CRISIS NOTES, 3/30
COVID-19 PUBLIC HEALTH CRISIS
Deaths in Spain and Italy have hovered at 800–1000/day for the last five days, indicating a plateau, but at an elevated level without any clear timeline for receding. New cases, however, are now declining significantly in Italy, a crucial sign that the crisis may be at or near a peak in the nation that has been at the center of the COVID-19 crisis for the last month.
The United States has emerged as the global epicenter of the pandemic, with 143,055 cases as of Monday morning, according to Johns Hopkins, substantially more than any other nation, though testing variations make any true comparison across countries impossible. According to Dr. Anthony Fauci, the U.S. case incidence and early mortality figures suggest that between 100,000 and 200,000 Americans will perish in the crisis.
The rapid escalation of the crisis in the tri-state New York Metro Region and New Orleans has turned dire, with hospitals already reporting shortages of protective equipment and ventilators and NYC Mayor DeBlasio warning that the city has only enough supplies to last through the end of this week. “This is battlefield medicine. Give us the support we need right now,” Mayor DeBlasio implored.
Detroit and Chicago have emerged as new COVID-19 epicenters.
Weak testing capacity persists in many regions, making tracking and containment impossible.
Despite early and persistent denialism; continued Federal mismanagement of the COVID testing regime; an absurd push, coordinated with billionaire donors, to return to normalcy by Easter, when the pandemic will begin to peak in the United States; obfuscation on the ventilator crisis; the refusal to invoke the Defense Production Act; and pathological efforts to withhold critical resources from states and governors deemed to be insubordinate, Trump has maintained high polling numbers for his response, owing largely to increased “war-time” visibility, distorted coverage by Trump-affiliated propaganda outlets, led by Fox News, and the steadfast allegiance of his reactionary base, which has, to this point, responded well to the nativist and conspiratorial frames pushed by the White House.
The allegiance of Trump’s base will be tested by the COVID-19 advance in “red” states, already underway in Louisiana (4,025 cases) and Georgia (2,809 cases). Pollster Nick Gourevitch finds that Trump’s crisis approval ratings may already have begun to erode.
The feebleness of state public health infrastructure and the high rate of co-morbidities in southern states pose a particular threat. This combined with a deep anti-scientist culture strain (exemplified by the fiasco of a premature opening at Fallwall-controlled Liberty University and strong attendance a certain megachurches this past weekend ), reaching up into the leadership class, create a uniquely fertile ground for the virus, though much of rural American may be aided in its fight by low population density.
A startling number of billionaires, including Lloyd Blankfein, Tom Golisano and casino magnate Tilman Fertitta, have openly pushed for a premature return to normalcy, highlighting the sociopathic, and indeed genocidal, outlooks embedded in a large faction of the owning class.
For laypeople (like myself) looking for an introduction to the virology of COVID-19, the resources made available by Johns Hopkins are stellar.
ECONOMIC/FINANCIAL CRISIS
As expected, the $2.2 trillion coronavirus bailout — the CARES Act — included a significant expansion of unemployment benefits — an additional $600/wk for unemployed workers — and $1,200 checks for most individuals, but the bulk of the funds will flow to corporations and banks.
The bailout marks a transition from a longstanding neoliberal alliance led by the Treasury Department, the Federal Reserve and Wall Street banks and hedge funds to a structured financial partnership between the three, with an erosion of checks and balances and blatant conflicts of interest.
The multiple investment vehicles established by the Act, including the PMCCF to purchase flagging corporate bonds and the TALF to purchase asset-backed securities like those at the heart of the 2008 financial crisis, will be overseen by Treasury Secretary Stephen Mnuchin. Because the Federal Reserve is prohibited from such direct interventions in the market, the CARES act, through a sleight of hand, places the Fed in the role of financing these purchases, and the Treasury in the role of purchaser, overseeing the alphabet soup of new entities. This blurring of the lines between the Fed and Treasury has some precedent in the 2008 financial crisis, but not nearly at the scale enabled by the current bailout. Through the new integration, Trump and Mnuchin are positioned for greatly expanded influence over the Central Bank, given that, through these new investment vehicles, they can exercise direct influence over monetary policy.
The decisions about which corporate and municipal bonds to purchase, and thus which corporations and banks to prop up, and which to let fail, will be made by the BlackRock , the largest private holder of capital in the world, with $7 trillion under management. BlackRock principle Larry Fink influenced this unorthodox structure, which places him in the role of global kingmaker, through direct contact with President Trump in the lead-up to the Act. There was no formal process for awarding BlackRock the bailout trading contract, making it the largest no-bid contract in history.
Given that BlackRock has substantial, and in many cases leading, investment positions in every business sector, any decision to allocate Federal funds represents an inherent conflict of interest.
Jim Bianco in Bloomberg notes that “the federal government is nationalizing large swaths of the financial markets. The Fed is providing the money to do it. BlackRock will be doing the trades.” But since the government will not receive an equity stake for the bulk of its new investment, it assumes massive market risk, while profits remain in private hands.
Even before the Fed had begun to finance these new investment vehicles, the first phase of crisis response pushed its balance sheet over $5 trillion for the first time. The rapid growth of the money supply has given rise to speculation over the future of the dollar, with some suggesting that it makes devaluation inevitable and a restructuring of the global financial order away from the dollar likely. In the short-term, dollars are in great demand, and thus their value remains high, as investors exit equities and other unstable investment markets and hold what remains of their wealth in cash, a process dubbed a “margin call”.
The real impacts on the dollar likely depend on the nature of the debt and to whom its proceeds accrue. The current dynamic parallels closely the early years of the Great Depression. Given the massive “destruction” of demand in the economy, due to falling incomes and real estate valuations, and the tightening of debt, which has replaced stagnating wage income as a source of consumer power in recent decades, only stimulus that revives consumer ability to participate in the economy — such as universal income payments or labor-heavy public works on the Green New Deal model— can help to reconstruct pre-crisis conditions.
Instead, as in the pre-1932 period of the Great Depression, Treasury and the Fed are leveraging the expanded monetary supply largely to subsidize speculative, non-productive market actors. Thus, the massive Fed debt and Treasury debt, as currently structured, functions as an non-productive “rent” extracted by finance and other bailed-out speculators from the public treasury and the Central Bank.
With states and municipalities in crisis, many “Main Street” businesses, from mom-and-pop stores to corporate retail, already shuttered or near bankruptcy, paralyzed by the indeterminate length and severity of the COVID-19 crisis, and the entire residential and commercial real estate sector in crisis there is little prospect of capitalist economic reconstruction short of direct stimulus on the scale of the New Deal.
With Treasury Secretary Steve Mnuchin and Blackrock’s Larry Fink at the helm, capital’s antipathy toward taxation and public goods will win out over these elemental lessons of history.
RESISTANCE AND LOCAL ACTION
Two corporate “winners” in the COVID economy — Instacart and Amazon — face job actions today by workers demanding better conditions and pay.
The People’s Bailout campaign, a project of the Working Families Party, Sunrise Movement, SURJ and others, held the largest online demonstration to to date on Sunday, demanding direct economic relief, universal access to healthcare and a just transition.
Mutual aid efforts are flourishing here in Buffalo and just about everywhere else.
