TRUMP VS REALITY

The impeached president Donald Trump is doing everything he can to give the illusion of being in good times.  He touts the propped up stock market, he praises the phony Trumped up jobs numbers, and avoids the elephant in the room.  He uses racial animus to rile up his base.

Let’s examine each of these accusations.  First, the illusion of a sound economy.  Trump has long equated the stock market performance with the economy.  Market is up, he is happy and all of his wealthy friends likewise are happy.  The stock exchanges only capture the economic heath of the wealthy.  Below are some reasons that is true:

Business failures from Bureau of Economic Research

Sector Description Percent loss %(Feb-Apr 2020)

Black 41%

Latinx 32

Asian 26

White 17

The 41% represents 1.1 million black owned businesses decreasing to 640,000 in April 2020.  The Payroll Protection Program (PPP) did not help the small and small disadvantaged businesses in the inner city. Is Trump preening the police and the military, in order to subject the desperate civilian protesters without hope, to violence to control the unrest?

The majority of the small businesses going under, were shut out by the first come first served. The favored and connected got first dibs on PPP.  The average small business employs 9 people.  The payouts favored the “small” businesses with 500 employees or more.

Will the October surprise be another downturn in the economy?  October has always been the bane of stock market investors.  It was October of 1929 when the stock market tanked prior to the Great Depression.  Other large market corrections have also occurred in October.  October is the first month of the Federal Government’s fiscal year and programs authorized by the congress are just beginning to ramp up, thus has been one rationale for the annual October dip.

This year could be like the 1929 event.  The confluence of the 6-week unemployment extension being lifted, the 3 month rent freeze lifted, 6 month mortgage payment moratorium and car lenders putting off payments for 30-90 days all will all come due sooner than later.

The Fed declined to speculate when asked about the record run-up in the Dow and the S&P indexes.   They know the 6 trillion dollar loan and grant monies dolled out and charged less than 1% interest, is the actual reason.

Large companies that kept employees on the payroll were given the money as a grant.  This allowed these companies to retain their key base.  They were also allowed to buy back stocks and thus increasing the market price without any corresponding effort, such as profit or productivity gains, nothing other than the buyback. 

The Fed liquidity forced into the market had nowhere else to go since the world was caught up in the same morass.  The Fed purchased everything it could get its hands on, despite the junk bond statue. Even if a company was on its last legs and would have gone under without the virus…Uncle Santa Clause was there to save Christmas.  These marginal companies will not have the ability to survive in an economy that will shrink for 2-3 years, even with a vaccine.  This will ultimately be another big debt increase foisted on the next administration by the incompetence of this administration. 

The 6 trillion dollars of liquidity the Fed forced into the economy looks like the worst investment anyone with half a brain could make.  Not in 100 years of the existence of the Fed have they used taxpayer monies to speculate on the economy. Why? Only to temporally make the illusion that everything is rosy…well, it’s not!  Is it being used as an incentive or a bribe to those companies that have supported the President?  How can we tell?  It’s all a secret and will not be disclosed until after the 1st of the year.  Why then?  Did the Fed play favorites with public funds in the distribution of the $6 trillion, only giving assistance to those companies that would increase the stock indices?  Who knows, with no oversight?

The PPP is also suspect and the Fed will not disclose to whom the $2.2 trillion dollar payouts were made despite congressional requirements for oversight.  To what states is Trump directing the concentration of funds and liquidity?  Who is he helping and why the secrecy from what Trump claims to be the most transparent President in history?

Lets now look at his unemployment numbers from a realistic standpoint.  It is obvious the BLS is not ignoring the real values, but brushing them off into a footnote.  I have previously written about the intent of the systematic undercount. Trump has used the figures to express how well he has done.  The inflated jobs numbers buoyed the market last week until the bubble burst and the Harvard doctor predicted another wave and an additional 100,000 deaths by the end of September.

BLS has also stated what they have done in order to possibly explain some of the gross errors.  One thing I did not comment on in prior rants, as I thought it not to be relevant, however, it could have a dramatic impact on the real numbers, if you make an analysis of their comments is….  The Fed normally interviews 60,000 households.

 It only interviewed 41,000 households for May. A small difference is multiplied many times, so any error may become significant.  The BLS’s excuse was the virus and its employees were not able to work and do the interviewing.  Ok let’s look at that statement. If the BLS employees are not able to work, and the individuals work near where they live and canvass.   Are the households in the areas where the virus is locking down, also unemployed or unable to work at a disproportionate rate, than someone canvassing in an area without the virus and is open?  So what is the effect of an undercount in the hardest hit areas?  I originally thought the data set was ok, in that it was random, however after an analysis it could be skewed toward less unemployment with the under survey.  The data could also be skewed if the areas canvased are selective areas, where there is less virus and therefore less unemployment.

The data the BLS shows is that there are only 21 million people drawing unemployment and there are 30 million non-farm workers unemployed.  In May, the BLS reported that there were 9 million individuals that were unemployed but not looking for work for the last 4 weeks, due to the pandemic?  How can they look if they are in a lockdown?  If they were unemployed prior to the last 4 weeks, they are still not counted as unemployed by the BLS.

In addition, there was what appears to be classification errors as follows:

A miscalculation of millions of workers that have been absent and have most likely lost their jobs.  And any worker that was paid to the 12^th of the month and even if he was terminated after that date, was not counted as unemployed.

All these undercounts help Trump pull the wool over the eyes of the ill-informed Trump base of dotards in training, using this as good news to help the illusion of a good economy and with the temporary infusion of capital in the market all is well?

AXIOS published an article dated 12 June showing unemployment breakdown

U.S. UNEMPLOYMENT CLAIMS (Thru 6 June, 2020)

Pandemic unemployment initial 2.8 million

Pandemic unemployment assistance 9.7 million

Traditional state unemployment

assistance Initial 3.2 million

Continued state assistance            18.9 million

Other programs    .8 million

Total             35.4 million claims

My calculation of unemployment would take the 35.4 million unemployed and divide by 160 million fully employed and get a more realistic number of 22.1% for the unemployment as of 6 June 2020.

The CARES act allowed millions of individuals that would not have qualified for unemployment insurance, the self-employed and those that have quit their job, to receive Pandemic Unemployment Assistance program (PUA).  This amounted to 700,000 workers applying last week alone, however all these individuals are not counted as unemployed. 

Does anyone think there is a reality problem? 22.1% unemployment vs BLS published rate of 14.7%.  And a market hipped up on sugar to increase the indices.

Trump is touting a strong economy based on smoke and mirrors.  When will the other shoe fall? October is likely when everyone realizes the virus is here to stay and all Trump has is magical and wishful thinking.  Unfortunately for the next president, the mirrors will be broken and only a waft of smoke will be left hanging in the air.  When Trump leaves office the only thing left will be the cesspool he created when he drained the swamp and his hired grifters will all slink away.

The misery in the economy is below the surface and is not shown.  The concentration on the market and unemployment is only a distraction from the abject poverty and rampant unemployment and misery caused by the pandemic.  Trump must know the potential for large numbers of protesters this summer, with the current misery index being as high as I’ve seen in my life. 

First Trump had governors fix the virus numbers with a hired company to report for the CDC, so he could reduce the impact.  Then he uses taxpayer money to give the markets a sugar high and his administration also presents the illusion of misrepresented unemployment numbers to Donald Trump and his followers so they can remain in the bubble of Trumps reality.

All of the above activities should be drowned out by the pandemic.  The president has removed the word virus, pandemic, and covid from his limited vocabulary.  This as he claimed to be at war with the virus and claimed it was a national emergency, yet he acts like an ostrich and buries his head and pretends its gone.

He has switched over into election mode and it appears he cannot walk and drink a glass of water with one hand.  He wants nothing to do with the virus and has gone the way of Pilate.  Trump’s 50-state solution has not worked and he has no clue as to the most efficient and effective method to control the virus.  Divided we fall in this pandemic.  Without a unified message, the virus will persist at the current levels until a vaccine is deployed.  All presidential leadership has been flushed into the cesspool he created.