Equity Wealth and Consumption

Figure 1: Household equity wealth, in billions dollars (blue, left log scale), and estimated based on Russell 5000 (blue triangle at 2020Q1), and consumption, in billions Ch.2012$ SAAR (red, right log scale). Source: Fed Flow of Funds, via FRED, BEA 2019Q4 2nd release, and author’s calculations.

Note that scales are in logs. The picture looks a lot worse in levels.

On the other hand, equities net worth is only about 18% of total net worth in 2019Q4.

97 thoughts on “Equity Wealth and Consumption

  1. pgl

    I was wondering what happened to market valuations of aircraft leasing companies so I went here:

    https://finance.yahoo.com/quote/AER/balance-sheet?p=AER

    AerCap Holdings N.V. is the largest publicly traded aircraft leasing company in the world with $36 billion worth of planes per their book valuations. It is also a company with about 80% of that value financed with debt. Their stock prices has declined by over 80% since the COVID-19 crisis began. Pity the shareholders I guess but this represents a $6 billion decline in value. So the market is now saying that the planes are only worth only $30 billion.

    OK this is not the end of the world as we know but Trump wants our taxpayer dollars to bail out the airline sector, which really means a taxpayer handout for the shareholders.

    Reply
    1. Moses Herzog

      commenter pgl says:
      ” ……as we know but Trump wants our taxpayer dollars to bail out the airline sector, which really means a taxpayer handout for the shareholders.”

      Get ready for it.

      How hard will it be to convince Dementia Nancy she “needs to sign this today” and that Dementia Nancy will say she “Has to show the American people they can pass laws promptly ‘across the isle’ “?? When Bush’s Treasury Secretary Hank Paulson got on his knees and started whimpering about TBTF banks suffering like orphan children, Dementia Nancy had tears smearing her mascara that very instant. Dementia Nancy’s empathy for the working man needing a mortgage cramdown or better mortgage loan terms from the courts as a remedy for mass unemployment and house repossession?? Well, Dementia Nancy says that suffering can wait “in perpetuity”, because Dementia Nancy and people like Joe Biden think that “contract law is very important”. President Obama couldn’t hardly take a break from his “personal book recommendations” on Twitter, or slightly adjust his half-asleep-butt in his seat to be moved to stump speech on that score.

      It’s worth noting though, that Barkley Junior of James Madison University fame says Dementia Nancy would make a hell of a canasta player at the local nursing home, and I’m hard-pressed to disagree with Junior on that one.

      Reply
      1. dilbert dogbert

        I think that gun you are using in the circular firing squad has a U shaped barrel.
        Nancy doesn’t invite me to her parties either. That is why I hate her. Bitch!

        Reply
        1. Moses Herzog

          Not sure your meaning here. She is ineffective. She was ineffective before she was senile. Now she is both senile and ineffective. I don’t give “free passes” based on gender. Now, if other people want to do that so they can appear “with the times”, that’s not my problem. I call them how I see them. Biden is in the same boat. And some people here are going to find that out the hard way when they watch the Biden vs trump debates, and then proceed to try and convince me/us afterwards that they knew this was going to be a Biden public speech disaster, when as far as I can tell (speak ye here now if you are out there) I am the only one on this blog who has expressed how this is going to play out with a man who can’t tell which girl is his sister/wife or that he is no longer running for U.S. Senate in the year 2020.. It’s a recipe for major national TV disaster, and from my view you’d have to be a damned near idiot not to see that one just around the bend here.

          I shouldn’t even have to express this–it should be obvious to anyone with two eyes the woman has dementia, that same as Reagan had it around 1983. But so now in 2020 if you breathe you have to prove you’re not “sexist”, so you are required to insult a male of equal weight in order to make a patently obvious negative statement about a woman. So there’s your Biden meat to make both sides of our little gender ledger clear out. Is that phony enough for you??—-or do I need to start reading David Brooks columns to figure out the “smooth way” to do an eminence front???

          Reply
      2. Barkley Rosser

        Wow, Moses, you wrote “Dementia Nanvy” six times in this comment. Sorry, but repeating something does not make it true, not even remotely true. Not a single person here agrees with you in the slightest about Nancy Pelosi. Has anybody here ever supported you on this insane rampage of yours? No. Everybodh here ,everybody, gets it that she is both very smart and very effective.

        How completely have you lost your marbles on this nonsense?

        Reply
      3. Dave

        Moses.
        I really don’t understand your very tiresome misogynistic writings about Nancy Pelosi. I feel like you are very confused and just hate powerful women. I wish you would stop. It’s embarrasing to be in the same blog as you sometimes.

        Reply
        1. Moses Herzog

          @ Dave
          I think it’s sad that anytime anyone criticizes a woman not doing her job, or doing it extremely ineffectively they are labeled “misogynist”. I also think it’s sad, this would be in Barkley Junior’s case, that when I prove him wrong and call him out as wrong/incorrect, factually vacant, his “go to” weapon is crying “misogynist!!!”. This coming from a man who bragged about hiss family’s confederate history as if it’s something to be “proud of”, as if he’s a direct descendant of Thomas Jefferson, or he just proved his lineage to King David of Israel. A man who supports women who put blacks in prison for minor crimes. A man who supports a woman who lies about her ethnic heritage for favoritism in job hirings related to quotas at universities dominated by whites. I could go on. What YOU do, Dave and what Barkley Junior does, because he acts like a 12 year old (maybe many 12 year olds are better actually) when he’s told he’s wrong about something, lashes out and grabs the nearest railing, is water down and dilute the meaning of the term misogynist, by tossing it out when you find a point of disagreement about something. Which is why many people now scoff and laugh when the term even comes up in conversation—because people like YOU and Barkley Junior use it as you do.

          The reason I don’t reply to many of Barkley Juniors dementia infused comments is 1) If you spend all your time denying claims made by people with no substantive argument, you end up going off the rails of the real issue. 2) I don’t have time to play children’s games relating to a paper that showed–and actually specifically termed close to a uniform distribution (or uniformly distributed if you prefer) of Native American admixture in European Americans, because Menzie wants to play babysitter to Barkley for collegial reasons. Sorry, Menzie, that’s how I see it–I’m going to pay you the respect Menzie, of NOT lying to you in my thoughts on the matter.

          Dave, you remind me a little of a commenter here who called himself “rtd” who was a coward, and would hover over comments, and reply to people long after the fact, and make comments like you have here, 6 days after I made the above comment. Maybe COVID-19 has you busy?? Or maybe you’re as emotionally frail as Barkley Junior, and thought you’d sneak in a cheap shot. I thought I’d still give you the reply you deserve. Well, here it is. Try 8 days next time instead of 6 days like you did here and see if you can sneak some putdowns in without the person being allowed to defend themselves. Then you and “rtd” can have a party on the “free shots” you get in on people.

          Reply
    1. no

      equities net worth is only about 18% of total net worth

      Maybe I’m reading it wrong, but, Rodeo might not slow down. I read that as wealth ISN’T tied to corporate valuation.

      Reply
    1. Willie

      He is hyperventilating. But it will be interesting to see if the parrots suddenly have new taking points. Nobody in this current administration has an ounce of credibility left.

      Reply
      1. Moses Herzog

        The theft of Andrew Yang’s idea seems to certainly qualify in the desperation dept. Even Krugman has said this is not the right way to go about it. At least Andrew Yang was sincere in his intent on UI. These MAGA bastards??

        Reply
    2. Bruce Hall

      Tired of yelling “we all gonna die”?

      https://www.connexionfrance.com/French-news/French-researcher-in-Marseille-posts-successful-Covid-19-coronavirus-drug-trial-results?

      I’ve said the equity meltdown was based on fear and once this treatment is accepted and implemented the equity markets will return robustly. Got cash?

      Meanwhile, Amazon and a lot of local businesses are hiring temporarily laid off workers as temporary delivery drivers. https://abcnews.go.com/US/wireStory/amazon-seeks-hire-100000-surge-orders-69628178. You can’t even get into some stores they are so packed. Obviously, if people were believed all of the hype around Covid-19 and were rational, they wouldn’t be packing the stores they way they are and subjecting themselves to Covid-19 exposure. https://www.twincities.com/2020/03/17/coronavirus-grocery-stores-can-hold-steady-if-customers-dont-panic-shop-costco-kowalskis-start-limiting-supplies/

      Sure, some discretionary service business are feeling the pinch and could close if they are already marginal. But this has been a major opportunity for other businesses.

      Things will return to normal in a few months.

      Reply
      1. Menzie Chinn Post author

        Bruce Hall: “Things will return to normal in a few months.” This is the most irresponsible thing you have ever written. It may turn out to be true — the second coming is also possible in the next few weeks, but I don’t count it likely. In China, drastic measures were implemented in mid-January. We’re in mid-March – are things “back to normal” in China?

        JP Morgan f’cast is at -14% q/q SAAR in 2020Q2.

        Reply
        1. pgl

          Even the Trump White House is talking about an 18 month Marshall Plan. Yes even Donald Trump is being more responsible than cheerleader Bruce Hall.

          Reply
        2. pgl

          I would define normal right now being able to complete a grocery list by going to one store. I went to two in my neighbor and got most of what I needed. But no chicken and no bread at either. Oh well – the Brooklyn pizza joints are open for to go orders!

          Reply
        3. pgl

          ” In China, drastic measures were implemented in mid-January. We’re in mid-March – are things “back to normal” in China?”

          Trump acting as if he is Winston Churchill now (more like Neville Chamberlain) has declared war (well sort) and is blaming China (pronounced Jina) for Trump’s total lack of action for the last two months. Hey – his sycophants are now lying about what the WHO was saying in January.

          Reply
        4. baffling

          my guess is bruce has continued to receive his information from faux news. the network is just know realizing how they brainwashed the most vulnerable demographic in this entire ordeal, but the network still does not know how to right the ship. they are too proud to say “i was wrong”, and if they do, their viewers will simply say they are cowards. there is a good chance bruce hall will not be here to comment in another year, due to covid19 and the action he has taken thus far. to people like him, it is all a hoax and propaganda by the left wing media. many of them will pay a significant price.

          Reply
        5. Bruce Hall

          Menzie, what economics principle did you use to arrive at you conclusion? Normal doesn’t mean back on some trendline; normal means a non-disruptive environment in which business and the economy can function normally and begin growing again.

          Here’s some new of a non-economics nature: https://www.fiercepharma.com/pharma/bayer-preps-u-s-donation-malaria-med-chloroquine-to-help-covid-19-fight-report. With the advent of a treatment and prevention, drastic measures become unnecessary. The Chinese reported in February that they had begun treating Covid-19 patients with Chloroquine and were seeing positive results. Business activity is already picking up there.

          “Chinese medical experts have confirmed Chloroquine Phosphate as the first anti-viral drug against novel coronavirus Covid-19.

          Sun Yanrong, the deputy head of the China National Center for Biotechnology Development under the Ministry of Science and Technology, made this known during a press conference on Monday, February 17, 2020.

          Based on the result of clinical trials, Chloroquine Phosphate, a well known antimalarial drug, has been confirmed to have certain curative effect on coronavirus disease, the Chinese official said.”

          If you’ve been following the news, you know that the epidemic is still nascent in the U.S. and the reactions are in anticipation of a catastrophe. I firmly believe the disease will be stopped in its tracks very shortly based on other countries indicating they have or probably will begin using chloroquine to treat/stop the Covid-19 virus. When that happens in the U.S., people will quickly return to their normal routines knowing that if they should contract the virus there is a treatment.

          Also, if you’ve been following the news, large and small businesses have quickly adapted to the current situation. Amazon wants to hire 100000 people. Local businesses have begun offering curbside pickup or delivery of their products. That’s what I love about capitalism; it never lets a crisis go to waste.

          Rather than waste money on distributing $1,000 to everyone in the U.S., Trump should be arranging funding to acquire and distribute this cheap medication so that it is quickly available to the people already infected and to treat any who may subsequently be infected.

          Reply
          1. not_really

            I firmly believe the disease will be stopped in its tracks very shortly based on other countries

            I love how “very shortly” can be anything Bruce wants it to be. 1 week? Yes. 1 month? Yes. 6 months? Yes. 1 year? Yes! Very shortly!!!

            This thinking “other countries” somehow being both to blame and somehow rescue the U.S. has nothing to do with basic science around transmission vectors. It’s more fascist rhetoric, not a concrete plan to manage an easily transmitted flu.

            We went from “liberal hoax”, to “it won’t be that bad”, to total economic chaos because of the far Right’s obsession with “borders” and “walls”. Instead of relying on experts, science, and transparency to ensure some stability, we have faith-based policy.

            Something only just beginning to be discussed is the thin line between the decade-long routine of low-pay workers just getting by and their destitution just got wiped away with an election coming. Interesting times!!!

          2. pgl

            “With the advent of a treatment and prevention”.

            My God you are a moron. Clinical trials is not the same thing as actually having a successful treatment. Trump said today that the FDA approved this. Of course he lied – just like you are.

      2. 2slugbaits

        Bruce Hall You linked to an article about some French therapy. Things in France are horrific. Just this morning I got an email from my sister in Paris. Total lock down. You need to fill out a government form just to walk your dog or go to the store. If you step outside, you need to provide a form that you must sign under penalty. The gendarmes are very vigilant. And oh by the way, she also mentioned that there are a lot of fake news stories floating around in the French press. For example, she linked to one story buzzing in France claiming that a supposed “doctor” specializing in infectious diseases was telling people to drink lots of hot tea to kill the virus. I’m not kidding. You need to be very skeptical of the kind of stuff that’s floating around in English translations of French and Italian media. Methinks you’ve been duped once again.

        As to the rest of your post, apparently you haven’t gotten the memo from Fox Noise Headquarters. Even Sean Insanity has gotten religion on this. Try reading the study from Imperial University. That’s the one that shook the hell out of Team Trump and finally got him to move off the dime the other day. We may not all die, but unless people take this seriously it’s a good bet you will. In fact, it’s a near certainty. Instead of reading fake stories why not try brushing up on your high school math, with particular emphasis on how exponents work.

        Reply
        1. Bruce Hall

          2slug, I’m surprised at your comment. Usually you are a little more prepared with research before commenting. Just do a news search on chloroquine. It’s not just the French:

          Some results:

          Chinese medical experts have confirmed Chloroquine Phosphate as the first anti-viral drug against novel coronavirus Covid-19.

          Sun Yanrong, the deputy head of the China National Center for Biotechnology Development under the Ministry of Science and Technology, made this known during a press conference on Monday, February 17, 2020.

          Based on the result of clinical trials, Chloroquine Phosphate, a well known antimalarial drug, has been confirmed to have certain curative effect on coronavirus disease, the Chinese official said.

          Also: An Effective Treatment for Coronavirus (COVID-19) (Google Docs) — fairly technical.

          Also: Health Ministry approves experimental treatments for coronavirus (The Jerusalem Post)

          Related: https://www.gov.uk/government/publications/medicines-that-cannot-be-parallel-exported-from-the-uk

          Reply
          1. pgl

            For the 10,000 time. Clinical trials do not necessarily we have an effective treatment. EVERY ONE knows this. But you keep writing the same old lies over and over. You are one very stupid fool.

        2. pgl

          “You linked to an article about some French therapy.”

          This researcher is the real deal and if it happens to work on the French, it can be tested here, in China, etc. But of course he has run tests on only 24 people so far and everyone involved is saying it is way too soon to declare that this will be an effective test.

          You know – if Bruce Hall actually READ his own links, he might get this simple point. But no – Bruce cannot take the time to read and comprehend. He is too busy acting like a dumb cheerleader in a mini-skirt. Two bits, four bits … MAGA!

          Reply
      3. pgl

        Do you have to continue to embarrass your own mother on a daily basis or what? NO ONE said we are all going to die so your opening line is just your usual pathetic BS. But can we remind you once again: (a) to READ your links; and (b) that you suck at the topic of biopharma research. From your link:

        “A renowned research professor in France has reported successful results from a new treatment for Covid-19, with early tests suggesting it can stop the virus from being contagious in just six days.”

        FYI dumbass – we are talking about phase I trials, which means very little. But I already mentioned this possible treatment. Again from your link since clearly you have not READ it:

        Chloroquine – which is normally used mainly to prevent and treat malaria – was administered via the named drug, Plaquenil. The treatment was offered to 24 patients, who were among the first to become infected in the south east of France, and who had voluntarily admitted themselves to hospital for the process.

        Bayer is working with the French government hoping to come up with a treatment but Gilead Sciences of the good old USA is in phase III trials with what MAY become a treatment. But as I have said many times – this research takes time. I guess it will take even longer for you to learn how to READ.

        Reply
        1. Bruce Hall

          pgl still having a difficult time connect the dots, eh? I know you really, really want a catastrophic epidemic in the U.S. to end Trump, but it has blinded you to what is happening elsewhere. Sure, there are going to be expedited trials, but the Chinese have already accepted it as a treatment and other countries are beginning to jump on the bandwagon.

          Meanwhile, I’ve got a pile of cash I’m going to use to buy the stocks you sold in a panic.

          Reply
          1. pgl

            I certainly do not “want a catastrophic epidemic”. You are a lying piece of garbage. I have prayed for these experimental treatments but I know the difference between trials and FDA approval. I’m being following closely Gilead’s stock and their Yahoo Finance conversation page. The President just said some incredible treatment has been “approved” by the FDA. That would nice if it were but he lied again/

            He is being as irresponsible as can be. And you are his #1 cheerleader. You have been shown over and over to be either an idiot or liar. If not both. Spare me with this stupid insults.

          2. pgl

            “Chinese have already accepted it as a treatment and other countries are beginning to jump on the bandwagon.”

            Another blatant lie. Gilead is testing their experimental drug on Chinese patients. That is a good thing even if your boy (Trump) insults the Chinese. Come on Bruce – no one with an IQ above the teens can believe the stupid crap you write. Yes – you are clearly lying. And these lies are actually quite dangerous.

      4. pgl

        On this testing by Didier Raoul, his treatment has been tried on only 24 people so far. Once again Bruce races way ahead of reality. I sometimes wonder who is dumber in this way – Donald Trump or Bruce Hall. But the same source had an update yesterday:

        https://www.connexionfrance.com/French-news/French-lab-Sanofi-hypothetically-offers-millions-of-doses-of-potential-Covid-19-Plaquenil-anti-malaria-drug

        A French medical laboratory has said it is ready to give the French authorities “millions of doses” of an anti-malaria medication that early tests have suggested may help cure Covid-19.

        French manufacturer Sanofi has said it could hypothetically offer enough doses of Plaquenil – a drug containing the molecule hydroxychloroquine – to treat up to 300,000 people if necessary.
        Chloroquine is normally used mainly to prevent and treat malaria, and also to treat auto-immune conditions such as Lupus and rheumatoid arthritis.
        In China, ongoing Covid-19 clinical trials have successfully used chloroquine phosphate and hydroxychloroquine to treat coronavirus patients.
        In France, renowned research professor Didier Raoult – who had been tasked by the French government to research possible treatments of Covid-19 – this week posted a video detailing “promising” results of a chloroquine trial of 24 Covid-19 patients in France.
        Professor Raoult – from infectious diseases institute l’Institut Hospitalo-Universitaire (IHU) Méditerranée Infection in Marseille (Bouches-du-Rhône, Provence-Alpes-Côte d’Azur) – said that the infected patients he had treated with the drug chloroquine (under the name Plaquenil) had seen a rapid and effective speeding up of their healing process.
        They also saw a sharp decrease in the amount of time they remained contagious, he said.
        Yesterday (Tuesday March 17), government spokesperson Sibeth Ndiaye said that similar clinical trials would now be extended to more patients, but said that there is currently no definite “scientific proof” that the treatment works.
        She said: “[New trials] will be completed by a team independent of Professor Raoult.”
        Some experts have warned of the dangers of authorising the use of chloroquine too quickly, in the absence of wider studies, and said that the side effects of chloroquine can be severe, especially in the case of overdose.

        Look – it is good that they are doing clinical trials but Bruce Hall should be required to write this last sentence 1000 times on the chalk board. Maybe if he does, he might FINALLY get the point that doing clinical trials is a far cry from having an effective treatment. Or maybe not as he really is the dumbest person ever.

        Reply
        1. Bruce Hall

          pgl still picking out only the negatives:
          https://www.newsweek.com/hydroxychloroquine-malaria-drug-coronavirus-fda-1493293

          President Donald Trump announced Thursday that the Food and Drug Administration (FDA) has approved hydroxychloroquine—a drug used to treat malaria, rheumatic diseases and other conditions—for COVID-19.

          As the COVID-19 pandemic spreads around the world, scientists are scrambling to identify treatments that may be effective against the disease. Hydroxychloroquine—a common derivative of chloroquine—is among those touted as most promising by some experts.
          What’s the difference between hydroxychloroquine and chloroquine? They both work essentially the same. However, hydroxychloroquine is safer; much less potentially toxic.

          Trump is forcing the bureaucracy to move faster than it is accustomed to, but the situation calls for it. The concept of waiting 2 years for the FDA to go through it’s normal process when people are dying would be roundly condemned if, say, the current president were Hillary Clinton trying to move things along. The FDA has the power to make exceptions to long-term testing when a drug is generally safe and repurposing indicates at least some degree of efficacy. If you became seriously ill with Covid-19 and were offered hydroxychloroquine as a treatment with a good chance of improving your situation dramatically with little risk of side effects, would you say, “No, not if Trump is pushing it”?

          Your reaction is not rational; it is political. Keep repeating 1000 times: “I will actually do some research before I comment”. https://www.nature.com/articles/s41421-020-0156-0

          Reply
          1. pgl

            “President Donald Trump announced Thursday that the Food and Drug Administration (FDA) has approved hydroxychloroquine—a drug used to treat malaria, rheumatic diseases and other conditions—for COVID-19.”

            Thanks for pointing out what we all know. We all also know Trump LIED. A very dangerous and irresponsible lie at that. Oh wait – you still think clinical trials = having an effective treatment. Which makes you THE STUPIDEST PERSON ALIVE!

          2. pgl

            Another link from Bruce Hall that he did not read:

            “Remdesivir is a nucleoside analog prodrug developed by Gilead Sciences (USA). A recent case report showed that treatment with remdesivir improved the clinical condition of the first patient infected by SARS-CoV-2 in the United States2, and a phase III clinical trial of remdesivir against SARS-CoV-2 was launched in Wuhan on February 4, 2020. However, as an experimental drug, remdesivir is not expected to be largely available for treating a very large number of patients in a timely manner.”

            Some people (like the idiot Bruce Hall) thought Trump was saying the FDA approved this for treatment but as the FDA chair had to note correcting Trump this drug is still in clinical trials. OK Brucie is hyping some French thing:

            “In light of the preliminary clinical data, CQ has been added to the list of trial drugs in the Guidelines for the Diagnosis and Treatment of COVID-19 (sixth edition) published by National Health Commission of the People’s Republic of China.”

            There’s that term again – clinical trials. Of course basic biopharma research is WAY over Bruce Hall’s little brain.

            “an overdose of CQ can cause acute poisoning and death”. What an inappropriate dose of one of these treatments can kill the patient. Guess why companies do clinical trials. Don’t ask Bruce Hall as he has no clue.

          3. pgl

            Brucie boy noted that HCQ is not as lethal as CQ but our little Trump cheerleader clearly missed this from his own link:

            “Whether HCQ is as efficacious as CQ in treating SARS-CoV-2 infection still lacks the experimental evidence.”

            Efficacy is a big deal and another reason biopharmas do clinical trials. But once again do not expect a MAGA hat wearing moron like Bruce Hall to get basic biopharma research!

  2. not_really

    equities net worth is only about 18% of total net worth

    Maybe I’m reading it wrong, but, Rodeo might not slow down. I read that as wealth ISN’T tied to corporate valuation. Which, makes sense in my head given the decades of lightly regulated American capitalism.

    Reply
  3. Brian Poi

    Mark Zandi and I did a report several years ago. Speaking solely from memory, we found that a $1 decline in stock market wealth–assuming it’s more than just a short-term fluctuation–led to a 10 cent decline in personal consumption. A $1 decline in housing wealth led to a 5 cent decline. Another interesting finding is that the wealth effects do change quite a bit over time. Prior to the Great Recession the housing wealth effect was higher than the equity wealth effect, presumably facilitated by the easy availability of HELOCs and HELOANs.

    As a rough guideline, figure a permanent $1 trillion decline in financial wealth leads to a $50 to $100 billion decline in consumption.

    This bear market is going to hurt.

    Reply
    1. macroduck

      Mr. Poi, this may be the paper you have in mind:

      https://www.economy.com/mark-zandi/documents/2015-10-10-Wealth-Matters-A-Lot.pdf

      Readers will want to go to the tables or the “What Does It All Mean?” section toward the end to see conclusions about housing vs financial wealth. Nothing in the early paragraphs about differences in wealth effects. For those who remember that housing has a larger wealth effect than financial wealth, Mr. Poi and company note that the balance has shifted since the 2008-2009 financial crisis (as distinct from the one we are just starting to experience now) .

      These guys agree with you about the limits on the wealth effect from housing:

      The (Mythical?) Housing Wealth Effect – Charles Calomiris, Stanley D. Longhofer, William Miles

      https://www.nber.org/papers/w15075

      They argue that housing wealth is correlated with expected income. Correct for that and the wealth effect from housing is insignificant. That suggests that the large impact from housing wealth found in earlier research may instead have been the effect of expected income on spending. That doesn’t make the current situation any better, given the real possibility that income will fall by more now than it did in the prior recession.

      Reply
      1. Moses Herzog

        I want to make clear, because of some blog automated process, sometimes the comments sort of “jump” away from each other and create an anachronism. My just above comment was intended for Brian Poi and his edifying comment related to how market wealth effects consumer spending.

        I hope people will do their best to remain positive during these times. Get AWAY from the news for some hours when it’s starting to consume your thoughts.

        I have often thought about teenagers who do “drastic things” they can never take back, when they are going through the emotional rollercoaster of the teen years of their life, and/or even freshman year of college, and that it would be cool if somehow magically older people could somehow convey the real feeling they would have in later years, and how small the things are that seem so huge to them in their teen years will seem much smaller when they get older. I have this same feeling towards COVID-19. Things will get better, and we will navigate and negotiate our way to good times again. Don’t let an anomaly, relatively short blip in the average American lifespan of about 75 years, “mess you up” internally. Don’t do drastic things in this phase.

        Reply
  4. dd

    I have any idea. Rather than issuing checks ithe government should compel credit card issuers to suspend interest, penalties, fees and payments for 60-180 days. The Fed can support the financial institutions and save people and the economy at the same time. Issuing checks is dumb as panicked crowds will overwhelm financial institutions. Americans have credit cards right now, plus it will help contain the spread. Credit cards and the equipment can be cleaned; cash is a contamination source and cashiers have to handle it. Remember China burned contaminated cash.
    The Fed and the financial sector can heroic!

    Reply
    1. macroduck

      Issuing checks means the public’s credit profile doesn’t worsen as the result of policy action. Encouraging credit use, even under favorable conditions, does worsen credit profiles. The result is consumption now at the cost of consumption later. Since the current prospect is for consumption to fall well below capacity, we don’t need to borrow consumption from the future. We need to boost consumption now while maintaining consumption in the future.

      In times of crisis, allowing the sector with the best access to credit to do the borrowing on behalf of everyone else is optimal. The federal government has the best access to credit.

      By the way, states and munis do NOT have good access to credit right now. Muni debt is in really bad shape. That inhibits government spending below the federal level and puts an additional crimp in household wealth.

      Reply
      1. macroduck

        Which is to say, fiscal policy is the best course of action to support demand, not credit policy. Credit policy is best reserved for preventing credit disruption.

        Reply
        1. macroduck

          Which is merely to say that the policy action which comes closest to the actual policy goal is almost always best. Credit policy for credit disruption. Direct spending or direct income to households when spending (demand) is in short supply. Government infrastructure spending when infrastructure is in bad shape. Food assistance to households which are short of food.

          If anyone can think of a legitimate policy goal in which tax cuts are the action which comes closest to the policy goal, then our national obsession with using tax policy as a social policy tool can be justified. Otherwise, leakage dampens the effect on the intended goal, even in the best case. In the more realistic case, tax cuts are just a way of keeping benefits away from those who don’t earn enough or own enough to pay much tax.

          Reply
        2. Moses Herzog

          @macroduck
          This is not a “great observation” but it’s something that can’t be expressed enough at this point, that fiscal policy is a much better tact than offering loans and credit in a low demand environment. I applaud you for saying it.

          Reply
      2. Barkley Rosser

        I have posted on Econospeak about the coming fiscal crisis of the state and local governments. This is under the radar but coming. Revenue sources for both states and locals will collapse soon with the economy more broadly. But it iss not just that states and munis have bad credit, not really the case actually, it is that nearly all are forbidden o run deficits. They cannot borrow except for specific capital projects accepted by citizeens in bond referenda. This was recognizeed back in 2009, and about a third of the Obama fiscal stimulus general revenue sharing to help out state and local governments. We shall need this again, but so far this is way beneath the radar.

        Reply
        1. Moses Herzog

          @ Barkley Junior
          Did you know there are at least 9 states now that allow carryover of deficits?? How difficult do you think it would be for states to change that “forbidden” balance budget statute when they were under threat of going into default??? Careful how you answer Junior, ‘cuz I tried to make that one simple for you by inserting the word default into the question.

          Possibly the biggest and most dramatic national and international economic downturn since 2008, and you have figured out it might create state budget revenue shortfalls and municipal government revenue shortfalls. I think I just felt an involuntary quiver in my pelvic region from your discovering this “way beneath the radar” scoop Barkley. Is this a “stock” or a “flow” thing Barkley?? Use small words for us so we can all “follow” your train of thought please.

          WOW, Barkley Junior has now turned water into wine folks. Barkley Junior will be giving a lecture at Brunswick County Schools tomorrow on what happens to the level of fuel in your car’s fuel tank when you fail to take it to the gas station on a trip to Northern Canada. Make certain to RSVP for this life-changing event!!!!

          Reply
          1. Barkley Rosser

            Moses,

            Todsy there have now been a spate of stories in newspapers, such as WaPo, and on the internet, such as at Marginal Revolution, noting that indeed state and local governments are facing serious budget problems, with the numicipal bondn index having crashed badly, among other things. I intitially posted on this on Econospeak several days ago basically before anybody else was commenting on this. It is now not as “under the radar” as it was when I initially posted or even whey I put this comment here, which yo useem to think iis either reidiculous or obvious. Maybe you are right that it should be obvious, but somehow people were not noticing it until basically today. And still almost none of these observers is making the other obvious point that the feds should provide general revenue sharing, as was done quite substantially in 2009, which I noteed.

            You are right that some states have looser rules on running budget dificits (and Vermont is fine wirh just running them period), but the vasrt majority still have the strict rules in place, and basically all local government face such limits. You may also be right that if things get really baad some of these governments may change their rules, but providing some revenue from the federal government, which can run bidger deficits, would certainly still help the situation. I do not see why you think this suggestion by me is somehow something that should be sending mme to give lectures in county schools.

            As it is, this is a real probem that I spotted and called out before anybody else, with others now. I realize that you really want to score some sort of points against me, having been caught with your pants fown on various matters, but, sorry, Moses, you just flopped pretty big time on this one. I am right and called out this problem whille it was still “unde the now radar,” now coming out from there. Grow up, Mose.

          2. Barkley Rosser

            It appears that there may be some aid for states and local governments in the bill that eventually gets agreed upon in the Senate, although such was not in McConnell’s version that was voted down twice.

    1. Willie

      The Fed may be heroic. The financial sector never will be. Ever. That’s one of the very few things you can be certain of.

      Reply
  5. spencer

    Oil is at $22 — that is a massive destruction of wealth.

    At $22 oil is any fracking operation profitable?

    Is it profitable to operate any wells that are not decades old?

    Reply
  6. The Rage

    “The Fed” is irrelevant this cycle guys. This is a corporate bond bust. Companies that due to light regulations on stock buybacks and personally enriching themselves drove debt levels up the ying yang. This is not a prime banking crisis, but a corporate solvency crisis that I thought would be triggered by subprime banking going down due to excessive lending, stopping growth and forcing this margin call on corporate balance sheets. But what do you know, it was Midgard/Earth/Chinese all this time who was going to burst the bubble.

    The Fed simply has no tools to fight this. They are irrelevant. Only bankruptcy, shareholder death and partial nationalization of investment will end the carnage. 2000$$ checks………….puhhleeeze. What a waste.

    Reply
    1. macroduck

      The claim that this is a bust of any particular market and not some other market amounts to a false dichotomy. For one thing, loans are a greater share of outstanding junk than bonds. More important, though, is that financial markets and institutions are all subject to the issues of liquidity, volatility, risk premia, portfolio effects and on and on.

      That does not mean the Fed is more or less powerful in this episode than in the past. The Fed’s ability to influence outcomes is massively impaired, but not necessarily because corporate debt ( bonds and loans) is a mess. The economy is simply not interest-rate sensitive near zero. The Fed does have the capacity to prevent the worst liquidity conditions, but not to directly cure real economy supply or demand weakness.

      Reply
        1. The Rage

          It is what it is son. This is a corporate bond collapse. It sucking wealth from the economy. The Fed doesn’t have the means to go into private sector corporate debt markets. Most of its actions are a waste.

          In this regard, the primary dealers and mainstreet are drifting in the same boat.

          Reply
          1. pgl

            As of March 18 – the BBB corporate bond rate hit 4.99% whereas the long-term government bond rate was only 1.6%. So OK the credit spread is now at 3.4%. Of course THE RAGE remains too lazy and/or stupid to present a shred of actual market data.

    2. macroduck

      False dichotomy in claiming bonds, not banks, are the problem. For one thing, loans are a bigger part of the junk market than bonds. More importantly, entanglement in the financial sector means problems are never isolated to one source of finance.

      The Fed’s lack of effective economic tools results from insensitivity to interest rates. It’s a low-rate environment thing. The Fed can have some impact on liquidity, which is crucial to preventing even worse outcomes.

      Reply
      1. Willie

        Which leads to my curiosity about the meaning of an inversion in a low interest rate climate. Is it a bigger deal, a lesser deal, or about the same as an inversion when rates are high?

        Reply
        1. Moses Herzog

          @ Willie
          I think the main thing is (although there is more than one thing implied here), it leaves less bullets in the chamber for policy makers and the Fed Res. They can still buy back government bonds and do some other things, but certainly it limits things on monetary policy. Inversion may not “mean what it once did”, but it’s still something you can “key off of” to gauge economic climate. It’s still gonna get it right most of the time.

          Jeffrey Sachs, who is probably even more of a bleeding heart liberal than I am, but I do like him as a person. I don’t agree with Mr. Sachs on everything, but he is sincere in his academic rigor.
          https://www.youtube.com/watch?v=cAUpxjHBVTI (Menzie, this is on Bernie Sanders’ official YT channel, so I think you can trust it not to exceed any limits of good taste once you verify it has the “official” YT checkmark on the channel.)

          Unless I’m drunk (and even then) I’m usually gonna give you a “heads up” Menzie if there is vulgarity. I know you have to still check, but I’m just saying I would never intentionally try to sneak something super offensive by you.

          Reply
      2. The Rage

        Those bonds aren’t serviced by the primary dealers, but nonbank sources. The Fed is simply useless. This is a reverse recession from 2008.

        Reply
  7. Moses Herzog

    Yo-Yo Ma, internationally famous cellist and artist. Yo-Yo Ma’s parents are the type or immigrants America attracts when we don’t have a bigot like the orange creature in the White House right now:
    https://www.youtube.com/watch?v=wczq8RjxA9M

    Immigrants are what sustains America’s vigor, drive, and hunger to succeed. Which is often lost by native born Americans who sometimes forget how fortunate they are, and that things like democracy are earned. Yo-Yo Ma’s parents gifted us this great artist. Are these the people we want to turn back at our southern border, or ANY border?? There are more Yo-Yo Ma’s out there. We want them to choose Germany, France or other countries over ours?? Is that where we want to go?? With lazy, obtuse people like donald trump’s children to take us to our future?? What kind of future would that be for America with lazy loungeabouts like don jr. and Eric trump?? Yo-Yo Ma and his parents have more Americanism in a single distal phalange than don jr. or eric trump have in their entire body.

    Reply
  8. pgl

    The stock market today is at the same level it was when Trump took office. So much for his empty promises. But Gilead Sciences has seen a rise in its stock price pushing the market value of its equity back to $100 billion:

    https://finance.yahoo.com/quote/GILD/

    Could this be the market expecting Gilead’s experimental treatment for COVID-19 to ultimately be successful?

    Reply
  9. pgl

    Oh my – Trump is getting desparate:
    https://www.wsj.com/articles/trump-sought-to-expand-virus-drug-tests-over-fda-objections-11584545251
    Trump Sought to Expand Virus Drug Tests Over FDA Objections
    Plan would have expanded use of investigational drugs for coronavirus; FDA officials said plan would pose risks to patients

    https://www.usnews.com/news/us/articles/2020-03-18/trump-to-hold-news-conference-to-discuss-fda-coronavirus

    Trump to Hold News Conference to Discuss FDA, Coronavirus

    U.S. President Donald Trump said he would hold a news conference on Wednesday to discuss “very important news” from the U.S. Food and Drug Administration related to the coronavirus, but gave no other details.

    Reply
    1. Willie

      The orange guppy doesn’t care if people are harmed so long as he can preen and pretend he’s the solution to all problems. Like any other garden variety tin pot, if you think about it more than a nanosecond.

      I work with an otherwise intelligent person who happens to be a devout Republican. The turnabout in his rhetoric whipsaws depending on what the latest talking points are. This time, though, he doesn’t seem to have gotten the memo that Trump is kinda sorta taking this seriously now. He says it’s just the flu and it will be gone in three weeks. Then he thinks the economy will come roaring back. He also still says climate change is a hoax. The crazy thing is that he’s a sane, rational engineer, aside from the tribal talking point religion. I don’t get it. But, it makes me a little nervous about being around him right now. If he’s not taking it seriously, what does that mean for what he does, where he goes, and what kinds of precautions he takes or doesn’t take?

      Reply
    2. Bruce Hall

      Since most (>95%) of Covid 19 infections have not been serious enough to warrant hospitalization and won’t need medication… and since most who have been hospitalized have recovered, but who might have benefited from a drug… and since there is no approved drug for treating those who fall in the last category of serious/critical condition, the FDA already has that covered: https://www.fda.gov/patients/learn-about-expanded-access-and-other-treatment-options/right-try

      Taking Chloroquine has risks of itself; hydroxychloroquine has significantly less risk and protocols and safe dosages are known. It won’t necessarily save someone who has been weakened by a severe underlying health issue by the time they become critical, but trials in China, South Korea, and France (even if limited) all demonstrate positive curative results at all stages of infection. The alternative for a dying patient is wait one or two years for the FDA normal bureaucracy to satisfy itself that it won’t be blamed if the drug causes a problem. That might be 10-22 months too late.

      I’m guessing that if you were faced with imminent death due to Covid-19, you would not be arguing for a 2-year “safe” period.

      And then there is the issue of “ooops”: http://www.drugsdb.com/blog/fda-approved-drugs-pulled-from-market.html The peer-reviewed science doesn’t always come up with the best answer. The bureaucracy has a mission, but there are mission failures of incorrectly approving a drug that causes severe harm and failing to move quickly enough to save people who simply have to die as a result. The latter is why there is the Right to Try law.

      Reply
      1. pgl

        Still pretending that a 2% mortality rate is no big deal. I guess you play Russian roulette every day of the week. Hint by Sunday you will likely be dead. Which of course spare us your incessant BS. Today we hear that we will see over 20 million people in California catch this disease. Which means 400 thousand will die. And yea – a Trump sycophant like you could care less about those liberal Californians. Funny thing – the most likely to die are those MAGA hat wearing fools who are as stupid as you are.

        BTW – your treatment is still in phase I trials. I get you are too dumb to know WTF that even means!

        Reply
  10. pgl

    https://talkingpointsmemo.com/live-blog/white-house-coronavirus-task-force-briefing

    Trump told reporters that there’s a “very powerful drug” in the works that has shown “very very encouraging early results. And we’re going to be able to make that drug available almost immediately,” he said. “And that’s where the FDA has been so great. They’ve gone through the approval process. It’s been approved.”

    WTF? Nothing has past phase III trials. But our lying cheerleading President just said something has.

    Reply
  11. pgl

    Just heard an honest statement from a member of the White House COVID-19 team – “there are several experimental drugs in the pipeline”. That is an accurate statement even if it is directly contrary to the dangerous lie uttered by Trump when he claimed that FDA had “approved” one of these experimental treatments.

    I think we all get this except of course Trump cheerleader and village idiot Bruce Hall. Who of course will likely repeat his insulting lie that I am hoping people die.

    Reply
  12. joseph

    A friend said that Trump in his press conferences looks like the guy who suddenly realizes he needs to act sober before the cop gets to the window of his car.

    Reply
  13. pgl

    Sharing a couple of pieces of reality over this dangerous nonsense about some alleged cure approved by the FDA put forward by two highly irresponsible liars – Trump and Minnie Me Bruce Hall. First my post today at Econospeak can be found here:

    http://econospeak.blogspot.com/2020/03/has-fda-approved-covid-19-treatment.html

    And here is Barkley’s excellent comment:

    I saw a link claiming that the French Minister of Health declared some of the reports about Raoult’s work are “fake news” (not sure of the original French). It looks that chloroquine is being used in South Korea on seriously ill patients who are doing poorly, but only on them due to the known bad side effects, especially serious on the eyes. it has had some positive effects in those cases, but not worthy of some of the jumping up and down going on in various quarters. Probably somewhat useful, especially for seriously ill patients, but no general panacea.

    But I’m not the only person who is calling BS on Trump. This is from a medical doctor:

    https://talkingpointsmemo.com/edblog/covid-vaccine-treatment-remdesivir

    Today’s presser is unbelievable. I am an MD and member of our hospital executive administration in the thick of Covid preparation. Remdesivir is currently an infusion drug only- meaning you have to be in a hospital hooked to an IV. The ongoing clinical trials are all in hospitalized patients. The enrolled patients are those with evidence of lung disease, meaning that some damage is already present. There is no way that the infusion will ever be a practical solution for the vast majority of infected patients (not in hospitals). There is an oral preparation, but it is only now being tried in Phase 1 studies, meaning being determined if it is even safe for human consumption? I certainly hope that they do not rush the oral drug to market without even knowing if it is safe. Think Thalidomide, COX inhibitors, Gepants. We are at least a year away from effective treatment, unless some miracle cure in existing drugs is identified.

    Reply
  14. pgl

    People who follow Gilead Sciences are certainly far more intelligent that our serial liar and village idiot Bruce Hall. One provided some key details as to where the two promising POTENTIAL treatments are:

    https://finance.yahoo.com/quote/GILD/community?p=GILD

    Many confused & asked me today after Trump/ Hanh at noon on TV if we have an FDA approved treatment for CV 19? The simple answer is “NO,” not yet but mentioned the impressive Remdisivir which is also under experimental & compassionate use only.

    But the BIG difference is Remdesivir is already in Phase 3, & the last phase before the final FDA & mass production. While Chloroquine & others are just starting or after today’s approval can now start Phase 1 clinical trial specifically for RX of CV19. If someone has malaria, yes we have an FDA drug to RX malaria-Chloroquine.

    FDA approved the experimental & compassionate use of Chloroquine to RX Covid 19, but no drug yet had been approved specifically to RX CV19.

    Every patient has to sign a consent & disclosure form in return of the RX, as CDC/FDA/Bayer will gather & built data coming out from the use.

    Here is Chloroquine’s phase 1 plan through NIH:

    Study Type : Interventional (Clinical Trial)
    Estimated Enrollment : 10000 participants
    Allocation: Randomized
    Intervention Model: Parallel Assignment
    Masking: Double (Participant, Investigator)
    Primary Purpose: Prevention
    Official Title: Chloroquine Prevention of Coronavirus Disease (COVID-19) in the Healthcare Setting; a Randomised, Placebo-controlled Prophylaxis Study (COPCOV)
    Estimated Study Start Date : May 2020
    Estimated Primary Completion Date : May 2022
    Estimated Study Completion Date : May 2022

    Reply
  15. Moses Herzog

    I’m trying to remember the name of some goober troll commenter here on this Econbrowser blog that had mentioned the strong possibility that this would occur. He’s some kind of goober troll, misguided type, putting up YT music links after he’s looped on a bottle and thinking about some feminam hominum from Chaoyang. Initials M.H. Don’t let the bastard SOB know I talk about him that way—he’s the spiteful type with a low tolerance for bullShit emitted from Virginia regions
    https://twitter.com/lisaabramowicz1/status/1240205462466899968.

    Better yet, just read ALL of Abramowicz Twitter feed:
    https://twitter.com/lisaabramowicz1

    It is also no small thing that Yellen and Bernanke were calling for a bailout on corporate debt in the FT, with U.S. bond liquidity disappearing.
    https://twitter.com/lisaabramowicz1/status/1240267492154638336

    We have officially entered “Crazytown” people. Buckle up.
    https://econbrowser.com/archives/2019/05/inversion-close-of-trading-5-13-2019#comment-225044 . <—there's probably 3 other links where I said this near exact same thing, but I'll be damned if I can find them. I think one was in a Hamilton post, but I'm too lazy to search it out right now.

    Reply
    1. Barkley Rosser

      OK, Moses, what is the “this” that you mentioned “the strong possibility that this would occur”? That we would be hit with the worst pandemic in a century that would then tank the entire economy including the financial markets? I do not remember you making any such prediction. If the “this” is that there had developed by last fall liquidity problems in the financial markets for a variety of reasons (regarding which we had some debates), then this emitter of “bullShit from Virgtinia regions” agreed with you. Obviously the system had gotten very fragile, and I think I commented here and in some other locations over a week ago about how the repo markets were erupting and the initial Fed interest rate cuts were not helping, which led to the Fed pumping in $1.5 trillion a week ago to stabilize those markets.

      Sorry, M.H., bu that lots of bonds now look dicey as the entire economy is crashing harder than at anytime in any of our lifetimes is utterly unsurprising and not some great brilliant insight by you or prediction from you. When exactly was it that you forecast this pandemic and its full economic effects (which we have yet to see)?

      And for the record, I completely stand by my comments on these matters from last fall. If I remember correctly, you, Moses, made some completely incorrect comments, although later you got more coherent, while never actually fessing up to having messed up. So, really, it is pretty silly of you now to bring this up so as to remind us that you barged into that discussion saying completely incorrect and sillyi things. Really, at this time I think we do not need such memories, especially when accompanied by a bunch of pompous and clearly idiotic bragging.

      Reply
      1. Moses Herzog

        @ Barkley Junior
        Are you so far gone into dementia you can’t even click on a link in a comment?? Here is the 2nd one I have provided. I remember making at least 4 of them. Four at the very minimum.
        https://econbrowser.com/archives/2019/02/if-a-recession-shows-up-in-2020-who-will-have-predicted-it#comment-221608

        Please feel free to cite what I remember up to even late January 2020 were your wuss-like comments on the matter of recession. Or, after I take some anti-nausea pills, I can go ahead and hunt them down for you very soon. Would you like me to present “The Best of Chickensh*t Barkley’s 2019–2020 Milquetoast Recession Sentiments”?? Lets start off with this one, you made on January 20 of this year, nearly exactly 60 days ago:
        https://econbrowser.com/archives/2020/01/business-cycle-indicators-as-of-today#comment-233564

        Let’s even juxtapose Barkley Junior’s chickens*t comment, with a comment I made 12 hours before Junior’s in the same exact thread:
        https://econbrowser.com/archives/2020/01/business-cycle-indicators-as-of-today#comment-233555

        BTW, the fact that corporate bonds are defaulting, is yet another verification that the problem for quite awhile has been a funding problem, not a “liquidity” problem. Insufficient capital funds are what is causing multiple defaults, not “liquidity”. The fact you are still talking out of your hind region on corporate bond defaults once again verifies your deficient knowledge base.

        Reply
        1. Barkley Rosser

          OK, fine, Moses, you successfully peredicted a tecession this year, thaat is now upon us thanks to the coronavirus, which I do not think you predicted. I also confess that I have avoided making any predictions about whether or not there would be a receission this year. I only make predictions when I am sure I shall be right, and until the virus hit, the signals on the a recession were very mixed, indeed in recent months looking more like there would not be a recession despite weakness in manufacturing and some other areas. If you wish to accuse me of making “chickenss*t comments” for not weighing in one way or the other on predicting or not a recession, be my guest. I am fine with having been cautious on the matter precisely because so many things seemed to be unclear, and in the end what pushed us into it was not anything anybody was predicting, certainly not you, Mose.

          Reply
          1. Moses Herzog

            @ Barkley Junior
            https://econbrowser.com/archives/2019/06/10yr-3mo-treasury-spread-continuously-inverted-since-may-23rd#comment-226226

            https://econbrowser.com/archives/2019/08/whos-forecasting-a-technical-recession#comment-229778

            https://econbrowser.com/archives/2020/02/explaining-the-administrations-economic-forecast#comment-234303

            Well, Barkley Junior, in your comment farther up in this thread you claim to be “the first person” to ever perceive a problem with state level and municipal government budgets:
            “I intitially [sic] posted on this on Econospeak several days ago basically before anybody else was commenting on this”
            And my personal favorite: “As it is, this is a real probem [sic] that I spotted and called out before anybody else,”

            WOW…… And now you are “the first person” to be too timid in predicting a recession “until you could be sure you were right”—->> “I only make predictions when I am sure I shall be right, and until the virus hit, the signals on the a recession were very mixed, indeed in recent months looking more like there would not be a recession despite weakness in manufacturing and some other areas.”

            Congrats Barker Junior, you are a perpetual fountain of knowledge (or perpetual fountain of laughter??) this blog should be grateful to.

          2. Barkley Rosser

            Moses,

            Back to playing Trump as a liar again?

            I never said that I was the first person EVER to notice a problem with state and local finances during a recession. I siad I was the firsr so far this time, and I challenge you to find anybody who did it this time before I did, which was last Wednesday. Gao ahead. Finds somebody. Then you can make these idiotic complaints. Othrwise, you should STFU you lying pices of nmahure.

            Of course lots of people have noticed this problem in the pasr. I pointed that out in my post on Econopeak last Wednesday. Back in 2009 it was well known and so a third of the Obama stim was general revenue sharing. I called for that again, noting that nobody seems to be pushing this. That remains the case. There is this huge fight about a fiscal stim, but nobody’s plan has any of this general revenue sharing in it. So the problem I identified, and so far seem to have been the first person THIS TIME to do so (Peter Dorman echoed my point later on Econospeak also, and there havee been, since, press reports on the problem, but not before last Wednesday). So it is still a problem that needs to be recognized, but you choose to sneer at me for bringing it up.

            I also made no claim about being the first person to be “too timid” (not my word, yours, jerk) to come down on whether or not we were going to have a recesion or not. The one time I publicly commented on this specifically was that time last September you ridiculed when I spoke to some bankers. I was asked then about chances for a recession this year, and simply quoted Menziie Chinn’s latest estimate at time, which was 51%, noting that this was an eestimate based on a regularly checked model.

            As for the matter of corporate bond dedaults, you once agains show you do not know what is going on. They are now beginning to default thanks to our having gone into a recession. But there was a liquitidy problem again in the markets about two weeks ago that led to the Fed pumping $1.5 trillion in to stabilize the repo maekts. This had nothing to do with corporate bonds defaulting and everything to do with the liquidity problems several of us recognized last year that you kept denying and kept rrying ignorantly and stupidly to turn into a corporate bond fragility problem. You were wrong then and you are wrong now.

            This has been one of your worse rec3ent posts, with outright lies and garbage init. Disgustiing.

          3. Moses Herzog

            Watching Barkley Junior falsely claim he is “the first the ever….. uh uh uh, this time the first ever, uh uh uh [typo number 4,004 here]” then show his lack of knowledge on how bonds go into default as he pops a blood vessel in his already useless brain is hilarious and delectable. It’s like being in Liaoning province late November and eating boiled Chinese cabbage with congealed pig blood for the first time. It’s very savory in the winter time. I never visited Barkley Junior’s site “misspeak-on-econo.com”, but who knows, I might try it if my self-quarantine goes over a month in length.

            God bless.

          4. Barkley Rosser

            Moses,

            It has just been pointed out that you are BLATANTLY LYING that I claimed that I was the first EVER to have noticed that there is a problem of funding for stare and local governments. But here you are again, like lying Donald Trump repeating the lie. How sick are you? have you been guzzing entire bottles of hard stuff before you write this garbage?

            As fot this matter of bonds and liquidity, the problem two weeks ago was that people were having trouble selling 30-year US Treasury bonds. That was a matter of liquidity. There were no corporate bonds defaulting. This latter problem has since increasingly become a serious problem as the economy has plunged into deep recession, but that was not happening then. YOu are just completely out of it on this matter, as you were last year. Nobody here supported your rank nonsense then, and in case you have not noticed, nobody here has stepped forward to support yoiu again as you get back into this idiotic blather.

            As for Econospeak, it iis not “my” blog. Several other people blog there, including pgl who comments here regularly. It has for several years in a row been rated as one of the top 100 eonomics blogs along with this one. Sneering at it without ever having read it just confirms what a ridiculous and foolish jerk you are.

          5. Barkley Rosser

            Oh, and for the record, Moses, I do happen to think that corporate debt levels are too high, and now that we are plunging into this deep downturn this problem is going to become very serious. But it is not why repo markets were freezing up on trading 30-year Treasuries over two weeks ago, and it is not why interst rates in repo markets were popping up to 10% last fall, even though you have been delusionally and pretty much all by your self pusing this silly line.

  16. Moses Herzog

    I’ve been (justifiably) giving Xi Jinping and Beijing bureaucrats lots of $hit about how they’ve handled this (and their “straightening of the curve” which Torsten Slok showed). If you believe that Chinese deaths due to COVID-19 has gone down to zero “except for those damned dirty Laowai amongst us” you are a FOOL.. If you believe that Xi Jinping is drinking YOUR milkshake.

    Has anyone looked at the COVID-19 visual graphic for the state of Russia (something tells Menzie has) on the John Hopkins site??
    https://www.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6
    See anything funny?? See anything, that uuuuuuuuhh, “stretches credulity”?? This is similar to the story we see in Indonesia and many other states. How does Putin look on this, maybe, say 24 months from now on that?? Another interesting show to watch. Can Putin fly with his ears like some Disney elephant?? If he threads the needle on this one–either way it’s going to be highly entertaining viewing.

    Reply
    1. pgl

      14250 cases in US with 1.44% having died already. Scary especially since only 121 are listed as full recovered. But Bruce Hall thinks the number of people who will die in the US is no big deal. I guess all Bruce cares about is making Trump look good. MAGA!

      Reply
  17. pgl

    Did Bruce Hall catch this incredibly embarrassing Q&A between a real reporter and the little baby who pretends to be our leader?

    https://talkingpointsmemo.com/news/trump-reporter-coronavirus-press-briefing

    President Donald Trump called NBC journalist Peter Alexander a “terrible reporter” asking a “very nasty question” at a press conference Friday after Alexander prompted him to give a message to Americans scared by the rapid spread of the coronavirus. “I think it’s a very bad signal you’re putting out to the American people,” Trump continued, standing next to a stone-faced Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health (NIH). “The American people are looking for answers, and they’re looking for hope. And you’re doing sensationalism and the same with NBC and ‘con-cast.’ I don’t call it Comcast, I call it ‘con-cast.’” Alexander looked on, astonished, as Trump continued his tirade. “Let me just say something, that’s really bad reporting,” the President concluded. “And you ought to get back to reporting instead of sensationalism.” Trump added that Alexander should be “ashamed of himself.”

    NBC is upset at how Trump berated its reporter. Forget that – Q&A started when the reporter asked Trump about how Trump touted how great some French possible treatment was only to have Fauci tell everyone the truth that this treatment is still going through trials for efficacy and potential serious side effects (like death). Trump kept saying it may work or it may not work. Of course, Trump kept claiming he knows these things. Of course, Trump knows nothing about biopharma.

    Of course, Bruce Hall has over and over declared this experimental drug is a proven viable treatment. Which if you think about it is even more dishonest, dumb, and dangerous than Trump’s tirade.

    Reply
    1. Willie

      That kind of thing will get more common as Trump’s inherent incompetence gets more and more exposed to the world.

      Reply
  18. Moses Herzog

    Aside from highlighting Barkley Junior’s latest “great discoveries in forensic accounting”, never let it be said that Moses Herzog doesn’t do his damndest to provide solid comedy entertainment for those assembled at this blog:
    https://twitter.com/AlertasTransito/status/1241044699193978880

    Remember kids, cool guys never look at explosions, they just look at middle aged guys in hazmat suits running after much faster teenage boys:
    https://youtu.be/Sqz5dbs5zmo?t=56

    Reply
  19. Baffling

    Pence announces TODAY that the government has just ordered millions of masks. TODAY! This was an apparent need understood by my pet monkey a month ago. But the trump administration just got around to it today. It seems we are being led by a bunch of baboons.

    Reply
  20. baffling

    i know it is a rhetorical question, but why should pence, his wife and rand paul all get access to coronavirus tests? None exhibited symptoms. On the other hand, we have thousands of folks out there who do have symptoms, and by getting tested we can definitely say whether they are transmissible to others or not. this will save lives. why in the world should rand paul or pence’s wife get a test without symptoms. if they feel they are possibly contaminated, why not simply self isolate like the rest of america? of course, they really should not be inconvenienced by the fact the federal government has been COMPLETELY UNPREPARED for this event, despite having at least a solid month of prep time. until very recently, we had very little testing capability. this allowed the disease to spread through our communities unchecked. and now our health care facilities will be overwhelmed, without adequate ventilators and other medical devices to keep the very ill alive. this is a travesty. our elected leaders, and those chosen to lead our response teams (fema, cdc, etc) should all be investigated and held accountable for the unnecessary deaths that will result from the most pathetic leadership i have ever seen in my life. this episode makes the leadership during katrina look heroic. the president said anybody who wants a test can get one. this is false, unless he uses the corev timeline and allows a test years from now to count as available today. pathetic.

    Reply
    1. 2slugbaits

      My understanding is that Rand Paul did exhibit symptoms and that is why he asked to be tested. I don’t fault him for that. But I do fault him for ignoring the test results after he knew that he had tested positive. And the guy is supposed to be a physician! His poor patients. Then again, there’s always been something just a bit “off” about Rand Paul. He sounds like he could be related to the perpetual teenager Rick Stryker, Jr.

      Reply

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