It’s Friday, so let’s a have a little fun with the not so funny US debt disaster. Toward that end, I thought I’d tell a story.
First: The Ridiculous
But first, let’s just start with the topic which no one can ignore: How does a stock market on the eve of an earnings season of which no one even has a clue and as unemployment approaches 15%, notch its best week in 46 years as most Americans are suffering their worst financial stress in a lifetime?
The stats, which Bloomberg’s Sarah Ponczek describes as “bordering on the ridiculous,” reveal $4T added to share prices only a week after $10T was shaved off. So, again, how can one possibly explain this? Why would dip-buyers purchase stocks trading at 40 times the worst profit estimates ever recorded?
Well, take a wild guess.
The Fed just added trillions of “stimulus” and the folks on the Hill added trillions more in deficit spending–i.e. US debt, and folks, trillions ought to buy something, right?
But let me, again, tell you a little story about how this all ends…
The American Express Black Card
American Express has a fancy credit card tucked away in an exclusive corner of its high-end kingdom of credit that goes beyond the color of even gold or platinum.
It’s a tres chic metal card wielded by rock stars, Wall Street A-listers and even James Bond whenever he checks into the Casino Royal or makes a detour to the Bahamas.
It’s called the Centurion Card, but is otherwise known among Madison Avenue boutiques and Hollywood restaurants from Shutters to the Ivy as the “Black Card.”
What’s so special about the Black Card?
Very simple: It has an unlimited spending limit.
This means a small circle of ballers, from Justin Bieber to Bill Gates, can ostensibly stroll into a Ferrari dealership, a Monaco realtor’s office or a G-4 brokerage and throw it all down on a single credit card.
Because, unlike the US debt, they can afford it.
Conjuring images of “hang the rich”?
Black Cards have no spending limits because those who own them (unlike US debt issuers) actually pay their bills at the end of each month.
Every penny. Every month.
In short, unlimited credit, however outlandish (and frankly absurd) it may seem, is at least (unlike US debt) honest credit, for it’s based upon a basic requirement: Pay your bill.
Chuck and His Black Card
Now, imagine handing a Black Card to an unemployed dog-walking hipster named Chuck with a bad drug habit, no math skills and a pathological addiction to shopping?
Just think of the fun Chuck would have on a 30-day trip around the globe with a jet full of shopping bags and an appetite for the wines of Ojai to Napa, Bordeaux to Hunter Valley?
Imagine the selfies Chuck would take strolling down the Champs Elysees or island hopping off the coast of Spain from Sardinia to Majorca in a sailboat bought that morning after Polo at the Guard’s Club?
Think of all the “love stories” that Black Card would inspire along this road trip as Chuck’s new card made him suddenly “mysterious” to the ladies?
Ahhh what freedom, what bliss! Chuck has such a sudden je ne sais quoi about him, no? What a guy.
But then comes the end of the month. The bill is due.
Chuck has no money. Just a few empty wine bottles on the floor of his Amex-upgraded suite at the Four Seasons, Mid-Town.
The love-stories vanish, there’s no fuel for the jet, the sailboat is gone and there’s no more feed for the polo ponies.
Chuck is dumbfounded. He sneaks past the front desk of the hotel, stands on 57th Street, stares up at the sky and screams, “why me?”
In short, Chuck is… totally… chucked.
Does Chuck’s story seem a bit absurd? Hard to believe? Total fantasy?
Well, you aint seen noth’n yet.
Chuck Goes to Washington
So, let’s put Chuck’s latest month into perspective, for if his Black Card journey sounds just plain stupid, it pales in actual comparison to just how far the US debt went into the red this March.
My former neighbor from Stevensville Michigan, David Stockman, recently tallied up the bill that Washington DC just put on our national Black Card on Thursday, and folks here it is, in his own words:
“-$25,000,000 for additional salary for House of Representatives (blows your mind, right off the bat!)
-$100,000,000 to NASA (because, who knows why?)
-$20,000,000,000 to the USPS (because, why the heck not?)
-$300,000,000 to the Endowment for the Arts (Ah, screw it – let’s do it! They’ll never know)
-$300,000,000 for the Endowment for the Humanities (because, not that many people even knew that was a thing?)
-$15,000,000 for Veterans Employment Training (for when the GI Bill isn’t enough)
-$435,000,000 for mental health support (Man, oh man, that’s a lot of suicide hotlines)
-$30,000,000,000 for the Department of Education stabilization fund (Whoa, that’s a big one! Wonder how much goes to the NEA?)
-$200,000,000 to Safe Schools Emergency Response to Violence Program (I guess the virus is kind of violent)
-$300,000,000 to Public Broadcasting (NPR has to be bought and paid for by somebody. That somebody is you.)
-$500,000,000 to Museums and Libraries (Who the heck knows how we are going to use it?)
-$720,000,000 to Social Security Admin (But get this – of this, only $200,000,000 is to benefit people. The rest is for admin costs)
-$25,000,000 for Cleaning supplies for the Capitol Building (Seriously, it’s on page 136)
Still reading through this crap?
-$7,500,000 to the Smithsonian for additional salaries (Wait a minute, what about the virus?)
-$35,000,000 to the JFK Center for performing Arts (See above)
-$3,000,000,000 upgrade to the IT department at the VA (I guess $3 billion ought to cover it.”)
-$315,000,000 for State Department Diplomatic Programs (What the heck does this mean?)
-$95,000,000 for the Agency of International Development (What is this? Let’s keep the money here and clean up the streets of S.F. and L.A.)
-$300,000,000 for International Disaster Assistance (Put this and the next one together and we’re starting to look pretty compassionate – Globally, anyway)
-$300,000,000 for Migrant and Refugee Assistance (page 147)
-$90,000,000 for the Peace Corp page 148 (Specifically to fight CoVid-19?)
-$13,000,000 to Howard University page 121 (Wonder what the University did to deserve this?)
-$9,000,000 Misc. Senate Expenses page 134 (Otherwise known as Petty Cash – maybe it’s needed to settle all them, there Harassment claims?)
-$100,000,000 to Essential Air carriers page 162 (This is OK because the Airlines are going to need billions in loans to keep them afloat. Besides, $100 mil is chump change)
-$40,000,000,000 goes to the Take Responsibility to Workers and Families Act page 164 (This sounds like it’s direct payments for workers. Let’s hope so)
-$1,000,000,000 Airlines Recycle and Save Program page 163 (A cool $1 Billion? What’s the heck is this program all about?)
-$25,000,000 to the FAA for administrative costs page 165 (Not even gonna ask)
-$492,000,000 to National Railroad Passenger Corporation page 167 (AMTRAK – a.k.a. THE BIG OLD MONEY PIT)
-$526,000,000 Grants to AMTRAK to remain available, IF NEEDED, through 2021 page 168 (“IF NEEDED?, IF NEEDED ! ” ) Tell me, what are the odds that it doesn’t go unused? – Hidden on page 174 the Secretary of Transportation has 7 days to allocate the funds and notify Congress.
-$25,000,000,000 for Transit Infrastructure page 169 (Why isn’t this in a separate bill? We need it, but what’s it doing in a Coronavirus bill?)
-$3,000,000 Maritime Administration page 172 (Who knows? It’s a piddling amount anyway)
-$5,000,000 Salaries and Expenses Office of the Inspector General page 172 (This office has been pretty busy the last couple of years) No voter ID to get a ballot , and anonymous “ballot harvesting” page 650 (Hmmmm. Does the phrase “voter fraud” come to mind? Any price tag? What’s ballot harvesting?”)
-$2,500,000 Public and Indian Housing page 175 (CoVid-19 related?)
-$5,000,000 Community Planning and Development page 175 (See above)
-$2,500,000 Office of Housing (See above)
-$1,500,000,000 Tenant-Based Rental Assistance Office of Public and Indian Housing. (See above)
-$1,000,000,000 of which can be used as “additional administrative and other expenses”. page 176 (That’s a billion we’re talking about here – a billion, with a “b”)
-$720,000,000 to the public housing fund page 177 (CoVid-19 related?)
-$100,000,000 for Community Block Grants for Native Americans page 183 (See above)
-$250,000,000 for Housing Block Grants for Tribes page 182 (See above)
-$130,000,000 for AIDS Housing page 185. $20,000,000 of which goes to one-time grantees, whatever that means page 186 (See above)
-$15,000,000,000 for the Community Development Fund page 188 (That’s $15 Billion!) (Only $10,000,000 of which is set aside for infrastructure for fighting infectious Disease page 191)
-$5,000,000,000 in Homeless Assistance page 193 (Aaahhh, what’s another $5Billion?)
-$100,000,000,000 for Rental Assistance – page 198 (Or another $100 Billion, for that matter?)
-An additional $7,000,000 to enforce the Fair Housing Act page 203
-Paid Family Leave for Sickness is 2 paid work weeks – page 213
-Emergency Family Leave (Now applies to all employers, not just companies over 500 employees – page 208)
-Guarantees paid leave to employees who have an in-law who gets sick – page 209 (In-law? Really?)
-Opens up leave for someone you are in a “committed relationships with” – page 212 (What if there’s more than one? There could be several)
-$1,000,000,000 for more Obama-phones! (That’s right, folks. A cool $Billion. Do you have any idea how stupid your Congressman thinks you are?)
-$227,000,000 for grants to States for youth activities – page 80
-261,000,000 for grants to States for dislocated worker employment and training activities, including supportive services and needs-related payments; page 80
-$10,000,000 for Migrant and Seasonal Farmworker programs (What the heck? Thought this was supposed to be about the virus)
-$100,000,000 for ‘‘Job Corps’’ (See above)
-$15,000,000 for ‘‘Program Administration’’ (Who would want a program without an administrator or two)
-$6,500,000, to the ‘‘Wage and Hour Division’’ (Who knows?)
-$30,000,000, to OSHA (Guess they can’t get by on the fines they impose)
-$10,000,000 for Susan Harwood training grants (You can bet this money will be well spent)
-$1,300,000,000, for ‘‘Primary Health Care’’ (A billion-three? Who gets to spend this?)
-$75,000,000, for ‘‘Student Aid Administration’’ (Enhancing our student debt fiasco)
-$9,500,000,000, for ‘‘Higher Education’’ (Come on now! Somebody should be asked to explain this. $9.5 Billion? Really? Higher Education? Higher than what?)”
Ok, folks, that’s what I call one helluva an Amex bill.
And that’s just the spending submitted yesterday.
Less than a month before this epic moment of stupid masquerading as a US “CARE package,” the Fed unleashed its Unlimited QE, whipping out $150 billion a day to forever buy Uncle Sam’s Treasury bonds for the simple reason that no one else will…
I mean, why let a good crisis go to waste if you’re a DC hero?
And hey, what’s a $150 billion a day of free-market distortion and US debt to a country with a money printer and a population kept in the debt-dark by DC and a ratings-hungry media that tracks a flu pandemic with 24/7 hysteria while ignoring anything even remotely related to math, US debt or other news?
Or how about the ongoing, trillion-plus repo bailouts equally omitted from the 24/7 Covid-obsessed media coverage?
Is All this Black Card Spending Justified to Beat the Coronavirus?
DC and its fear-peddling propaganda arm disguised as “journalism” from CNBC to FOX would sure like you to believe so—as such headlines mask the $25,000 pay raise Congress just sneakily passed for themselves, and we all agree those geniuses on the Hill deserve a raise for all their good work, as they toss a $1200.00 check to the masses after giving themselves a pay raise. I mean, let them eat cake, no?
Such brave leadership, Chuck style…
And as for the Covid-19 justification, let me remind readers that most of the DC Black Card spending and debt in the last month went to the bond markets, not COVID victims.
Why? Because I was trained as a lawyer and securities trader, not a doctor of virologist.
That said, and like each of you, I’m of average intelligence and average cynicism, so I’ll at least raise the possibility that COVID-19 is not a fatal pandemic about to pour black-plague doom upon an entire population which justifies locking the US economy and all its trusting masses behind a closed door.
Instead, and factually speaking, we’re dealing with a highly contagious virus that clearly preys upon a genuine, yet limited, identifiable, as well as isolate-able sub-population that could be far more effectively protected at a fraction of the cost to our civil liberties (civil what?) and economic realities than the national crack-down we are all experiencing.
Getting Back to Chuck
Remember Chuck and his Black Card?
He’s such a joke because he couldn’t pay for his spending. No sympathy for Chuck.
But folks, what the Fed and DC have done to this country in the last 30 days makes Chuck’s Black Card month of debauchery profoundly tame by comparison when it comes to financial restraint.
You see, Chuck was just a moron; he spent what he didn’t have.
But the Fed and US Government is something far more sickening and giving a whole new level of meaning to the term “moronic”: They are spending and binging against the future of this country—basically borrowing against my and your children’s future.
But if they (or you) think such spending and printing has no hangover-effect, they’d have to be as deluded as the reflection in Chuck’s mirror at the Four Seasons.
In my next report, I’ll take a deeper dive into just what that hangover looks and feels like.
For now, I’ll just say this: It’s gonna be a doozy. In the meantime, enjoy the temporary market party the DC Black Card just handed you. But remember: The bill is coming…