Month: February 2020

Bridgewater founder Ray Dalio has been a fixture in the financial press for more than a year now as he has transitioned from running his firm to establishing himself as a media commentator and pseudo-prophet, loudly exhorting the public to heed his warnings about capitalism and its shortcomings. Economic inequality is an imminent threat to societal cohesion in the US, Dalio claims. And in a series of disorganized screeds published on LinkedIn and accompanied by charts that were presumably assembled on the fly by a team of Bridgewater analysts (since computers handle most of the actual investing at Bridgewater now), the billionaire has laid out his plan to repair the damage caused by decades of corporate greed (allegedly unleashed during the 1980s by Ronald Reagan’s free-market reforms).

Not only is Dalio’s plan hopelessly unworkable, and not only because it hinges on the emergence of a kind of mythical technocratic champion able to bend Congress to his or her will and push through a slate of reforms that would undoubtedly infuriate corporate America, all while preventing it from doing everything in its power to undermine the administration and its economic agenda in retaliation.

It’s unworkable because we tried all that. The answer to America’s ills isn’t more government giveaways – that’s what got us here. But politics aside, WSJ published a scathing deep dive in its weekend edition examining the turmoil at the top of Bridgewater, which has long been the subject of gossip and speculation in the industry. Dalio is 70 years old, but despite claiming that he’s not really responsible for the company’s day-to-day operations, WSJ reporters found that this isn’t true. Dalio is still very much in charge, and after a series of botched succession plans – which all fell apart because his handpicked executives eventually clashed with Dalio’s dictatorial style – it’s not exactly clear what Bridgewater’s plan is for the coming decades. 

Ray Dalio caricature courtesy of WSJ

These questions are being posed at a difficult time for Bridgewater: the firm was recently the target of a harassment complaint filed by a former employee, and last year its flagship fund badly underperformed the market, during a year that was a bonanza for most investors.

Most recently, Eileen Murray, a co-CEO of Bridgewater along with David McCormick, has announced plans to leave the company at the end of Q1. Her decision, announced in December, followed reports that she was in talks to take the top job at scandal-scarred Wells Fargo. However, that job went to former BNY chief Charlie Scharf, and it’s unclear what Murray has in mind for her next move.

Since then, there’s reportedly been some bad blood with Dalio.

Mr. Dalio – who is co-chairman and co-chief investment officer – at age 70 isn’t giving up real control over the business that helped him amass a $19 billion fortune. His word nearly always wins out in debates at Bridgewater on topics from management, staffing and investments to compensation, personnel and the wisdom of meeting with an autocratic head of state, say current and former employees.

Mr. Dalio repeatedly overruled Ms. Murray on whom to hire, fire and promote, according to the current and former employees. She has told several friends she was exhausted and couldn’t do the job anymore.

Ms. Murray is still negotiating the terms of her exit; Mr. Dalio wants to cut the value of her stake in the firm, according to some of the current and former employees. Bridgewater bars employees from independently speaking with the press.

According to WSJ, it all goes to show that all of Dalio’s preaching about ‘radical transparency’ is just that. Talk – at least where Dalio is involved. And that’s why his senior managers never seem to pan out. Because employees at the firm, from the most junior to the most senior, understand that it’s extremely risky to challenge Dalio about anything, lest he respond thusly. Several witnesses told WSJ that Dalio mocked an underling when he objected to Dalio’s plan to meet with Russian President Vladimir Putin.

Several years ago, Mr. Dalio arranged a conversation with Russian President Vladimir Putin to discuss economic policy, said some of these employees. Employees expressed concerns about engaging with the autocratic leader, and Mr. Dalio told one that “if you’re so smart, why aren’t you rich?” according to people who heard the comment.

Mr. Dalio overruled the dissenters. Indeed, Mr. Dalio went on to meet with Mr. Putin several times in person, one of the people said. Other employees believed Mr. Dalio was right to discuss economic policies with Mr. Putin.

Representatives of Mr. Putin declined to comment, and Mr. Dalio declined to comment on the discussions. The company said it does not disclose “who Bridgewater people meet with.”

Would you look at that: Dalio, an ardent critic of President Trump, is a friend and routine business confidant of Putin. We’d be curious to see his FBI file.

Meanwhile, even the most senior employees like Dalio’s current co-CEO (who was just recently abandoned by Murray, his co-CEO) has reportedly complained about a kind of vindictiveness that Dalio displays toward departing employees that manifests in the form of frugality.

Dalio has reportedly worked to reduce senior employees ‘phantom equity’ to which they are entitled upon leaving the firm. However, the senior employees denied this to WSJ.

“He is so cheap,” Mr. McCormick told colleagues late last year, speaking about his boss, according to the contemporaneous notes of one person who heard the comment. “Not only did he want to sell the house but he wanted to get the nickels out of the couch.”

Mr. McCormick said the attempt to reduce his stake “did not happen and I did not make that comment.” He said he has a “terrific working and personal relationship” with Mr. Dalio. He also said “I never discussed a job at BlackRock.” A company spokesman added that Mr. McCormick “never discussed with Larry about leaving Bridgewater.”

Though as much as we might mock Dalio for his obvious hypocrisy and his laughably unimaginative plan to fix capitalism (hint, hint, hint: it involves raising taxes on the rich).

But there’s one thing about Bridgewater that nobody can dispute. The firm remains the world’s most successful hedge fund shop, with few qualified rivals for the crown. Surrounded by a sea of fakers, imitators and interlopers who together suffered some of their worst outflows in recent memory last year, Bridgewater continues to grow, and outperform, despite the flagship fund’s lackluster performance in 2019 (it outperformed by a wide margin the year before).

Since then, Bridgewater has delivered the biggest net gains of any hedge fund, according to a 2019 report from LCH Investments, a result due partly to Bridgewater’s large size. Its investors include endowments, public pension funds and sovereign wealth funds. It manages about $160 billion, making it the largest hedge-fund firm in the world.

But in recent years, Bridgewater has been less than impressive. The flagship hedge fund, Pure Alpha, barely made any money last year despite a banner year for assets of all stripes, according to data reviewed by The Wall Street Journal. It bets on and against markets world-wide in an effort to stay ahead of macroeconomic trends.

A smaller fund called All Weather that makes automated, computer-driven trades gained 16.6%. That lagged the 21.7% return of a Vanguard Group fund that uses a conventional mix of 60% stocks and 40% bonds.

Mr. Dalio has described the investment performance as embarrassing in meetings with staff, according to people familiar with the conversations. The company said in a statement that “we don’t know of any such comment.” It added that “while Bridgewater’s alpha last year was disappointing to Ray it was within the range of expectations.” Mr. Dalio said in a statement that “there is a waiting list to invest” in Pure Alpha, which he said made 10% in 2018 when “most assets were down.”

While we’re sure Dalio will blast the WSJ for fabricating its reporting (he does this every time WSJ writes about him), it’s worth noting that the genius comics behind 1990s sketch comedy “Mr. Show” came up with a name for Dalio’s professed money-based value system.

It’s called Worthington’s Law.

It was created by David Worthington – a truly great man. Quite simply, the law stipulates that an individual’s intelligence and overall value to society increases along with his or her personal fortune. By this logic, Jeff Bezos and Mark Zuckerberg are two of the smartest, most honorable and beloved individuals in all of America. So are Warren Buffett, and Bill Gates.

Oh, and Dalio, of course – but we have a feeling you figured that out already for yourself.

But the billionaire hedge fund founder took a major hit last year when he gave $100 million to the State of Connecticut to improve its schools, step 1 in his plan to save capitalism. But Dalio’s ‘philanthropy’ was a massive PR blunder, and his reputation took a serious hit.

Don’t be like Ray, kids. Hoard your money.

Authored by Michael Snyder via The End of The American Dream blog,

We haven’t seen an outbreak like this in any of our lifetimes, and it is really starting to frighten a whole lot of people.  This virus has an incubation period of up to 14 days, it spreads very easily from person to person, and it also appears to be mutating very rapidly.  For now, the vast majority of the confirmed cases are still in China, but the virus continues to pop up in more locations around the globe. 

In fact, on Friday we learned that the U.K. and Russia have both confirmed their very first cases.  This is obviously a very dangerous disease, and nobody is quite sure what is going to happen next.  But videos that are circulating on social media are fueling speculation that this could become a horrifying global pandemic of epic proportions.  In particular, a brand new video that shows a man that suddenly dropped dead on a street in Wuhan is causing quite a bit of fear and speculation…

Police in hazmat suits yesterday surrounded the body of a man who was found dead on the pavement at ground zero of China’s virus epidemic.

The grey-haired man collapsed and died while wearing a face mask on a street in Wuhan, a city of 11million people which is under quarantine amid the coronavirus crisis.

It is feared that the virus caused the man’s death, and the reaction of police and medical staff in forensic suits highlighted the fear pervading the city.

It is very important to stress the fact that we don’t know why this man died.  He could have just had a heart attack.  But when authorities showed up to collect the body, they were wearing “protective suits” and the entire street “was thoroughly disinfected”…

Although it’s not known if the grey-haired man died of the killer bug, it is clear from these pictures the authorities were taking no chances.

After being inspected the body was eventually zipped into a medical bag and carried into a van before the street was thoroughly disinfected.

Those who examined him were also sprayed down by colleagues after removing their protective suits.

Other videos that have come out of China have shown trucks spraying an unknown liquid on the streets of Wuhan.  Apparently authorities believe that this is going to do some good in fighting the virus.

Meanwhile, fear is also spreading rapidly in parts of the globe where only a few cases have been confirmed so far.

In the United Kingdom, surgical masks are almost totally sold out at this point.  The following comes from Paul Joseph Watson…

Surgical masks have almost sold out across the United Kingdom over fears of coronavirus despite the fact that there hasn’t been a single confirmed case of it in the country.

Pharmacy retailer Boots says that its six-pack of “safe & sound” surgical face masks is sold out, as is another box of 50 masks.

The company said it was “working to make additional stock available for customers to purchase in store and on boots.com which we hope will land over the next week.”

Of course a case has now been confirmed in the U.K., and that is only going to make the fear even worse.

In Australia, an argument between two mothers about the coronavirus became so heated that both of them ended up in the hospital…

The fight started between a pair of moms on a Sydney mothers’ group chat site and ended with the two in the hospital, according to police.

“The argument quickly escalated from verbal to physical; pushing, slapping, hair pulling and finally both on the ground, briefly unconscious, all despite the efforts of bystanders trying to intervene,” Northern Beaches Police said on Facebook Thursday.

As this outbreak intensifies, the amount of bizarre behavior that we are going to witness is only going to increase.

Fear is a very strong motivator, and an invisible killer virus that spreads very easily from person to person is going to cause a lot of people to really freak out.

Here in the United States, an entire school district in the state of Ohio was completely shut down on Thursday and Friday…

An entire school district in Ohio was shut down for two days this week after nearly 600 students called in sick, the district’s superintendent said.

All classes and after school activities at Three Rivers Local School District in Cleves were cancelled for Thursday, Jan. 30 and Friday, Jan. 31. because of a major flu outbreak.

We aren’t just talking about one school.  An entire school district kept students away for two days, and I can’t recall ever hearing about such a thing happen due to a flu outbreak before.

Could it be possible that 600 students all had the flu?

Sure, it is possible.

But what is more likely is that a lot of parents decided that their kids should “call in sick” once rumors started to fly.  Some of the students exhibited symptoms including “high fever, vomiting and body aches”, and those exact same symptoms are also associated with the coronavirus outbreak.  Cases of the virus are already starting to pop up all over the country, and it is certainly understandable that many parents would be overly cautious in this sort of an environment.

And the federal government has finally decided that being overly cautious is the right move for the nation as a whole.  In fact, just moments ago the Trump administration declared a public health emergency in the United States…

The Trump administration on Friday declared the coronavirus a public health emergency in the United States, and announced that certain foreign nationals deemed to pose a risk of transmitting the disease will temporarily be denied entry to the U.S. Some returning American citizens potentially at risk will be quarantined.

Health and Human Services Secretary Alex Azar said that President Donald Trump signed an order for the U.S. to deny entry to any foreign nationals who have traveled in China within the past two weeks, aside from the immediate family of U.S. citizens.

This should have probably been done a week or two ago, but nobody really knew how bad this outbreak was going to become.  Over the last two weeks, the number of confirmed cases has gotten 236 times larger.  At this point it has become quite clear that something really big is happening, and governments around the world are starting to act.

Initially, the Trump administration didn’t want to alarm the public, but now it is safe to say that the public is definitely alarmed.  In fact, it is being reported that a lot of people are actually buying face masks for their dogs.

For several years we had been enjoying a period of relative peace, prosperity and stability, but now things are starting to change in a major way.

During the Spanish flu pandemic of 1918, approximately 500 million people got sick and tens of millions of people died.

Hopefully this current outbreak will not evolve into that sort of pandemic, but if you want to see something that will really freak you out, just read what Zero Hedge just posted.

This does not appear to be an ordinary virus.

Global authorities are not disclosing everything that they know, and this is another reason why fear is spreading like wildfire.  Most people just want accurate information so that they can make good decisions, and from the very beginning of this crisis the information that we have been getting has definitely not been accurate.

Well that didn’t take long. Despite President Trump previously touting support from some Gulf Arab states like Bahrain and United Arab Emirates for his ‘deal of the century’ Mideast peace plan unveiled at the White House Tuesday, the Arab League on Saturday declared it has officially rejected the plan. 

Meeting in an emergency session in Cairo the pan-Arab bloc stated it “rejects the US-Israeli ‘deal of the century’ considering that it does not meet the minimum rights and aspirations of Palestinian people.”

Simultaneously Mahmoud Abbas announced in a scathing speech before the assembly of Arab leaders that the Palestinian Authority (PA) is cutting all ties with the US and Israel.

“They told me Trump wants to send me the deal of the century to read, I said I would not,” Abbas told the meeting. “Trump asked that I speak to him over the phone, so I said ‘no’, and that he wants to send me a letter, so I refused to receive it.”

Holding up a map produced by the White House of the envisioned future ‘two-state solution’ and what the proposed new state of Palestine will look like, Abbas said further: “I challenge any of you, if you can even see us on the map.”

“If you ask a child in first grade to draw Trump’s map he will never know how to.” He added, “This is a disgrace.”

Abbas said he refused to go down in history as the person who “sold out Jerusalem”. The deal controversially cuts Palestinians out of control over holy sites of the Old City in Jerusalem, while claiming to offer parts of the city’s eastern sector to serve as capital of a future Palestinian state, but only if certain “conditions are met” long term. 

The Arab League further agreed “not to… cooperate with the US administration to implement this plan” while emphasizing that a two-state solution must include a Palestinian state based on the pre-1967 borders recognized by the UN with the capital being East Jerusalem, according to Al Jazeera.

From the start both the PA and Hamas indicated the plan would be dead on arrival as they were not even privy to negotiations related to key components of the plan. Especially the crucial part of the White House plan giving Israel ‘annexation’ rights over at least 30% of West Bank territory, which Netanyahu has said parliament will move to vote on Sunday.

However, a number of commentators have noted the 181-page US-Israel proposal was almost designed to fail in the sense that it concedes all that Israel desires with little significant in the way of concessions to the Palestinians. Israel can then move forward with taking West Bank and Jordan Valley territory while claiming it extended an ‘open hand’ as part of the deal. 

Authored by Aaron Maté via The Nation,

When liberals start rallying around John Bolton, you know something is off…

Donald Trump’s far-right administration is one of the most dangerous in US history, which makes the disappointment over the imminent failure of his impeachment case understandable. But the impeachment proceedings never challenged what actually makes the Trump White House so fraught. In adopting hawkish Cold War chauvinism toward Russia, Democratic House impeachment managers embraced rather than opposed a perilous right-wing agenda. They did this while presenting a weak, overblown, and hypocritical case that posed no threat to Trump.

The holes in the Democrats’ impeachment case were apparent from the start, and the House proceedings and Senate trial brought them to the fore. The lone witness who communicated with Trump about the frozen military funding to Ukraine—and, even more crucially, the only Trump official thought to have relayed a quid pro quo to the Ukrainian side—is EU Ambassador Gordon Sondland. But Sondland testified that the link between aid and the opening of investigations was only his “presumption” and that he had communicated this presumption only in passing. Ukrainian officials, including President Volodymyr Zelensky, Foreign Minister Vadym Prystaiko, and Zelensky aide Andriy Yermak, have all said that they saw no ties between the frozen funding and pressure to open investigations.

In the face of rejections by top Ukrainian officials of his core allegation, Schiff has mischaracterized the available evidence and engaged in supposition. Sondland, according to Schiff’s account, told Yermak, “You ain’t getting the money until you do the investigations.” But both Sondland and Yermak offer a radically different account. According to Sondland, he told Yermak in “a very, very brief pull-aside conversation,” that he “didn’t know exactly why” the military funding was held up, and that its linkage to opening an investigation was only his “personal presumption” in the absence of an explanation from Trump. Yermak does not even recall the issue of the frozen aid being mentioned.

To overcome that, Schiff has gone to the extraordinary step of arguing that it’s not just Sondland who is lying but the Ukrainians as well. “Like they’re going to admit they were being shaken down by the president of the United States,” Schiff told the proceedings.

Sure, that’s one possibility, but it is also wildly speculative.

Ukrainian officials say they did not learn about the weapons freeze until it was publicly reported more than one month after the Trump-Zelensky call. And even after they did find out, and even voiced concerns to their US counterparts, there is no record of any complaints about the alleged linkage. As Democratic Senator Chris Murphy recalled of a meeting with Zelensky in early September—after the funding freeze became known—the Ukrainian president “did not make any connection between the aid that had been cut off and the requests that he was getting from [Trump attorney Rudy] Giuliani.”

House impeachment managers have not overcome this evidentiary flaw. They have tried to claim that the White House effectively admitted to their allegation in an October 2019 news conference by acting White House Chief of Staff Mick Mulvaney. But as I detailed back when Mulvaney’s comments initially caused a stir, Democrats and media outlets pundits rendered them as damning by isolating one fragment and ignoring the bulk of what Mulvaney said.

The absence of concrete evidence explains the last-minute excitement over compelling the potential testimony of another Trump administration official, former national security adviser John Bolton. A New York Times report about Bolton’s forthcoming memoir led to declarations that Bolton confirmed the quid pro quo allegation at the heart of the impeachment trial. As in other cases, that is based on a mistaken and maximalist interpretation of the available facts. The Times did not quote from Bolton’s manuscript. In its characterization of what Bolton wrote, the Times reports that Bolton said Trump “preferred sending no assistance to Ukraine until officials had turned over all materials they had about the Russia investigation that related to Mr. Biden and supporters of Mrs. Clinton in Ukraine” (emphasis mine).

If this account is accurate, then Bolton is not confirming that Trump conditioned military assistance to Ukraine’s announcement of an investigation into Joe Biden and his son. Instead, Bolton is relaying that Trump “preferred” that Ukraine assist efforts to uncover the extent of Ukrainian meddling to hurt Trump’s campaign and help Democrats in 2016 – meddling that did in fact happen. Recall that Trump is not on trial for preferring that Ukraine hand “over all materials they had about the Russia investigation,” but for pressuring Ukraine to announce an investigation of Trump’s political rival.

The faulty interpretation of available evidence has been accompanied by hyperbole, fearmongering, and militaristic chauvinism.

“The president’s misconduct cannot be decided at the ballot box,” Schiff declared in his opening arguments.

“For we cannot be assured that the vote will be fairly won.”

Even if every allegation against Trump were proven correct, this is a ridiculous statement. Suppose Ukraine had announced an investigation of Burisma, the gas company where Hunter Biden obtained his lucrative board seat, as well as of Ukrainian meddling in 2016. Does anyone believe that such an announcement from Kiev would somehow undermine the fairness of the 2020 US election?

We already have precedents to test Schiff’s scenario. In December 2018, a Ukrainian court ruled that Ukrainian officials had illegally interfered in the 2016 US election when they leaked documents purporting to show illegal payments to Paul Manafort. The ruling made headlines in several US outlets, but beyond that, the response was null. If Ukraine were to now announce a follow-up investigation of Burisma and 2016, it is reasonable to expect that some outlets would report on it, but absurd to suggest it would mean that the 2020 election could not “be fairly won.”

In 2016, the Clinton campaign paid a former British spy to dig up dirt on Trump from foreign sources, including Russians. That solicitation of foreign interference was massively consequential, fueling three years of all-consuming innuendo and serving as the basis for an FBI surveillance warrant on a member of Trump’s campaign. Had Clinton won, would that have undermined the legitimacy of her victory or been impeachable?

The Democrats have delivered an underwhelming answer. On Thursday night, House impeachment manager Hakeem Jeffries said that the two incidents are not analogous, because in Clinton’s case the Steele dossier “was purchased.”

Far more worrying rhetoric comes in Schiff and company’s repeated invocations of Russia. They have argued throughout the trial that Trump’s pause on military funding for Ukraine “put our national security at risk,” because “the United States aids Ukraine and her people so that we can fight Russia over there so we don’t have to fight Russia here.” US hawks from the Johnson administration in Vietnam to the Bush administration in Iraq have used the same language. It’s not a serious argument: Trump’s predecessor, Barack Obama, refused to send that same military funding at all. By Schiff’s logic, Obama is guilty of an even more egregious offense.

The very fact that such militarist chauvinism is being adopted by the leadership of the Democratic Party is far more dangerous than anything they have accused Trump of in this impeachment trial. Rather than alleging that Trump has been insufficiently confrontational toward Russia, Democrats should be working to stop Trump policies that have increased tensions with the world’s other top nuclear power.

The dangers of warmongering toward Russia were underscored on the second day of the Democrats’ arguments. Just blocks away from the Capitol, the Bulletin of Atomic Scientists announced that it had moved its Doomsday Clock t0 100 seconds before midnight, the closest it’s been since 1953. The Trump administration’s nixing of the INF treaty and its signaling that it won’t renew the last treaty limiting nuclear weapons, New START, were cited as major reasons. Under Trump, the Bulletin noted, “the United States has adopted a bullying and derisive tone toward its Chinese and Russian competitors.” There is no hope of reversing this existential threat so long as Trump’s political opposition is adopting a tone toward Russia that is just as bullying and derisive.

We might also consider what hopes Democrats have of defeating Trump so long as their prevailing tone through Trump’s entire first term continues unchanged. The self-reflection that should have resulted from losing to him in 2016 has been replaced by an obsession with blaming Russia and demonizing it in the process. Democrats have also chosen to prioritize two scandals that highlight corruption and elitism in their top ranks. The stolen Democratic Party e-mails at the heart of Russiagate exposed a bias against Bernie Sanders and a preference for the neoliberal, militarist policies he opposes; and the allegedly sought-after investigation at the heart of Ukrainegate centered on an unqualified son receiving a lucrative gas company board seat in Ukraine while his vice president father was supposedly battling corruption there.

In the process, voters have seen a party that fights harder for the pride and privilege of its establishment candidates than it does for working people. The devotion to centering intra-elite drama has gotten so extreme that it has meant bigger liberal rallies to save Jeff Sessions’s job than to save the Iran nuclear deal. Now, liberal energy is being poured into an even more reactionary, right-wing figure who has been deemed a potential savior: John Bolton. If that is not a wake-up call, it is hard to think of what is. Rather than mourn the loss of a drawn-out impeachment trial, Democrats might wish to recall the failed results of their last drawn-out fixation, Russiagate, and break their Cold War–addled impeachment fever.

It’s been a tough few months for China…

First, they faced food shortages (and soaring food costs) as African Swine Fever swept across the nation cutting China’s pork production in half and slaughtering hundreds of millions of their porcine pals.

Then, they faced total economic shutdown and social lockdown as the deadly Wuhan Coronavirus spread across the nation faster than a Buzzfeed ‘which cat suits your social justice needs best’ article, killing hundreds and leaving 10s of thousands sick.

And now, as if things weren’t bad enough, according to the website of the Ministry of Agriculture and Rural Affairs, the Information Office of the Ministry of Agriculture and Rural Affairs, bird flu is back!

As Reuters reports, the highly pathogenic avian influenza outbreak of H5N1 subtype of poultry occurred in Shuangqing District, Shaoyang City, Hunan Province.

The case reportedly occurred on a farm with 7,850 chickens, 4,500 of which have died of the bird flu.

Authorities have culled 17,828 poultry following the outbreak.

As a reminder, Avian influenza is deadly to most birds, and it’s deadly to humans and to other mammals that catch the virus from birds. Since the first human case in 1997, H5N1 has killed nearly 60% of the people who have been infected.

But unlike human flu bugs, H5N1 bird flu does not spread easily from person to person. The very few cases of human-to-human transmission have been among people with exceptionally close contact, such as a mother who caught the virus while caring for her sick infant.

What next?

Authored by Chris Hamliton via Econimica blog,

2019 saw US population growth at its lowest percentage level in US history aside from the pandemic years of 1918/1919 (when the Spanish flu took the lives of nearly 700,000 Americans). The 0.5% annual growth meant US population grew by approx. 1.55 million persons in 2019.

Today, I just wanted to focus on the implications of low population growth on US employment.  To set-up this article, I think it’s important you see the raw population and employment data, by age groups.  No highly gamed unemployment percentages or in labor force or out of labor force.  Just raw population data and employment data.

25 to 54 Year-Old Population, 25 to 54 Year-Old Employees

First, the population and those employed among the largest and most influential segment of the US population, the 25 to 54 year old’s.  They make up about 60% of the 15 to 64 year old population and 70 percent of those employed among the same group.  They are the engine that drives US consumption.  Their population added 59 million from 1966 through 2007 but since 2007, this segment has added just a half million.  Employment among them rose 54 million from 1966 through 2000…but has essentially stalled since 2000, adding just 3 million employees over the last two decades.

Below, the 25 to 54 year-old population (red line) and employees (blue columns) both on a year over year basis.  The growth of the population has always been a governor on the potential for employment growth.

15 to 24 Year-Old Population, 15 to 24 Year-Old Employees

To understand America, the chart below is so important.  You reap what you sow, and if your young adult population ceased growing four decades ago, you can only fake economic growth for so long.  The population of young adults has risen less than one million persons over four decades and those employed among them has declined by three million.  This population is busy attending university, at record proportions, and is once again likely at peak employment.

Below, the 15 to 24 year-old population (red line) and employees (blue columns) both on a year over year basis.  Note the current period of declining population versus rising employment.

55 to 64 Year-Old Population, 55 to 64 Year-Old Employees

It is the growth of the 55 to 64 year-old population and employment among them that has driven the US economy since the mid 1990’s.  The population more than doubled from 1993 to present (21+ million) and those employed rose by 16 million.

However, looking at both the 55 to 64 year-old population (red line) and employees (blue columns) on a year over year basis, the end of growth is upon us.

Pulling it all together, the black line below is the annual growth of the 15 to 64 year-old population versus the columns representing annual employment change, by age groups (blue 25-54, yellow 15-24, red 55-64).  Three things to note here, (1) the decelerating 15-64 year-old population growth, (2) the shifting employment growth from the young adults to the 55-64 year-olds over the course of fifty years, and (3) it was the huge loss of employment in ’08/’09 that provided the fuel for the current incredibly long period of employment growth despite the decelerating working age population growth.

Over the next decade, the annual working age population growth will be about 10% of what it was from 1970 through 2010.  So, to gauge potential employment growth or the fuel for employment growth…getting clear proportions of the population employed is pretty important.

I’m going to focus on the 25 to 64 year-old age segment, as they represent 87% of the employed among the 15-64 segment and they are the segment with the highest median incomes.  The chart below shows the periods of recession followed by employment growth (blue columns) above population growth (red columns).  This employment growth taking place faster than population growth has happened every time since 1970 until a ceiling, about 76%, is hit in the percentage of persons working.

Checking the proportion employed among the 25-64 population, that ceiling of potential employment appears to exist around 76%…which was hit in 1989, 1994 (but pushed through to 78% in 2000), 2007, and again in 2019.

How important is peak employment among the 25 to 64 year-olds?  Check the chart below showing the federal funds rate (black line) and the amazing correlation with the portion of 25 to 64 year-olds at work.  The pre-1981 employment peaks were considerably lower as this was before women had employment rates comparable to men…but the post-1981 period saw progressively higher integration of women into the workforce, eventually surpassing male participation rates.  So, the 76% ceiling appears to be the point of peak employable persons and the point at which growth in employment ceases, triggering the Federal Reserve to begin a new interest rate cut cycle as the recession is imminent.

But to be fully transparent, the chart below shows each age groups employment as a percentage of their population.  25 to 54 year-olds are essentially at peak employment, 55 to 64 year-olds are at record employment, and 15 to 24 year-olds regaining about half the ground they lost in the last great recession but still over 10% from all time highs.  However, due to structural reasons, this is probably about as high as the 15 to 24 year-olds will get.

All this is to say that the federal government and Federal Reserve have shot the works (tax cuts, deficit spending, QE, Not-QE?!?, etc. etc.) to get the economy well past a sustainable level…and now the lack of further potential growth among employees means a lack of growth among consumers.  The Fed has already begun the rate cuts and acknowledged there is no further fuel (population growth) to power any further economic growth.

Finally, just to offer a few more viewpoints on what has taken place…the chart below is the 15 to 54 year-old population, employees, federal funds rate, and federal debt.

Or, below, looking at declining annual US births (inclusive of all births to legal and/or illegal parents) versus surging federal debt.

Clearly, the only thing growing is debt.

Countries that surround China have closed their border crossings and halted trade this week, air carriers across the world have also suspended flights to and from the country because of the novel coronavirus outbreak. Beijing has responded with outrage, by saying the measures enacted by the global community to limit the spread of the deadly virus goes way beyond standards accepted worldwide, reported R.T. News. 

Chinese Foreign Minister Wang Yi told his Indian counterpart Subrahmanyam Jaishankar on Saturday that “we have adopted the most comprehensive and strictest prevention and control measures, and many of them go far beyond the requirements of the International Health Regulation.” 

“China’s efforts are [aimed at] not only protecting the health of its own people but also safeguarding the health of people worldwide. Governments and the World Health Organization (WHO) have given full recognition to this,” Wang said.

The minister also said that Beijing “does not agree with the approach adopted by individual countries to create tension or even panic” by closing borders, trade, and flights to and from China. 

He pointed out that the WHO “did not approve of travel or trade restrictions on China.”

For anyone who didn’t listen to officials at Thursday’s emergency conference, it sounded like they were reading a script from Beijing, with consistent praises of the Chinese regime for their efforts in “containing” coronavirus. 

WHO officials during the meeting also emphasized that global flights, borders, and trade must remain open with China, again it sounds like these officials were widely pressured by Beijing to keep the global economy open for business despite the known fact of a deadly virus outbreak. 

#Coronavirus outbreak across the world

1.China
2.Thailand
3.Japan
4.Singapore
5.Hong Kong
6.Malaysia
7.Macau
8.Australia
9.United States
10.Vietnam
11.France
12.Germany
13.UAE
14.Canada
15.Finland
16.Sri Lanka
17.Nepal
18.India
19.Philippines
20.Cambodia pic.twitter.com/eXSvjTvccx

— RT (@RT_com) January 30, 2020

Also, on Saturday, China’s foreign ministry spokeswoman Hua Chunyin criticized President Trump’s travel ban on foreign nationals, who traveled to China within the last several weeks. 

Hua said Trump’s order to limit travel to and from China to the U.S. contradicted the WHO’s request to avoid travel bans. 

“Just as the WHO recommended against travel restrictions, the U.S. rushed to go in the opposite way. Certainly not a gesture of goodwill,” he said. 

The decision by the U.S. to restrict travel to China was followed by Japan, Germany, Britain, Hong Kong, Macao, Russia, North Korea, Australia, Thailand, Singapore, South Korea, and others, to name a few. 

Airline carriers across the world also closed direct and indirect flights to China.

On Friday, Delta Airlines, American Airlines, and United Airlines said they were suspending flights to much of China. 

British Airways, KLM Airlines, Cathay Pacific, Finnair, Turkish Airlines, Air France, Air Seoul, EgyptAir, Lion Air, Austrian Airlines, Kenya Airways, Vietjet, and Lufthansa have also cut flights to the country. 

List of airlines suspending flights to china due to #coronavirus pic.twitter.com/AiTns9Opvm

— *Walter Bloomberg (@DeItaOne) February 1, 2020

China’s anger towards the world for closing borders, trade, and flights as a “devil virus” persists, is likely driven by the fact that its economy could implode if the shutdown is prolonged.