Clarence Thomas Mentions ‘Frodo Baggins’ In SCOTUS Case About The Electoral College

It’s always fun when our elderly Supreme Court Justices reference pop culture.

During oral arguments on a case about members of the Electoral College breaking with the popular vote and voting for a different candidate, Supreme Court Justice Clarence Thomas brought up the popular “Lord of the Rings” character Frodo Baggins, The New York Post reported.

An attorney for what the Post referred to as one of the “faithless electors” was arguing that electors should be allowed to ignore the popular vote and choose a candidate based on their conscious. Thomas interrupted the lawyer to make his “Lord of the Rings” reference.

“The elector who had promised to vote for the winning candidate could suddenly say, you now, I’m going to vote for Frodo Baggins. I really like Frodo Baggins. And you’re saying, under your system, you can’t do anything about that,” Thomas said, according to the Post.

Josh Harrow, the attorney who was making the argument, quickly noted the fictional limit of Frodo Baggins.

“Your honor, I think there is something to be done, because that would be a vote for a non-person. No matter how big a fan many people are of Frodo Baggins,” Harrow said.

“I do think the important point is that the framers hashed out these competing concerns,” he added. “They understood the stakes and they said among these competing hypotheticals, electors are best placed to make the ultimate selection. That hasn’t changed.”

More from the Post:

Baggins made another appearance during closing rebuttal from opposing counsel Colorado Attorney General Phil Weiser, who is defending the state’s move to kick out an elector who defied pledges to vote for Hillary Clinton after she won the state in 2016.

“My friends on the other side have failed to offer any viable theory on how to address the spectacle of a bribed elector, an elector who votes for Frodo Baggins, or one who would perpetrate a bait-and-switch on the people of the state,” Weiser said.

It should be noted that while “Lord of the Rings” is considered pop culture, Frodo made his first appearance in the book “The Fellowship of the Ring,” which was published in 1954, when Justice Thomas was about six years old. Justice Thomas is now 71.

The case being argued relates to presidential electors in 2016 who ignored the popular vote in their states to vote for a different candidate. As I reported back in 2016, more of those who defected did so to vote for someone other than Hillary Clinton, rather than Donald Trump.

The media had predictably hoped that enough members of the Electoral College would defect from Trump to make Clinton president, but in the end, seven electors attempted – successfully or not – to defect from Clinton, while only two defected from Trump.

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Millions More File for Unemployment, But Big Positive Signs Seen in States That Have Opened

Nearly 3 million laid-off workers applied for U.S. unemployment benefits last week as the viral outbreak led more companies to slash jobs even though most states have begun to let some businesses reopen under certain restrictions.

Roughly 36 million people have now filed for jobless aid in the two months since the coronavirus first forced millions of businesses to close their doors and shrink their workforces, the Labor Department said Thursday. An additional 842,000 people applied for aid last week through a separate federal program set up for the self-employed and gig workers.

All told, the figures point to a job market gripped by its worst crisis in decades and an economy that is sinking into a severe downturn. Last week’s pace of new applications for aid is four times the record high that prevailed before the coronavirus struck hard in March.

Jobless workers in some states are still reporting difficulty applying for or receiving benefits. These include free-lance, gig and self-employed workers, who became newly eligible for jobless aid this year.

In Georgia, one of the first states to partially reopen its economy, the number of unemployment claims rose last week to 241,000. In Florida, which has allowed restaurants to reopen at one-quarter capacity, claims jumped to nearly 222,000, though that state’s unemployment agency has struggled to process claims.

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Other states that have lifted some restrictions, such as South Carolina and Texas, reported large declines in claims.

President Donald Trump appeared to respond to the report by tweeting, “Good numbers coming out of States that are opening. America is getting its life back!”

The latest jobless claims follow a devastating jobs report last week. The government said the unemployment rate soared to 14.7 percent in April, the highest rate since the Great Depression, and employers shed a stunning 20.5 million jobs. A decade’s worth of job growth was wiped out in a single month.

Even those figures failed to capture the full scale of the damage. The government said many workers in April were counted as employed but absent from work but should have been counted as temporarily unemployed.

Millions of other laid-off workers didn’t look for a new job in April, likely discouraged by their prospects in a mostly shuttered economy, and weren’t included, either. If all those people had been counted as unemployed, the jobless rate would have reached nearly 24 percent.

Most economists have forecast that the official unemployment rate could hit 18 percent or higher in May before potentially declining by summer.

The job market’s collapse has occurred with dizzying speed. As recently as February, the unemployment rate was 3.5 percent, a half-century low. Employers had added jobs for a record 9½ years. Even in March, unemployment was just 4.4 percent.

RELATED: Data Shows Michigan Residents Are Defying Governor’s Stay-at-Home Order

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Now, with few Americans shopping, traveling, eating out or otherwise spending normally, economists are projecting that the gross domestic product — the broadest gauge of economic activity — is shrinking in the April-June quarter at a roughly 40 percent annual rate. That would be the deepest quarterly contraction on record.

The states that are now easing lockdowns are doing so in varied ways. Ohio has permitted warehouses, most offices, factories and construction companies to reopen, but restaurants and bars remain closed for indoor sit-down service.

A handful of states have gone further, including Georgia, which has opened barber shops, bowling alleys, tattoo parlors and gyms. South Carolina has reopened beach hotels, and Texas has reopened shopping malls.

Data from private firms suggest that some previously laid-off workers have started to return to small businesses in those states, though the number of applications for unemployment benefits remains high.

Few analysts expect a quick rebound. Federal Reserve Chair Jerome Powell warned Wednesday that the virus-induced recession could turn into a prolonged downturn that would erode workers’ skills and employment connections while bankrupting many small businesses.

Powell urged Congress and the White House to consider additional spending and tax measures to help small businesses and households avoid bankruptcy.

Powell spoke a day after House Speaker Nancy Pelosi, a California Democrat, proposed a $3 trillion aid package that would direct money to state and local governments, households and health-care workers.

Homebase, a software company that provides time-clock technology to small businesses, has tracked how many employees have clocked in and for how many hours since the pandemic struck. Though Homebase’s data suggests that some people have returned to work in states that have partially reopened, it’s unclear how sustainable that trend can be unless many more customers return.

In Georgia, which began reopening in late April, the number of people working at small businesses on Tuesday was down 37 percent compared with the beginning of March, according to Homebase’s data.

That is an improvement from mid-April, when the number of employees working had fallen by half.

In New York, which remains mostly shut down, employment at small businesses is down 63 percent as of Tuesday, only slightly better than in mid-April.

The Associated Press contributed to this report.

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Some Schools Are Pulling the Plug on Distance Learning as Students Suffer During Lockdown

After the school district in Chattahoochee County, Georgia, called an early end to the school year, seniors lined up one day last week to complete their graduation paperwork.

Students who hadn’t seen one another since in-person classes ended abruptly in March amid the coronavirus outbreak commiserated over all they’ve missed out on, including the prom and a senior class trip.

Some also wondered about what they may have lost academically.

“Honestly, remote learning, I don’t think was my favorite thing,” 18-year-old Isabella Branson said. “It’s kind of hard to stay motivated when you don’t have anything to look forward to and you don’t see your friends.”

The small rural district is among many around the U.S. that have pulled the plug on distance learning, all citing familiar reasons. It’s too stressful, the lack of devices and internet access is too much to overcome, and what students get from it just isn’t worth the struggle.

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In Georgia, where the school year is ending early for one of every 10 students, many district leaders say the final weeks of the school year would have been dedicated anyway to preparing for and taking standardized tests that are now canceled.

The governor and state schools superintendent who have moved to dismantle parts of Georgia’s high-stakes testing system have said they are not opposed to fewer instructional days.

“We didn’t cut any class time out,” Chattahoochee County High School Principal Josh Kemp said. “There was no reason to pile more on our parents and students.”

But Kemp and others also acknowledge that there was material that wasn’t covered and that teachers will have to find a way to fold it in next year for returning students.

“They weren’t able to get all the standards,” said Tammy Bailey, the science department chairwoman at the high school. “I think there will be a gap.”

Classes had been scheduled to run through May 21, but remote instruction instead came to an end March 8 in the Chattahoochee County school district.

A majority of the high school’s 450 students live on the U.S. Army’s sprawling Fort Benning, while a minority live around the small town of Cusseta.

Only 59 percent of households in the district have access to broadband internet at home.

Other districts around the country that are ending the school year early including Omaha and some nearby suburban districts in Nebraska, Washington, D.C., and some in New Hampshire. Officials say they want to relieve stress on families, ease problems for students without internet access, and focus on preparing for a fresh start in the fall.

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The last three weeks of school is “probably not prime instructional time,” said Andrew McEachin, an education policy researcher at RAND Corp. But he said that kids in struggling households may suffer most from being cut off from the normalcy of a school routine.

“I think the biggest thing about cutting a school year short is not what it does on average, but what it does on equity,” McEachin said. “Even if school isn’t working as well as we want it to be, that may be the best access low-income students have to learning.”

Georgia Gov. Brian Kemp, a Republican, said on April 16 that he trusted schools to set their calendars, and the following day, state Superintendent Richard Woods wrote that schools’ focus during the pandemic should “not be on test scores” but on making sure children are “healthy, safe and nurtured.”

But Michael O’Sullivan, executive director of GeorgiaCAN, a group that supports Georgia’s testing system, says this spring has been a preview of a “zero-accountability world.”

“It’s the easy way out of a very difficult situation, but that doesn’t mean it’s going to be good for kids,” O’Sullivan said.

Some schools in Georgia are making plans to combat academic losses from the year, such as beefed-up summer sessions. The Scintilla Charter Academy in Valdosta is aiming to start the next school year on July 23, to make up the time it lost when it ended on April 30.

Scintilla Dean of School Mandy Avera said her families were “stressed and overwhelmed” by online learning.

The school covers kindergarten through sixth grade, and Avera is among educators who question whether younger children can successfully acquire critical skills such as learning to read without a face-to-face interaction with a teacher.

“It just created a situation where we just can’t be as interactive as we like to be at Scintilla,” Avera said. “Kindergartners don’t understand why they’re at home. They don’t understand why they can’t go back to school and see their friends and see their teachers.”

Back in Cusseta, some seniors were stressed about being able to bring only four guests to a socially distant graduation ceremony, while others were disregarding imposed distance to hug and gossip.

But Chattahoochee County Superintendent Kristi Brooks was already trying to think about the next school year, despite uncertainty on whether in-person classes will resume.

“They’re going to have missed 60 days of instruction,” Brooks said. “When we come back for the fall, we’re going to have to pick up in some basic areas.”

The Associated Press contributed to this report.

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Ministry Launching Live, Interactive Virtual Summits To Take On Youths’ Most Challenging Faith Questions

Colorado-based Summit Ministries is taking its Christian worldview course online to answer some of American youths’ most challenging questions about God and culture.

Because of the coronavirus outbreak, it is unclear how many of the celebrated two-week long, in-person summer sessions will occur, hence the shift to the virtual format.

Normally, about eight sessions attended by 180-200 students each take place between Memorial Day and Labor Day, either at Summit Ministries headquarters at the base of the Rockies near Colorado Springs or at Covenant College near Lookout Mountain, Georgia.

Summit has canceled its first two in-person courses scheduled for June, but is hopeful the others will happen later in the summer.

The ministry will conduct multiple 5-day online events during the early weeks of summer.

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“We have started a Summit Virtual,” Jeff Myers, president of Summit Ministries told The Western Journal. “So for the first time, Summit is wide open to lots of people. It usually sells out.”

“It’s live, interactive,” he explained and “gamified.”

“It’s a fast-paced kind of thing, where there are raffles and quizzes and questions, and quick transitions between one thing and another and surprise guests … [to] keep it as a very vibrant learning environment.”

The sessions, both in-person and online, are for young adults ages 16-to-25.

Olivia Brown, a recent college graduate, couldn’t say enough about her experience attending Summit’s summer sessions, when she was in high school.

“I enjoyed it so much that I went 2 years in a row … so that I could soak up as much knowledge as possible,” Brown told The Western Journal in a text message.

“I learned how world-views impact culture from a Christian-based perspective,” she added, “while we also had fun activities like going into local places in town.”

Myers affirmed the goal of Summit’s sessions is “to help equip and support young adults in embracing God’s truth and championing the biblical worldview.”

When asked the areas students get most challenged in their faith when they go off to college, Myers said there are really three.

RELATED: Illinois Pastor Defies State Order To Close Down Church Services

“They come back from the classroom pretty sure, No. 1, that nobody really knows what is true. And No. 2, that God is not relevant to anything that’s important,” he explained.

The final issue, he said, is that their “Christian morality isolates them from their friends and from the kinds of things they would like to do.”

Summit takes on these and other issues with the help of top Christian apologists and speakers about faith and culture.

Myers said some of the questions addressed include, “How do we know there is a God? How do we know the Bible is true? Should I be pro-life or pro-abortion? What should I think about sexuality? Does the Bible say anything about marriage and man-woman, or man-man, or woman-woman? What does the Bible say about gender?”

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“Is there anything in the Bible that can guide me in talking to my socialist friends?”

“It’s a wide range,” Myers said. “From sociology to economics to philosophy to theology.”

Students also engage in small group discussions to further dig into the material presented.

Summit Ministries will be conducting a Facebook Live online preview of the sessions on Thursday at 6 p.m. Mountain Time (8 p.m. Eastern Daylight Time).

“This will be the kind of thing that can give parents some hope for this summer and give students something productive to do,” Myers said of the virtual programs.

“If they begin the summer this way, then it could change the course of the rest of the summer, which will help them be better prepared to go back to school in the fall.”

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Rogue Flynn Judge Goes Even Further, Appoints Anti-Trump Lawyer to Case DOJ Has Already Dropped

The federal judge hearing former National Security Advisor Michael Flynn’s case appointed a “friend of the court” Wednesday to present opposing arguments in response to the Justice Department’s motion to drop the case and consider if Flynn should be held in contempt of court for perjury.

Judge Emmet Sullivan of the U.S. District Court for the District of Columbia appointed retired federal judge John Gleeson, a vocal critic of the Trump administration’s handling of the Flynn case, as the amicus curiae in this case.

Gleeson is a retired New York federal district court judge who currently works as a partner at the international law firm Debevoise & Plimpton, Fox News reported.

He co-wrote an Op-Ed for The Washington Post this week saying that the Justice Department “has made conflicting statements” to Sullivan and arguing the move to dismiss the case “is actually just a request.”

“There has been nothing regular about the department’s effort to dismiss the Flynn case. The record reeks of improper political influence,” the Op-Ed read.

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“Flynn’s guilt has already been adjudicated,” it added. “So if the court finds dismissal would result in a miscarriage of justice, it can deny the motion, refuse to permit withdrawal of the guilty plea and proceed to sentencing.”

Gleeson said that although some documents have been made public, the transcripts that Flynn said he lied about have not been disclosed by the DOJ.

“The department once argued that those conversations confirmed Flynn’s guilt. It now claims those conversations were innocuous,” he wrote.

Gleeson had also previously worked with former special counsel Robert Mueller prosecutor Andrew Weissman, according to Twitter sleuth Techno Fog.

Sullivan has not yet appointed an amicus to counter Gleeson’s argument, Fox News reported.

This new order comes a day after Sullivan, who was appointed to the federal bench by former President Bill Clinton, said he would open up the process to hear “friend-of-the-court” submissions and effectively put the government’s effort to drop the charges on hold.

A group called “Watergate Prosecutors” had sought to file such a submission, claiming it had a “unique perspective on the need for independent scrutiny and oversight to ensure that crucial decisions about prosecutions of high-ranking government officials are made in the public interest.”

Flynn’s defense objected to the delay in dismissing the case, according to The Washington Post.

RELATED: Flynn Judge Faces Ethics Complaints After Head-Scratching Move

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“No rule allows this filing,” attorney Sidney Powell wrote in her own court filing, noting that Sullivan would not accept outside groups’ comments in the past.

“This Court has consistently — on twenty-four (24) previous occasions — summarily refused to permit any third party to inject themselves or their views into this case,” she said.

Powell said courts cannot “usurp the role of the government’s counsel.”

“This travesty of justice has already consumed three or more years of an innocent man’s life — and that of his entire family,” Powell wrote. “No further delay should be tolerated or any further expense caused to him and his defense.”

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John Brennan Goes Berserk After His Role in Unmasking General Mike Flynn Revealed


John Brennan

Former CIA Director and Spygate ringleader John Brennan lashed out at Trump again on Thursday suggesting the President is a ‘despot.’

CBS News reporter Catherine Herridge on Wednesday obtained the list of Obama operatives who unmasked General Flynn and released it to the public.

Names included former VP Joe Biden, former CIA Director John Brennan, Samantha Power, former DNI chief James Clapper, former FBI Director James Comey and others.

Brennan’s role in the unmasking of General Flynn was revealed and US Attorney John Durham is now looking at the unmasking list.

Brennan is angry and lashed out at Trump on Thursday morning.

BRENNAN: President Trump’s propaganda & disinformation machine, which operates according to a despot’s playbook, is the most aggressive & odious in history. It far surpasses even Russia’s ability to trample the truth, harm U.S. security, & undermine America’s reputation worldwide.

It was also revealed that Brennan had intel saying Russia wanted Hillary Clinton to win the 2016 election because she was more malleable than Donald Trump.

Brennan however suppressed the intel that suggested Russia wanted Hillary to win and ran with narrative that all 17 intel agencies concluded Russia wanted Trump to become president.

The IG report released in December of 2019 confirmed John Brennan did indeed rely on the phony dossier for the ICA report on so-called Russian interference in the 2016 election.

John Brennan claimed in a May 2017 testimony under oath that Hillary’s phony dossier didn’t factor into the Intelligence Community’s Assessment report on Russian interference of the 2016 presidential election.

Brennan told Trey Gowdy during his testimony when asked if the CIA relied on the dossier, “No. Because we — we didn’t. It wasn’t part of the corpus of intelligence information that we had. It was not in any way used as a basis for the Intelligence Community assessment that was done. It was — it was not.”

On page 179 of the IG report, Comey told IG investigators that he remembered having numerous discussions with John Brennan where the former CIA Director said the dossier was “important” enough to include in the ICA — Comey confirmed that yes, the dossier was part of the “corpus of intelligence information” the agency had.

The core of the ICA report matches the central findings in Hillary’s phony dossier. For Brennan to claim the dossier wasn’t used for their findings is absurd, it’s a blatant lie.

Brennan perjured himself and suppressed intel saying Russia wanted Hillary Clinton to win the 2016 election.

WATCH:

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Michigan’s Gov. Whitmer Now Under Fire For State’s COVID-19 Nursing Home Policy

Michigan’s Democratic governor Gretchen Whitmer — once on the short list to be former Vice President Joe Biden’s running mate in the 2020 Democratic presidential election — is the latest official to come under fire for a policy requiring some nursing homes and other adult care facilities to take COVID-19 patients, many of whom are still suffering with the after-effects of the virual infection and could be contagious.

Thanks to a Detroit lawmaker who blew the whistle on the policy, according to the Detroit News — enacted by Whitmer in an executive order — Michigan Republicans are now investigating whether the governor put elderly Michigan residents at risk of contracting the novel coronavirus, and whether her order perpetuated Michigan’s ongoing coronavirus pandemic.

“Michigan has been putting long-term care patients recovering from the virus in the same facilities with patients who don’t have the virus,” the Detroit News reported Monday, adding that Whitmer’s executive order “requires seniors who are positive for COVID-19 to be brought to the TCF Center in Detroit or to ‘regional hubs,’ which are nursing homes where the state says there has to be separation of the COVID-19 positive and negative patients.”

The TCF Center was an overflow coronavirus hospital located in a convention center — a hospital that has since wrapped up operations, forcing patients who might have been cared for by TCF Center nurses to enter “regional hubs.”

A local NBC affiliate, though, found that private nursing care facilities were also being forced to receive COVID-19 patients.

“The Department of Health and Human Services gave Local 4 more insight into its regional hub system. There are now 21 of them. The state is paying these homes $5,000 per COVID-19 positive case they take,” WDIV Detroit reported. “We also learned that there are some nursing homes taking these patients that do not have the same strict separation policies that regional hubs are required to have. Only about half of the state’s nursing homes have been inspected since the policy went into effect last month.”

As in New York, nursing homes must accept the COVID-19 positive patients or face repercussions, and despite Federal provisions requiring separation, many nursing homes are unable to ensure there is distance between positive patients and the general adult care population, leaving many long-term residents exposed. Funding, as well as staffing, has been an ongoing issue for adult care facilities in both states.

New York finally reversed its policy over the weekend, with Governor Andrew Cuomo admitting that the program led to widespread coronavirus outbreaks in nursing homes and ordering routine testing and inspections for most adult care facilities suffering through the pandemic.

Detroit Democrat Leslie Love, a Michigan state legislator, says the practice should end in Michigan as well.

“To return seniors into an environment, seniors with the virus still recovering from the virus, into an environment with, well, seniors, just didn’t seem — it’s not a good idea,” she told the Detroit News, adding that her mother is in a nursing home and recently had to be tested for the virus. “That would break my heart [if she contracted COVID-19] because I’ve been on the front lines of this, trying to make sure our seniors — my mother, your mother, anybody else’s mother — does not get sick and die from this, particularly if they’re in a nursing home.”

A Michigan legislative panel is now reviewing Whitmer’s order, according to local outlets. Legislators have already expressed serious concerns with the practice.

“We are forcing nursing homes to take new COVID patients, assuming they have a census below 80%,” one legislator told media. “This doesn’t seem like the safest scenario for seniors already in the home.”

Michigan has not seen many nursing home deaths from coronavirus, but the state’s Director of Health and Human Services told the legislative panel this week that he doesn’t believe the official numbers are accurate. The New York Times reported late last week that of the 18,000 COVID-19 cases in Wayne County, the county that houses Detroit, around 3,000 are in nursing homes.

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The Real Killer Is COVID-Lockdown-Driven Unemployment

The Real Killer Is COVID-Lockdown-Driven Unemployment

Tyler Durden

Thu, 05/14/2020 – 13:45

Authored by Christopher Dembik, head of Macro Analysis at Saxo,

Summary 

Today, the U.S. Federal Reserve will release a survey confirming the economy is doomed for a long and painful downturn. Chairman Powell said in a webinar at the Peterson Institute for International Economics yesterday that one of the main findings, which is similar to that of many other surveys, is that lower-income Americans have been the most affected by the consequences of the virus. According to Powell: "Among people who were working in February, almost 40% of those in households making less than 40,000 USD a year had lost a job in March".

The coronavirus is a pure negative externality. It initially caused a negative supply shock that was rapidly offset by a negative global aggregate demand shock. The fact that global commodity prices are plunging also speaks to the fact that we are dealing with a demand shock.

The only short-term solution to limit the spread of the virus was to favor social distancing and to implement strict lockdown where it was needed, which contributed to depress aggregate demand. Households were called upon to stay at home and avoid social interactions, which forced them to spend less. If consumers buy less, companies are inclined to produce less. In other words, if some companies can continue to produce despite these unusual circumstances, they do not necessarily have the incentive to do so. This will also have a negative impact on production and will cause massive layoffs. This is the phase in which we currently are.

Phase 1: Temporary massive layoffs

In the United States, the economy destroyed more than 20 million jobs in April due to the lockdown, which pushed the unemployment rate to 14.7% from 4.4% a month earlier. According to several members of the Federal Reserve, the unemployment rate might quickly climb to 20%, eventually reaching a peak close to 30%. But a better indicator of what is actually happening is probably the ratio unemployment as share of population (16 years and over) which dropped to 51.3%. Said differently, only half of the population has a job. The service sector has been the most affected by the coronavirus: more than 7 million jobs have been lost in leisure and hotels, almost 2.5 million in education and health and another 2 million in retail trade. The below charts shows the impact on unemployment rate by education level.

We see that every unemployment rate quadrupled so far during the lockdown period but, as it is the case with every “normal” recession, the size of the shock is much greater for lower education level than for higher ones. The only major difference is the amplitude of the shock in such a short period of time.

Phase 2: Hysteresis effect and solvency issues

A large chunks of layoffs are considered as temporary (up to 70% in the United States according to the April nonfarm payrolls report). When the lockdown measures will be lifted, the economy will restart as normal and companies will hire back those who were laid off during the crisis. I disagree with this assumption.

If China leads the rest of the world in the ongoing process, then there is no V-shape recovery in perspective.

In China, it took one month to one month and half for productive capacities to get back to 100%, but consumption remains sluggish.

Retail sales fell 15.8% year-on-year in March and restaurant spending plunged nearly 50% over the same period.

Many shops are still desperately empty, even in Beijing.

This phenomenon is called the hysteresis effect. Although the pandemic has disappeared, it continues to have a noticeable effect on consumption and savings behavior. Due to the uncertain economic outlook and fears of rising unemployment, consumers are strongly inclined to save, which is a huge negative for aggregate demand, and will amplify the economic downturn. As a result, companies are facing increasing solvency issues topping sometimes preexisting decrease in industrial profit (as it is the case in China where industrial profit was down minus 37% in Q1 2020) and will have no other choice but to focus on restoring cash flows and to cut costs, including jobs. The vicious circle of sluggish aggregate demand and solvency issues is just about to start and will lead to a strong and lasting jump in unemployment which will be more important in countries with insufficient automatic stabilizers.

Winners and losers in the post-COVID world

Coronavirus scars will weaken the economy for years to come. Policymakers, with a massive inflow of liquidity into the economy, have delayed and postponed a lot of pain but they have not eliminated it. The second economic wave is coming and will be characterized by weak demand, an unprecedented number of bankruptcies and much higher unemployment. Before the outbreak, the global economy was already in a very weak position, with a high level of public and private debt, elevated market valuation and low growth momentum. Historical precedent tend to indicate that, contrary to wars, there is no strong recovery after pandemics and depressive effects, such as depressed investment opportunities and increase in precautionary saving, can persist up to 40 years (see for further details this excellent paper published on the website of the NBER).

Another characteristic of pandemics is that they leave the poor even farther behind. One of the latest IMF blogposts (see here) using the net Gini coefficient concludes that pandemics progressively widen gap between rich and poor and hurt employment prospects of those with only a basic education while scarcely affecting employment of people with advanced degrees. The most striking finding is certainly that inequality tends to increase in the long run (the net Gini increased by nearly 1.5% after five years), confirming that pandemics scars have a very long-term impact on the broad economy.

The risk is that the gap between rich and poor, symbolized in the above chart by the evolution of the S&P 500 since its low point of March 23 and the aggregate increase in U.S. jobless claims over the same period, will widen further. There have been plenty of research from the IMF and the Bank of England over the past years demonstrating that quantitative easing induces a lasting jump in wealth inequalities due to the increase in the price of financial assets (see herehere and here). Given the amount of liquidity injected by central banks all around the world and the initial effect on the stock market, the winners of the ongoing crisis might likely be the 1%. On the contrary, the losers will be the rest of the population, especially the less educated, that will need to cope with higher unemployment and lower purchasing power. Coronavirus unemployment is putting at risk the social contract made between citizens and the state and may pave the way to populism. Governments will certainly try to address the issues of unemployment and inequality by implementing more redistributive policy and letting the fiscal deficit widen. Will it be enough? I don’t have the answer yet, but I know that policymakers cannot let down the 99% one more time.

via ZeroHedge News

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GOP: 1st Act of House Select Coronavirus Panel to Harass Blue-Collar U.S. Workers, Not China

Republican congressmen complained on Wednesday that the first deed by the recently established Democrat-led House Select Coronavirus Subcommittee was to “beat up” on blue-collar workers rather than China’s contribution to the spread of the lethal virus across the world.

Communist China is the birthplace of the illness associated with the new coronavirus (COVID-19) that is plaguing the world.

During the first hearing by the House coronavirus panel, the top Republican on the subcommittee and Minority House Whip, Steve Scalise from Louisiana, declared:

The very first action, though, of this subcommittee was not to help people get back to work. In fact, the very first action of this subcommittee was to attack hard-working, blue-collar Americans.

Attacking blue-collar workers is not what we should be doing. We should be helping workers in America get back to work. We really should be holding China accountable for what they did, and unfortunately, that is not happening. That’s not what’s going on with this committee, and that’s a real concern, Mr. Chairman.

None of the Democrats on the House Oversight and Reform Select Subcommittee on the Coronavirus refuted the Republican assertions. Rep. Jim Clyburn (D-SC), the chairman of the subcommittee, defended his decision not to focus on China.

Republicans also lambasted the leaders of the “bipartisan” panel for not letting them call any witnesses to testify on Wednesday.

Rep. Jim Jordan (R-OH), the ranking member of the full House Oversight and Reform Committee, blasted the panel as a partisan “political” ploy “designed to go after the president.”

Congressman Scalise acknowledged that all seven Democrats on the subcommittee sent a letter “harassing” companies that employ blue-collar workers across the country.

The Democrats demanded that they return the money they received from the Paycheck Protection Program (PPP), a cornerstone of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.

On May 8, Democrats on the panel gloated about sending the same letter to several companies, arguing that they were “large, public corporations” that must “immediately return taxpayer funds that Congress intended for small businesses struggling to survive during the coronavirus crisis.”

Jordan said Reps. Conor Lamb (D-PA) and Tim Ryan (D-OH) pushed back on their Democrat colleagues sending one of the letters to a company that employs people in their states — Universal Stainless & Alloy Products, Inc.

The Ohio Republican was outraged that the first act of the subcommittee was to “beat up” on blue-collar workers, rather than China.

Scalise noted that the companies that received the letters “did everything that they were told to do.”

“They were told to keep the workers on the payroll and that PPP was there to help those very companies. And in fact, every member of the committee that signed the letter harassing those companies voted for the [CARES] bill,” he said.

The letters targeted some companies that employ steelworkers, truck drivers, and welders.

“These are the very people we were trying to help, and in fact, they’re right now living in fear because … if [their employers] had to return the money today after they followed all the rules that we all voted for, they would have to lay off hundreds of workers each,” Scalise said.

Rep. Mark Green (R-TN) also criticized the House panel’s first move.

“Instead of attacking American businesses by further taking the PPP loans, we should be looking at China,” Green declared. “Their role in this. From day one, China’s lies and deceptions have severely hampered the global response.”

There are already eight mechanisms within Congress to conduct oversight of the bills passed to combat the coronavirus and the crisis caused by the disease, Jordan and Green noted.

Trump administration officials have accused Communist China of mismanaging its response and hiding the extent of the outbreak within its borders during the early stages of the pandemic, with the help of the Beijing-influenced World Health Organization (WHO).

via Breitbart News

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