Week 9 of the Quarantine
Let the word go forth,
That we will let our children bear any burden and pay any price…
…so we are spared the COVID-19…
…as well as losses from our stupid financial policies.
– Bill Bonner, channeling JFK
SAN MARTIN, ARGENTINA – On Friday, we were struggling to understand the essence of the Universal Lockdown approach to protecting the public’s health.
Rather than sequester those who are sick, it puts healthy people under house arrest… even those who are only marginally at risk. Most of the workforce, for example, is about as likely to die in an accident driving to work as from getting the coronavirus.
So, what is it? A mistake? A crime? A sin? A social faux pas?
Perhaps it is a bit of all those things, like dropping an atomic bomb on Nagasaki… and then going to a funeral wearing a pink tie.
Nagasaki was bombed, said the authorities, to “save the lives of our soldiers.” But what kind of a monster would kill a child to save his own skin? And what kind of public health officials lock up millions of children and young adults now in order to keep old people from getting sick?
We don’t know. But the cost is rising. On Friday came news from the job front.
You’ll recall that the hallmark of “financialization” was the destruction of U.S. manufacturing. Americans exported dollars. Foreigners exported autos, refrigerators, and big-screen TVs.
The feds rigged the stock market and interest rates so that the easy money was made in “finance,” not in manufacturing. Mommas wanted their sons to grow up to be hedge fund managers, not assembly line managers. New York boomed. Detroit went bust.
With manufacturing “outsourced” to China, Mexico, Vietnam, and other low-wage countries, the trade deficit soared. And it became harder and harder for the U.S.-based working stiffs to find a good job. In the 40 years from 1980 to 2020, wages rose 10 times in China. In the U.S., they were flat.
The factories – where the real “breadwinner” jobs had been – went cold and silent. Unemployment fell to record low levels in 2018-2020, but it was a mirage. The new jobs were created in the soft sectors – such as health and leisure – where wages (and hours worked) were low.
So what was the average American man supposed to do? He could get a job serving drinks to the stock mongers! Or he might go into health care claims management. Or maybe retail – he could stock the shelves at Walmart… or drive a truck for UPS, making sure that all that cheap stuff from China got to American consumers.
But in Friday’s jobs report, he got more bad news. The COVID Recession has now wiped out ALL of the new jobs that had been created in the entire 21st century… targeting especially the very sectors where he had found refuge. People have not stopped buying stocks; but they’ve stopped going to restaurants and shopping malls. Stansberry’s NewsWire reports:
Leisure and hospitality job losses were the driver again, falling by 7,310,000. But across the board, virtually every industry lost jobs. There were 2,489,000 jobs lost in the education and health care sectors while the retail sector saw 2,000,000 jobs disappear.
And remember, most people sell their time by the hour. They make money when they not only have a job, but when they can work enough hours.
And guess what else? In terms of employment in the sector, the “leisure and hospitality” sector is back to where it was 32 years ago, despite population growth of around 90 million. In retail, meanwhile, jobs are back down to a 26-year low.
But take heart, oh ye poor lunch bucket proletariat, the stock market is bouncing back. It foretells a V-shaped recovery, say the papers…
“Never, ever bet against America,” says Warren Buffett (while keeping much of his own money in cash).
“…the U.S. economy will come roaring back stronger than ever,” adds Donald J. Trump.
Parking lots full of cars…? Malls full of shoppers…? Restaurants overflowing with diners…? And cruise ships once again resounding with the joie de vivre of retirees, happily spending their childrens’ inheritance?
Either that… or the stock market bounce foretells trillions of dollars of fake money flushed into Wall Street!
Let’s see… Will people rush back to restaurants, carefully raising their facemasks to eat a bite of chou farci? Are they already making plans to go to Europe this summer, packing their Clorox chewables? Will they return to the retailers as soon as the doors reopen… eager to spend the money they didn’t earn during the lockdown?
And the owners? Will they welcome their employees back with open arms and pay raises? Will they add new services and new facilities? Where will they spend the profits they didn’t make during the lockdown?
As near as we can figure, the V-shaped recovery is a fantasy. Customers will trickle back, careful not to spend money they don’t have. Many businesses will never reopen.
And those that do will do so hesitantly… cautiously; they will worry about a return of virus hysteria… a lingering recession… and another lockdown.
This is not what the virus wrought; this is what the Universal Lockdown wrought.
Was it worth it?
We’ll look at the numbers tomorrow…
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