company that’s administering Fed buying programs – said his company would henceforth be betting on the Fed’s bets.

“We will follow the Fed and other DM central banks by purchasing what they’re purchasing, and assets that rhyme with those,” said BlackRock’s Rick Rieder.

Other companies are employing the same strategy. “The stimulus seems to be endless,” said Dirk Thiels of KBC Asset Management in Brussels. “Buy what the central bank has been buying and in the short-term it’ll be a good strategy.”

It’s one thing for the Fed to step in and help important companies that have been unduly damaged by coronavirus, firms like Ford, whose debt was downgraded to junk in late March (but which is eligible for support under the Fed programs announced on April 9th).

It’s another thing for the Fed to create fresh bull markets around its own investments in the debt of basket-case companies, especially since it’s not clear how, say, the continuous propping up of junk bond Exchange-Traded Funds (ETFs) addresses issues like unemployment, or anything else for that matter.

“These financial bailouts are unconnected to any real-world crisis strategy,” is how one market analyst puts it. 

Brian Chappatta of Bloomberg added a similar criticism this week, asking, “How exactly do high-yield ETF purchases help Americans get jobs or pay rent?” 

The Bank of England last summer identified the state of such “open-ended funds” as a potential systemic problem:

More than US$30 trillion of global assets are now held in open‑ended funds that offer short‑term redemptions while investing in longer‑dated and potentially illiquid assets, such as corporate bonds…

The Bank added, “the mismatch between the liquidity of a fund’s assets and its redemption terms can create incentives for investors to withdraw funds ahead of other investors.”

It went on to say that under a “severe but plausible set of assumptions,” there could be a rush of redemption requests that could “overwhelm the capacity of dealers to absorb those sales,” causing “market dysfunction.”

This is a fancy way of saying that investment banks and asset managers have been making big bucks trading collections of longer-term, potentially hard-to-sell corporate bonds as highly liquid and relatively safe products. In a crisis, the Bank of England warned, these would suddenly be hard to sell, at which point the possible underlying dogshit-ness of these debt instruments might be exposed, causing further market panic. 

When the Covid-19 crisis hit, exactly this “severe” scenario seemed to take place. Several of the world’s biggest corporate bond funds plummeted in value, and buyers were suddenly scarce. A $30 billion bond fund managed by (again) BlackRock, the iShares iBoxx $ Investment Grade Corporate Bond ETF or “LQD,” went into freefall, only to rebound spectacularly once the Fed announced its first bond-buying program (managed by Black Rock, of course) in late March. 

“A $33 billion ETF sees most cash in 18 years on Fed-fueled rally,” read the cheery Bloomberg headline on March 25th. LQD at this writing is up 23.7% since the Fed announced its bond-buying program. Another troubled BlackRock fund, the $15.8 billion HYG – the world’s largest junk bond fund – now looks like an ascendant product as well.

All of these issues come on top of others inherent with the Fed programs. As Stanley’s Americans for Financial Reform has pointed out:

… the announced terms for these facilities would seem to permit public financing of leveraged buyouts, public financing of share buybacks to enrich already wealthy executives, public support for corporations that are simultaneously engaged in laying off their workers, and a range of other highly problematic outcomes…

Again, there are some restrictions in parts of the CARES Act, and in some of the Fed programs, that take aim at layoffs, buybacks, executive bonuses, and other issue. But the bond purchasing programs in particular have few restrictions on executive compensation, on buybacks, on layoffs or offshoring of labor, on payments to private equity owners, etc. There isn’t much point in restricting the spending of bailout money on handouts with one hand, if you can do it freely with the other hand, yet this is how the coronavirus rescue is structured.

This is in addition to the near-total lack of oversight. To date, the only person assigned to the Congressional Oversight Commission with purview over these programs is former adviser to Elizabeth Warren, Bharat Ramamurti. Ramamurti has no staff, no office, nothing except — this is not a joke — a Twitter account. I asked him if more resources had come his way since early Swiftian news stories identified him as a quixotic “lone” regulator attempting to watch and oversee trillions in spending by himself 

“Nope,” he said. 

Ramamurti has however sent Fed chair Jerome Powell a letter, “to respectfully request that the Federal Reserve publicly release detailed and timely information about each individual transaction” made under the new lending programs.

Remember, much of the Fed’s rescue lending is backed by Treasury dollars, which means the taxpayer is eating what otherwise would have been the market risk of many of its investments. 

However, the Fed has shown no inclination to release any information about its activities. Thus this is a brave new world not just in terms of economics, but also oversight. Essentially, the spending of huge amounts of taxpayer money has been outsourced to the Fed, whose ideas about disclosure suck even worse than those of congress.

It’s early, but the Main Street and Wall Street rescues are looking increasingly disconnected from one another. One looks like it doesn’t work, while the other might work way too well. If only we could see enough to know for sure. 

We’ve been watching Hong Kong closely these past few weeks to see if Beijing, having mostly reopened the mainland economy, relieving the pressure for the first time in months, would turn its attention back to its top priority pre-corona: Crushing an insurgent pro-democracy movement in the Special Administrative Region.

Early on Saturday morning in Hong Kong, HK police arrested 15 pro-democracy movement activists, including a high-profile tycoon who was one of the few members of the HK business community to vehemently back the protest movement, according to the SCMP.

The targets included Hong Kong media tycoon Jimmy Lai Chee-ying, and 14 other supporters. The pretext for the arrest was their involvement in last year’s protests.

Jimmy Lai

Even if the name isn’t widely known in the US, Lai is a major figure in the leaderless and mostly amorphous Hong Kong pro-democracy movement. He has been targeted before, including an attack on his home carried out last fall by thugs likely backed by the Communist Party.

The sweeping crackdown comes more than six months after the last major pro-democracy demonstration in the city, though some protesters took to the streets during the early weeks of the corona outbreak to demand that borders be closed and other heavy handed measures be taken by the city government to prevent a re-run of the SARS outbreak, which killed more than 300 in HK. That movement, of course, was first set in motion last spring in response to an extradition bill being expedited by the government that would have made Hong Kongers subject to prosecution (and, they feared, persecution) in mainland Communist Party-controlled courts.

Details provided by SCMP claimed that police tried to arrest Lai n the middle of the night, but were forced to wait until he returned home (American cops could definitely show their colleagues in Hong Kong a thing or two about how to pull off a ‘tactical GPS takedown’).

The arrest were reportedly sanctioned by Hong Kong Chief Executive and Beijing puppet Carrie Lam.

Officers earlier showed up at the home of the Apple Daily founder, but he was not in at the time. He returned in the afternoon and was arrested at 2.50pm. He was accused of organising and participating in unlawful marches on August 18 and October 1 from Causeway Bay to Chater Road in Central.

Police also entered and searched his place under a warrant.

Others arrested included former lawmakers Martin Lee Chu-ming, Albert Ho Chun-yan, Lee Cheuk-yan, “Long Hair” Leung Kwok-hung and Au Nok-hin, according to legal sources.

Several former lawmakers were also detained and arrested (Beijing has already pushed out many of the most progressive pro-democracy hardliners from the HK legislature), including those named by the SCMP below:

Also held were former lawmakers Yeung Sum, Sin Chung-kai, Cyd Ho Sau-lan, and activists Raphael Wong Ho-ming, Figo-Chan Ho-wun and Avery Ng Man-yuen.

They were detained over organising and joining unlawful assemblies on August 18, October 1 or October 20 last year. The suspects were taken to several police stations.

Martin Lee was taken to Central Police Station in Sheung Wan, while Leung Kwok-hung was sent to Ngau Tau Kok Police Station.

Police also showed up at the home of former legal sector lawmaker Margaret Ng Ngoi-yee. She later reported to Central Police Station and was arrested there. She was involved in the August 18 rally.

Several of those arrested were charged with additional crimes – that is, appearing at more rallies than the demonstrations cited above, according to a police superintendent. Lam added that the operations are “still ongoing” and that more arrests might follow. The arrested will be arraigned in a Hong Kong court on May 18.

Of course, this crackdown will be seen as nothing less than a brutal outrage and a betrayal by most democracy-minded Hong Kongers (the vast majority of the population). By arresting Lai and targeting other well-known figures in the movement, authorities almost seem like they’re trying to bait Hong Kongers into returning to the streets.

Perhaps that’s their strategy: If anybody tries to march this time, police can resort to brutally suppressive tactics in the name of safeguarding public health. However, we can’t help but notice that it almost seems like Beijing is trying to trigger a return to the massive rallies of last summer.

But why is Beijing even willing to risk the possibility that thousands – potentially hundreds of thousands – of Hong Kongers might react by crowding into the streets in the middle of a resurgence of the virus? Recent reports from Hong Kong suggest the economy is already reopening, and locals are growing more comfortable being back out in the street.

Why did Beijing pick now to rock the boat, and prosecute individuals for crimes that roughly one-third of HK’s population engaged in at one time or another?

The Spanish government has just “authorized” the military to prepare planes for aerial spraying of disinfectants across major metro areas as confirmed COVID-19 cases and deaths continue to rise, reported La Razón News.

The order was first published in the Boletín Oficial del Estado, the country’s official gazette, on Friday, that “authorizes the NBQ (Nuclear, Biological and Chemical) units of the Armed Forces and the UME to use biocides authorized by the Ministry of Health in disinfection efforts to deal with the health crisis caused by the coronavirus.”

According to the order, “the most effective disinfection techniques are the use of aerial means because through them, with nebulization, thermonebulization and micronebulization techniques, all surfaces are reached quickly, avoiding reliance on manual application, which it is slower, and sometimes it does not reach all surfaces because there are obstacles that prevent reaching them.”

The order continues to say “aerial disinfection” missions will be conducted “regularly” as long as the pandemic continues to ravage the country.

On Friday, Spain reported 5,252 new infections, the most significant jump in cases in more than a week, pushing up total cases to 184,948, with 19,478 deaths. The surge in cases could suggest that curve flattening via strict social distancing measures are not working, hence why the government has called up the military to conduct aerial disinfectant spraying missions.

La Razón News said the 43rd Air Force Group would operate Canadair CL-415 aerial firefighting planes that will most likely be outfitted with special sprayers to create an even stream of disinfectants while blanketing a metro area.

Each CL-415 has a range of 1,518 miles with a 1,620-gallon tank that can be mixed with chemicals. The plane is amphibious and can refill on a body of water.

Spain has deployed unmanned aerial systems and ground-based robots to spray disinfectants on the street level. Still, the move by the government to blanket entire towns with disinfectants via airplanes suggests that current efforts are failing to suppress the virus.

As early as late January, we started to note that China was deploying drones with 5-gallon tanks of disinfectants to spray streets.

China using drones to spray the citizen with chemicals to combat the virus. pic.twitter.com/qRSBolO66X

— Malak Manatazach (@mjtruIys) February 17, 2020

In late February, China started converting ground-based agriculture robots with sprayers to disinfect public areas.

Our farm #robot R80 has stepped forward to join the #fightcoronavirus operation, disinfecting parking lot outside the office block in Guangzhou. Lightweight, flexible to traverse small districts, R80 can disinfect an area of up to 64800 square metres per hour, with no dead ends. pic.twitter.com/Dm7r8kqjVK

— XAG (@XAG_official) February 11, 2020

Spray cannons on trucks in China. 

SPRAY, SPRAY, SPRAY THE #CORONAVIRUS AWAY.
China continues spraying disinfectant to contain the CoronaVirus. pic.twitter.com/qmXNwM5Ni0 03#FBR

— Tomthunkit™ (@TomthunkitsMind) April 15, 2020

More spraying in China.

Disinfection is underway! China’s most virus-stricken province, Hubei, is disinfecting entire cities to curb #coronavirus, as trucks and medical workers spray disinfectant through the streets. pic.twitter.com/JNXViVPV3s

— People’s Daily, China (@PDChina) February 10, 2020

By March, Spain deployed its Army personnel to disinfect train stations.

The Russians converted a jet engine to spray disinfectants… 

Russian engineers in Chelyabinsk have converted a jet engine to spray disinfectant, as cities around the world try to destroy viral cells that may be lingering on surfaces. pic.twitter.com/dIXeh9455N

— Radio Free Europe/Radio Liberty (@RFERL) April 13, 2020

Just remember, the spraying of disinfectants, if that is by ground-based systems or humans, or aerial systems such as drones or airplanes, it will be coming to major metros across the US.