With all the fuss and bother over whether President Trump should nominate a replacement Justice to the Supreme Court, and whether the Senate should hold a confirmation vote, it's easy to lose sight of the real danger threatening us right now. John Mauldin puts it in perspective.
The point now is that many Americans are living unemployment check to unemployment check.
It’s easy to forget that the enhanced unemployment benefits helped more than the unemployed people. In many cases, the “recipients” were simply conduits. They received money from the government and immediately sent it on to their lenders and landlords. The fiscal stimulus kept those people afloat, too. And its ending will hurt them, too.
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Quick math: If 20% of the adult population reduces spending 25%, the net effect is consumer spending falls 5%. That, alone, leads to an even deeper stall-speed recession. It will generate more layoffs and bankruptcies, meaning more unemployment, until something gives the economy the lift it needs.
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We are in an unprecedented situation. Close to 30 million workers are on unemployment benefits, and that’s after a partial recovery that is now tapering off. Those benefits are the only thing keeping us out of an outright depression that frankly could be worse than the Great Depression (and I don’t think that’s a hyperbolic statement), and they are about to disappear. I fully recognize my own philosophical flip-flop here. But I would rather be called a hypocrite than see millions suffering.
The fact is, we haven’t seen anything like this before. It’s not just another recession. The pandemic and our efforts to control it unleashed economic demons. We need an exorcist or at least some holy water. Instead we get boring sermons. I’m alarmed and you should be, too.
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I realize we are in a contentious election season. Feelings are running high. I wish more people would realize our economic challenges transcend politics. We will still be in deep trouble whether Trump or Biden is president next year, and regardless of which party controls the House and Senate. Neither side has all the answers. We need them to set aside the rhetoric and take care of all Americans.
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I am not saying a recovery is years off or impossible. I am optimistic we will recover, but it is not going to be a typical 12-month cycle to see recovery begin. We have to buy ourselves and those entrepreneurs some time to figure out what a post-COVID-19 world looks like. The more time we can buy, the stronger the recovery will be.
I get that adding debt will be a drag on economic growth. That can’t be helped. There’s a hole in the boat and we have to plug it, and while doing so we have to bail and row.
The world is going to be repriced. Everything. We are going to have to find new uses for a lot of things now in surplus, like strip malls and office space, lots of equipment, and those new uses may require lower prices. All while technology is disrupting our world in ways we don’t understand. No one ever said it would be easy.
The 85% of us who are working need to help those who aren’t. Bigger tips. Donations to food banks (have you seen some of the lines for food banks? Depressing.). Look around your own community. Are there ways you can help the at-risk population? We are seeing an epidemic of depression and suicide. Reach out to your neighbors who are lonely. I am sure you can think of your own ways. Then just do it.
In the meantime, call your senators and representatives and tell them to do their @#$%# job. Don’t yell at them for compromising. Support them when they do. We can resume yelling at them when unemployment is 6%.
There's more at the link. Highly recommended reading.
Frankly, if the US economy collapses, it won't matter who controls Congress, or the Senate, or the White House. It won't matter whether we have 8 or 9 SCOTUS judges in the short to medium term. We'll be too busy trying to survive to worry about such niceties. If you don't know where your next meal is coming from; if you've been kicked out of your home because you can't pay the rent or cover your mortgage; if your vehicle has been repossessed because you've fallen behind on the payments . . . all those are real, in-your-face emergencies. Even Antifa's and BLM's antics will matter a whole lot less - because they'll be trying to survive, too.
We need to get our priorities straight. The economy should be at or very near the top of our list right now.