DENIAL IS LETHAL

For the past decade, being an idiot has paid handsomely. The insanity continued just long enough to convince everyone that ignorance is bliss. Now, unfortunately, being a denialistic fool is no longer an asset, it is mass burial. Because hard to believe but in an Idiocracy there is no strength in numbers. Still, it was a good run with an inevitable ending...

Those who follow Trump to his logical denouement, won't make the return trip. Trump is the past and the past is failure. MAGA is legacy empire recycled for nostalgia sake one more time. But they say: "Trump ran on a platform of neo-isolationism". No he didn't, he is a demagogue who ran on a platform of opportunism and mob mind control. He demanded MORE power than any prior president in U.S. history so he could command and control the entire world on Twitter. Trump is everything that failed about the past - ignorance, arrogance, greed, gluttony, and desecration. Desecrationism is over. And now Mother Nature demands the pound of flesh that is owed, and she will get it, in size. Trump's aged base are between a rock and a hard place: Health versus wealth. However in their minds they are entitled to both.

Which fully explains why the stock market is now held aloft by the stay at home virtual economy bubble, while the real economy implodes in real time. It's the "we can have our cake and eat it too" obligatory delusion. In addition they can surely implode the Chinese while China's imported goods continue to flow to shelves at Walmart uninterrupted.

This week we learned that the "Payroll Protection Program" was a bust.

"...Data from the Small Business Administration shows net weekly PPP lending has actually been negative since mid-May, as fewer firms applied for loans, and some borrowers returned funds"

The money left unborrowed and unspent under the program - represents a lost opportunity. Businesses were supposed to use it to retain workers, but may have been laying them off instead of tapping the money.

Some 38.6 million people have filed for unemployment insurance since the crisis began, and the unemployment rate is expected to near or surpass the 25% record reached in the Great Depression."

Last week, Mitch McConnell was adamant that there would be no more stimulus, because the GOP views stimulus programs to be hindering the re-opening of the economy. However, this week McConnell said more stimulus is likely. Blogging under these conditions of continuous bullshit is challenging at best. The GOP is now in a very difficult situation ahead of the election. More stimulus will only slow the economic re-opening and reduce the economic multiplier. If people are fat and happy at home ordering everything on Amazon they are less likely to go back to work. Whereas a large reduction in stimulus at this point will leave many families exposed to a collapse in incomes. So policy-makers can either pay people to stay at home or they can motivate them to scrounge for jobs that may no longer exist. Either way the economy implodes. However, the stimulus at least gives people a fake sense of security, which is all the Republicans need between now and November. This being an existential election on all sides.

From an economic standpoint, the additional stimulus will merely give a false sense of comfort while allowing wholesale carnage to take place in the background. One by one companies are now going bankrupt quietly but steadily. The government can't bailout everyone at the same time and no amount of Fed loans are going to make a difference. As we see above, the PPP small business loan money was not even fully deployed. There is too much risk and economic uncertainty to be taking on more debt under these perilous conditions. Even debt that came with an escape clause was deemed too risky:

For their part, many large companies have already drawn down their credit lines and are now downsizing in order to survive. The dead money sectors of the economy are (mall) retail, autos, travel, entertainment, financials, energy and real estate. Which from an investment standpoint leaves Utilities, toilet paper stocks, big pharma/biotech, Lockheed Martin & Co, and of course the Super Tech bubble. All of which are overvalued.

This combined fiscal and monetary election rigging voodoo is lethal to anyone who places their full faith and credit in it. Coronavirus has brought full Japanification to the entire planet. Whereas previously printed money was used to simulate stock market prosperity, now printed money is being used as a proxy for jobs and incomes. When GDP hits zero, economists will be shocked at what they have fabricated. A 100% virtual economy, existing in denialistic fantasy alone.

Today marked another 2 million plus initial unemployment claims, meaning new layoffs, however economists highlighted the reduction in continuing unemployment claims as evidence of economic recovery. Picture the entire U.S. economy having been shutdown for two months and then re-opening last week ahead of Memorial Day. How many people would you predict were called back to work?

Three quarters? Half?

Wrong: 16%: This is the best indicator we have for current period REAL GDP or lack thereof:

“The paradox of thrift is a negative feedback loop. The more people save, the less they spend; the less they spend, the worse the recession gets; the worse the recession gets the more they save.”


This is the savings rate going back 60 years:

As I've said, when the middle class bailout arrives, everyone is going to be forced to fit their lifestyle inside an average income plus whatever savings they have left and whatever income they can eke out of the obliterated economy. Everything else is on the table now.

I for one am not worried about the future. We've finally turned the corner to start worrying about this planet and people rather than corporate profit. It's been a long time in coming and an exorbitant cost. However, the final tally is far from over. Those who can't make the adjustment from being loyal corporate drone to human being, will find this next phase difficult to say the least.

Eventually the debts will get inflated away and a new currency paradigm will evolve. The dollar's exploding liabilities are far too onerous to ever be repaid. The same is true for most other global fiat currencies. However, in the deflationary phase, currency destruction can take a long time. Just ask the Japanese who now have debt at 238% of GDP. More than double the U.S. figure.

Facing the future is not easy, but this decrepit society has been avoiding reality for too long already. Why can't we all be Japan for the next 30 years? Because Japan was in deflation when the rest of the world was in expansion. Japan benefited from exports to the U.S. and China. The entire world can't all export their way to prosperity in a global depression. Quite the contrary. 

Denial and delusion got us this far, but it will be excess baggage for the rest of the journey. Under the new paradigm, less is more. From now on being a denialistic idiot is no longer an asset, it is now a colossal liability.

On Wednesday this week, the Trump Administration warned that passing the proposed Hong Kong Security law would bring hard consequences. Today (Thursday), China passed the new law by a 100% majority.  When 2.1 new layoffs were announced, the Dow gapped up 200 points at today's open. Which has been the exact same pattern for six weeks - a Dow rally every time jobless claims rise. Now featuring 40 million souls unemployed.

Trump announced that consequences will be unleashed sometime Friday. Overnight, China announced that once Trump does whatever he is going to do, they are going to retaliate. Which I take as meaning this weekend.

We have now achieved Super Idiocracy. Implode at your own risk.