by Pam Martens and Russ Martens, Wall St On Parade:
The stimulus bill passed by Congress and signed into law by President Trump in March, (the CARES Act), increases the miserly amount most states provide in unemployment benefits (an average of $378 weekly) by an additional $600 per week. But that extra $600 only lasts until July 31 — a period of four months. Millions of small businesses, such as restaurants and retail shops, will shut down permanently as a result of this business disruption, meaning that workers in places like Florida, the third most populous state in the U.S., will be back to their preposterously low weekly unemployment allotment of $275 per week in just four months.
Let that sink in for a moment. A worker in Florida, where Republican Governor Ron DeSantis is in charge, is expected to live on $275 a week or $1100 per month, or the annualized amount of $13,200 per year. That $275 a week hasn’t increased in more than two decades, despite the cost of food and housing soaring over that period in Florida. And among the 50 states, Florida ranks dead last in terms of how long its Scrooge-esque unemployment benefit lasts: just 12 weeks versus 26 weeks for most other states.
Other states with Dickensian unemployment benefits include Mississippi at $235 weekly; Arizona at $240; Louisiana at $247; and Alabama at $275.
The CARES Act will give workers an additional 13 weeks of unemployment benefits, on top of the typical 26 weeks – but only at the rate their state is paying – and those additional weeks will end on December 31 of this year.
In numerous states, newly unemployed workers have been unable to contact their dysfunctional unemployment office. The Tampa Bay Times published stories from laid-off workers attempting, in vain, to file for unemployment benefits in Florida. One worker called it “some sort of sick nightmare.”
In Ohio, workers hoping to get that extra $600 per week will have to wait for the state to hire a vendor to build a computer system to process those claims, according to a report yesterday by the Columbus Dispatch. The newspaper also reported that Ohio has received 696,519 claims for unemployment benefits in the past three weeks, which was double the amount it received for the full year of 2019. Thus far, Ohio has only been able to process payments for 195,000 people.
Now consider how the Federal Reserve Bank of New York (New York Fed) and Congress take care of Wall Street.
On September 17, 2019 the interest rate on overnight loans (repo) made between banks and other financial institutions spiked from the typical 2 percent to 10 percent. There was no coronavirus COVID-19 outbreak anywhere in the world at that point. There were no skyscrapers collapsing on Wall Street. There was no national emergency of any kind to warrant bailing out Wall Street. But within 24 hours the New York Fed had pumped $53 billion to the trading houses on Wall Street. No questions asked. No clogged phone lines. No paperwork to fill out. No standing in lines. No asking Congress for a vote. Just $53 billion created out of thin air by the New York Fed and instantly funneled out to Wall Street’s trading houses with the push of an electronic button.
Over the next six weeks, the New York Fed pumped out more than $6 trillion in below-market rate loans to Wall Street’s trading houses – without one single hearing being held in Congress to investigate what was going on. And, again, there was no national emergency, just bloated behemoth banks on Wall Street with dodgy financials afraid to lend to one another – the exact same situation that brought on the financial crisis in 2008 that led to a $29 trillion secret bailout by the New York Fed that lasted for two and one-half years.
Last year’s repo bailout by the New York Fed is still ongoing but it is now just one of a mind-numbing number of programs the New York Fed has rolled out to bail out Wall Street banks and trading houses. Once again, the money is flowing effortlessly to Wall Street in the trillions of dollars while 10,000 people waited in lines last Thursday in San Antonio, Texas in 90-degree heat to get food from a food pantry.
The Wall Street programs are not going to last for just 4 months or to the end of the year as are the CARES Act’s programs for workers. They are going to last longer than they did during the 2008 financial crash.
The New York Fed’s Term Asset-Backed Securities Loan Facility (TALF) will last three years. The Primary Market Corporate Credit Facility (PMCCF) will last for four years and buy up investment grade as well as junk-rated corporate bonds to shore up the balance sheets of mega banks on Wall Street. The Secondary Market Corporate Credit Facility (SMCCF) will last for five years, buying up everything from investment grade to junk corporate bonds as well as junk-rated exchange traded funds (ETFs).
Just how is it that the New York Fed knows that it will need these “emergency” programs to be around for four and five years when the coronavirus outbreak is expected to end within months.