Dana Blankenhorn

Why Jay Powell is Worse Than Trump

The COVID-19 pandemic was the greatest transfer of wealth, from the poor and middle class to the very rich, in the history of the world.

But the transfer wasn’t done by Donald Trump.

It was done by Federal Reserve chair Jay Powell.

The $2.3 trillion the Federal Reserve created out of whole cloth in March  went almost entirely to people who already had money.

Powell bailed out every bad and stupid bet the market had made. He bailed out the airlines. He bailed out the cruise lines. He bailed out the casinos and the oil companies.

Capitalism is supposed to be about private risks that can go bad, and risks that work fueling the greater good. At a stroke, Powell turned that truth on its head, removing the risk markets are built to protect, and socializing it. The vast majority of people were told to pay their rent and buy food while tens of millions were losing their jobs.

Carnival Cruise Lines should be out of business.  They bought back stock and handed out big dividends when times were good. Technically they’re not even an American company. While they have offices in Miami, they’re legally run out of tax havens. But if you bought Carnival when I said sell, on May 15, you’re up 50%. That’s because, after Powell’s actions, Carnival was able to borrow $6 billion from investors desperate for yield, something that was only possible because of the Fed’s money creation efforts.

Typhoid Murray

This is one in a series of short stories I've been writing during my own coronavirus quarantine. You can find the complete collection of fiction written especially for this blog here. My books are available on the Amazon Kindle, for sale or for reading via Kindle Unlimited. 

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The deadliest mass shooting in U.S. history, in Las Vegas, Nevada, killed 58 people.

Larry Murray, known as Murray the Spreader among the regulars at Biloxi’s Beau Rivage casino, where he was a dealer, felt certain he could beat that.

He also thought he could get away with it.

When the Beau Rivage re-opened in early June, he was ready. The company had protocols in place to check temperatures and separate gamblers, but Larry Murray was confident these were garbage. Besides, they couldn't police his off hours.

He knew it was only a matter of time before he got the virus.

Why Black Lives Matter to Me

You’re looking at the face of an old white guy and wondering about the headline.

Here’s the story.

I was brought up racist, on Long Island. I didn’t think that was the case, but I know now it was. I knew people like Roger Stone, Eugene Delgaudio and David Keane when they were kids. That’s because during the height of the Vietnam era I was part of a group called Young Americans for Freedom, a right-wing agitprop created by William F. Buckley when the SDS was getting started.

I’m not proud of it. I got falling-down drunk at age 16, and the hangover lasted until the day after school started. I told my parents I was sick.

We weren’t rich, but we had a lot of white privilege. It helped me get off Long Island and into Rice University, even though my parents had saved nothing for college. It got my dad a small business loan when he fell through a false roof and became disabled. The parents of the girl I married turned out to be well-off too. Most Rice parents are.

I was blind to my own good fortune. I saw myself as an idealist. I went to Northwestern, got a job at a business newspaper, and covered the end of the Houston oil boom.

Zombies

This is one in a series of short stories I've been writing during my own coronavirus quarantine. You can find the complete collection of fiction written especially for this blog here. My books are available on the Amazon Kindle, for sale or for reading via Kindle Unlimited. 

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Clean, bright Florida beaches aren’t where you go for horror.

For that, you need a place like the Maine woods. Deep, dark, filled with the noise of animals and the crackling of branches. The hoot of an owl, the rustle of an eagle’s wings as snatches its prey.

That’s where the scare is.

Madison “Mads” Fitzpatrick, a 20-year old University of Florida sophomore, loved a good Stephen King story. She had read them all. She had also read his imitators, and much of his fan fiction. She even wrote some of it. She wanted to be an English major. Her dream was to become the 21^st century’s Stephen King, to meet him at a book launch, and to win his praise.

She was starting to write a horror story when the virus sent her home from the dorm, back to Homosassa, where she lived with her grandparents. Mom and dad had perished on 9-11. They were traders at Cantor Fitzgerald. She was a baby then, staying with Dot and Bill Lawson at their home on Long Island.

The Cost of Free Money

With the Federal Reserve having thrown trillions of dollars into the economy, many people ask where inflation went?

Look at your portfolio.

What should have happened in March was that helicopter money would go into spenders’ pockets. That money would have then gone into rent, into food, and into other necessities, increasing the value of companies that made and sell those goods, keeping the economy going.

Instead, the money went to investors who, with bonds priced near zero, bought stocks. Meanwhile the economy collapsed.

Anything that works now carries a ridiculous price. Amazon.com (AMZN) is a great company, but is it worth 110 times earnings? Apple (AAPL) faces huge supply chain problems, so is it worth 27.5 times earnings? Microsoft (MSFT) is at 35 times earnings, and slow-growth Walmart (WMT) is at 25 times.

Money is also flowing into things that should be worthless. AMC Entertainment (AMC) admits its movie theater chain may have to go out of business. Yet the stock is worth $5.50 per share, the market cap is still $575 million. Luckin Coffee (LK) is practically Enron. It lied about its revenues and is facing delisting. But it still trades, at $2.61 per share, a market cap of $650 million.

There’s your inflation. It’s hiding in asset prices.

The Coward

This is one in a series of short stories I've been writing during my own coronavirus quarantine. You can find the complete collection of fiction written especially for this blog here. My books are available on the Amazon Kindle, for sale or for reading via Kindle Unlimited. 

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Jake Frederickson idolized his grandfather.

Buck Frederickson was approaching 70 as the year 2020 opened, but he still went to the shop every day. Buck’s Appliances in St. Cloud helped Buck’s son, Chuck, become the first Frederickson to graduate college, in 1990. Chuck became a State Farm agent and earned enough, in turn, to pay all Jake’s bills when he went to the U in 2018.

Jake wanted out. He had a vague major in the sciences. He wanted to do something relevant.

Trump vs. Tech is The Story of 2020

In his effort to maintain power through the pandemic, Trump deliberately divided America.

He got the smaller piece of it, and figures that’s OK, because Wall Street is behind him.

But that’s not where the money is. It’s why he’s going to lose.

Trump’s economic policies favor investors, Wall Street, and those who can work from home while paying our bills. By pushing out trillions of new dollars, mainly to people who didn’t need it, Trump brought the stock market back. He thinks the stock market is the economy.

It isn’t.

The Fire This Time

Over Memorial Day weekend, my wife drove my son back to his home.

What none of us knew was that she was driving right into the fire of our time.

My son is now a biochemistry Ph.D candidate at the University of Minnesota in Minneapolis. He wants to work on COVID-19, the virus that wrecked the global economy earlier this year, and that is putting America into its second Great Depression.

As she headed home Tuesday morning, the match was lit a few miles from my son’s apartment. George Floyd was murdered by cops using what had become a standard Minneapolis police practice, but which officer Derek Chauvin took to extremes. As most people know now, Chauvin kept his knee on the back of Floyd’s neck for 9 minutes, asphyxiating him. Killing him. Murdering him. Other officers stood by and did nothing.