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The Pandemic Is A Stark Reminder That U.S. Policy Serves The Wealthy

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Commentary: With the economy in such bad shape, how come the stock market is gaining strength? All indicators like jobless rates, weak service and mfg. sectors, drop in consumer income, etc. points to poor earnings for investors. What factors are at work here?

Remember that 84% of stocks are owned by 10% of investors and the top 1.0% has 40 % of the nation’s wealth. The primary option for their wealth are treasury and corporate bonds where yields are poor because we have very low interest rates. Actual yields for these low risk bonds are less than 1.0%. Therefore, the plutocrats are taking a chance on the future of stocks.  However, the Dow Jones and S & P 500 index does not measure the wellbeing of most Americans.

The official U.S. unemployment rate is 15%, but when you include those not officially in the workforce--it is closer to 20%. Many of these workers also lost their employer-based health insurance. In other developed countries like Denmark, Germany, Japan and New Zealand the unemployment rate is below 5%, because their government policies made sure workers got paid during this Coronavirus pandemic.

These countries also have universal health care, so all workers still have access to health providers. The U.S. didn’t do that because they were more worried about (primarily large) business owners and banks than workers. We also spent more stimulus funds per worker, than these countries did. Top down economic policies and inequality is alive and well in the U.S. and has been for many years.

The Federal Reserve just tossed a glass of cold water in the face of anyone predicting a swift recovery. The Fed recently said, “the ongoing crisis bought on by the pandemic shutdowns has caused steep job losses with economic activity falling sharply across the map.” And business owners report their outlook for recovery remains “highly uncertain”.