THE EMPERIOR HAS NO CLOTHES

Trump, the demagogue in chief, has sought to garner support by appealing to popular desires and prejudices, rather than by using rational arguments.  The problem Trump has is his distain for science and therefore the truth.  It takes truth to have a rational argument.

With his pole numbers dropping rapidly, he lost the economy as an argument and now uses fear. The worse the pole numbers fall, the more his rhetoric rises to a fevered pitch and becomes more and more dangerous.  With the three of the largest crisis in decades looming Covid-19, Demonstrations for justice, and the economy, Trump has lost his mojo. 

On Covid-19, which has turned into a major public health crisis this administration is attempting to deny, Trump has pushed the problem onto the states. The Trump administration has announced their withdrawal from testing in states.  Could this be due to the requirement in the recovery bill passed by congress that requires Covid-19 testing to be provided free of charge? By the cancellation of the testing, now the states must purchase the tests.  Has Trump made it possible for the suppliers to gouge each of the states for the tests at a profit?

He is on the wrong side of the Black Lives Matter and the demonstrators demand justice.  Trump recently expressed his praise for stop and frisk and had praise for Rudy Giuliani’s implementation of the action. Trump has praised the Police and Police unions, the same ones  that perpetuate the us vs them mentality.  He labels all demonstrators “looters” and “terrorists” and does not recognize all they are asking for is equal justice under the law.

On the economy, he has lost this battle as well.  Consumer confidence is a necessary commodity to have a thriving economy.  Trump ignoring the virus does not fly past anyone that can watch the news.  All one need do is to compare the U.S.’s to the EU’s response at conquering the virus and obviously we are not out of the woods.  Some say we are still in the first wave.

  Trump is relying on future debt to prop up the market for visual pablum. In increasingly desperate attempts, the Fed is working feverously and with alacrity to incur deferred debt that has not been authorized by congress. 

Because the debt is deferred and there is paper to cover the liquidity infused into the economy.  The congress is eventually going to get the bag of excrement in the form of junk bonds, high-risk investments, low interest loans with questionable means to repay with a prolonged virus.   This was the Fed’s action only and has had blowback for going about the infusion this way. 

I have written about how for the 1^st time ever, the Fed was buying these risk investments to infuse capital into the economy, and it worked.  Corporations gave dividends and stock buybacks stoked by the Fed’s infusion and voila!- the market is happy.  I thought the Fed had used every tool in their arsenal and those which will generate deferred debt with an extended virus and medical crisis.  Not quite, how about a re-run!

Remember too big to fail in 2008, when the banks and junk bond dealers got bailed out with taxpayer funds and added to the debt?  Remember ENRON?  Ok, now what other damage to the economy can we foist on the future without a vaccine?  Oh, it’s mountains of deferred debt? Of course it is. In 2008 the Fed made another of the most risky moves to date. Rather than letting banks and investment firms fail, they were bailed out with taxpayer money (debt).  Guardrails that held back banks and investment firms were put in place.  These regulations were installed to protect the taxpayer from to big to fail. 

The Fed has lifted the ban on banks investing in high-risk bonds and other high-risk financial instruments.  With the banks able to borrow at near 0% interest and purchase high-risk and high interest bonds and other high-risk secured mortgage paper, what could go wrong? The banks are sure to take on loans that maximize the risk vs investment.   Will they be willing to go where they went before?  Of course they were bailed out before and the taxpayers paid the tab. Where are the Republican objections to this risk that is based on magical thinking?  They were adamant that they should have never been bailed out, because once they know there is a backstop, they throw a screwball at the expense of deferred taxpayer debt. What could go wrong?

Trump’s has some truthiness but misleading information.  I call BS in his rallies, he bragged about the record 2.5 million new jobs created in May. These were non-farm delivery jobs, cleaning and sanitizing jobs and other service related work. The statement is so misleading it uses the term “new” jobs ignores the lost jobs. The new jobs were all as a result of the pandemic.  The lost jobs were over 20 million in April, so the net is minus 17.5 million jobs.