THE US Federal Reserve Bank yesterday launched an unlimited money printing programme to try to halt the collapse of the US ‘economic miracle’, and with it President Trump’s campaign to win a second White House term.
This was after Goldman Sachs analysts caused panic, predicting that the US economy will shrink by 24% in the second quarter of 2020.
The Federal Reserve Bank pledged to buy $500bn of Treasury Bonds and $200 billion of mortgage-backed securities last week. Now, going further than its rescue package after the 2008 financial crisis, the Bank has said it will establish three new lending schemes to provide borrowers with $300bn to keep rates down.
The Bank blamed the coronavirus pandemic for the crisis, stating that it is causing tremendous hardship across the USA and around the world.
A 24% collapse in the second quarter of 2020 would constitute a mighty blow against Trump’s campaign for a second presidential term.
Despite the money-printing programme, the Dow Jones and the S&P closed 3% down on Monday, while unemployment is now beginning to rocket upwards in the USA. Goldman Sachs estimates that in the week to March 21, 2.5 million US workers filed for unemployment benefits. This is eight times the 281,000 figure for the previous week! That figure was in itself the biggest one week rise for any week since the 2008 financial crisis.
Meanwhile, Treasury Secretary Mnuchin is seeking to gain approval for the largest fiscal stimulus package in modern times but is currently still locked in battle with the Senate Democrats.
His stimulus would total $2 trillion, and will include sending $1,200 directly to Americans, supplemented by sending hundreds of billions of dollars to small businesses as loans. These measures equal almost 10% of US GDP.
It is designed to win votes for Trump and make up for a drop in US output that is predicted to reach $1.25 trillion.
Meanwhile, the coronavirus crisis is exploding all around Trump, with New York’s Democratic Party mayor Bill de Blasio stating that the USA is ‘about 10 days away from seeing widespread shortages in ventilators,’ adding that, ‘If we don’t get more ventilators people will die.’
New York State has become the epicentre of the outbreak in the US and accounts for almost half of the country’s cases. There are now 31,057 confirmed cases nationwide, with 390 deaths already confirmed. On Sunday, the state’s Governor Andrew Cuomo said 15,168 people had tested positive for the virus, an increase of more than 4,000 from the previous day.
‘All Americans deserve the blunt truth,’ de Blasio told NBC News. ‘It’s only getting worse, and in fact April and May are going to be a lot worse.’ New York now accounts for roughly 5% of Covid-19 cases worldwide.
On Friday, President Donald Trump approved a major disaster declaration for the state which gave it access to billions of dollars of federal aid. However, de Blasio has continued to criticise the administration for what he views as an inadequate response.
‘I cannot be blunt enough: if the president doesn’t act, people will die who could have lived otherwise,’ he said. ‘This is going to be the greatest crisis, domestically, since the Great Depression,’ he added, referring to the economic crisis after the 1929 Wall Street Crash!
Speaking at a news conference at the White House on Sunday, President Trump said he had approved a major disaster declaration for Washington State and would approve a similar measure for California. ‘This is a challenging time for all Americans. We’re enduring a great national trial,’ he said.
In California, officials instructed hospitals to restrict coronavirus testing. Meanwhile, a hospital in Washington state – once the centre of the US outbreak – said it could run out of ventilators by April.
On Sunday, Illinois Governor JB Pritzker said states were ‘competing against each other’ for virus supplies. ‘We need millions of masks and hundreds of thousands of gowns and gloves,’ he said.
‘We’re getting just a fraction of that. So, we’re out on the open market competing for these items that we so badly need.’
US workers are very angry at this situation and many of them are looking to Bernie Sanders as their champion with his pledge to bring in free health care and a programme to provide jobs at trade union rates of pay for all!
Sanders must represent these workers against the Republican Trump and the Democrat Biden and stand as a socialist candidate for President of the USA.
This would provide a way forward for US workers!