Let Them Eat Loans

By David Stockman  |  February 13, 2019

Nor public flame, nor private, dares to shine;
Nor human spark is left, nor glimpse divine!
Lo! thy dread empire, Chaos! is restored;
Light dies before thy uncreating word:
Thy hand, great Anarch! lets the curtain fall;
And universal darkness buries all.

– Alexander Pope, “The Dunciad,” (1728 – 1743)


Welcome to Peak Dysfunction.

That the Dow Jones Industrial Average is off 300 or 400 points today is rather incidental – though Wall Street is surely headed for a steep fall.

It’s action at the other end of the Acela Corridor that dominates Bubblevision so far in 2019…

First, it’s the Shutdown.

Then, it’s the State of the Union.

Soon, it’ll be the Debt Ceiling.

Amid all this, the Commonwealth of Virginia is coming apart at the seams – in what could be both a look back at how we got here as well as a look forward to what could be the nation’s fate…

The Duopoly couldn’t come up with $5 billion – in a nearly $4 trillion annual federal budget – for the Donald’s inane wall. It is an affectation, sure; just as sure is Democrat desire to exact even the most trivial of wins over the Tweeter-in-Chief.

Such pettiness is reflected as well in the pissing contest over the format of the president’s Constitutionally required annual message to Congress. And that’s just 75 minutes of hot platitudes, weaponized hypocrisy, and empty promises.

Just wait until we get to the “debate” about extending Debt Ceiling in early March…

Actually, a useful lesson has emerged from this Shutdown/Let’s-Get-the Donald nonsense.

Let’s turn it over to purported billionaire Wilbur Ross:

‘I know they are [going to homeless shelters] and I don’t really quite understand why because as I mentioned before, the obligations that they would undertake – say borrowing from a bank or credit union – are in effect federally guaranteed,’ said Ross. ‘So the 30 days of pay that people will be out – there’s no real reason why they shouldn’t be able to get a loan against it and we’ve seen a number of ads from the financial institutions doing that.

‘When you think about it, these are basically government-guaranteed loans because the government has committed, these folks will get back pay once this whole thing gets settled down,’ Ross said. ‘So there really is not a good excuse why there should be a liquidity crisis. Now true, the people might have to pay a little bit of interest but the idea that it’s paycheck or zero is not a really valid idea.’

He said that on CNBC a couple weeks ago, amid what was then a 32-day shutdown, about the 800,000 federal bureaucrats forced to miss two paychecks.

For once, the Donald’s doddering old Commerce Department Secretary was spot on.

The average federal employee makes $80,000 per year. They ought to have plenty of cash in the bank or unused credit. They’re eligible for unemployment insurance anyway. And they always get paid back.

(That’s been the case since these events began to happen back in the 1970s; I lived through eight of them as a Member of Congress and as Director of the Office of Management and Budget under President Reagan.)

Folks, Ross has served up the greatest indictment imaginable of the Donald’s “strongest economy ever.”

Salaried federal workers should have some security. But Ross revealed a sad fact: Even the aristocracy of American labor now lives hand to mouth, stretching biweekly paychecks  at Wal-Mart and Amazon.com.

That’s the very opposite of “strong.” It’s evidence of a fragile economy.

All it takes is another stock market crash to trigger CEOs and CFOs into another binge of layoffs, liquidations, and restructurings…

They will, in other words, sacrifice Main Street to appease their trading gods.

But, this time, there will be no fire brigade from Imperial Washington.

How can we double down on the double down on money-printing and debt-driven “growth”?

West Virginia Senator Joe Manchin also chimed in on the recent plight of federal workers in his state. But his words apply to a much broader constituency:

‘I’ve been all over West Virginia, people are hurting,’ he said. ‘They’ve got no cash flow. Making decisions, do I put gas in the car or do I feed the kids? This is real.’

This is only the beginning…

When the Cure Is Worse Than the Disease…

Alexandria Ocasio-Cortez – or “AOC,” as a fawning Mainstream Media has anointed her – is the Member of the U.S. House of Representatives from New York’s 14th district.

Modern monetary theory – or “MMT” – is a theory from the left that rationalizes government debt and deficits.

AOC-and-MMT-style socialism just might be the new elixir of empire.

It’s coming… And you can read all about it in the February issue of The Stockman Letter

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David Stockman

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David Stockman

David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.MORE FROM AUTHOR