Shades of “Shovel Ready”

Joe Sparatta

by James A. Bacon

Unemployment in the United States is the highest it has ever been since the end of the Great Depression. But good luck luring people back to work, at least in the short term. Many people can make more money on unemployment than when they were working.

Joe Sparatta, chef/owner of the Heritage and Southbound restaurants in Richmond, says his line cooks are making $960 a week on unemployment. “None of them want to come back because I can’t pay them that,” he told the Richmond Times-Dispatch. “I don’t blame them.”

The RTD explains:

Unemployment benefits vary based on an individual’s pay while employed, but the typical benefit is on the higher end, which maxes out at $378 a week. Under the CARES Act, the federal government has kicked in an additional $600 a week for workers through July, making the maximum amount available to laid-off workers $978 a week for up to four months.

For many Richmond-area restaurant workers — and workers of all fields — bringing in what amounts to just over $50,000 a year is more money than they’ve ever made.

Paying people not to work is a classic case of government policy making things worse. This moronic measure will go down as the COVID-19 recession’s analogue to “shovel ready projects” in the past recession. Actually, it’s worse.

The shovel-ready projects packed into President Obama’s counter-recessionary stimulus package may have wasted a lot of money on construction projects of marginal value, and a lot of projects may not have kicked in until the recovery was underway, but at least they did put people to work. This particular provision of the CARES Act is paying people not to work, and it’s making it harder for small businesses to reopen their businesses.

The measure does expire after a couple of months, and there’s no assurance that Sparatta could get his restaurant up and running even if he could re-hire his chefs, but making it financially worthwhile for people not to work is clinically insane. This ikind of idiocy what you get when lawmakers try to fix a problem by throwing money at it.

The United States has have achieved a new level of government recklessness. Instead of squandering hundreds of billions of dollars to fight a recession, as we did in the last recession, we’re now misallocating trillions of dollars. There’s a lot of ruin in a nation, as Adam Smith famously said of the United Kingdom. Let’s hope there’s a lot of ruin in the United States as well. With a ruling class like the one we’ve got, we’re going to need it.

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56 responses to “Shades of “Shovel Ready”

  1. I’m really going to be interested in the responses of those on this blog who come from the left. Should be revealing.

  2. In this blog, if you’re not hard right – you’re left!

  3. That’s the sort of all or nothing fallacy that you routinely engage in, Larry. Also sometimes called the fallacy of false alternatives. Pretty clearly, opinion on this blog is all over the map. Some opinion is just simply wrong, without reference to right or left. But then, everyone’s entitled to my opinion 😉

  4. Like I said… if you don’t agree with the hard right premise of the blog, you’re by definition “left” and if you actually say that – then the “fallacy” blather is brought up… which is just more bullfeathers!

    There is NO QUESTION that the relief money was/is the king of all idiocy and the GOP and Mnuchin could not wait to get it approved and yes the Dems were more than happy to do it also.

    This unemployment aspect was just one of several outsized WARTS where multi-million dollar businesses also easily scooped up money while some mom/pop businesses got zip and Mnuchin had to then say “give it back”!

    The whole effort was clearly done in a panic but like I said, the unemployment wart was just one of several… so why focus on just that one?

    What they were trying to do was give the money to the unemployed in hopes that hey would spend it right away and keep the economy afloat.

    It did not matter if they worked or not – and more money was better than less…

    They plan to tighten it down… if the economy comes back…

    that’s the way stimulus works…

    I AGREE, it’s BETTER if some product is actually produced – like infrastructure but the way this administration “works” is so bizarre and dysfucntional , that Congress had low expectations.. just get the money out there.. and they did.. and yes, it was and is ugly.

    partisan it ain’t.. but is.

    • Well just think about it, Larry. You don’t even try to refute my contention that your argument is fallacious, perhaps because you don’t understand the difference between logical argument and fallacious argument (who can say?), but instead, you compound the problem through more fallacious argument, the argument-by-assertion that my contention is “bullfeathers”. Not a stellar defense 😉

      • Crazy – you don’t really have a contention, guy. hot air , yes.. but more than that, nope. thin. very thin… but heck that’s what you guys do!

        state your contention – and I’ll respond, but right now I don’t see much.

        • Help, help.. I’m being personally attacked.

          OK I’ll say it. My contention is that you fundamentally don’t understand logic and its uses. And when you make an argument, you often fundamentally misunderstand the principles about which you are arguing. See my post nearby re: supply side economics and your, again, fundamental misunderstanding of what it is. Try refuting it with a “corrected” understanding of supply side economics if you have one. Also, if you think my understanding of logical argument is flawed, refute it. I don’t have much patience for mere assertions that its “bullfeathers” or “hot air”


    As predicted weeks ago, the effort is now underway in Congress to greatly expand these enhanced benefits. The proposal I saw with Rep. Don Beyer’s name on it had a complicated 5-tiered system, based on the depth of unemployment, and as I recall extended the enhanced benefits to 52 additional weeks. The bill also prevents the UI payments from being counted as income against other social programs (SNAP, Medicaid…) so those would be on top of the UI. Details:

    The most honest approach the House Democrats are pushing is just a simple, straight forward federally-guaranteed minimum income for life, $2,000 per month. “From each according to his means, to each according to his needs.” Never let a crisis go to waste.

    • The name of the game here is call aggregate demand. If that drops precipitously, it cascades through the economy because even low income folks spend their money and that money, in turn, creates jobs… everything from slurpees to uber to furniture.

      So, “details” like were the folks who got the money going to “work” was not a critical aspect, they just wanted the money to get back into the economy.

      it’s that simple. All this wailing and gnashing of teeth- maybe in normal times but right now – it’s just noise.

  6. Wow. The “aggregate demand” argument which basically says that by artificially injecting cash into an economy, then it will automatically increase the supply is even less cogent today when the governments are artificially holding down the supply of goods and services. What can the recipients do with their windfall if they cannot buy a new car, take a vacation, get a haircut, buy clothes, or other “non-essential” items, or in some places essential things like meat. They can use some of it to replace lost income to pay rent, utilities, etc. which will keep the recession from deepening, they can save some for even worse days ahead, or they can buy things made in China. I do remember that there was a fight in Congress over the $600 bonus money, and the Republicans unfortunately caved. Our 2 Senators might have made a difference if they had the good sense to stand up against it.

  7. If thee is demand for something, the market will supply it. If you provide products but no one has money to buy it, how does that work?

    it don’t.

    that’s why it’s called aggregate demand and yes, if people have money, they’ll spend it… that’s the whole entire point of stimulus.

    Otherwise they’d give the stimulus to manufacturers to produce more stuff that people could not buy.

    What the GOP “caved” to was reality – that the money needed to go to people who would then spend it. Stephen Moore and Laffer had zero influence on the GOP on the bailouts.

    Don’t worry, after this blows over, the GOP will love Moore and Laffer again…

    • Spoken like a true Keynesian, who has been discredited for years. Under your theory, we can print money with no real value attached, give it to folks and presto: aggregate demand. Aggregate demand is not the end of the discussion. In this circumstance, it’s only the beginning. the GOP didn’t cave to reality, they caved to politics. Your posts here are quick to attack the GOP, which is fair, but your focus is on politics and who is worse, the democrats or republicans, instead of what makes economic sense.

      • Well no, it’s not a theory. It actually does work that way and that’s why most politicians actually vote that way.

        Supply-side makes no sense what-to-ever. You can produce products til the cows comes home but if no one has money to buy them – you just end up with inventory.

        You don’t give money to the airlines to fly more planes when there is no demand for air service… it’s just loony.

        You don’t give money to GM to make cars if no one can afford them or they can but don’t want or need them.

        You have to produce a product that people want AND they have the money to buy.

        OTOH – if people DO have money , then they will choose what they want to spend it on – that’s called demand – and if there is money in the economy that’s called aggregate demand.

        Again- if supply side actually worked – the way out of this collapse would be to pay companies to produce goods and not provide unemployment money.

        When people are unemployed – producing goods that they cannot buy does not work.

        And actually supply side comes dangerously close to the govt controlling the means of production…. and deciding WHAT to produce, no?

        • >>You don’t give money to GM to make cars if no one can afford them or they can but don’t want or need them.

          I just can’t let this go. This all or nothing stuff has got to stop. Pretty obviously GM does not make as many cars in a recession as they do in a full economy. They can’t sell them.

          You are stuck in the Keynesian theory that supply creates its own demand. That is not what supply-siders say. Rather than the traditional Republican argument that taxes are immoral and that people should keep their own goods and not give it to the government, supply-siders argue that taxes and regulation should be minimized in order that the collective benefit be raised. The Laffer curve posed that there is an optimal tax rate, that there is zero revenue to the government at 100 % tax or 0% tax; it has to be somewhere in between and the problem is finding that somewhere. Generally speaking, said Laffer, the tax rate is always too high to create the maximum revenue to the government or maximum collective benefit to workers.

          How is the collective benefit raised? Henry Ford understood that economic efficiencies, whether in production efficiencies in making cars or tax and regulatory efficiencies that reduced economic drag, enabled his workers to buy one of his cars. Supply-siders don’t say “just create supply”. They want tax and regulatory efficiency so that more people can afford goods and services. Fundamental misunderstanding, Larry.

          • All or nothing? WHAT THE…

            NO – Supply does NOT create it’s own demand – ergo Supply-side does not..

            your claim that cutting taxes and regulation is NOT what organizations like Investopedia say:

            ” Supply-side theory is an economic theory built on the concept that increasing the supply of goods leads to economic growth. … Comprehensively, supply-side approaches seek to target variables that bolster an economy’s ability to supply more goods.”

            Now, are you mistaken or just blowing smoke here?

            Crazy – Laffer and Moore DID give it a go in Kansas..

            what went wrong?

            the problem with cutting taxes is the idea that when you do that, you’re not also cutting jobs… it’s like they were just collecting taxes and they went into a black hole…


            Only a FOOL would think that collected taxes don’t pay for salaries, right?

            ya’ll have some “issues” here…

          • Holy shit, Larr. First off

            >>Supply does not create it’s own demand.
            Never said it did. That was Keynesian theory, of which you are an obvious adherent and which has long been discredited, either in favor of the Chicago school and Milton Friedman or supply-side, depending on who you talk to.

            Not mistaken about the definition of supply-side and Laffer and Moore. Your Ivestopedia definition is not inconsistent with mine; the problem is it only vaguely suggests how supply siders increase the supply of goods without naming the variables targeted. Supply-siders name tax and regulation reduction as the variables to be targeted. They don’t advocate the government handing money to producers. Reduce taxes and regulation, they say, and you will get more supply more efficiently and less expensively, enuring to the benefit of everyone and enabling them to afford the goods produced. It is that way that economic growth is produced.

            Kansas is not a test of supply-side economics, simply because it is only part of a much larger economic system: the federal government which controls the lion’s share of the taxes imposed. Reducing taxes in a state system can necessarily only have very limited impact.

            >>the problem with cutting taxes is the idea that when you do that, you’re not also cutting jobs… it’s like they were just collecting taxes and they went into a black hole…>>

            You’ll have to elaborate on this one. Why would you necessarily cut jobs when you cut taxes? Is that a result? or a cause? or what?
            I can say one thing though, the salaries paid with taxes do not usually produce the kind of value produced in the private sector for the simple reason that an awful lot of government jobs create drag on the economic system, for example, in the form of regulation that tends to impede production of value, or makes industry engage in mind boggling reporting requirements that no one then reads, or prohibits this or that economic activity that would otherwise add to value, or else they simply pass money from the taxpayer to the supplier of whatever goods the government hopes to supply through the private sector, with an additional tax on the system in the form of their salary. I hope I don’t have to give a schpiel on the impact of regulation here. You may think that the regulation is necessary for some political goal, but the economic impact of regulation can’t be denied. Police and fire produce a service that we would have to buy somewhere if the government didn’t provide it, so there is more value in that salary being paid. But in any event, the question is not whether taxes pay salaries, the question is whether there is value created by that payment.

            Larry, this has been fun, but I have to sign off for the afternoon. I actually have to do some real work producing value, instead of indulging myself with non- value producing blog posts. Happy to continue this discussion on another day when I have more time. I’m sure there will be another opportunity, but I’m also sure that you will take the last word today.

  8. Do you agree or disagree with the premise that the $600 weekly bonus for the unemployed will make it more difficult for businesses to reopen as quickly and to the extent “allowed” by governments because they will not be able to compete with enhanced unemployment benefits? That is what Senators Graham, Sasse, and others were arguing, but found no agreement among Democrats. We should have learned by now that multi-billion (or trillion) programs should not be overnight by a handful of lawmakers and staffers.

    • Let me ask you – did the GOP – unilaterally oppose the $600 unemployment or just a few?

      I do not think the money alone would keep folks from working if they felt the jobs themselves were safe. Believe it or not, most folks want to work but they don’t want to be used like cannon fodder.

      but is the GOP united on this or is it just a few and the rest of the GOP is all in on it?

  9. I don’t have a problem with the additional $600 per week for UI, as long as it is not extended. This helps folks who lost their jobs through absolutely no fault of their own or of the business. It injects money into the economy so that these people can buy groceries, pay their rent or mortgage, pay their health insurance premiums, pay for prescriptions, etc. If we are going to help airlines, which were making record profits in the past few years and paying large salaries to their executives, we should be helping the little guys, too. I just finished a takeout meal from one of the restaurants we frequent. Obviously, the owner is not having trouble keeping his cooks.

    • Dick, I have the same problem with your analysis that I have with Larry’s. It seems there is a somewhat widespread difficulty understanding the impact of printing money, or borrowing money. We can’t pay it back. We also increase the possiblity that China becomes our lender of last resort, which probably doesn’t have much political purchase in today’s environment. When you give that money to people without any real value created in return, you create a problem. Going to Walmart and buying a TV does not mean the buyer has created value. He has just created a transfer payment to someone else who may.

      There is an argument, historically relied upon by supply siders, that you can grow out of the debt. That means that the economy produces so many goods and services that the resulting taxes from their consumption keeps the debt under control. And historically, that has worked so far as the economy has been productive.

      Please leave the “creating aggregate demand” argument to Larry. While we don’t have inflation now, if that new infusion of “money” creates more dollars than there are goods to be bought because few people are working to produce the goods, then we will again see inflation like that in South American countries, and be in the position of having to monetize our considerable debt, which is what happened after the Second World War. The only thing that saved us then was the explosion of our production capabilities because of the war effort and the transformation of that capability into making consumer goods. We still had to monetize our debt, never a good thing him
      I consider Jim to be a better economist than I am, so I wish he would weigh in on these matters.

      • I understand the impact of printing money. I would have more sympathy with the folks who decry the money provided to lower income folks that will help them keep their heads above water until the jobs come back if those same folks were equally indignant about the billions of dollars in tax cuts for millionaire real estate investors that was tucked into the CARES legislation. Furthermore, I did not hear a peep about the increasing debt and having to print money when billions in tax cuts were enacted a couple of years ago. (Not even the CBO agreed that the tax cuts would “pay for themselves”.)

        I would have preferred that, instead of just increasing unemployment benefits by $600, the legislation would have required the recipients to render some sort of public service in exchange for those benefits, such as clearing public parks of invasive plants (value). (I assume that you would have preferred that, as well.) Unfortunately, it would be hard to do that in the era of social distancing. (And there would have had to have been some bureaucracy to administer it, a real no-no for some people.)

        I am not an economist and don’t pretend to be. I do know, however, that not everyone agrees that supply side economics is the magic bullet that its proponents proclaim.

  10. Obviously they were not united. The Democrats were united and still defend the bonus money. Supply and demand principles apply to the labor market as well as for goods and services. Your opinion that people would go back to work for say $12 and hour, taxable plus commuting and child care expenses, and forego at least $18 tax-free and no work expenses clearly would not be universal. Do I take it from your answer that you disagree with the premise that it would make it more difficult (I did not say impossible) for employers to hire workers?

  11. I think most folks go back to work if the workplace is safe and they have childcare as long as the schools are still closed.

    I just think the premise here is, as usual, really simplistic and not anything near the reality – and most GOP think that way also when push comes to shove. All pretence of their economic theory has gone out the window as it should have all along.

    The Dems don’t have all the answers either – but this is another one of those partisan divide issues the partisans are pushing NOW in the middle of the pandemic… they have no scruples along with no backbone on their supposed principles.

    • No argument about your comment on the politics. A pox on all their houses. But there seems a willingness to ignore economic principles on this blog. There can be no question that the length of the wait to go back to work will proportionately create economic misfortune and following it, personal physical misfortune. The only question in my mind is whether the economic damage will have an arithmetic, geometric or elliptical relationship to the time we wait. Some want to wait, in effect, until the r0 equals 1 before we do much of anything. I don’t think there’s any question that is a recipe for disaster

      • And I can tell you , it won’t get better if manufacturers make more products than there is demand for in the economy. It just doesn’t work that way..

        Jet Blue is not going to get better by flying more planes if there are no customers.

        But if I give Joe some money, he may well buy a plane ticket. What would be even better would be if Joe makes something then I give him money.

        Like we did during the great depression with CCC.

        Once the economy recovers, the money starts moving again and productivity again provides more wages for more productive labor.

  12. Extraordinary times call for extraordinary measures.

    This is not the norm. Having watched friends on UI in 2009, this is definitely an extraordinary measure. Not a one said, ” Whoopee,” even the two who were planning on retiring in 2010.

  13. Bread and circuses, along with illegal immigration. We already have a huge number of people on Social Security Disability. We need to get people back to work. The human spirit needs to work as part of an individual’s self-worth.

    Future aid to businesses and higher education should be conditioned on compliance with E-Verify and limits on executive compensation to no more than $400 K for the top dog and no more than SES for other executives. If and when you pay back Uncle Sam, you can raise your executive compensation.

  14. re: ” The human spirit needs to work as part of an individual’s self-worth.”

    I agree with that and then some and that’s why I think that many (not all) would rather work than get unemployment. And if you want to incentivize it then do what we do already with the earned income credit – just boost it up for right now.

    The answer here is to not find things we don’t like then argue against it but to support a better way of doing the main purpose.

    Some folks are half-glass empty and some are half-glass full.

    And a question – does anyone think that undocumented work at those meat packing plants? What should be done about it? Fire them and fine the heck out of the meatpackers?

    • Larry, when I was a kid, my dad worked for the Telephone Company. For years, he worked at the South St. Paul Stockyards, repairing and installing telephone service. Later, he was the foreman of the crew who did the same thing. He knew a helluva lot about the packing plants and shared that information with me.

      Packing plant workers were well paid for their labor back then. These were union jobs. The kind of jobs Democrats are supposed to cherish.

      But the GOP greed for cheap labor and the Democratic greed for more social services (more jobs for people with advanced degrees) and votes destroyed the good-paying jobs. Is our meat any cheaper. Illegal immigration has caused and will continue to cause economic and social problems. Other nations control their borders. Why won’t we?

      • re: ” But the GOP greed for cheap labor and the Democratic greed for more social services (more jobs for people with advanced degrees) and votes destroyed the good-paying jobs. ”

        Not understand the Dem part… How did the meat packing plants end up with immigrant labor? How did the Dems cause that?

        “Is our meat any cheaper. Illegal immigration has caused and will continue to cause economic and social problems. Other nations control their borders. Why won’t we?”

        Are you blaming the Dems for that? It’s the GOP businessman who do not want E-verify enforced, right?

        The Dems are actually fighting to make sure the workers have safe working conditions… and fair wages, right?

  15. Supply Side is Reaganomics…trickle down… economics…

    If there is no demand for a given product, no amount of reduced taxation or regulations will create a demand for it. Conversely, a product that IS in demand – taxation and regulations won’t matter near as much as competition. As long as all competitors are subject equally to the same taxes and regulation, competition will determine which ones prosper – as long as there is demand for their product.

    And really taxes and regulation will actually sharpen competition because the competitors who produce that widget for less will beat the other competitors – but again – only if there is demand for that product.

    You just can’t create demand for something by lowering taxes, regulations, or even costs on it. If people don’t want it – making it cheaper won’t make them want it any more.

    A good counter example is American Pickup Trucks. They are subject to the same taxes and regulations as other vehicles but manufacturers make thousand of dollars per pickup compared to a couple hundred on an econo-box.

    Same taxes, same regulations – increased demand.

    This is not really rocket science – except to supply siders…

    If supply-side were actually REAL – then the GOP and Trump would have knock-down-drag-out insisted that the stimulus money go only or primarily to manufacturers and not unemployed folks.

    Almost every one of them voted for unemployment money because it was thought the money would be spent immediately and go into the economy and provide jobs. Giving money to employers was not going to create jobs… for products there was no demand for… just 100% opposite.

    What supply-side is – at it’s core – is trickle down – tax the wealthy less and they will “provide” (invest) for the folks further down the food chain.

  16. I worked for Lazard for 10 years in the int’l debt division. People like CrazyJD, Bacon, etc. have been around for over a century preaching “we’ll never pay it back” and “the end is coming.” They’ve never been correct since they first started attacking FDR’s policies.

    The fact is that these “debt prophets” don’t even understand what debt is. They confuse debt and currency. They’re not the same.

    I hate to tell every right winger in this country, but 2008 completely and totally discredited all the scaremongering. If there has been any nation in the post-WW2 world which tried to play the silly mercantilist game, it was China.

    And guess what happened? Nothing. Not a damn thing. In fact, the world figured out that most of the convertible games that China was playing were simply stuffing federal debt at the local level. They were as complicit as everyone else. And so is the private sector. Go look at debt levels of your favorite corporation. Apple just took on $7 billion in debt in 2019.

    The fact is that “debt” is nothing more than bonds. As long as governments pay the interest and principal of bonds, there is no “calling” of debt. The alleged “debt trap” is really nothing more than rising interest rates. And, if you know anything about interest rates, they’ve been going through the basement for 10 years now even as the world’s sovereigns have doubled their debt. So much for the “debt trap.”

    Japan is still at negative interest rates with the highest debt/GDP ratio in the world and the 3d largest economy in the world. The right wingers just say, “uh, um, well…”

    Read this if you want to understand how silly all of the right wing blather is:

    That’s right. Argentina has defaulted on its debt 8 times in 200 years, and is about to do so for the 9th time. In 2001 , when I worked for Lazard, I remember we were told by the same right wing crowd that the nation’s default was going to choke economic development for good and the nation would be in a perpetual recession going forward. Hardy har har. Didn’t happen. The nation had a mini-default in 2014 and is about to have another one in 2020. Yet…the nation keeps chugging along. It had positive GDP growth from 2003 to 2008. So much for “pariah economic state” due to “debt” and “default.” Within 2 years of the 2001 default, its economy got red hot.

    If Argentina hasn’t “paid the price” for 3 debt defaults in 19 years, it is beyond incredible to think that the U.S., Beijing, Tokyo, Berlin, London, etc. would ever “pay the price.”

    Here’s a simple fact that blows up all of the scaremongering: The world is aging quickly. Even China. Why has Japan avoided the “debt trap” and why will the U.S. avoid it as well? Because capital is now increasingly held by people older than 60. These people have 10s of trillions in wealth, and once you pass 60, you don’t put much, if any, in equities. You certainly don’t tie it up in real estate. You put it in bonds. Everyone who works in sovereign debt understands this. The marketplace for sovereign debt instruments is actually growing rapidly across the world as China ages out (and due to the one child policy is going to get old quick).

    This idea of “the end is near” is simply people believing in a false sense of “morality” in which “debt” is “evil.” If you want to play morality, fine. But morality is not international economics. Int’l economics does not care about the “debt to GDP level” any longer, if it ever did. Go look at what % of the developed world’s population is going to be over 60 in 2025. “Debt” is going to soon crowd out equities in terms of customers.

    • I tend to agree with your basic premise, which I think is: debt can be an ongoing part of a nation’s operations, such that an assumption that all debt will be eventually repaid is probably not correct. I think there is a difference between servicing debt by paying interest and redeeming bonds as they come due and eliminating all debt. A nation’s debt is not a like a homeowner’s mortgage.

      At the same time, debt service crowds out other expenditures and could force more borrowing, higher interest rates and, presumably, higher taxes. But I don’t think the United States or other nations need to become debt free to prosper.

  17. And he uses Argentina to prove his point. Amazing! Simply Amazing.

    • Please, enlighten us as to your experience in international finance.

    • “Please, enlighten us as to your experience in international finance.”

      It’s a lot deeper, more adult and serious, and intelligent, than your international finance experience, apparently.

      Go back, study, learn and think about, the economic and resultant social and political history of Argentina from 1900 to today, before you start lecturing to us and holding up Argentina as model for America to follow.

      • A non-answer. As expected. Again, what is your experience in int’l finance?

        I did not hold up Argentina as a model for America to follow. I simply pointed out that the “debt” idiocy, including the “default” scare tactic is a joke. Go look at Argentinian GDP growth in 2005, four years after right wingers proclaimed it a “pariah” state due to a 2001 debt default.

        I am sure that if we went to the debt issuance divisions at Goldman or UBS or JPMorgan they’d be talking about Argentinian political history from the early 20th history. (Rolls eyes…long, awkward pause at the obvious lack of experience.) No, if you’ve ever worked on international debt issuance, nobody talks about silliness like that. Never.

        I also mentioned Japan. Hmmmm…funny you didn’t mention Japan. Where’s the default? Why are they still at negative/zero interest rates?

        As to Argentina…Why did their economy rebound in 2003 when they were supposed to be “done”?

        Answer the questions about Japan.

        You won’t, because I’m right. The developed world is aging rapidly. People over 60 crave bonds. Nations and banks love issuing bonds at negative interest rates. We’ve never seen the global population anywhere near this old. No major economy is defaulting. Even minor economies that do default are going to attract investors. Argentina is going to still be able to issue debt after their 3d default in 19 years. I guarantee there will be a market for Argentinian sovereign debt in 2021. The world is too old for there not to be.
        Human history has never seen demography like this. What hit Japan 10 years ago is now hitting the world in force.

        Japan has taught us: People over 60 shun equities, want bonds, and do not spend a lot of money. They have done everything they can to fight off deflation, not inflation due to this demography.

        Look at the Trump economy: tax cuts on top of massive debt. And, they still couldn’t touch 4% GDP growth. Why? Because the demographic bomb that hit Japan is hitting America. Debt and inflation are not our coming problems….deflation is the real threat.

        • CREGUY, by your reckoning, we have reached an extraordinary point in human history. We have created the ultimate economic cold-fusion process in which nations can run deficits and create money year after year, decade after decade. Spend, spend, borrow, borrow, borrow, borrow. Just suppress interest rates to zero, or to negative numbers. Simple! No negative consequences ever.

          • Please explain where I’m wrong. As I say to all my right wing friends: Explain Japan. Even among the smartest minds in the group, there really isn’t a good answer.

            The only way that I am wrong is that seniors decide they want to go “risk on” with their capital.

            You act as if I’m an outlier. What I am saying is common wisdom in financial circles now.

            Please point out a time in human history when the developed world was so old. You can’t. Again, go talk to investment banks. They will tell you that they have never seen anything like this market for debt. Ever. And it’s all due to demographics.

            What people are not even thinking about is just how old China is going to get within a decade. Go look at the age group charts of China. Another extraordinary market for debt is coming online as the Chinese age out of employment.

            Old people want yield over risk. That’s not extraordinary. Older people have been more conservative with assets forever. Instead of being dogmatic, look at the facts. People over the age of 60 want yield, not risk. Until that attitude changes, sovereigns can issue more and more debt. If your theories were true, interest rates would be climbing through the roof after 08 and 20. They’re holding steady or going lower. Demographics trump gov’t policy. Period.

          • GREECE! GREECE! I hear they were actually eating tree bark in Greece !

            Besides, what about all those _ithole countries?

            No shortage of boogeyman… thank gawd.

          • Dick Hall-Sizemore

            I have nothing substantive to add to this discussion. I have never been able to grasp international finance. But, I am delighted there is a new commenter on this blog who has some experience and credibility and brings a different perspective. You also present your case in a clear, logical manner, along with examples and evidence. That is what makes this blog, if not unique, significantly different and better than other blogs.

          • Explain Japan.

            The Japanese people have an extremely high savings rate — much higher than Americans. The government can fund more borrowing without going to international markets. And they politically accept the silent wealth transfer (hidden taxes, if you will) from savers to borrowers (i.e., the Japanese government) through artificially engineered low interest rates. The Japanese do pay a price, however — a sub-par GDP growth rate that runs about 1% a year.

            As the old economics saying goes, there’s no such thing as a free lunch. If you can’t figure out who’s paying, it’s probably you.

      • Recall this from CREGUY:

        “CREGUY | May 10, 2020 at 6:23 pm

        I worked for Lazard for 10 years in the int’l debt division. People like CrazyJD, Bacon, etc. have been around for over a century preaching “we’ll never pay it back” and “the end is coming.” They’ve never been correct since they first started attacking FDR’s policies.

        The fact is that these “debt prophets” don’t even understand what debt is. They confuse debt and currency. They’re not the same.

        I hate to tell every right winger in this country, but 2008 completely and totally discredited all the scaremongering. If there has been any nation in the post-WW2 world which tried to play the silly mercantilist game, it was China.

        And guess what happened? Nothing.” End Quote

        So now, in reply to CREGUY, how is Argentina with all its debt doing today? Today’s Wall Street Journal fills us in:

        “Argentina Defaults on Sovereign Debt Amid Coronavirus Crisis – The country is struggling with economic contraction, runaway inflation and a hard-currency squeeze

        Argentina defaulted on sovereign debt for the ninth time in its history, as Latin America’s third-biggest economy grapples with a new cycle of economic contraction, runaway inflation and a hard-currency squeeze exacerbated by the coronavirus pandemic.

        The cash-strapped country officially entered into default on Friday after failing to make a $500 million interest payment on foreign debt.

        The default is Argentina’s third this century as the government of nationalist President Alberto Fernández failed to reach a deal with bondholders to restructure about $65 billion in foreign debt. The debt includes bonds issued as part of previous restructurings after the country defaulted in 2001.

        The government and foreign bondholders are expected to continue talks beyond Friday, hoping to avoid a messy outcome.

        “Nobody involved in this process would be well served by a hard default,” said Hans Humes, the head of New York-based hedge fund Greylock Capital, a creditor involved in negotiations with Argentina, referring to a default resulting in lawsuits and no negotiations. Argentine debt is held by a variety of hedge funds and managers …

        Although Argentina’s debt default is unlikely to spark financial turbulence in Latin America, Fitch Ratings expects a record number of sovereign defaults this year as the pandemic roils the global economy. In April, Ecuador, a cash-strapped oil producer, delayed debt payments until August as it was battered by one of Latin America’s worst coronavirus outbreaks. Lebanon defaulted in March for the first time …” End Quote

        For more of Wall Street Journal Article by Ryan Dube and Santiago Perez, see

  18. Here’s a metric worth looking at:

  19. Re current discussion, read a superb piece of journalism by Andy Kestler in today’s WSJ:

    “Graduation Is a Time for Unlearning
    You’re now free from empty campus dogma, so seize the chance to try out better ideas.

    Dear grads, lockdown class of 2020: Switch off “Animal Crossing,” wrap up that episode of “The Masked Singer,” pause practicing your TikTok “Renegade” dance, finish ironically chugging your Corona beer, and listen up—Karens, Beckys and Chads, too.

    Yes, someone owes you an apology. You’re heading into the worst job market, competing with 33 million recently laid-off plus furloughed employees. I told you to take that antifungals course. To paraphrase the philosopher Bluto, 3¾ years of college down the drain. All this from a coronavirus 22-year-olds have a statistically insignificant chance of dying from. You will forever be Generation C. All of Gen X through Z’s FOMO—fear of missing out—has morphed into FOGO, fear of going out.

    You got cheated out of a graduation ceremony, but don’t despair: Facebook to the rescue. This Friday it’s hosting #Graduation2020. Woo-hoo! And professors be damned—“words of wisdom” will come from Oprah, Awkwafina, Jennifer Garner, Lil Nas X and Simone Biles, with special musical guest Miley Cyrus. But, get this, only two of those six graduated from college and they are all incredibly successful. I think this is Harvard dropout Mark Zuckerberg rubbing it in.

    They may not be sages, but neither are the people you trusted who got you to blow through your parents’ savings. Especially since you finished classes via videoconference—remember, you can’t Zoom a zoomer because a zoomer can’t be zoomed (ask your dad). The only good news is that you won’t have bad dreams like the rest of us about missing class or that last test. You likely passed automatically.

    These aren’t the ideas you’re looking for. The continued lockdowns are proof that those we trust, politicians and omniscient public-health officers, flunked economics. You probably took an Econ 101 course filled with tired Keynesian dogma. Or a comparative-lit class that ignored the Western canon. Or consumed a culty climate catechism.

    You might even have trusted to expect a sustainable, intersectional, collectivist utopianism paying you to sit at home collecting Universal Basic Yang Bucks. Well, you’re sitting at home all right—unemployed and maybe unemployable. If you’re floundering, don’t expect anyone to admit, “You messed up, you trusted us. …”

    For more of this very sharp and highly insightful commentary on the sad state of our times, and higher education’s roll in destroying the future of its students see:

  20. I’ve just read this entire column of comments from top to bottom. Wow. I ignored it for two days because I was too angry to address it respectfully, but Dick H-S did that for me and for that, thank you, Dick.

    To me, the underlying issue is the public health crisis, and the impact on ordinary people from addressing the public health crisis — in other words, the amelioration of harm from a necessary evil. JB simply doesn’t believe the evil — the shutdown — was necessary; therefore ameliorating its impact was “insane.” I disagree. I must be insane.

    But this was always about a temporary response to a temporary crisis, versus the acceleration of Boomergeddon. CJD, you and LG and CREGUY elevated this debate to a new plateau: welfare as illustrating the [de]merits of supply-side economics; the [de]merits of tilting at debt-financed Argentine windmills. Maybe we need to add to that debate the [de]merits of COVID-19. Surely there’s some good somewhere in anything that gets economists so upset, isn’t there?

    • Acbar –

      You’ve been stuck blind.

      Myopic fixation, anger, disease driven politics, and lust for power and control by elites, are the real issues at play here.

    • Acbar, I am disappointed by this statement from you: “JB simply doesn’t believe the evil — the shutdown — was necessary.”

      That’s not true, and you can’t find a scintilla of evidence to back up that statement. I have said on many occasions that the shutdown was overkill and applied indiscriminately, and I have said that the economic consequences of the shutdown has likely aggravated maladies that are impossible to measure in real time. But I have never criticized, for example, the ban on large gatherings, the shutdown of visitors to nursing homes, the closing of certain types of businesses where the virus might spread easily, and (in the early stages when we thought hospitals might be overwhelmed) the ban on elective procedures.

      We now know more about this epidemic than we did two months ago. We know, for example, that Virginia hospitals are not about to be overwhelmed, therefore it makes sense to allow elective surgeries again. We also know that the virus dies quickly in conditions of warmth, humidity and sunshine, and that, therefore, it makes little sense to continue banning certain outdoor activities. We also know how devastating the economic effects of the shutdown are (although I don’t believe we fully appreciate the cascading effects to come), and therefore are in a position to make different tradeoffs between containing COVID-19 and shutting down the economy.

      • re: “we now know”.

        not when you initially were criticizing… though..

        and basically you disagreed that he virus was that bad that it warranted the shutdown.


        you kept posting graphs as if there would be a “peak” and after the peak, restrictions were no longer warranted.


        what the epidemiologists have been saying all along – the science if you will – is that social distancing was not precisely known with required to it’s effectiveness and it would take time to know – and even then – if restrictions were loosened – more disease would spread but we still don’t know with precision.

        This is the science. But politics is what is in play.

          • Nope. The attacks on Northam were early on.. and there was
            continuing doubt as to whether the virus was a deadly as the science was saying…

            And again – I look at the criticisms with regard to whether they are coming across the board – regardless of political stripes and when I see almost all of it aligned by politics, we know really what it is.

            So to give you a good example The recent paroles issue – has actually spawned criticism – across the board.. credible and justified…

    • Struck blind, Acbar… lordy..

  21. “My vision shall return!”

    Yes, Arbar, not to worry!

    Your unfortunate condition is firmly and chronically in my daily prayers. And in those of Nancy, too.

    We gotta covered. On both Flanks.

    • Thanks for watching the flanks, as my eyes are focused straight ahead.

    • If you look straight ahead, Acbar, then you gotta start thinking along these lines:

      “Americans Need Hope as Well as Safety (The economic crash has deadly consequences of its own. The bias now should be toward a return to life

      …The first wise man is George Shultz, a participant in and observer of history to whom I spoke by phone. “It is a catastrophe,” the former secretary of state and of labor said of the virus and the economy. “The government shuts things down, the government has all the money and is dealing it out, so there’s an expectation the government can get us out of this.” But no government has that power.

      Where is the hope? “We have a potentially vibrant private sector. There’s an immense amount of energy and ingenuity and fresh thinking there. They think about how to get themselves in a profitable position, and to do that they have to take into account a lot—supply chains, the health of their employees, the safety of customers. We have to open things up and say to the private sector, ‘Do your job.’ They have creativity, they want to get things up and going again.”

      The second wise man: Ken Langone, a founder of Home Depot. If you hear his name a lot lately it’s because he endowed a hospital at the center of New York’s struggle with coronavirus, NYU Langone Medical Center. He said if we do everything we can to make people safe, we’ll be doing everything to get business going.

      “There is a bigger risk in business not being open than in staying closed,” he said by phone. “Why? Look, you’re looking at depression, financial problems, taxes will have to go up to pay for all this.” Taxes pay for public services—including the operation of hospitals.

      “It isn’t safety or business, it’s safety right now which allows business.” Every American can contribute by observing the protocols we now know by heart—washing hands, maintaining social distance, wearing masks, using hand sanitizer. “If the American people want to be cavalier about this they should be ashamed.”

      Last Sunday afternoon he drove to the Home Depot store in Jericho, N.Y. Home Depots have stayed open as essential businesses. “I go up and down the aisle. There wasn’t an empty space in the parking lot. They were buying flowers, garden tools, seedlings—people were all over. People aren’t gonna sit and vegetate at home. The wife says, ‘Don’t sit around on your ass, go buy some paint, paint the house.’ American energy, this is our advantage.”

      But the store is careful. “We have distancing. All wore masks. People will have to stand 6 feet away and yell a little. OK with me, I like to yell!”

      “We’re not gonna be the same,” he said. “We’re gonna be challenged like never before, but we will pass the test with flying colors. . . . Capitalism brought America to the party. It’s what gonna get us out of this mess.”….

      For more of this May 7, 2020 Wall Street Journal article by Peggy Noonan, see:

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