Category Archives: History

This article appeared online at TheNewAmerican.con on Thursday, April 9, 2020: 

The latest report from the Labor Department on Thursday showed that 6.6 million people filed for unemployment insurance the week ending April 4. Forecasters were predicting 6 million.

The report also adjusted upward the number reported the previous week, to 6.9 million. Added to the claims filed the week before that, 17.6 million Americans are now out of work as a result of the coronavirus shutdown.

And that number is very likely much too low as the states’ unemployment offices have been buried with new claims that haven’t been processed yet.

Two questions are surfacing: Just how bad is it likely to get? And how long will it last?

Here is how bad it is at the moment:

This article appeared online at TheNewAmerican.com on Wednesday, April 8, 2020: 

The Congressional Budget Office (CBO) projected that the federal government would run a deficit this fiscal year of more than $1 trillion, or about five percent of the country’s gross domestic output of goods and services.

William Foster, the lead U.S. analyst at Moody’s, the credit rating agency, says the deficit, thanks to the CARES (Coronavirus Aid, Relief, and Economic Security) Act, will instead likely approach 10 percent of GDP, while Fitch Ratings is predicting it will be closer to 13 percent. Either way, they both predict that the deficit this year will exceed the previous post-World War II record for the deficit, set in 2009, when it was 9.8 percent of GDP.

The CARES Act is injecting an expected $2 trillion of new money into the economy in order “to provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 coronavirus pandemic,” according to the act’s complete title. Other credit facilities, by loosening credit requirements, are expected to add up to another $4 trillion, with talks currently underway for CARES 2.0 to add even more new money to the economy.

None of this was taken into account by Truth in Lending, the non-partisan think tank that promotes “transparent government financial information,” when it published its latest report on the nation’s current financial condition on April 7. Instead of repeating the canard that the national debt is only around $23 trillion, it reported that the federal government actually owes more than $113 trillion when “off-budget” items such as Social Security and Medicare are added back in.

For this, the think tank gave the federal government a financial grade of “F.”

David Stockman, President Ronald Reagan’s director of the Office of Management and Budget from 1981-1985, called the move to flood the economy with new money the “greatest folly”:

This article appeared online at TheNewAmerican.com on Tuesday, March 31, 2020: 

The “Waffle House Index” flashed red last week as the impact of the coronavirus shutdown really began to bite. The Waffle House restaurant chain is a cultural icon with 2,100 locations, mostly in the South. It is also a leading indicator of the health of the economy. The Federal Emergency Management Agency (FEMA) uses the health of the chain as an indicator for the health of the economy as a whole.

As Craig Fugate, the former head of FEMA, expressed it this way: “If you get there and the Waffle House is closed? That’s really bad.”

The Index has three levels: Green (the restaurants are open, full, and operating with a complete menu); Yellow (they are operating on emergency power, serving only a partial menu); and Red (they are closed).

The chain has closed nearly 400 of its 2,100 restaurants, reflecting what St. Louis Fed President Jim Bullard just announced:

This article appeared online at TheNewAmerican.com on Wednesday, March 25, 2020: 

There is simply no way to sugar-coat the numbers coming this week and next: They will be awful, ugly, frightening, “unprecedented,” “unparalleled,” and historical.

The early warning shot was the unemployment report last week that showed claims jumping by 50,000 over the previous month. Estimates are that March’s unemployment numbers will exceed two million.

Wednesday’s report from Edmunds showed that car sales dropped by a sickening 36 percent in March, compared to February.

The Federal Reserve estimates that

This article was published by The McAlvany Intelligence Advisor on Monday, March 23, 2020: 

If one reads and believes the media, the impact of the shutdown of the economy to fight the COVID-19/coronavirus is going to be severe and long-lasting. Some are suggesting that America will be unrecognizable after the virus has been contained.

For example, Goldman Sachs, the international banking behemoth, said Friday that it was revising downward its best estimate of the impact the COVID-19/coronavirus shutdown was likely to have on the U.S. economy: from a negative five percent in the second quarter (April-May-June) to a breathtaking 24 percent decline. This would be the largest contraction the economy has seen since the first quarter of 1958 when the GDP declined by 10 percent.

The investment banking firm also estimated that filings for unemployment insurance benefits would soar to a record 2.25 million this week, more than triple the prior record of 695,000 claims in 1982. This would push the unemployment rate from the middle three-percent range to nine percent, or even higher. That would reflect more than 10 million people being forced to file for benefits after being laid off.

Goldman’s economists wrote: “Why such an extreme forecast … in Q2? The sudden stop in U.S. economic activity in response to the virus is unprecedented, and the early data points over the last week strengthen our confidence that a dramatic slowdown is indeed already underway.”

Some commentators are predicting a recession, usually considered to be two back-to-back quarters of negative growth (shrinking). But the National Bureau of Economic Research (NBER), the private non-profit research organization tasked with determining when recessions begin and end, defines a recession differently:

This article appeared online at TheNewAmerican.com on Sunday, March 22, 2020:

Goldman Sachs, the international banking behemoth, said Friday that it was revising downward its best estimate of the impact the COVID-19/coronavirus shutdown was likely to have on the U.S. economy: from a negative five percent in the second quarter (April-May-June) to a breathtaking 24-percent decline. This would be the largest contraction the economy has seen since the first quarter of 1958, when the GDP declined by 10 percent.

The investment banking firm also estimated that filings for unemployment insurance benefits would soar to a record 2.25 million this week, more than triple the prior record of 695,000 claims in 1982. This would push the unemployment rate from the middle three-percent range to nine percent, or even higher. That would reflect more than 10 million people being forced to file for benefits after being laid off.

Goldman’s economists wrote: “Why such an extreme forecast … in Q2? The sudden stop in U.S. economic activity in response to the virus is unprecedented, and the early data points over the last week strengthen our confidence that a dramatic slowdown is indeed already underway.”

Some commentators are predicting a recession, usually considered to be two back-to-back quarters of negative growth (shrinking). But the National Bureau of Economic Research (NBER), the private non-profit research organization tasked with determining when recessions begin and end, defines a recession differently:

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

 

A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.

Accordingly, the shutdown, if it is short, isn’t likely to result in a full-blown recession. Instead history is likely to record not only that it was short in duration but that the economy’s reaction to it was overblown.

And its end is likely to have many remarkable ameliorative and positive effects, some of which are already occurring.

Consider, for example,

This article appeared online at TheNewAmerican.com on Thursday, March 19, 2020: 

On January 19, 2017, the day before President Trump was inaugurated, the Dow closed at $19,804. On February 12, 2020 the Dow closed at $29,551. One month later, on March 18, the Dow closed at $19,500.

In two weeks, millions of Americans will be receiving statements showing the balances remaining in their 401(k)s and their IRAs. Others will be opening their brokerage account statements.

Those not paying attention are in for a shock. Those who have been paying attention are also in for a shock. For those who thought they’d put away $10,000, their balances are now $6,600. For those who had $25,000 socked away, they now have $16,500. For those with $50,000, their balance is now $33,000. For those who thought they had $100,000 parked safely away, they now have just $66,000.

After recovering from the shock,