What a surprise! Big companies got most of the stimulus money meant for small businesses

One part of the stimulus program was the Paycheck Protection Program (PPP) that was meant to enable owners of small businesses to keep paying their employees even while their businesses were shut down. The program was limited to companies that had less than 500 employees. Why did employees of large corporations like Amazon not get similar protections? The assumption by the government seemed to be that these companies could afford to do so on their own without government help though in the absence of any law forcing them to do so, one cannot imagine Amazon’s Jeff Bezos depriving himself of even the tiniest bit of his huge wealth.
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The strange world of futures contracts

There was this news report in the last few days about the price of oil going negative to -$40 per barrel, giving the impression that oil producers were now paying people to take their oil. Of course, that could not be strictly true. It is not as if your local gas station was paying customers to fill their tanks. In actuality, gas prices were trading normally, though the prices have been dropping due to the lowered economic activity because of the pandemic leading to an oil surplus.
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The US obsession with the stock market

The last week has seen the media focus almost obsessively on the coronavirus and one aspect of its coverage has been its supposed negative effect on the stock market. I have been railing about the absurd obsession in the US with stock market prices, to the extent that the Federal Reserve of the US, supposed to deal with the fundamentals of the economy, cut interest rates by a huge amount, seemingly in response to the fall in stock prices before it was clear that the epidemic had any impact on those fundamentals. Not that it helped, since the stock market continued to fall anyway. We know that Donald Trump cares deeply about stock prices, the only thing really matters to him.
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The missing cryptocurrency queen

Some people have made a lot of money in the tech world. Some have done it by creating companies, others by investing in them. But there are others who wish that they had invested in successful companies early on and made a lot of money but didn’t and now feel that they missed out. These people who are on the lookout for the next big thing so that they can get is early and cash in too. Such people are easy prey for con artists who know that the sales pitch of ‘buy now before it is too late’ can drive people to rash decisions and invest in something they may know little about for fear of missing out again.

We have seen this scenario play out so many times before and blog reader Jason Wessel sent me a link to this extraordinary story about someone who managed to scam people out of millions of dollars by promising them great rewards with a new cryptocurrency called OneCoin that she claimed would put Bitcoin out of business. The scam was based on the multi-level marketing scheme used by companies like Amway whereby people are recruited to sell both a product and also recruit new people to sell the product. Part of the sales proceeds of the new recruits goes to the person who recruited them, all the way up the chain. This is a version of a pyramid scheme and, like all such schemes, the few people who get in early make the most money while those lower down the chain can lose whatever they invest.
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The menace of private equity firms

Luke Darby explains how venture capital and private equity firms are responsible for destroying otherwise healthy companies, killing jobs, devastating communities, while reaping fat rewards for their investors. Once they take over a company, the private equity partners take out huge fees for themselves, burdening the company with large debts.

The quick and dirty explanation of private equity is that these are firms that buy other businesses. They restructure acquired companies in order to increase short-term profits or otherwise make them look more appealing to a buyer, and then sell them at a profit. While that means a nice chunk of cash for the investors who made the sale, it can be a chaotic and disastrous process for the employees of the companies being bought and sold, and they might get laid off or see their company broken up and sold out from under them.
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First they took from the poor, then the middle class, then the upper middle class, then …

Everyone knows the response that bank robber Willie Sutton supposedly gave when asked why he robbed banks. He is said to have replied, “Because that’s where the money is.” Sutton denied he ever said it but that story has entered the folklore.

But that saying seems relevant when we see something similar happening with the way that the oligarchy increases its share of the wealth, by going where the money is. We know that the poor have been squeezed so that the wealthy get even wealthier. But as the money left among the poor dries up. the oligarchs started squeezing the middle class. Wolf Richter says that it now appears that the oligarchs are starting to put the squeeze on the upper middle class.
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Bernie Sanders and two economics professors explain the benefits of Medicare for All

Sanders keeps making very clear arguments about its benefits in order to counter the distortions.

Economists Emmanuel Saez and Gabriel Zucman explain how the Sanders’s plan for Medicare for All will result in reduced taxes, because what we now pay in health care premiums are in fact taxes, something that opponents of universal health care plans try to ignore.
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Debating the wealth tax

To understand why the oligarchy in the US absolutely hates the idea of Bernie Sanders or Elizabeth Warren becoming president, one need look no further than their proposals for a tax on wealth to serve two goals: provide income to fund their progressive agendas and to reduce the staggering levels of inequality in the US.

Sen. Bernie Sanders has unveiled his plan to directly tax the wealth of millionaires and billionaires — and it goes substantially further than Sen. Elizabeth Warren’s plan to do the same.

The proposal would cut the wealth of billionaires in the United States in half in 15 years and entirely close the gap in wealth growth between billionaires and the average American family, according to University of California Berkeley economists Gabriel Zucman and Emmanuel Saez, who advised Sanders on his plan. Hitting the richest 180,000 American households, Saez and Zucman estimate the tax would raise $4.35 trillion over the next decade, which Sanders says would go toward paying for his biggest policies, including Medicare-for-all, affordable housing, and universal childcare.
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How the ratings agencies triggered the financial meltdown

Matt Taibbi has come out with an excellent article that looks at the role of the ratings agencies, those institutions that are supposed to protect the interests of investors by providing accurate ratings for the investments issued by companies, in causing the financial collapse of 2008. Their role has been criticized before (I wrote about it back in 2008 here and here) but Taibbi says that recent revelations show that their culpability is even worse than was thought.
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How some of the tax plans compare

Economist Gabriel Zucman has compared what the average tax rates will be depending on your income, based on the various plans offered by Bernie Sanders, Elizabeth Warren, Joe Biden, and under Donald Trump. It should come as no surprise that Bernie Sanders and Elizabeth Warren go easy on the bottom 99% and start taxing the richest 1% very heavily, with Sanders really socking it to them. Joe Biden and Donald Trump tax the 99% more than the other two plans, tax the top 1% a lot less, and greatly reduce the tax rates of the top 400 individuals.