No one’s flying and MILLIONS of jobs might be lost – but airlines took billions, CEOs got rich and employees got screwed, again
Millions of people are fearful and permanently out of work. The supply chain devastation will continue with a tsunami of defaults, starting with the airlines who promised not to fire employees in return for bailouts.
Last week saw drug maker Moderna surge over 20 percent and a few transportation stocks, most notably within the airline sector, surge over 15 percent in a matter of hours. Retail and cruise-line shares steamed higher as well. We also saw another claim from a big pharma drug pusher that it has a miracle vaccine for Covid-19 (let us sell billions of these VACCINES!).
Did someone hit a magic switch that turned the economy back into high gear? Has everything been forgiven? The real question is can we ever go back to the way everything was and ignore the economic carnage caused by the global economic depression we entered a few months ago? Albert Einstein defined insanity as “repeating the same thing over and over and expecting to achieve a different result.” Unfortunately, that seems to be exactly what we’re doing.
The airlines frittered away billions in stock buybacks – American Airlines alone spent $13 billion on share buybacks. Airlines received at least $50 billion in government bailouts that taxpayers will be on the hook for when they go bankrupt. As I explained (here), American Airlines’ CEO Doug Parker was paid 150 million dollars to crash the airline that will cost tens of thousands of jobs – jobs that will be gone forever. The mainstream media is reporting on the 25,000 jobs AA is preparing to furlough, but is failing – or refusing – to see the macroeconomic big picture and the reality that MILLIONS of jobs could be on the line.
Here are some pictures I took of New York's eerily empty JFK airport as I was flying back to the UK last week. Frightening?
It is clear that the business and the ancillary supply-chain businesses (leases and purchases from Boeing, airplane parts, airline maintenance, jet fuel, food services, employees to clean planes and airports) are not returning anytime soon.
We are talking MILLIONS of jobs across the airline supply chain that will never return. Will airlines go bankrupt? YES! Why wasn't Parker fired and the board sacked? Why did the government fund $10 billion in bailouts when 25,000 people are about to be sacked?
What caused the current global economic depression and are the governments being honest about it? The credit crisis that began in earnest back in 2008 was caused by too much debt, credit and leverage. Then it hit high gear with Boris Johnson’s top adviser shrieking “2.2 million Americans and over half a million Brits will die from coronavirus.” This statement was the shot that ended democracy around the world, and it came from Dr Neil Ferguson and his Imperial College “models” funded by Microsoft's Bill Gates.
The full report is here.
New York City’s economy is in the tank. It is estimated that over fifty percent of the small businesses that closed due to Covid-19 will never reopen. This means millions of jobs are gone forever, and it will cause more vacant commercial real estate to come onto an already over-supplied property market. Property prices in cities will collapse and, as job losses continue, we will see a catastrophic increase of defaults on residential mortgages that will cause a broader collapse in all property prices.
The global economy is in an economic depression, illustrated and compounded by massive unemployment, contracting gross domestic product, staggering amounts of private and public debt and a wealth inequality gap that has rocketed to stratospheric new highs. Central Banks, aka rogue hedge funds, have printed trillions of dollars. These funds have re-inflated asset bubbles to wildly grotesque levels of valuation that have never been seen. US Federal Reserve and Swiss National Bank money went to Apple, which helped Apple conduct record amounts of share buybacks, putting AAPL’s stock price at new record highs and a billion dollars in Apple CEO Tim Cook’s pocket.
Did any of this help Main Street? Nope. These reckless policies inflated the most outrageous valuations, bubbles, and greed in history. For example, Tesla traded above $1,800 per share this week. We now have Covid-induced fear and irrationally greedy markets – a toxic, unsustainable combination.
Big governments worldwide have massively increased their debt with a false belief, instilled by Keynesian economic charlatans, that if you print more money, you can print demand. Remember Harvard’s Larry Summers? He convinced Bill Clinton to get rid of Glass Steagall and blew up Citibank with Robert Rubin. Summers and Paul Krugman are now jumping on the Joe Biden, Bernie Sanders and AOC bandwagon of “Free stuff for everyone”.
The lunatics are running the asylum, and as Albert Einstein said, “The definition of insanity is repeating the same thing over and over and expecting to achieve a different result.” It’s a safe bet this global depression will devastate the financial markets as it slowly deleverages and wipes out the reckless gamblers.
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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.
