By Buck Sexton
No one could have imagined at the start of 2020 that by mid-summer, the country would have a raging viral pandemic, tens of millions jobs lost, and a presidential election season that will have almost no rallies and perhaps only one debate.
And as riots rock cities on the West Coast and COVID-19 cases surge in the Sun Belt, there’s a nationwide psychological shock that remains difficult to shake…
Despite the appearance of stability in the markets, a financial pandemic with grave consequences is just beginning.
Millions of people have discovered they can run businesses remotely in part or entirely – in some cases with minimal interruption of operations. This has led to the stereotype here in New York of the financial adviser or corporate lawyer who admonishes everyone on social media to “wear a mask!” and “flatten the curve” from their second homes in the Hamptons or Hudson Valley, all without missing a paycheck… It must be nice.
A new normal has set in. The grocery stores are stocked, and toilet paper is once again in abundance. Yet this new normal is politically fragile…
The ability to work from home has turned into a class warfare meme all its own. Drugstore and grocery workers have been showing up for months, while better paid white-collar employees have been using Zoom and Slack from the comfort of their living room couches. And service-industry employees have lost jobs that many will never get back.
The white-collar professional class has been able to ride out the pandemic in much greater safety and comfort than the working or even much of the middle class. Having multiple homes is a luxury that now also feels like a lifeline during outbreaks of infectious disease.
Those with money saved in the bank have been able to shelter-in-place at the whims of politicians without too much trouble. As long as food-delivery apps work and Netflix stays online, the American bourgeoisie have been largely comfortable in quarantine.
On the other hand, for those who travel and labor for a living, the picture has been much more bleak. They generally have limited job options and minimal savings. Yes, the government has thrown them a lifeline with the $600-a-week federal unemployment benefits of the CARES act, but that’s set to expire this week.
The expected drop to $200 a week will be taken as a message to lower-wage employees that it’s time to get back to work, COVID-19 be damned.
The resentment over this is only going to build, and could soon boil over… Billionaires have made many more billions during the lockdown. Passive income during the pandemic has been a financial as well as health advantage. The tech baron’s role in the economy is more dominant than ever before. For those elite professionals who went into this pandemic with ample financial resources (and assorted government bureaucrats), COVID-19 has been mostly an inconvenience.
The gap between the haves and have-nots during this period has only grown. For anyone living paycheck-to-paycheck, the lockdowns and economic downturn have caused tremendous uncertainty and anxiety that’s likely to get worse. Rent payments and mortgages have been deferred for a while, but will soon come due.
And who foots that bill? What happens when workers currently receiving unusually generous unemployment checks are told that they’re about to get cut back? What happens when mobile high earners permanently flee overcrowded, poorly run cities and take the most valuable part of the tax base with them?
We already have a mass movement of radical agitators in the city streets across the country. So far, they’ve been a destructive nuisance. If we head into another round of massive layoffs and cutbacks, the unrest could turn truly revolutionary.
It’s impossible to predict where this is heading without knowing who will win the election. If Biden is victorious, his base (the rioters) will pursue the same ends through legislation and government power. The Democrat party has been handed an enormous opening for socialism in 2021.
And no matter what, the government’s actions this year have helped lay the groundwork for universal basic income, Modern Monetary Theory, and a wealth tax. This could be ruinous…
Whatever the election outcome, there are looming systemic socio-economic risks. The U.S. government is spending trillions of extra dollars this year, in addition to the almost $25-trillion national debt. It’s as though we are trying to run an experiment where we test the outer limits of the federal government’s financial engineering. Nobody knows when the lockdown will end, so it’s impossible to gauge the true economic damage from this unprecedented blunder.
What we may soon find out is that our economy was able to withstand the virus, but the political climate it created was the real threat to American prosperity and the rule of law.
Viruses can be cured with a vaccine… But class warfare can only be defeated when human beings no longer feel envy and politicians stop telling lies.
Whether you wear a mask or not, don’t hold your breath for that.
Publisher’s note: If you agree with Buck about the incredible wealth gap raging in America today, you have to sign up for our free online event tomorrow morning. Your first and best chance to protect yourself and your family… and possibly even establish real and lasting generational wealth is tomorrow. Click here to sign up for free right now.
Now here are some of the stories we’re reading…
‘Trouble’s coming,’ warns short-selling legend who just cashed in a roughly $100 million winning bet
“This market is setting up to be one of the great short opportunities of all time. Trouble’s coming, I don’t know when, but it’s coming.”
Americans have downsized their views of what it takes to be rich and financially comfortable
Chalk up yet another way the COVID-19 pandemic has upended lives and perceptions: The crisis has changed the way Americans view wealth.
Eight in 10 Americans say the country is heading in the wrong direction
New poll shows more Americans say the country is headed in the wrong direction than at any point during the Trump presidency.
Miami Police Setting Up ‘Mask Traps,’ Issuing $100 Fines to People Wearing Masks Improperly
The theoretical case for government mask mandates has to be weighed against the reality of their enforcement.
New York Rats Emboldened by Lockdowns Have a New Enemy: Sundrop
Sundrop, a shelter mutt with a sunny disposition, is ruthless with the vermin, which are venturing farther afield amid lockdowns.
And let us know what you’re reading at [email protected].
Executive Editor, American Consequences
With P.J. O’Rourke and the Editorial Staff
July 29, 2020