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Here's How A Cashless Society Would Affect Day-To-Day Life
by Tyler Durden Tue, 08/25/2020 - 22:05 Authored by Daisy Luther via The Organic Prepper blog, Have you ever thought about the ramifications of a cashless society? I’m talking about the real, first-person effects, not some ephemeral conspiracy theory or possible biblical prophecy. This is bad news for a lot of reasons, not the least of which are the ways it would affect day-to-day life. Here’s my definition of a cashless society, so we’re all singing from the same songbook: Cash would no longer be legal tender, therefore you could not make purchases with it, pay bills with it, or spend it in any way. You would not be able to deposit cash into your bank account so you wouldn’t be able to accept cash for an exchange of goods or services. Therefore, cash would be nothing more than a worthless piece of paper. (I know, I know. Debt-based currency is a totally different article though.) We’re heading this way. Jose recently wrote that Venezuela is rapidly becoming cashless and here in the United States a concerning early sign is that there is a “change shortage” which is causing many stores to give you your change on a store loyalty card or invite you to donate that change to some cause. GiftsThink of all the times that cash is an appropriate gift. I’ve always given money, like stuffing a child’s birthday card with a $20 bill or giving a new graduate some cash to put toward college expenses. When I got married, we received quite a bit of money from various loved ones. My dad always gave my daughters some spending money of their own each time we visited and they were surprised and delighted every single time. However, in a cashless society, there are two problems with this. First of all, the recipient would not be able to use the cash. He or she would not be able to spend or deposit it. Secondly, if a monetary gift is given, it would have to be done with a check or electronic transfer. This means that the government (and the Tax Man) would know precisely how much money any person is given. That might not be a big deal for the 7-year-old who got $20 from grandpa, but what about the graduate who raked in a couple thousand in gifts from family members to celebrate his or her accomplishments? At what point will the government have their hands out for “their fair share?” Side GigsA lot of folks are really struggling right now with the COVID shutdowns. Jobs have been lost, hours have been cut, and financial problems abound. One of the ways that these people are making ends meet is with side gigs. Folks are cutting grass, cleaning houses, driving for Uber, delivering food, babysitting – they’re coming up with all sorts of ways to make some extra money. A huge percentage of these people are being paid in cash. But if suddenly you can no longer spend your cash, you’d need to be paid electronically. How many people who don’t already have a business have a merchant account for taking credit or debit cards? There are options like Paypal and Venmo, which take a percentage fee, but they’re going to have to figure out something. And then, as above, every single bit of this side gig money is traceable and trackable. This could quickly turn your 20 bucks from lawn mowing into $15 after taxes. Selling Secondhand GoodsRaise your hand if you’ve ever sold something to pay a bill. Me too! I’ve sold jewelry, furniture, exercise equipment – all sorts of stuff to meet an obligation when in a pinch. Not only that, but I have a yard sale every single year to downsize the things that I found I don’t really use, which often brings in a few hundred dollars. How will this work in a cashless society? Well, if you are selling just one larger item, you’d probably end up using some kind of payment app like Venmo or Paypal. On the other hand, a yard sale would be nearly impossible to conduct electronically. Who is really going to be able to sit there and do Paypal transactions all day, especially when folks are buying things that cost 25 cents? And there we are, down another way of making some quick money. TipsLots of folks who work in food service and the beauty industry, just to name two niches, depend on tips to make a living. Generally, tips are collected from tables or paid out at the end of the shift if they were put on a debit card. But…once there is no cash, these tips will have to end up going on a regular paycheck. One hundred percent of this money will be subject to payroll withholdings. This will mean that a lot of people see a sharp decrease in their earnings, plus they’ll have to wait for their checks to get the money. It puts a lot of power into the hands of the management and it would not be difficult at all for someone to manipulate the amounts the workers have earned. ChildrenI’ve written many times about the importance of allowing children to handle their own money. It teaches them responsibility and life skills that will serve them well in the future. (Learn more about talking to your kids about money in this article.) My daughters have had access to money since they were in kindergarten, and possibly before. Now, how are you going to give a five-year-old access to money if it’s all electronic? Are they going to end up with their own bank accounts and debit cards? That hardly seems realistic. There is also the option of gift cards, but that means the money can only be spent at certain places, taking away the vital learning curve of saving your money to put it toward a Big Goal. Forget lemonade stands, gifts from Grandpa, or putting change in a piggy bank – these will all be things of the past. The unbanked or underbankedEight million households in the United States are “underbanked” or “unbanked.” This means that they don’t have any kind of bank account due to fees, bad credit, or other obstacles. These people rely on check-cashing businesses that already take a hefty fee to give them the pay they’ve earned. What will they do when this is no longer an option? Most of the people who are unbanked or underbanked are living under the poverty line already. This would mean that they can no longer pick up side-gigs to make ends meet, they can’t do odd jobs, and getting them any kind of assistance will be more difficult. Slate reports how the coin shortage is affecting these Americans: To the average American, this shortage may only cause minor headaches—a harder time paying at a parking meter or exact change required at a coffee shop. But some 8 million American households, or 6 percent of Americans, are “unbanked,” meaning that because of fees and other financial hurdles, they have no checking, savings, or money market account. Many rely instead on services such as money orders, pawn shop loans, or payday loans. According to Venky Shankar, a marketing professor at the Center for Retailing Studies at Texas A&M University, Americans who make $25,000 a year or less use cash for around 45 percent of their purchases. So those Americans might struggle to pay for essential services without change on hand. They also might find it more stressful to round up or donate their change, should stores ask for it. “For an unbanked or underbanked person, it could leave them in a horrible situation if they don’t have access to the cards,” saidAngela Lyons, a professor of economics at the University of Illinois at Urbana-Champaign. (source) And this is just a coin shortage. Imagine how difficult it would be if our society became completely cashless. So, we can see this isn’t an ideal situation for any of us.But even these things are relatively minor in comparison to the potential for abuse against citizens in a cashless society. If every single dime you bring in is tracked and recorded, you will have no financial privacy, and you’ll also be at far more risk. Many of us keep some cash savings around the house for emergencies. Even if there is a bank holiday, we’ll be okay because we have the money sitting around to take care of any incidentals while we are unable to access our banked money. But what happens when things are cashless? All that money we’ve stashed away over the years would have to go into the coffers and we’d lose a certain amount of control. It’s all well and good when times are okay, but what happens when there’s a Cyprus-style event and the government decides a bail-in is in order? If you don’t recall, back in 2013, billions of dollars were seized from depositors to protect the small country’s banking system. This was done to make good on an $11.6 billion dollar debt owed to creditors outside the country. If you think that sounds far-fetched – like something that could “never happen here,” it’s incredibly important to note that we already have language that allows for bail-ins here in the United States. After the bailouts for the economic crisis of 2008, Congress passed the Dodd-Frank Wall Street Reform and Consumer Act of January 2010, which prohibits government bailouts but allows bail-ins. So, yes, the money in your account could indeed be used to save a floundering bank. Not only that, but think about the outrageous phenomenon of civil asset forfeiture. If you aren’t familiar with it, that means that an entity can seize your property or money even when you have not been convicted of a crime. Civil asset forfeiture provides billions of dollars to the US Government and local police departments every single year. Imagine how much easier that would be if your wealth was all in one place. And let me take it just one step further before I take off the tinfoil – think about how many websites, YouTube channels, and social media accounts have been purged and demonetized over the past few years. Is it that much of a stretch of the imagination that this could be taken a step further? That perhaps unpopular opinions could be fined and money immediately be withdrawn from the accounts of those who dissent with the status quo? Maybe I’m just another paranoid conspiracy theorist. But are you actually paranoid when “they” are really out to control you?
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The Quiet American Reset
ZeroHedge.com Tue, 08/25/2020 - 00:05 Authored by Alastair Crooke via The Strategic Culture Foundation, The great de-coupling is here. The U.S. now has plan a to purge Chinese tech companies fully from America’s internet, creating what the Trump administration has dubbed the Clean Network. It mirrors the White House’s existing 5G Clean Path initiative to remove all Chinese components from systems ‘everywhere’, and which now extends it to everything tech on the ‘net. China fears a financial ‘Iron Curtain’ is about to fall – a complete expulsion from the dollar sphere. In fact, soft capital control is already birthing, with Bloomberg reporting that the U.S. is now asking colleges and universities to divest from Chinese holdings in their endowments, “warning schools in a letter this last week, to get ahead of potentially more onerous measures [coming] on those holding the shares”. Reportedly, the Chinese leadership annual August Beidaihe retreat, agreed (should the recommendations be subsequently endorsed at the Central Committee plenum in October) that China should prepare for war; build food and energy reserves; establish the Eurasian continental economic system, recover its overseas gold and broaden the global RMB settlement system (including its digital Yuan) – and prepare for the complete interruption of relations with the U.S. Yet, whilst the media focus is all on this ‘tech’ and ‘sphere’ de-coupling, something profound – and quite separate – is already shaping the global monetary order (quite apart from likely Chinese exclusion). It is set, in the longer term, to be more revolutionary – and contentious – than even ‘de-coupling’. It is getting sparse attention. However, as it becomes ever more evident that no ‘V’ shaped economic rebound will be arriving soon – as the U.S. ‘house’ catches fire again with Coronavirus over the autumn and winter, presaging a further economic closedown – the chances are that this bombshell will indeed ignite. First, a little background: Earlier this month, Zero Hedge published a remarkable interview with two former Fed economists – Simon Potter (who was also the former head of the Fed’s Plunge Protection Team for many years) and Julia Coronado – both of whom have tremendous impact on thinking at the Fed. They hinted at the Fed’s ‘last ditch’ stimulus and bailout strategy (i.e. should the U.S. economy be further stalled by Coronavirus): It is ‘to wire’ digital money directly into Americans’ smartphone financial apps, bypassing the banking system entirely. “The two propose creating a monetary tool that they call ‘recession insurance bonds’, which draw on some of the advances in digital payments and ‘wired’ instantly to Americans”: “As Coronado explains the details, Congress would grant the Federal Reserve an additional tool for providing support — say, a percent of GDP [in a lump sum that would be divided equally and distributed] to households in a recession. Recession insurance bonds would be zero-coupon securities, a contingent asset of households that would basically lie in wait. The trigger could be reaching the zero lower bound on interest rates or, as economist Claudia Sahm has proposed, a 0.5 percentage point increase in the unemployment rate. The Fed would then activate the securities and deposit the funds digitally in households’ apps. “As Potter then elucidates: “it took Congress too long to get money to people, and it’s too clunky. We need a separate infrastructure. The Fed could buy the bonds quickly without going to the private market. On March 15 they could have said interest rates are now at zero, we’re activating X amount of the bonds, and we’ll be tracking the unemployment rate—if it increases above this level, we’ll buy more. The bonds will be on the asset side of the Fed’s balance sheet; the digital dollars in people’s accounts will be on the liability side.”” Then, just days later, Federal Reserve Governor, Lael Brainard, hinted once again at the coming monetary revolution: “To enhance understanding of digital currencies, the Federal Reserve Bank of Boston is collaborating with researchers at MIT, in a multi-year effort to build and test a hypothetical digital currency oriented to central bank uses … It is important to understand how the existing provisions of the Federal Reserve Act with regard to currency issuance apply to a CBDC and whether a CBDC would have legal tender status, depending on the design”. So what would prompt the Fed to pursue “this significant policy process”? Why – another leg down, resulting from an upsurge in Covid-19, of course. The last bailout was not just “clunky”, it sent stocks and bonds soaring skyward. And has severed asset prices from any connection to metrics of value, from fundamentals, and from analysis (and did do not much either for ordinary Americans). What we now have, therefore, is a market focussed only on narratives, and not on reality. This has implications, too. The prospect of the Fed ‘printing’ digital dollars, wired to peoples’ cash-pay apps, as a new stimulus mechanism – replete with the overtones of a ‘Davos Reset’ formula for moving toward a digital, global Universal Basic Income model is obvious – as is the political temptation for politicos to pay for all sorts of political ‘projects’ in this way. Yet this is only a half of the ‘Revolution’ – two other components are already ‘done’. Two tipping-points have been passed.
So, let’s try putting all this into some sort of order: Firstly, America has already started down the path towards a nationalised (centrally-managed) economy – rather like China’s. The Treasury and Blackrock Hedge Fund, (who manage the Congressional bails out distribution on behalf of the Treasury), now make the (economic) life-or-death decisions for U.S. businesses – from the very big, down to the very small. This is a ‘great reset’. And like most temporary measures, it is likely here to stay. What’s not to like from the U.S. President’s point of view? He controls ‘money’ issuance now that the Treasury and Fed effectively are fused together, and can ‘steer’ the U.S. economy in a ‘national-interest’ direction during its tech war with China (and Europe). Free markets? They do not exist in America at this point. Secondly, this financial war is already underway, and China will likely use its CIPS (financial clearing system) and its Central Bank initiated digital yuan (already in use) to circumvent SWIFT and the USD. Except this will mean others being paid in a non-fungible digital currency that can only be recirculated back to China for its goods. Or, maybe not? Like China’s Shanghai oil futures market, foreign sellers may be given the option to hold their sale proceeds either in Chinese debt instruments, or, to exit their Yuan via the physical gold market. But, apart from U.S. and China, Russia, Italy, Iran and UK are, amongst others, planning their own CBDCs. Are we moving then – in an era of enhanced financial war – towards multiple, non or quasi, fungible digitalized of means of payment, as the new normal? Third, the world again is demanding gold in exchange for U.S. dollars. And the Fed’s primary dealers – some of which operate as bullion banks — seem unable to comply. But with the advent of the Coronavirus, the U.S. financial system has been forced to lower real interest rates down into negative territory, causing gold to look more attractive than holding devaluing U.S. Treasuries. Traditionally, the Fed controls the gold market to prevent gold from effectively competing with, or displacing, the U.S. dollar as the primordial monetary instrument. But someone, or some entity somewhere, is now battling the U.S. central bank for that control. In short, the Fed’s manipulation process presently is failing. And unless the Fed can suppress the price of gold, and regain control, we may see an escalating, downward spiral in the value of the dollar vis à vis gold. Here – finally – we come to the crux. In outlining the monetary ‘revolution’ taking place in the U.S., there is much in it for the Wall Street ‘Davos’ contingent to like: the move from traditional money into digital; Central Banks issuing digital money (though the ‘Davos’ crowd would prefer that to be done by a global authority); the end of cash; and the system-control and transparency that digitisation would allow. Some of this – such as the political instrumentalisation of smartphone apps – have been given a push by the Coronavirus. But the U.S. Establishment is deeply split: Yes, there is a powerful, Wall Street, globalist component who support Davos, but others in the Deep State, including some amongst the neo-cons, would rather die-in-a-ditch than see U.S. dollar hegemony lost – amidst the undoubted exigencies of the present economic recession. These tend to be Trump supporters. So let us put the final pieces into place: U.S. asset markets are presently unhinged from all fundamentals, and ruled by a ‘don’t fight the narrative’, and existential fear of potentially ‘missing out’. In other words, the un-anchored stock market highs – on which Trump’s re-election hopes are pinned – are highly vulnerable. Sentiment can shift in the flash of an eyelid from an adrenalin-fuelled ‘fight’ mode, to ‘flight’. All that is needed is a changed narrative. And what narrative might that be? Well, the ‘Sage’ of Omaha, Warren Buffet, this week dropped a very unexpected narrative: Not known as a ‘gold bug’, he was shown to have dumped stocks and bought gold, and gold-miners. So, who next for sparking the October market sell off, as the dollar continues to spiral downwards, and interest rates edge upwards? Mr Soros may be smiling? Food Bank Strains Emerge As Economy Falls Off Fiscal Cliff
by Tyler Durden Tue, 08/11/2020 - 22:25 https://www.zerohedge.com/markets/food-bank-strains-emerge-economy-falls-fiscal-cliff The latest economic data suggest the US recovery stalled. One look at the Citi US econ surprise index, as of this week, shows the recovery ran out of steam last month. A fiscal cliff is already underway, set to enter the second week on Friday (Aug. 14) as tens of millions of Americans are unemployed and have yet to receive their stimulus checks. The recovery, so far, is a massive economic sugar rush, entirely a function of the Trump administration on a reckless spending spree. One way the administration can artificially supercharge consumption is through issuing direct transfer payments to the working poor. The extra money has been used by households to pay down credit card bills, put food on the table, and pay housing expenses, while others used the free money to buy automobiles and FANG stocks. President Trump signed an executive order over the weekend to fund another round of stimulus checks of approximately $400 per week, a reduction from the $600 federal aid seen in the first round from March to the end of July. Massive federal spending has transformed America into a welfare state under the GOP watch. Tea Party politicians aren't pleased with the Republican establishment's wild spending spree. With a fiscal cliff coming up on the second week, tens of millions of folks are unable to consume because they are insolvent and jobless, and their amount of consumption is dependent on the government. We've noted before, a quarter of all household income is derived from the government. And with no stimulus checks in the mail, that means Americans are returning to food banks: Claudia Raymer, who manages a network of food-security groups in Ohio County, West Virginia, told Bloomberg when stimulus checks stopped arriving in late July, there was an immediate impact on households, resulting in rising food bank activity among the working poor. The fiscal cliff will be more damaging in lower-income communities (than major metros), such as small towns in West Virginia, where folks were being paid handsomely by the federal government to sit at home. The problem is, once the payments end, consumption plunges, and the local communities return to a recessionary environment. With federal aid already running out for the stimulus program, the fiscal cliff has already been realized in West Virginia: "We've definitely already seen food-security needs increase, just in a week, since the extra unemployment has ended," Raymer said. Treasury Secretary Steven Mnuchin said Monday the next round of stimulus checks could take a couple of weeks to distribute, which would suggest households might not receive their stimulus checks until the end of August. Days before the stimulus program ended (late July), a sizeable food bank line appeared in Baltimore, Maryland. — Alastair Williamson (@StockBoardAsset) July 26, 2020The economic crisis is far from over. Households are entirely screwed as depressionary unemployment levels will continue into the election. Many folks are dependent on direct transfer payments from the government and food banks for survival. Who would've ever thought this would be the case in the "greatest economy ever." IMF Chief Asks Banks To Halt All Buybacks And Dividends
by Tyler Durden Thu, 05/21/2020 - 14:00 While certain companies have continued with their buybacks even if it might seem ill-advised from a corporate strategy standpoint, banks have mostly abstained, while plunging profits have prompted some to suspend their dividends. That's probably for the best, according to a new opinion column published in the FT by the head of the IMF. As shares of banks around the world take a pounding thanks to the twin headwinds of low interest rates and a bleak economic outlook, we suspect more management teams - perhaps at the behest of activists nipping at their heels, or simply to try and hit their performance targets - might relapse and indulge once again in corporate America's favorite mechanism for returning capital to shareholders. Unfortunately, returning capital to shareholders is not what banks should be doing right now, according to the IMF's Kristalina Georgieva, who penned a column in today's FT calling on banks to stop all buybacks and dividends and shore up cash to ensure they have adequate capital buffers to withstand any turbulence that might be coming down the pike. * * * After the 2008 financial crisis, global regulators required banks to increase their prudential buffers of high-quality capital and liquidity. That significantly strengthened the resilience of the financial system. Many observers now cite those buffers as a bulwark against the adverse effects of the Covid-19 pandemic. But as we brace ourselves for a deep recession in 2020, and only partial recovery in 2021, this resilience will be tested. Having in place strong capital and liquidity positions to support fresh credit will be essential. One of the steps needed to reinforce bank buffers is retaining earnings from ongoing operations. These are not insignificant. IMF staff calculate that the 30 global systemically important banks distributed about $250bn in dividends and share buybacks last year. This year they should retain earnings to build capital in the system. Of course, this has unpleasant implications for shareholders, including retail and small institutional investors, for whom bank dividends may be an important source of regular income. Nonetheless, in the face of the abrupt economic contraction, there is a strong case for further strengthening banks’ capital base. Here are the reasons. Building stronger buffers is aligned with the array of actions undertaken to stabilise the economy. Governments are deploying fiscal measures in trillions of dollars, including financing that provides a backstop for borrowers who are tapping bank loans. Central banks have innovated and provided extraordinary liquidity support to a wide range of markets. Bank supervisors have exercised flexibility to the fullest possible extent by encouraging banks to restructure loan repayments, easing regulatory requirements, and allowing banks to draw down their buffers temporarily. The interests of bank shareholders are aligned with those of bank supervisors and customers. All stakeholders will ultimately benefit if banks preserve capital instead of paying out to shareholders during the pandemic. Protecting the banking sector’s strength now means that, once the recovery picks up, shareholders can expect large payouts — indeed the more profits retained now, the larger the eventual payout. The need to preserve capital is already being recognised and needs to be so more widely. In some countries, banks have voluntarily decided to collectively suspend shareholder payouts and buybacks. In others, supervisors have had to push. In March, the Bank of England asked banks to suspend plans to pay dividends and cash bonuses to executives, indicating it was ready to use its supervisory powers if anyone refused. Eventually the banks all complied. In Brazil, supervisors have had to use their authority to suspend payouts in a collective manner. Collective decisions are vital. Banks that take action on their own could be penalised by investors who fail to understand the need to restrict payouts. All banks should be covered - whether state-owned or private, whether commercial or investment. But no bank can do it alone, and if banks’ collective will is not there, then supervisors should take the decision for them. Today, supervisors in many countries use stress tests to determine whether - and by how much - payouts should be restricted. Pioneered by the IMF more than 20 years ago, these tests quantify the additional capital needed to keep banks resilient in the face of crisis, and are a vital guidepost helping us now to traverse an unfamiliar territory. It is time to update these tests to take into account the increased likelihood of more adverse economic scenarios caused by the pandemic. To ensure global consistency, international co-ordination is key. The IMF and the Financial Stability Board can help achieve this. Memories from the last global crisis still linger. The public sector is doing what it can to help prevent another banking crisis from happening again. Shareholders have both an interest and an obligation to do the same. The writer is managing director of the IMF The Collapse Will Be Very Visible: "For Lease" And "Space Available" Signs Are Going Up All Across America by Tyler Durden Thu, 05/21/2020 - 14:50 Authored by Michael Snyder via TheMostImportantNews.com, Initially, we were told that the coronavirus lockdowns would just “temporarily” disrupt the U.S. economy, but now it is becoming clear that a lot of the damage will be permanent. We are starting to see businesses go belly up all over the country, and this includes some of the most iconic names in the retail world. When J.C. Penney announced that it would be declaring bankruptcy and closing hundreds of stores, I warned that would just be the tip of the iceberg, and that has definitely turned out to be the case. In fact, on Wednesday many analysts were absolutely shocked when news broke that Victoria’s Secret has decided to shut down about 250 stores… Victoria’s Secret plans to permanently close approximately 250 stores in the U.S. and Canada in 2020, its parent company L Brands announced Wednesday. L Brands also plans to permanently close 50 Bath & Body Works stores in the U.S. and one in Canada, according to information the company posted online as part of its quarterly earnings. If this pandemic had passed quickly, perhaps those stores wouldn’t have needed to be shut down. But at this point it has become obvious that this virus is going to be with us for a long time to come. In fact, the WHO just announced that on a global basis we just witnessed the largest number of newly confirmed cases on a single day so far. Another major retailer that is closing down stores is Pier 1 Imports. In fact, it is being reported that not a single one of their locations will survive… Pier 1 Imports, which previously said it would close half of its fleet of stores, now plans to close all of its locations. The retailer, based in Fort Worth, Texas, announced in a news release Tuesday that it was seeking bankruptcy court approval to begin an “orderly wind-down” when stores are able to reopen “following the government-mandated closures during the COVID-19 pandemic.” I was never a huge fan of Pier 1 Import, but my wife liked to visit and see what they had, but now we will never be able to do that again. Something about that really saddens me. Of course it isn’t just retailers that are collapsing. Car rental giant Hertz “is on the verge of bankruptcy”, and things are not looking good at all… Hertz is on the verge of bankruptcy. At the end of April, it disclosed it had missed a large amount of lease payments on its rental cars. Since then, it has entered into forbearance and waiver agreements with these lenders that give it until May 22 to come up with the money and a plan. Its cars, now parked at various parking lots around the country, are collateral for this debt. Some of you old timers might remember the old Hertz commercials featuring O.J. Simpson. Those were much simpler times, and to be honest I really miss them. Unfortunately, times have really changed, and I seriously doubt that Hertz will be able to survive much longer in this very harsh economic environment. Needless to say, a lot of businesses are going to die in the weeks and months ahead of us. As I discussed the other day, it is now being projected that approximately one out of every four restaurants in the United States will be closing down permanently. Can you imagine what this is going to look like? We are going to have abandoned buildings all over the place, and this will especially be true in our more impoverished communities. The only chance we have of pulling out of this economic death spiral is if there is a full scale return to normal economic activity all across America, but that isn’t going to happen any time soon. Fear of COVID-19 is going to paralyze small and big businesses alike for the foreseeable future, and every new outbreak is going to spark more overreactions. For instance, Ford just shut down two major production facilities just a few days after “reopening” them… Just days after reopening its American assembly plants, Ford temporarily shut down two separate factories because employees tested positive for Covid-19. One plant in Chicago that builds the Ford Explorer, the Lincoln Aviator and the Ford Interceptor police car stopped operations Tuesday afternoon after two employees tested positive for Covid-19. Then, Ford’s plant in Dearborn Michigan that makes its bestselling F-150 pickup, shut down Wednesday. If we keep shutting things down every time someone gets sick, our economic problems are just going to get worse and worse. Look, the truth is that lots more people are going to get sick and lots more people are going to die. In fact, one new study has concluded that the U.S. death toll will more than triple by the end of 2020 “even if current social distancing habits continue for months on end”… Americans who will die after contracting the novel coronavirus is likely to more than triple by the end of the year, even if current social distancing habits continue for months on end. The study, conducted by the Comparative Health Outcomes, Policy and Economics Institute at the University of Washington’s School of Pharmacy, found that 1.3 percent of those who show symptoms of COVID-19 die, an infection fatality rate that is 13 times higher than a bad influenza season. Of course it certainly doesn’t help that we continue to allow people from other countries where COVID-19 is raging to fly into the U.S. without any special screening whatsoever… A glamorous Russian blogger says she has proved that the US is open for foreign tourism again, despite the pandemic, according to video obtained by DailyMail.com. Sofia Semyonova, 33, a fitness model, told how she traveled on a crammed Aeroflot flight with 500-plus passengers with ‘no social distancing’ from Moscow to New York City. She used her B2 tourist visa to enter America from Russia’s coronavirus epicentre ‘in 30 seconds without any extra questions’. I don’t know how this could possibly be happening, but apparently it is. Eventually, COVID-19 will literally be just about everywhere, and almost everyone in the entire country will be exposed to it. And fear of this virus will paralyze our economy for the foreseeable future. So the truth is that the “for lease” and “space available” signs that you are now seeing are just the start. A lot more are coming, and it is going to be a very dark chapter for our nation. JPMorgan's U.S. credit card holders spent 40% less due to coronavirus
Elizabeth Dilts Marshal NEW YORK (Reuters) - Credit card spending among some of JP Morgan Chase & Co’s U.S. customers fell 40% during March and early April compared to last year, as Americans stayed home to protect against the novel coronavirus, according to a new report on Thursday. The over time as layoffs, furloughs and unemployment insurance further impact families’ bank accounts,” Farrell said in a statement.The overall fall in spending was 8 times larger than the average drop in household credit card spending in the first month of unemployment during regular times, according to the report. The global outbreak of the coronavirus has forced governments worldwide to impose lockdown orders to contain its rapid spread, crippling economic activity. In the United States, more than 32 million people have filed for unemployment benefits since March while consumer demand has also been hard hit. The U.S. Federal Reserve warned this week that the country will likely see weak economic growth for “an extended period”. The JPMorgan Chase Institute studied anonymized spending data from more than 8 million Chase credit card customers for the period from March 1 to April 11. Credit card users who report household incomes of less than $39,000 reduced spending by 38%, while wealthier cardholders, with incomes of more than $92,000, reduced spending by 46%. The group says the difference largely reflects higher average spending by wealthier households. The report showed essential spending, like on groceries and healthcare, initially spiked by 20% before falling back. Spending on non-essential things fell by 50% and dropped 70% on restaurants. The group tracked only spending on Chase credit cards, like its Slate, Sapphire and Ink cards. It did not track spending with cash, debit cards or other bank credit cards. (In 10th paragraph, group changed income figures in subsequent draft of report) Nationwide Lockdown Sparks Plunge In Local Govt Tax Revenues; Cuts In Services Strike As Demand Soars
ZeroHedge Fri, 05/15/2020 - 05:30 Small to medium size cities and counties across the United States are facing huge budget gaps amid the coronavirus shutdown induced record unemployment, drying up crucial tax revenue for local governments. Bloomberg profiles a domino effect that Jefferson County, Alabama famously went through in 2011 leading to the biggest municipal bankruptcy in US history, saying it's experience portends a tsunami of what will be similar local government collapses. "A massive share of the local government’s tax revenue disappears. Elected officials lay off employees and shutter a health-care facility used by the poorest residents. Road work grinds to a halt. Residents wait in hours-long lines to renew their licenses," Bloomberg introduces of the scene that Alabama's largest county witnessed years ago. The report notes the picture is apt for today's prolonged coronavirus recession: Surging unemployment and business closures are causing government revenue to plunge nationwide in a matter of weeks, mirroring the swift hit to Jefferson County when a court struck down a wage tax that covered about 25% of its budget. The 660,000-resident county, which is home to Birmingham, fired 1,300 employees over three years, sold a nursing home and shuttered inpatient services at its hospital that cared for the poor. After closing satellite courthouses, the lines at the main one downtown grew so long that a portable toilet was installed in the park next door. Eventually, the county filed for bankruptcy. At the tipping point wherein the county was locked into a vicious downward cycle, the crisis led to mass furloughs and layoffs of public employees at even essential places like hospitals, jails, police units, and long-term care facilities. It also left decaying infrastructure in its wake as county crews simply stopped work on roads, fixing potholes, restoring an incredibly costly botched sewage system project, and public building maintenance. This scenario which played out in Jefferson County has very likely started in many other places, born out by numbers showing nearly 1 million employees already cut from state and local payrolls last month."Local governments are preparing to cut services, idle employees, raise taxes and sell assets," the report continues. "As a last resort, those burdened by excessive long-term debt and pension obligations could file for bankruptcy, although so far investors and analysts haven’t predicted a wave of insolvencies and not every state even allows it." In the prior case of Jefferson County, it made drastic and painful austerity-type measures which eventually prepared it to better weather the current economic "pause" brought on by the pandemic: To generate cash, the county sold its nursing home for $11.3 million. In one of its most politically difficult decisions, it closed inpatient and emergency care at Cooper Green Mercy Hospital, which served the county’s lowest-income residents. The money-losing hospital was underutilized, with typically fewer than 40 patients a day, and received more than $10 million a year in county subsidies, Carrington said. Although an urgent care facility remained open, the closing of the downtown hospital was hard for some residents because suburban hospitals weren’t on bus lines, said Scott Douglas, executive director of Greater Birmingham Ministries, a community organization. It ranked as the biggest municipal bankruptcy in US history after a series of local scandals involving corrupt and incompetent officials, a bungled sewage system project that left an enduring billion dollar debt, and toxic bonds, among other things. It was only in 2013 that Jefferson Country finally emerged from bankruptcy. Lock Bloomberg forecasts ominously that all signs point toward a similar crisis now ready to roll downhill for other local governments across the nation. |
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