[ed. More bad news. I think we all know the deal by now, the only question being just how bad it gets. Enjoy some music. It'll get better.]
Thursday, March 19, 2020
Wednesday, March 18, 2020
Why Sending $1,000 Checks to Everyone Won’t Solve the Coronavirus Crisis
... Meanwhile on the question of broader economic stimulus, several Republicans are now outflanking Pelosi to the left. On Monday, Senator Tom Cotton (R-Ark.) rejected the Pelosi bill as insufficient, while Senator Mitt Romney (R-Utah) proposed an immediate payment of $1,000 to every adult. On Tuesday, the White House released a massive $850 billion stimulus plan (which may get even bigger), including “$500 billion in a payroll tax cut, a $50 billion bailout for airlines struggling from plummeting demand, and $250 billion for small business loans,” Reuters reports.Even though these are big numbers, recall yesterday that Edmund Saez and Gabriel Zucman’s back of the envelope calculation was that the US GDP could suffer a 10% fall in GDP. Even Stephanie Kelton’s guesstimate that $2 trillion in stimulus was needed is light relative to that.
Moreover, more delay and more complexity leads to permanent damage. Even though the Administration claimed they’d get their $1000 checks out in two weeks, there’s no way that will happen between getting the legislation passed and the operational requirements of printing all the envelopes and checks and getting them out. In 2009, under an Obama stimulus program, the Federal government sent out 52 million checks, fewer than one expects here (presumably to ~155 million filers of Federal tax returns,1 since those are the addresses on hand; Social Security recipients are set up for electronic deposit, but they aren’t the group most in need). It took five months to distribute them, from May to October. One assumes there was also a sense of urgency then.And what does $1,000 per adult do? The average US mortgage payment is over $1,000, so for a couple, in most cases, housing costs will eat up a lot. It doesn’t take a lot of budget estimations to show that for most this money will support critical payments like housing, car expenses, the cell phone, perhaps student debt payments, for a month. It’s a very short term stopgap.
And even more important…that amount of money is chump change compared to paying any coronavirus treatment-related bills, and all we have from the officialdom on that front so far is empty promises. Look at an indicator of the costs even for those with insurance. From The Verge:
Someone with health insurance from their employer could pay $1,300 or more out of pocket for treatment if they’re hospitalized with a severe case of COVID-19, the disease caused by the novel coronavirus, according to one analysis. Health researchers based that prediction off of the costs associated with hospitalization for pneumonia…
Rae and his co-authors analyzed a database of insurance claims for people enrolled in employer insurance plans. They found that the total cost of treatments for people on those insurance plans who were hospitalized with severe pneumonia with complications was, on average, around $20,000 — though it ranged from around $11,000 to around $24,000. Insurers covered most of that cost, but the out-of-pocket expense for most people usually reached or exceeded $1,300.And for those who have jobs or a bit more of a cushion, a lot will be saved. It was for the most part in 2008 when the Bush Administration also launched a stimulus package that included sending checks of up to $600 to individuals, $,1200 for couples, and an additional $300 per dependent child. Even thought there was more to spend it on at that time (shops and entertainment venues were open), that was also a juncture when it looked like the economy might collapse into a depression. From The Balance:
The Bush Economic Stimulus Package didn’t have the impact it should have. A 2008 survey found that only 20% of those who received checks spent them. Another 32% put the money into savings. The rest use the checks to pay off debt.In other words, while saving people from bankruptcy or living on the street is a worthy goal, stimulus this ain’t. It’s a band-aid over the gunshot wound of business closures, job losses and pay cuts.
And loans to small businesses? Are you kidding? What small businessman wants to take on more debt when he isn’t sure of his income or even business survival? A few who are in situations where they have genuine reasons to think the coronavirus impact on them is as blip rather than a body slam might take the plunge, but the rest? Fuggedaboudit. Plus the time and effort involved in getting together a loan application and the uncertainty as to if and when any money might be forthcoming are further stressors when someone is fighting for his commercial survival. A business owner hit by the coronavirus lockdown needs money to pay his bills now, if he still has a prospect of riding out months of the new normal, and that’s just not how these programs work.
by Yves Smith, Naked Capitalism | Read more:
Image: Getty via
[ed. Yes. $1000 or even $2000/person is a panic, drop in the bucket solution (For each family member, or per family? For millionaires? One time? Monthly?). A better solution, if we have to go with something like this (everyone is apparently a socialist now) might be what China is doing - time sensitive coupons/vouchers that have to be spent within a certain time-frame or risk becoming useless. See: More of China’s local governments, companies resort to coupons to boost flagging consumer spending (South China Morning Post).]
After Blowing $4.5 Trillion on Share Buybacks, Airlines, Boeing, Many Other Culprits Want Taxpayer & Fed Bailouts of Their Shareholders
The Trump administration is putting together a rumored $850-billion stimulus package that will include taxpayer funded bailouts of Corporate America, according to leaks cited widely by the media. Trump in the press conference today singled out $50 billion in bailout funds for US airlines alone. A bailout of this type is designed to bail out shareholders and unsecured creditors. That’s all it is. The alternative would be a US chapter 11 bankruptcy procedure which would allow the company to operate, while it is being handed to the creditors, with shareholders getting wiped out.
So get this: The big four US airlines – Delta, United, American, and Southwest – whose stocks are now getting crushed because they may run out of cash in a few months, would be the primary recipients of that $50 billion bailout, well, after they wasted, blew, and incinerated willfully and recklessly together $43.7 billion in cash on share buybacks since 2012 for the sole purpose of enriching the very shareholders that will now be bailed out by the taxpayer.
Share buybacks were considered a form of market manipulation and were illegal under SEC rules until 1982, when the SEC issued Rule 10b-18 which provided corporations a “safe harbor” to buy back their own shares under certain conditions. Once corporations figured out that no one cared about those conditions, and that no one was auditing anything, share buybacks exploded. And they’ve have been hyped endlessly by Wall Street.
The S&P 500 companies, including those that are now asking for huge bailouts from taxpayers and from the Fed, have blown, wasted and incinerated together $4.5 trillion with a T in cash to buy back their own shares just since 2012 (...)
And those $4.5 trillion in cash that was wasted, blown, and incinerated on share buybacks since 2012 for the sole purpose of enriching shareholders is now sorely missing from corporate balance sheets, where these share buybacks were often funded with debt.
And the record amount of corporate debt – “record” by any measure – that has piled up since 2012 has become the Fed’s number one concern as trigger of the next financial crisis. So here we are. (...)
No one could foresee the arrival of the coronavirus and what it would do to US industry. I get that. But there is always some crisis in the future, and companies need to prepare for them to have the resources to deal with them.
A company that systematically and recklessly hollows out its balance sheet by converting cash and capital into share buybacks, often with borrowed money, to “distribute value to shareholders” or “unlock shareholder value” or whatever Wall Street BS is being hyped, has set itself up for failure at the next crisis. And that’s fine. But shareholders should pay for it since they benefited from those share buybacks – and not taxpayers or workers with dollar-paychecks. Shareholders should know that they won’t be bailed out by the government or the Fed, but zeroed out in bankruptcy court.
The eventual costs of enriching shareholders recklessly in a way that used to be illegal must not be inflicted on taxpayers via a government bailout; or on everyone earning income in dollars via a bailout from the Fed.
The solution has already been finely tuned in the US: Delta, United, American, and other airlines already went through chapter 11 bankruptcies. They work. The airlines continued to operate in a manner where passengers couldn’t tell the difference. The airlines were essentially turned over to creditors and restructured. When they emerged from bankruptcy, they issued new shares to new shareholders, and in most cases, the old shares became worthless. The new airlines emerged as stronger companies – until they started blowing it with their share buybacks.
Companies like Boeing, GE, any of the airlines, or any company that blew this now sorely needed cash on share buybacks must put the ultimate cost of those share buybacks on shareholders and unsecured creditors. Any bailouts, whether from the Fed or the government, should only be offered as Debtor in Possession (DIP) loans during a chapter 11 bankruptcy filing where shareholders get wiped out.
In other words, companies that buy back their owns shares must be permanently disqualified for bailouts, though they may qualify for a government-backed DIP loan in bankruptcy court if shareholders get wiped out. Because those proposed taxpayer and Fed bailouts of these share-buyback queens are just heinous.
by Wolf Richter, Wolf Street | Read more:
[ed. Debtor in Possession (DIP) loans. Or else, fund and nationalize. See also (previous): Boeing Seeks 'Tens Of Billions' In Bailouts After Fully Drawing-Down $13Bn Credit Line (Duck Soup). See also: Other options: How To Structure the Coronavirus Bailout (BIG/Matt Stoller).]
So get this: The big four US airlines – Delta, United, American, and Southwest – whose stocks are now getting crushed because they may run out of cash in a few months, would be the primary recipients of that $50 billion bailout, well, after they wasted, blew, and incinerated willfully and recklessly together $43.7 billion in cash on share buybacks since 2012 for the sole purpose of enriching the very shareholders that will now be bailed out by the taxpayer.
Share buybacks were considered a form of market manipulation and were illegal under SEC rules until 1982, when the SEC issued Rule 10b-18 which provided corporations a “safe harbor” to buy back their own shares under certain conditions. Once corporations figured out that no one cared about those conditions, and that no one was auditing anything, share buybacks exploded. And they’ve have been hyped endlessly by Wall Street.
The S&P 500 companies, including those that are now asking for huge bailouts from taxpayers and from the Fed, have blown, wasted and incinerated together $4.5 trillion with a T in cash to buy back their own shares just since 2012 (...)
And those $4.5 trillion in cash that was wasted, blown, and incinerated on share buybacks since 2012 for the sole purpose of enriching shareholders is now sorely missing from corporate balance sheets, where these share buybacks were often funded with debt.
And the record amount of corporate debt – “record” by any measure – that has piled up since 2012 has become the Fed’s number one concern as trigger of the next financial crisis. So here we are. (...)
No one could foresee the arrival of the coronavirus and what it would do to US industry. I get that. But there is always some crisis in the future, and companies need to prepare for them to have the resources to deal with them.
A company that systematically and recklessly hollows out its balance sheet by converting cash and capital into share buybacks, often with borrowed money, to “distribute value to shareholders” or “unlock shareholder value” or whatever Wall Street BS is being hyped, has set itself up for failure at the next crisis. And that’s fine. But shareholders should pay for it since they benefited from those share buybacks – and not taxpayers or workers with dollar-paychecks. Shareholders should know that they won’t be bailed out by the government or the Fed, but zeroed out in bankruptcy court.
The eventual costs of enriching shareholders recklessly in a way that used to be illegal must not be inflicted on taxpayers via a government bailout; or on everyone earning income in dollars via a bailout from the Fed.
The solution has already been finely tuned in the US: Delta, United, American, and other airlines already went through chapter 11 bankruptcies. They work. The airlines continued to operate in a manner where passengers couldn’t tell the difference. The airlines were essentially turned over to creditors and restructured. When they emerged from bankruptcy, they issued new shares to new shareholders, and in most cases, the old shares became worthless. The new airlines emerged as stronger companies – until they started blowing it with their share buybacks.
Companies like Boeing, GE, any of the airlines, or any company that blew this now sorely needed cash on share buybacks must put the ultimate cost of those share buybacks on shareholders and unsecured creditors. Any bailouts, whether from the Fed or the government, should only be offered as Debtor in Possession (DIP) loans during a chapter 11 bankruptcy filing where shareholders get wiped out.
In other words, companies that buy back their owns shares must be permanently disqualified for bailouts, though they may qualify for a government-backed DIP loan in bankruptcy court if shareholders get wiped out. Because those proposed taxpayer and Fed bailouts of these share-buyback queens are just heinous.
by Wolf Richter, Wolf Street | Read more:
[ed. Debtor in Possession (DIP) loans. Or else, fund and nationalize. See also (previous): Boeing Seeks 'Tens Of Billions' In Bailouts After Fully Drawing-Down $13Bn Credit Line (Duck Soup). See also: Other options: How To Structure the Coronavirus Bailout (BIG/Matt Stoller).]
Tuesday, March 17, 2020
Shelter in Place
[ed. We're all learning a lot of new pandemic phrases these days, and Shelter in Place (ominously) is one of them: Bay Area orders ‘shelter in place,’ only essential businesses open in 6 counties (SF Chronicle). See also: Life under 'shelter in place': long lines, empty roads, panic-buying cannabis; and, What does 'shelter in place' mean? California's coronavirus order, explained (Guardian).]
Image: Jeff Chiu/Associated Press
Boeing Seeks 'Tens Of Billions' In Bailouts After Fully Drawing-Down $13Bn Credit Line
A new disclosure on Tuesday afternoon details yet another troubling development for Boeing.
In its latest 8K, the plunging planemaker has completely drawn down its $13.8 billion credit line that it entered in October 2018 as it "navigates current business challenges" exposing just how fast this company is burning through cash.
President Trump has already been on record telling airlines that his administration is prepared to pledge $50 billion in support after passenger activity has fallen off a cliff due to the virus scare.
Boeing was struggling before the virus outbreak, dealing with 737 Max groundings, production halts, and cancellation orders.
As we raged previously, this bailout demand comes after the company blew nearly $100 billion on stock buybacks since 2013 helping push its stock to all-time highs not that long ago, and instead of selling stock to get liquidity, they're asking the Trump administration for a massive bailout.
So, no, nobody in their right minds should give Boeing even one penny in "short term aid". Instead, management and the board should be ordered to sell as much stock as they need - you know, the opposite of buying it back - to maintain the business, even it means sending the stock price crashing far lower.
Because it's called capitalism, and because there is no reason why taxpayers should foot the bill for a company which instead of saving cash when times were good, was handing it out to shareholders and a handful of executives, and which should now for some insane reason be eligible for a bailout when times suddenly go bad.
No: force Boeing - and others like it that spent billions repurchasing its stock while incurring massive amounts of debt - to sell its stock. After all that's what a public company's stock is - a currency - and just as Boeing could repurchase it when it had cash, and lifted its stock price to all time highs, it should now sell its stock and use the proceeds to fund itself, like any other corporation does when it needs funding. Last time we checked, Boeing's market cap was $73 billion, and it certainly afford to drop much more as the company now does the buyback in reverse.
This is also a warning to Congress and the White House: if chronic stock repurchasers such as Boeing, are bailed out instead of ordered to find their own sources of liquidity, there will be a mutiny in America and rightfully so, because it was Boeing's shareholders that got rich on the way up, and now it is somehow up to taxpayers to make sure the company, loaded up with record amounts of debt used to fund buybacks, survives one more quarter.
That, in a word, is bullshit.
by Tyler Durden, ZeroHedge | Read more:
Image: uncredited
[ed. With several massive stimulus programs in the works, sharks smell blood in the water. See also: Boeing, Which Repurchased Over $100BN In Stock, Is Downgraded To BBB, Seeks "Short-Term" Bailout (ZH). And it's not just Boeing: U.S. Airlines Spent 96% of Free Cash Flow on Buybacks (Bloomberg).]
In its latest 8K, the plunging planemaker has completely drawn down its $13.8 billion credit line that it entered in October 2018 as it "navigates current business challenges" exposing just how fast this company is burning through cash.
"As of March 13, 2020, Boeing has fully drawn on the Credit Agreement, consisting of approximately $13.8 billion, which amount includes additional commitments made subsequent to the initial closing date.
For additional information on the terms and conditions of the Credit Agreement, see Boeing's Current Report on Form 8-K dated February 6, 2020.
We continue to have access to revolving credit agreements entered into on October 30, 2019, which have also been disclosed. These facilities, which to date have not been drawn upon, provide us with additional liquidity as we navigate the current business challenges. For additional information on these credit facilities, see Boeing's Current Report on Form 8-K dated October 30, 2019."This comes just hours after sources told Reuters that Boeing is seeking a bailout of 'tens of billions' in US government loan guarantees amid the Covid-19 crisis.
President Trump has already been on record telling airlines that his administration is prepared to pledge $50 billion in support after passenger activity has fallen off a cliff due to the virus scare.
Boeing was struggling before the virus outbreak, dealing with 737 Max groundings, production halts, and cancellation orders.
As we raged previously, this bailout demand comes after the company blew nearly $100 billion on stock buybacks since 2013 helping push its stock to all-time highs not that long ago, and instead of selling stock to get liquidity, they're asking the Trump administration for a massive bailout.
So, no, nobody in their right minds should give Boeing even one penny in "short term aid". Instead, management and the board should be ordered to sell as much stock as they need - you know, the opposite of buying it back - to maintain the business, even it means sending the stock price crashing far lower.
Because it's called capitalism, and because there is no reason why taxpayers should foot the bill for a company which instead of saving cash when times were good, was handing it out to shareholders and a handful of executives, and which should now for some insane reason be eligible for a bailout when times suddenly go bad.
No: force Boeing - and others like it that spent billions repurchasing its stock while incurring massive amounts of debt - to sell its stock. After all that's what a public company's stock is - a currency - and just as Boeing could repurchase it when it had cash, and lifted its stock price to all time highs, it should now sell its stock and use the proceeds to fund itself, like any other corporation does when it needs funding. Last time we checked, Boeing's market cap was $73 billion, and it certainly afford to drop much more as the company now does the buyback in reverse.
This is also a warning to Congress and the White House: if chronic stock repurchasers such as Boeing, are bailed out instead of ordered to find their own sources of liquidity, there will be a mutiny in America and rightfully so, because it was Boeing's shareholders that got rich on the way up, and now it is somehow up to taxpayers to make sure the company, loaded up with record amounts of debt used to fund buybacks, survives one more quarter.
That, in a word, is bullshit.
by Tyler Durden, ZeroHedge | Read more:
Image: uncredited
[ed. With several massive stimulus programs in the works, sharks smell blood in the water. See also: Boeing, Which Repurchased Over $100BN In Stock, Is Downgraded To BBB, Seeks "Short-Term" Bailout (ZH). And it's not just Boeing: U.S. Airlines Spent 96% of Free Cash Flow on Buybacks (Bloomberg).]
Sunday, March 15, 2020
Panic at the Fed
With Wall Street desperate for the Fed to announce emergency measures on Sunday (after disappointing last week), and ideally before the futures open, Jerome Powell did not disappoint and moments ago the Fed announced a barrage of emergency measures which included:
The full statement is below (link): (...)
With all due respect to Thursday's massive repo expansion, this is the Fed's bazooka. It also means that after this, the Fed - which just cut rates to zero and launched QE5 - is now out of ammo, as Powell will have to cut rates to negative next and/or buy stocks outright for further monetary stimulus, something that would require the permission of Congress. And since that is unlikely absent a total collapse in the financial system, we are now down to fiscal stimulus and US politicians acting in a bipartisan fashion. Which may be a huge gamble.
Curiously, in this barrage of emergency actions, the one which arguably was most needed, a commercial paper facility, was missing. As such, it wouldn't be unthinkable to see the dollar funding squeeze worsen after the initial euphoria fades on Monday despite the launch of enhanced global swap lines.
The good news is that at least there is nothing more the Fed can announce on Wednesday, absent buying single stocks and ETFs of course, and as such all attention will now be on Congress and what additional fiscal stimulus the Fed can push through.
- Welcome back ZIRP: Fed cuts rates by 100bps to 0-25bps from 1.00 -1.25bps. This is in addition to the 50bps rate cut on March 3, which means that in just under two weeks the Fed has cut rates by 150bps to zero.
- Fed officially launches QE5 (no more "Non-QE" bullshit), consisting of "at least" $500BN in Treasury purchases and $200 billion in MBS.
- Boosting intraday liquidity: The Fed announces Measures related to the discount window, intraday credit, bank capital and liquidity buffers, reserve requirements, and—in coordination with other central banks—the U.S. dollar liquidity swap line arrangements
- Reserve requirements cut to zero: The Fed cuts reserve requirement ratios to zero percent effective on March 26.
- Coordinated swap lines: The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank announced a coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements. The pricing on the dollar liquidity swap arrangements is cut by 25 basis points, so the new rate will be the US dollar overnight index swap (OIS) rate plus 25 basis points.
The full statement is below (link): (...)
With all due respect to Thursday's massive repo expansion, this is the Fed's bazooka. It also means that after this, the Fed - which just cut rates to zero and launched QE5 - is now out of ammo, as Powell will have to cut rates to negative next and/or buy stocks outright for further monetary stimulus, something that would require the permission of Congress. And since that is unlikely absent a total collapse in the financial system, we are now down to fiscal stimulus and US politicians acting in a bipartisan fashion. Which may be a huge gamble.Curiously, in this barrage of emergency actions, the one which arguably was most needed, a commercial paper facility, was missing. As such, it wouldn't be unthinkable to see the dollar funding squeeze worsen after the initial euphoria fades on Monday despite the launch of enhanced global swap lines.
The good news is that at least there is nothing more the Fed can announce on Wednesday, absent buying single stocks and ETFs of course, and as such all attention will now be on Congress and what additional fiscal stimulus the Fed can push through.
by Tyler Durden, ZeroHedge | Read more:
Image: Eric Baradat/AFP via Getty Images
[ed. Futures market is tanking on the news. Probably because this was an emergency decision that couldn't wait two days for their next scheduled meeting. Smells like panic. I don't usually link to ZH, but they do stay on top of what's going on financially (if you can ignore all the crackpot comments). See also: Fed Disaster: S&P Futures Crash, Halted Limit Down; Gold, Treasuries Soar After Hisotric Fed Panic (ZH); and Fed Cuts Rates To Near Zero As Coronavirus Rips Through Economy (NPR).]
Saturday, March 14, 2020
The Struggle To Bring Up Better Boys
Dominance. Aggression. Rugged good looks. Sexual prowess. Stoicism. Athleticism. These are attributes of “the ideal guy” according to the young American men who spoke to author Peggy Orenstein for her new book, Boys & Sex.
In contrast surveys reveal that teenage girls are now more comfortable about rejecting stereotypical roles, thanks in part to simple slogans such as “Girl Power” and “Yes She Can”, coupled with the liberating message of the popular Frozen animation franchise. Music, sport and young adult literature have all been happily singing from this feminist hymn sheet for some time.
How about the boys then? Now the daunting task of exposing and exploding some of the equally damaging conventional pressures on male children and teenagers has received a boost with the publication of two striking new studies and the arrival in cinemas of Disney-Pixar’s recent release, Onward.
All attempt to show that boys need urgent help to express their feelings and deal with what society expects of them. And all three have met with a negative reception in some quarters.
The two books, Orenstein’s Boys & Sex, available here in paperback on Friday, and Cara Natterson’s Decoding Boys, out last month, argue that unless parents move swiftly to tackle their sons’ adolescent confusion and alienation, their daughters will soon leave them far behind when it comes to coping with emotions. Sex education for boys, they warn, has been left to the pornographers and football coaches, while the effects of changing male hormones are commonly misunderstood.
The aims of these twin examinations of modern boyhood sound pretty laudable, but they have already prompted accusations of bias and a suspicion that they’re designed to berate men, rather than help them.
Writing angrily in the conservative online magazine The Federalist, Glenn T Stanton alleges that Orenstein and Natterson’s books have only been welcomed by the liberal press, as represented by The Atlantic magazine, because they appear to support the idea that “toxic masculinity” is running rampant. By concentrating on examples of poor, insensitive male behaviour, Stanton believes the findings of the authors are just fuelling calls for current ideas of manhood to be ripped up and chucked away. Defining any social group, including young men, by its extremes is wrong, he argues.
Another male critic, who wrote in from Chicago in response to an article by Orenstein in The Atlantic, suggested that symptoms of “toxic masculinity” tend to be shrugged off by men as they grow up. He also felt that Orenstein’s choice to study young white “jocks”, or college sportsmen, had skewed her results: “Had she spoken with members of the debate team, for instance, or the drama club, or the school band, she might have opened a window to a very different landscape.”
Orenstein’s book, which has the full title Boys & Sex, Young Men on Hookups, Love, Porn, Consent, and Navigating the New Masculinity, is a follow-up to her 2016 hit, Girls & Sex, and its frank attitude to discussing sex means it is likely to appeal well beyond academic circles. Before writing, she took two years out to talk to boys across America, mostly college-bound and between the ages of 16 and 21. What she found was that when these intelligent young men were asked to describe “the ideal guy”, they frequently “appeared to be harking back to 1955”.
It made Orenstein wonder if parents have been looking the other way for too long: “Feminism may have provided girls with a powerful alternative to conventional femininity, and a language with which to express the myriad problems-that-have-no-name, but there have been no credible equivalents for boys. Quite the contrary: the definition of masculinity seems to be in some respects contracting.”
In Natterson’s book, which has the subtitle, New Science Behind the Subtle Art of Raising Sons, a series of useful bits of advice have been crafted from the author’s long practical experience as a paediatrician. The New York Times has judged it a good guide for all parents of boys and praised its “zippy, big-hearted” tone as it explains that puberty starts much earlier in boys than we used to think. It also argues that teenage boys should not be allowed to retreat into monosyllabic and fleeting family interactions. According to Natterson they need more emotional and physical reassurance than we ever realised.
In contrast surveys reveal that teenage girls are now more comfortable about rejecting stereotypical roles, thanks in part to simple slogans such as “Girl Power” and “Yes She Can”, coupled with the liberating message of the popular Frozen animation franchise. Music, sport and young adult literature have all been happily singing from this feminist hymn sheet for some time.
How about the boys then? Now the daunting task of exposing and exploding some of the equally damaging conventional pressures on male children and teenagers has received a boost with the publication of two striking new studies and the arrival in cinemas of Disney-Pixar’s recent release, Onward.
All attempt to show that boys need urgent help to express their feelings and deal with what society expects of them. And all three have met with a negative reception in some quarters.
The two books, Orenstein’s Boys & Sex, available here in paperback on Friday, and Cara Natterson’s Decoding Boys, out last month, argue that unless parents move swiftly to tackle their sons’ adolescent confusion and alienation, their daughters will soon leave them far behind when it comes to coping with emotions. Sex education for boys, they warn, has been left to the pornographers and football coaches, while the effects of changing male hormones are commonly misunderstood.The aims of these twin examinations of modern boyhood sound pretty laudable, but they have already prompted accusations of bias and a suspicion that they’re designed to berate men, rather than help them.
Writing angrily in the conservative online magazine The Federalist, Glenn T Stanton alleges that Orenstein and Natterson’s books have only been welcomed by the liberal press, as represented by The Atlantic magazine, because they appear to support the idea that “toxic masculinity” is running rampant. By concentrating on examples of poor, insensitive male behaviour, Stanton believes the findings of the authors are just fuelling calls for current ideas of manhood to be ripped up and chucked away. Defining any social group, including young men, by its extremes is wrong, he argues.
Another male critic, who wrote in from Chicago in response to an article by Orenstein in The Atlantic, suggested that symptoms of “toxic masculinity” tend to be shrugged off by men as they grow up. He also felt that Orenstein’s choice to study young white “jocks”, or college sportsmen, had skewed her results: “Had she spoken with members of the debate team, for instance, or the drama club, or the school band, she might have opened a window to a very different landscape.”
Orenstein’s book, which has the full title Boys & Sex, Young Men on Hookups, Love, Porn, Consent, and Navigating the New Masculinity, is a follow-up to her 2016 hit, Girls & Sex, and its frank attitude to discussing sex means it is likely to appeal well beyond academic circles. Before writing, she took two years out to talk to boys across America, mostly college-bound and between the ages of 16 and 21. What she found was that when these intelligent young men were asked to describe “the ideal guy”, they frequently “appeared to be harking back to 1955”.
It made Orenstein wonder if parents have been looking the other way for too long: “Feminism may have provided girls with a powerful alternative to conventional femininity, and a language with which to express the myriad problems-that-have-no-name, but there have been no credible equivalents for boys. Quite the contrary: the definition of masculinity seems to be in some respects contracting.”
In Natterson’s book, which has the subtitle, New Science Behind the Subtle Art of Raising Sons, a series of useful bits of advice have been crafted from the author’s long practical experience as a paediatrician. The New York Times has judged it a good guide for all parents of boys and praised its “zippy, big-hearted” tone as it explains that puberty starts much earlier in boys than we used to think. It also argues that teenage boys should not be allowed to retreat into monosyllabic and fleeting family interactions. According to Natterson they need more emotional and physical reassurance than we ever realised.
by Vanessa Thorpe, The Guardian | Read more:
Image: Allstar/Disney/Pixar
Blowing In The Whirlwind
... I sorely hate undercutting any argument against Biden, I do believe it is possible for old Joe to defeat Trump. Here’s how it’s likely to play out, if Biden is the nominee.
Both he and Trump will lumber around the country for months, dribbling out word salad to adoring supporters who don’t have the slightest interest in what the doddering old men at the rostrum are saying. Both will spout inane and barely coherent platitudes without offering anything remotely resembling actual policies or programs or solutions to the myriad of dire crises we face. Both will have their contentless, incoherent ramblings presented as cogent “debating points” and “policy positions” suitable for “deep analysis” by the shallow savants of the national press. There will be various gaffes, outrages, mini-scandals, along with a crazy quilt of polling numbers changing wildly by the day, even by the hour.
And none of it will matter. America’s electoral politics are so far removed from the actual reality of how power is really exercised in our society – and from the actual state of degeneration our dying society is really in – that it is nothing more than a badly rendered cartoon, a medicine show with clowns and con-men, a white noise machine howling down any genuine thought and feeling. It is, quite literally, sound and fury, signifying nothing: precisely because it no longer has any connection to the true operations of power and the reality of decay.
Trump recognized this first, but the Democrats have caught up. You don’t have to have any real policies. You don’t have to offer any real hope. You don’t even have to make any sense. Most people are so battered by the decay and tormented by the white noise that all they can do is grab hold of some emblematic figure offered to them by the system and project all their hopes and dreams and fears and desires onto them. (...)
There seems to be the feeling that we can’t really do anything at all about the problems that are bearing down on us like a runaway train – climate disruption and all its ever-rippling repercussions; the rise of hyper-powerful rich elites manipulating our increasingly hollowed-out institutions for their own benefit; the economic demise of industry after industry, region after region, community after community; the endless wars, covert and overt, with their gargantuan corruption and pointless cycles of violence; the healthcare atrocities that leave millions of people literally begging on the internet to obtain even the barest minimum of medical help, and so on. In the face of all this, many people long to embrace some figure or another who promises us a return to the “status quo”: either some mythologized post-war era when America was “great,” or just back to the Obama years, when things were “normal.”
Overwhelmed, battered, beset, anxiety-ridden, suffering, confused, many people don’t want to hear that hard work and big changes will be necessary if we are to have a chance for things to get better. They just want to latch on to something that will let them feel – if only for a moment – that the anxiety can go away, that someone up there in the circles of power will take care of it for us.
This is not the wisest course when faced with overwhelming crises – but it is an entirely natural and understandable one. When you couple this natural reaction to extremity with the aforementioned systematic effort to undermine and thwart the Sanders’ campaign, then it’s not surprising you end up with a blank screen like Joe Biden as your candidate.
And consider this: the blank screen of Donald Trump has now had four years in power, yet still those overwhelming, battering, confusing anxieties have not gone away – indeed, they’ve only multiplied. In this situation, it’s entirely possible, perhaps even likely, that enough people will turn away from the torn screen of Trump and try a new cure for their anxiety. (...)
What matters that he is a fresh screen where our most unworthy fears and unrealistic hopes can be projected, for a time; where we can forget, for a time, the massive disasters that are looming ahead and pretend that things can somehow go back to “normal.”
Of course, this can only be done by ignoring that it was the previous “normality” that brought us here in the first place – and by ignoring the fact that big changes and upheavals are coming no matter who is elected. We can’t escape it. The only question is: do we want to try to manage these big changes for the greater common good – or will we just allow them to ravage our lives in the worst way possible while we pine for a status quo of peace and quiet that never was, and thus can never return?
Both he and Trump will lumber around the country for months, dribbling out word salad to adoring supporters who don’t have the slightest interest in what the doddering old men at the rostrum are saying. Both will spout inane and barely coherent platitudes without offering anything remotely resembling actual policies or programs or solutions to the myriad of dire crises we face. Both will have their contentless, incoherent ramblings presented as cogent “debating points” and “policy positions” suitable for “deep analysis” by the shallow savants of the national press. There will be various gaffes, outrages, mini-scandals, along with a crazy quilt of polling numbers changing wildly by the day, even by the hour.
And none of it will matter. America’s electoral politics are so far removed from the actual reality of how power is really exercised in our society – and from the actual state of degeneration our dying society is really in – that it is nothing more than a badly rendered cartoon, a medicine show with clowns and con-men, a white noise machine howling down any genuine thought and feeling. It is, quite literally, sound and fury, signifying nothing: precisely because it no longer has any connection to the true operations of power and the reality of decay.Trump recognized this first, but the Democrats have caught up. You don’t have to have any real policies. You don’t have to offer any real hope. You don’t even have to make any sense. Most people are so battered by the decay and tormented by the white noise that all they can do is grab hold of some emblematic figure offered to them by the system and project all their hopes and dreams and fears and desires onto them. (...)
There seems to be the feeling that we can’t really do anything at all about the problems that are bearing down on us like a runaway train – climate disruption and all its ever-rippling repercussions; the rise of hyper-powerful rich elites manipulating our increasingly hollowed-out institutions for their own benefit; the economic demise of industry after industry, region after region, community after community; the endless wars, covert and overt, with their gargantuan corruption and pointless cycles of violence; the healthcare atrocities that leave millions of people literally begging on the internet to obtain even the barest minimum of medical help, and so on. In the face of all this, many people long to embrace some figure or another who promises us a return to the “status quo”: either some mythologized post-war era when America was “great,” or just back to the Obama years, when things were “normal.”
Overwhelmed, battered, beset, anxiety-ridden, suffering, confused, many people don’t want to hear that hard work and big changes will be necessary if we are to have a chance for things to get better. They just want to latch on to something that will let them feel – if only for a moment – that the anxiety can go away, that someone up there in the circles of power will take care of it for us.
This is not the wisest course when faced with overwhelming crises – but it is an entirely natural and understandable one. When you couple this natural reaction to extremity with the aforementioned systematic effort to undermine and thwart the Sanders’ campaign, then it’s not surprising you end up with a blank screen like Joe Biden as your candidate.
And consider this: the blank screen of Donald Trump has now had four years in power, yet still those overwhelming, battering, confusing anxieties have not gone away – indeed, they’ve only multiplied. In this situation, it’s entirely possible, perhaps even likely, that enough people will turn away from the torn screen of Trump and try a new cure for their anxiety. (...)
What matters that he is a fresh screen where our most unworthy fears and unrealistic hopes can be projected, for a time; where we can forget, for a time, the massive disasters that are looming ahead and pretend that things can somehow go back to “normal.”
Of course, this can only be done by ignoring that it was the previous “normality” that brought us here in the first place – and by ignoring the fact that big changes and upheavals are coming no matter who is elected. We can’t escape it. The only question is: do we want to try to manage these big changes for the greater common good – or will we just allow them to ravage our lives in the worst way possible while we pine for a status quo of peace and quiet that never was, and thus can never return?
by Chris Floyd, Counterpunch | Read more:
Image: Nick Roney
[ed. With all the virus panic these days, thought it might be nice to lighten things up with a little politics. See also: Coronavirus Is the Perfect Disaster for ‘Disaster Capitalism’ (Vice).]
A Week at the Epicenter of America’s Coronavirus Crisis
We stopped touching one another on a Wednesday. Or was it Tuesday? Information came at us so fast—confirmed cases, public-health warnings, deaths—you could swear the days of the week had been transposed, their order jumbled like everything else. Certainly by Wednesday the handshakes stopped. Hugs weren’t far behind. Even among longtime friends and family. This would soon happen elsewhere in the country, to a degree, but here in the Seattle area, where by week’s end covid-19 would kill nearly twenty of us, evading physical contact carried extra urgency. Every avoidance felt like an act of heroism. You told yourself you were saving lives, and you were probably right.
Days earlier, on Saturday, February 29th, we woke to news of the first U.S. death from the virus, a man in his fifties, at a hospital in Kirkland, eight miles northeast of Seattle. At nearby Life Care Center of Kirkland, two patients tested positive. The number of confirmed cases tripled within twenty-four hours. By Monday, five were dead, four of them patients at Life Care in their seventies and eighties. Out came declarations of emergency, from the Seattle mayor, Jenny Durkan; the King County executive, Dow Constantine; and Governor Jay Inslee.
We didn’t know it yet, but we were living in a kind of laboratory of the country’s future. We were the first. The first to see bus drivers don face masks; the first to take seriously, citywide, singing “Happy Birthday” twice in a row as we washed our hands. The first to experience a unique kind of isolation. Circumventing handshakes helped avoid spreading disease—the elbow bump won out as the preferred alternative—but it also fostered a sense that none of us should be anywhere near one another. On the bus you chose to stand rather than share a seat with a stranger. You thought about crossing the street when approaching too many other pedestrians on a sidewalk. Officials would eventually advise—then demand—that we avoid large public gatherings. We were still out in the world, but barely of it. Alone together.
In that isolation, you had time to notice just how many objects your fingers touch throughout the day. Door handles, crosswalk-signal switches, elevator buttons. Every surface was suspect. The elbow bump diversified, became an all-purpose tool. You elbow-tapped to select your floor, and used the same elbow to hold the sliding doors for someone rushing to get to work on time. (Then stood as far away from her as possible on the ride up.)
We also contended with Seattle’s new role on the world stage. We’re used to being in the news for our innovations, here in the home of Amazon, Microsoft, Starbucks, and the original Boeing. If we’re lucky, the Seahawks play a decent enough season for everyone else to hear about it. Now we were known as ground zero of a deadly epidemic poised to sweep the continent.
On Tuesday night, NBC News, sharing its story on the crisis, tweeted, “Seattle a ‘ghost town’ as residents face uncertainty of growing coronavirus outbreak.” We laughed it off and clapped back. It was a gross exaggeration. Those of us downtown could see the city wasn’t empty. But we recognized some truth in it, too. The weekday bustle was there, but anesthetized.
All the while more news issued out of Kirkland. In daily briefings, officials from Public Health—Seattle & King County shared the vaguest of details. “A female in her 80s, a resident of LifeCare, was hospitalized at EvergreenHealth. She is in critical condition.” “A male in his 70s, a resident of LifeCare, hospitalized at EvergreenHealth. . . . The man had underlying health conditions, and died 3/1/20.” The death toll kept rising, but without names and specifics the epidemic could feel unrelated to any real danger, as if it only consisted of inconvenient rules, an invisible event that merely compelled people to bruise elbows and hoard toilet paper and Purell. Then the families started talking.
[ed. See also: Why Washington state is at the center of the US coronavirus outbreak (Guardian); Saying Goodbye to Your Favorite Seattle Restaurant (The Stranger); and finally, 'He's an idiot' (Guardian).]
Days earlier, on Saturday, February 29th, we woke to news of the first U.S. death from the virus, a man in his fifties, at a hospital in Kirkland, eight miles northeast of Seattle. At nearby Life Care Center of Kirkland, two patients tested positive. The number of confirmed cases tripled within twenty-four hours. By Monday, five were dead, four of them patients at Life Care in their seventies and eighties. Out came declarations of emergency, from the Seattle mayor, Jenny Durkan; the King County executive, Dow Constantine; and Governor Jay Inslee.
We didn’t know it yet, but we were living in a kind of laboratory of the country’s future. We were the first. The first to see bus drivers don face masks; the first to take seriously, citywide, singing “Happy Birthday” twice in a row as we washed our hands. The first to experience a unique kind of isolation. Circumventing handshakes helped avoid spreading disease—the elbow bump won out as the preferred alternative—but it also fostered a sense that none of us should be anywhere near one another. On the bus you chose to stand rather than share a seat with a stranger. You thought about crossing the street when approaching too many other pedestrians on a sidewalk. Officials would eventually advise—then demand—that we avoid large public gatherings. We were still out in the world, but barely of it. Alone together.In that isolation, you had time to notice just how many objects your fingers touch throughout the day. Door handles, crosswalk-signal switches, elevator buttons. Every surface was suspect. The elbow bump diversified, became an all-purpose tool. You elbow-tapped to select your floor, and used the same elbow to hold the sliding doors for someone rushing to get to work on time. (Then stood as far away from her as possible on the ride up.)
We also contended with Seattle’s new role on the world stage. We’re used to being in the news for our innovations, here in the home of Amazon, Microsoft, Starbucks, and the original Boeing. If we’re lucky, the Seahawks play a decent enough season for everyone else to hear about it. Now we were known as ground zero of a deadly epidemic poised to sweep the continent.
On Tuesday night, NBC News, sharing its story on the crisis, tweeted, “Seattle a ‘ghost town’ as residents face uncertainty of growing coronavirus outbreak.” We laughed it off and clapped back. It was a gross exaggeration. Those of us downtown could see the city wasn’t empty. But we recognized some truth in it, too. The weekday bustle was there, but anesthetized.
All the while more news issued out of Kirkland. In daily briefings, officials from Public Health—Seattle & King County shared the vaguest of details. “A female in her 80s, a resident of LifeCare, was hospitalized at EvergreenHealth. She is in critical condition.” “A male in his 70s, a resident of LifeCare, hospitalized at EvergreenHealth. . . . The man had underlying health conditions, and died 3/1/20.” The death toll kept rising, but without names and specifics the epidemic could feel unrelated to any real danger, as if it only consisted of inconvenient rules, an invisible event that merely compelled people to bruise elbows and hoard toilet paper and Purell. Then the families started talking.
by James Ross Gardner, New Yorker | Read more:
Image: Chona Kasinger[ed. See also: Why Washington state is at the center of the US coronavirus outbreak (Guardian); Saying Goodbye to Your Favorite Seattle Restaurant (The Stranger); and finally, 'He's an idiot' (Guardian).]
Friday, March 13, 2020
The Fed Did Not Just ‘Spend’ $1.5 Trillion
This week, the Federal Reserve announced that it would inject as much as $1.5 trillion into the short-term money markets, an intervention designed to ease the pressure on the financial system and lower the chances of a financial crisis.
This action received a lot of criticism from the left. The progressive standard-bearer Alexandria Ocasio-Cortez argued that “the amount that the Fed just injected almost covers all student loan debt in the U.S.,” and that “we need to care for working people as much as we care for the stock market.” Senator Bernie Sanders said, “When we say it’s time to provide health care to all our people, we’re told we can’t afford it. But if the stock market is in trouble, no problem! The government can just hand out $1.5 trillion to calm bankers.” Others described the injection as a gigantic subsidy for Wall Street.
The progressive frustration was understandable: The Fed is a technocratic institution that has offered immediate resources to aid the markets. Yes, that makes bankers better off. No, that does not feel fair, not given the administration’s flailing, too-little, too-late response to the viral pandemic, something that is costing lives and livelihoods already. Broker-dealers get instant help; families get to wait for a meager expansion to food stamps.
Still, the online commentary was inaccurate both about what the Fed was doing and about why it was doing it. And there is a good progressive case for the Fed doing as much as it can to help the financial markets—and for Congress doing even more to help regular people.
A few technical points: The Fed did not spend $1.5 trillion. This was not a $1.5 trillion bailout. It did not cost Americans $1.5 trillion. It was not a $1.5 trillion subsidy for hedge funds and the like. It did not use up $1.5 trillion in resources that could have gone to another cause, whether Wall Street bailouts or Medicare for All.
The Fed works in weird ways, but here goes: The central bank announced that it would offer financial firms up to $1.5 trillion in short-term, collateralized loans. A firm can borrow $100 in cash overnight, for example, but only if it gives the Fed $100 in Treasury securities backed by the full faith and credit of the American government, and pays a small amount of interest too. Doing this costs the Fed nothing, and costs the American taxpayer nothing; when all is said and done, the central bank will probably make a small amount of money off the interest payments.
The Fed chose to do this not as a payoff for Wall Street or to calm the stock market. (It has nothing to do with the stock market at all, though equities crashing is in part a sign of the very financial strain the Fed is attempting to soothe.) It did it to help make sure that the market for Treasury bonds continues to function normally. It was not using taxpayer dollars to juice a money-losing industry, but instead acting as an emergency backstop for the markets writ large.
Signs indicate that it needs to do more, not less, in the coming days: The markets continue to act in strained and strange and erratic ways. Investment banks expect the central bank to drop interest rates to zero soon, and to begin purchasing huge sums of assets, something called “quantitative easing.” There is some chance, as well, that the Fed might end up setting up special facilities to supply liquidity to the financial system, as it did during the 2008 debacle.
There’s a lot for average folks to like about what the Fed is doing, as much as it might seem arcane or technocratic or unfair. For one, recessions complicated by financial crises are much, much harder to fight, and much, much worse than plain-vanilla downturns: If the Fed and other central banks keep the markets functioning, that benefits everybody. But a credit crunch would hurt everybody. Businesses are already seeing revenue evaporate. Many will seek loans to help tide them over. Low interest rates and liquid markets will help those businesses, the families that rely on them for work, and the communities they serve.
That said, there’s a lot not to like too. Morgan Ricks, a law professor at Vanderbilt University and an expert on financial regulation, questions why markets needed this kind of emergency oxygen now, and whether the Fed should be doing more to make markets work, even in times of crisis, without the government’s help. The Fed’s repo transactions may not cost anything, but the Fed is still propping up the financial sector.
More broadly, one could argue that the extraordinary measures the Fed has taken in the past and is taking today contribute to the country’s inequality. There’s a deep, intuitive unfairness to monetary policy going to the mattresses when fiscal policy has not even gotten out of bed: The Fed is helping rich financiers, while poor families are unsure whether aid is coming.
But the economy needs both monetary policy and fiscal policy. The trillion-dollar repo facility did not create some kind of either-or scenario, with aid to hedge funds and financiers crowding out aid to student-loan borrowers and gig workers. And the real fault here—both during the Great Recession and now—lies not with the Fed, but with Congress, particularly Republicans in Congress.
Democrats, acting with panicked muscle memory from the miserable exercises of the previous crisis, have proposed very aggressive fiscal policy, up to and including sending large monthly checks to every American household. A proposed rescue plan includes expanded unemployment insurance, paid sick leave, and more money for the Supplemental Nutrition Assistance Program. Republicans, still dismissing the severity of the pandemic, have suggested wan policies and slowed down the process. That means monetary policy is acting on its own. That means more joblessness and a sharper slowdown. That means lower-income families reliant on temporary work have no chance of recovering as fast as high-income families reliant on dividends and market returns.
Why couldn’t the Fed get creative and get into the fiscal-policy game? Why couldn’t it create $1.5 trillion and shower it on Americans? No less an authority than Ben Bernanke, the Fed chair who helped the country muddle through the Great Recession, has considered that scenario. It is possible, and at some point might become necessary. But it is not an option open to the Fed at the moment, since it would likely require a new legal framework and definitely require a lot of new policy infrastructure. (In one scheme, every American would incorporate as a kind of bank, then seek zero-interest loans. It would be weird.) Fed intervention in fiscal policy would also require, I imagine, Congress flat-out refusing to do its job and letting a downturn become a severe recession.
This action received a lot of criticism from the left. The progressive standard-bearer Alexandria Ocasio-Cortez argued that “the amount that the Fed just injected almost covers all student loan debt in the U.S.,” and that “we need to care for working people as much as we care for the stock market.” Senator Bernie Sanders said, “When we say it’s time to provide health care to all our people, we’re told we can’t afford it. But if the stock market is in trouble, no problem! The government can just hand out $1.5 trillion to calm bankers.” Others described the injection as a gigantic subsidy for Wall Street.
The progressive frustration was understandable: The Fed is a technocratic institution that has offered immediate resources to aid the markets. Yes, that makes bankers better off. No, that does not feel fair, not given the administration’s flailing, too-little, too-late response to the viral pandemic, something that is costing lives and livelihoods already. Broker-dealers get instant help; families get to wait for a meager expansion to food stamps.
Still, the online commentary was inaccurate both about what the Fed was doing and about why it was doing it. And there is a good progressive case for the Fed doing as much as it can to help the financial markets—and for Congress doing even more to help regular people.A few technical points: The Fed did not spend $1.5 trillion. This was not a $1.5 trillion bailout. It did not cost Americans $1.5 trillion. It was not a $1.5 trillion subsidy for hedge funds and the like. It did not use up $1.5 trillion in resources that could have gone to another cause, whether Wall Street bailouts or Medicare for All.
The Fed works in weird ways, but here goes: The central bank announced that it would offer financial firms up to $1.5 trillion in short-term, collateralized loans. A firm can borrow $100 in cash overnight, for example, but only if it gives the Fed $100 in Treasury securities backed by the full faith and credit of the American government, and pays a small amount of interest too. Doing this costs the Fed nothing, and costs the American taxpayer nothing; when all is said and done, the central bank will probably make a small amount of money off the interest payments.
The Fed chose to do this not as a payoff for Wall Street or to calm the stock market. (It has nothing to do with the stock market at all, though equities crashing is in part a sign of the very financial strain the Fed is attempting to soothe.) It did it to help make sure that the market for Treasury bonds continues to function normally. It was not using taxpayer dollars to juice a money-losing industry, but instead acting as an emergency backstop for the markets writ large.
Signs indicate that it needs to do more, not less, in the coming days: The markets continue to act in strained and strange and erratic ways. Investment banks expect the central bank to drop interest rates to zero soon, and to begin purchasing huge sums of assets, something called “quantitative easing.” There is some chance, as well, that the Fed might end up setting up special facilities to supply liquidity to the financial system, as it did during the 2008 debacle.
There’s a lot for average folks to like about what the Fed is doing, as much as it might seem arcane or technocratic or unfair. For one, recessions complicated by financial crises are much, much harder to fight, and much, much worse than plain-vanilla downturns: If the Fed and other central banks keep the markets functioning, that benefits everybody. But a credit crunch would hurt everybody. Businesses are already seeing revenue evaporate. Many will seek loans to help tide them over. Low interest rates and liquid markets will help those businesses, the families that rely on them for work, and the communities they serve.
That said, there’s a lot not to like too. Morgan Ricks, a law professor at Vanderbilt University and an expert on financial regulation, questions why markets needed this kind of emergency oxygen now, and whether the Fed should be doing more to make markets work, even in times of crisis, without the government’s help. The Fed’s repo transactions may not cost anything, but the Fed is still propping up the financial sector.
More broadly, one could argue that the extraordinary measures the Fed has taken in the past and is taking today contribute to the country’s inequality. There’s a deep, intuitive unfairness to monetary policy going to the mattresses when fiscal policy has not even gotten out of bed: The Fed is helping rich financiers, while poor families are unsure whether aid is coming.
But the economy needs both monetary policy and fiscal policy. The trillion-dollar repo facility did not create some kind of either-or scenario, with aid to hedge funds and financiers crowding out aid to student-loan borrowers and gig workers. And the real fault here—both during the Great Recession and now—lies not with the Fed, but with Congress, particularly Republicans in Congress.
Democrats, acting with panicked muscle memory from the miserable exercises of the previous crisis, have proposed very aggressive fiscal policy, up to and including sending large monthly checks to every American household. A proposed rescue plan includes expanded unemployment insurance, paid sick leave, and more money for the Supplemental Nutrition Assistance Program. Republicans, still dismissing the severity of the pandemic, have suggested wan policies and slowed down the process. That means monetary policy is acting on its own. That means more joblessness and a sharper slowdown. That means lower-income families reliant on temporary work have no chance of recovering as fast as high-income families reliant on dividends and market returns.
Why couldn’t the Fed get creative and get into the fiscal-policy game? Why couldn’t it create $1.5 trillion and shower it on Americans? No less an authority than Ben Bernanke, the Fed chair who helped the country muddle through the Great Recession, has considered that scenario. It is possible, and at some point might become necessary. But it is not an option open to the Fed at the moment, since it would likely require a new legal framework and definitely require a lot of new policy infrastructure. (In one scheme, every American would incorporate as a kind of bank, then seek zero-interest loans. It would be weird.) Fed intervention in fiscal policy would also require, I imagine, Congress flat-out refusing to do its job and letting a downturn become a severe recession.
by Anne Lowry, The Atlantic | Read more:
Image: Scott Applewhite
[ed. I can't figure out the Fed. Initially, it was supposed to alleviate financial crises by maximizing employment, stabilizing prices, and moderating long-term interest rates. That's it. A Bank for banks. However, over time its function evolved (without corresponding legislation) so that now it pretty much has free reign to do whatever it wants with US dollars - including propping up the stock market, causing severe price discovery problems, unknown risk, distortions in valuation, and inherent moral hazard. Even the Fed itself can't seem to decide what it's role should be: one component says it has three functions, another says five, and all are extremely broad.]
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