Wall Street vs America, And The Rout Continues

On January 1, 2020, there were already some beginning signs of an overheated economy, but it was hard to see them amidst the drumbeat of economic muscle-flexing. Ten years into the longest economic expansion in U.S. history, there was good news almost everywhere for economists to cheer.

Unemployment was running at 3.6%, the lowest since the 1960s. American businesses were riding a sugar high of massive deregulation, huge tax cuts and an accommodative Federal Reserve, artificially managing interest rates at 1.5%. Crude oil was stable, trading at 68.91 a barrel, and capital was flowing into and through the markets, leading to record profits and cash hordes for virtually all major corporations.

There was a little grumbling about the deficit — the prior year it had topped $1.1 trillion, far and away from a record for a year in a growing economy, and pushing the debt above $23 trillion — but that was considered nit-picking with interest rates so low and profits so high.

In the midst of the continuing prosperity, the stock markets reached all-time highs. The Dow sat around 28,624; the S&P 500 was 3,234 and the Nasdaq had jumped to 9,092. Investors were having a field day, and the party showed few signs of breaking up.

Fast forward 160 days.

The Coronavirus has stopped the country in its tracks, taking over 110,000 lives from almost 2,000,000 infected. The nation closed uptight, with some 40 million filing unemployment claims, and the unemployment rate reaching levels not seen since the Great Depression. Hunger stalked middle America, as 17% of all households reported food shortages. The cracks in national health care and chaotic political response to the twin crises of the pandemic and accompanying economic collapse crippled the country, while across the globe our key trade partners grappled with the same or worse.

The government, attempting to stave off the worst of the damage, pumped uncounted trillions of dollars into the markets, the business communities and the people’s pockets. Deficits exploded, and the final tally will likely see this year’s deficits easily exceed those of any five year period in our history, with the national debt approaching (or topping) $30 trillion.

As summer approached, people of good conscience in all 50 states recoiled at the brutal killing of a handcuffed man by Minneapolis police. Millions of people took to the street, most peaceful but some not, and the nation was torn apart by the protests and riots borne of long-standing grievances and systemic injustices.

Just 160 days into 2020, the picture has changed indescribably from that New Year’s Day. A traumatic pandemic; an economic collapse of historic proportions; an eruption of civic unrest and an unknowable future for all three crises in a society exhausted by pain, tragedy and discontent.

And the Dow sits at 27,572, marginally behind that January 1 figure.

The S&P rests at 3,233, identical to the start of the year.

The Nasdaq has rocketed to 9,924, a record high and 10% above where it was that New Years Day.

While Main Street is boarded up and limping to an uncertain tomorrow, the largest corporations are hopefully planning for their next surge forward. As tens of millions of Americans scrape to find the money to keep afloat, Wall Street has not had as much as a hair goes out of place. The government grumbles about passing along one more $1,200 check to support those struggles while bragging that the trillions available for the major enterprises are unlimited and that unprecedented deficits are irrelevant.

There has never been a dichotomy as blatant, as definitive as the one that is presented today. The contest between Wall Street and America was over before it began, and it was a rout.

How did we get here? How do we get back?

The first how was simple. The government prioritized the provision of resources — both existing and created — for the preservation of the entities that comprise the Stock Market. Experts carefully sculpted the stimulus outreaches to bridge corporate finances from their previous prosperity to a replication of the same. Both fiscal and monetary forces conspired to remove the ugliness of reality from the balance sheets of the giants. Massive capital flowed to where it was needed at literally zero interest; the usual burdens of reporting, compliance and tax payments were suspended to avoid embarrassing revelations, and the market looked into a future of unlimited support with growing optimism and expectations of continued largesse.

Stripped of their usual more localized competition, the goliaths romped freely; Walmart, Amazon and others saw enormous growth and increased market share, gains that may well be impossible to recover by whatever eventually emerges as the survivors from the devastation below them.

Simple. A “Transition to Greatness” indeed…

For America, the road to recovery is diametrically opposite. Obstacles to rebuilding are mountainous, as small businesses struggle to replicate what in many cases took lifetimes to build, constricted by a halting and uncertain customer base and slowly emerging permissions. The government cavalry was late, hard to find and in almost all cases, insufficient in size or conditions. Plagued by logistical failings and often exclusionary terms, the first batch of assistance was thin gruel, indeed… now, the limited elements of further prospective stimulus are being debated and condemned in the Senate.

Contrary to the cornucopia presented to the Fortune 50, the financial institutions and their captains, there is suddenly a renewed profession of fiscal responsibility and a misguided assessment that the struggle is over, and help no longer required. The basis for the idea that all is well in America? The stock market recovery, and the hopeful trend that the unemployment statistics have improved for a month from gut-wrenching to merely horrific.

The pain of the nation is not nearly enough; politicos are asking for evidence of the trauma worsening before they consider doling out some medicine.

The protests of the past two weeks came from a deep well of righteous anger, a demonstrable centuries-old imbalance in our country that was further thrown in the faces of minorities and the poor in the disproportionate punishment imposed by the pandemic and the economic disaster. The complaints are beyond justified, the demands merely a starting point towards balance and fairness.

But there is a “but”…

But in the energy of the protests, the government has had free reign to divert attention from the other imbalance, the other war of unequal dimensions. The lines at food banks have not diminished; the strains of main street businesses not eased; the hospitalizations and deaths from the virus not abated. In celebrating the temporary decline to what is an over 16% unemployment figure, the leaders mock the historic masses of jobless families. In

As some hospitals breath a sigh of relief, others are taking their place in full ICU’s and exhausted EMT’s. At last count, some 28 states were watching their COVID numbers rising, many to new highs without a flattened curve in sight. Major companies, flush with newly minted cash, continue to announce wholesale layoffs, and when the funding from the PPP program expires this month, millions of jobs that have been held on to by that thread may well be forfeited.

Relieved of the pressure of media and voters, the Administration has pulled in their efforts to respond to the cries of the country. Behind his newly erected barriers, the President has pronounced victory over the pandemic and a renewed economic rebirth. With the voices of the corporate lobbyists chipper and sated, the Senate leadership has plugged their ears against the complaints of the unimportant.

Mitch McConnell’s desk

The next chapter in the Care Acts, written in the House, is slowly dying of neglect on Mitch McConnell’s desk, and there’s no oxygen left in America to resuscitate it.

That second how, the way back, will be far more difficult.

The Black Lives Matter movement, and the urgently needed changes being discussed and debated, has waited too long for this moment for it to be diverted or diluted. That said, surely the media can remember — even for a few minutes per broadcast — that much of the country (including so many of the same victims) is being forced to endure other hardships as well. Indeed, the politicians who are not wholly invested in protecting the richest can remember that the poorest and the sickest are being lost to their neglect. Surely the nation’s leadership can acknowledge the need for a radical redressing of racial inequality on the same day that they resolve the urgent need for sharing a few chunks of Wall Street’s bounty with the men and women of the main street and beyond.

The problems of America are real, and will not go away through neglect or avoidance. The leadership has lost its excuses of insufficient capital and bureaucratic ineffectiveness; having revealed its infinite capacity for preserving the largest, it must now stand before the rest of us and answer to our calls.