The Main Street Manifesto

The historic protests sweeping America were long overdue, not just as a response to racism and police violence, but also as a revolt against entrenched plutocracy. With a growing number of Americans falling into unemployment and economic insecurity, while major corporations take bailouts and slash labor costs, something had to give.

Nouriel Roubini

roubini141_Andrew Lichtenstein Corbis via Getty Images_UStaxprotestwallstreet

NEW YORK – The mass protests following the killing of George Floyd by a Minneapolis police officer are about systemic racism and police brutality in the United States, but also so much more.

Those who have taken to the streets in more than 100 American cities are channeling a broader critique of President Donald Trump and what he represents.

A vast underclass of increasingly indebted, socially immobile Americans – African-Americans, Latinos, and, increasingly, whites – is revolting against a system that has failed it.

This phenomenon is not limited to the US, of course. In 2019 alone, massive demonstrations rocked Bolivia, Chile, Colombia, France, Hong Kong, India, Iran, Iraq, Lebanon, Malaysia, and Pakistan, among other countries. Though these episodes each had different triggers, they all reflected resentment over economic malaise, corruption, and a lack of economic opportunities.

The same factors help to explain populist and authoritarian leaders’ growing electoral support in recent years. After the 2008 financial crisis, many firms sought to boost profits by cutting costs, starting with labor.

Instead of hiring workers in formal employment contracts with good wages and benefits, companies adopted a model based on part-time, hourly, gig, freelance, and contract work, creating what the economist Guy Standing calls a “precariat.”

Within this group, he explains, “internal divisions have led to the villainization of migrants and other vulnerable groups, and some are susceptible to the dangers of political extremism.”

The precariat is the contemporary version of Karl Marx’s proletariat: a new class of alienated, insecure workers who are ripe for radicalization and mobilization against the plutocracy (or what Marx called the bourgeoisie).

This class is growing once again, now that highly leveraged corporations are responding to the COVID-19 crisis as they did after 2008: taking bailouts and hitting their earnings targets by slashing labor costs.

One segment of the precariat comprises younger, less-educated white religious conservatives in small towns and semi-rural areas who voted for Trump in 2016. They hoped that he would actually do something about the economic “carnage” that he described in his inaugural address.

But while Trump ran as a populist, he has governed like a plutocrat, cutting taxes for the rich, bashing workers and unions, undermining the Affordable Care Act (Obamacare), and otherwise favoring policies that hurt many of the people who voted for him.

Before COVID-19 or even Trump arrived on the scene, some 80,000 Americans were dying every year of drug overdoses, and many more were falling victim to suicide, depression, alcoholism, obesity, and other lifestyle-related diseases.

As economists Anne Case and Angus Deaton show in their book Deaths of Despair and the Future of Capitalism, these pathologies have increasingly afflicted desperate, lower skilled, un- or under-employed whites – a cohort in which midlife mortality has been rising.

But the American precariat also comprises urban, college-educated secular progressives who in recent years have mobilized behind leftist politicians like Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts. It is this group that has taken to the streets to demand not just racial justice but also economic opportunity (indeed, the two issues are closely intertwined).

This should not come as a surprise, considering that income and wealth inequality has been rising for decades, owing to many factors, including globalization, trade, migration, automation, the weakening of organized labor, the rise of winner-take-all markets, and racial discrimination.

A racially and socially segregated educational system fosters the myth of meritocracy while consolidating the position of elites, whose children consistently gain access to the top academic institutions and then go on to take the best jobs (usually marrying one another along the way, thereby reproducing the conditions from which they themselves benefited).

These trends, meanwhile, have created political feedback loops through lobbying, campaign finance, and other forms of influence, further entrenching a tax and regulatory regime that benefits the wealthy. It is no wonder that, as Warren Buffett famously quipped, his secretary’s marginal tax rate is higher than his.

Or, as a satirical headline in The Onion recently put it: “Protesters Criticized for Looting Businesses Without Forming Private Equity Firm First.” Plutocrats like Trump and his cronies have been looting the US for decades, using high-tech financial tools, tax- and bankruptcy-law loopholes, and other methods to extract wealth and income from the middle and working classes.

Under these circumstances, the outrage that Fox News commentators have been voicing over a few cases of looting in New York and other cities represents the height of moral hypocrisy.

It is no secret that what is good for Wall Street is bad for Main Street, which is why major stock-market indices have reached new highs as the middle class has been hollowed out and fallen into deeper despair.

With the wealthiest 10% owning 84% of all stocks, and with the bottom 75% owning none at all, a rising stock market does absolutely nothing for the wealth of two-thirds of Americans.

As the economist Thomas Philippon shows in The Great Reversal, the concentration of oligopolistic power in the hands of major US corporations is further exacerbating inequality and leaving ordinary citizens marginalized.

A few lucky unicorns (start-ups valued at $1 billion or more) run by a few lucky twenty-somethings will not change the fact that most young Americans increasingly live precarious lives performing dead-end gig work.

To be sure, the American Dream was always more aspiration than reality. Economic, social, and intergenerational mobility have always fallen short of what the myth of the self-made man or woman would lead one to expect. But with social mobility now declining as inequality rises, today’s young people are right to be angry.

The new proletariat – the precariat – is now revolting.

To paraphrase Marx and Friedrich Engels in The Communist Manifesto: “Let the Plutocrat classes tremble at a Precariat revolution.

The Precarians have nothing to lose but their chains. They have a world to win.

Precarious workers of all countries, unite!”

Nouriel Roubini, Professor of Economics at New York University's Stern School of Business and Chairman of Roubini Macro Associates, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank. His website is

Coronavirus: is this the end of the line for cruise ships?

Operators aim to rebuild trust with health measures but still face calls to improve conditions for their crews

Alice Hancock in London


It has survived norovirus, Sars and Mers, as well as regular outbreaks of gastroenteritis and legionnaires’ disease. But coronavirus has dealt the cruise ship industry what looks like a crippling blow.The 338 ships that make up the industry’s fleet are docked.

Carnival, the world’s largest cruise company, is haemorrhaging $1bn a month to maintain its fleet. Governments have issued “no sail” edicts and the majority of the 32m passengers that the Cruise Lines International Association projected would sail this year are stuck at home.

The halt on operations is due to last until at least August with ghostly ships marooned in harbours in what is known as “warm lay-up”, where systems are kept running to make sure that none seize up.The industry — which says bookings for 2021 are almost at the same level as they were this time last year — is now looking to rebuild public trust with new health and sanitation measures.

But Martin Luen, a banker specialising in travel at Baird, an investment bank, warns that it will be a slow return to growth: “Sectors at the scene of the car crash are rarely the first ones to recover.”

Travel and tourism businesses are under immense pressure ahead of the crucial summer season in the northern hemisphere. And even though the cruise ship companies have an unusually loyal customer base, eager to travel again, the risks of catching coronavirus and the added impact of social distancing rules at sea place an unusual burden on operators.

The cruise ship Carnival Miracle at Long Beach port in California. Carnival, one of the world’s largest cruise companies, is spending $1bn a month to maintain its fleet
The cruise ship Carnival Miracle at Long Beach port in California. Carnival, one of the world’s largest cruise companies, is spending $1bn a month to maintain its fleet © Mike Blake/Reuters

In a stark example of the difficulties the industry faces, more than 60,000 crew members remain stranded aboard ships waiting to find out if they will be repatriated to their home countries.

The US Centers for Disease Control and Prevention has ruled that it will only allow cruise liner employees to disembark if the companies guarantee to charter private flights to return them home and that executives sign legal assurances that the agency’s health protocols will be followed.

Of the three largest cruise companies, Carnival says it has 32,000 crew awaiting repatriation and Royal Caribbean says it has returned 26,000 of its 77,000 shipboard employees and is “hopeful that all remaining crew members will be home by the end of June”.

Norwegian Cruise Lines did not respond. Their efforts, they say, have been hampered by port closures and global travel restrictions that threaten to scupper this summer's holiday season.

One Royal Caribbean employee, who asked not to be identified, says that, until most of the crew from his ship were returned home in mid-April, 1,600 crew were at sea for three weeks without guests but under quarantine after several people tested positive for Covid-19. Although they were moved to the guest cabins, he says that if they left their rooms they feared being “fired”.

Royal Caribbean says: “Our foremost priority is getting our crew members home safely and we are investing heavily in this massive endeavour.”

Line chart of Share prices, rebased showing Pandemic threatens future of cruise operators

An outbreak on board Carnival’s Diamond Princess ship in February was the first sign that the industry had a problem. Japanese authorities quarantined it off the coast of Yokohama.

According to Johns Hopkins University data, 13 of the 712 people on board who were infected died. At the time it made up the single biggest cluster of cases outside China.

Its sister ship the Grand Princess was later held off Oakland, California, with 78 passengers testing positive for the virus, while other ships, such as the Holland America Line’s Westerdam, were forced to bounce between ports as country after country refused to let potentially infected ships reach land.

The clear impression given by the media was that these liners — with thousands of people sharing relatively small amounts of common space — were like “floating Petri dishes”.

Carnival, Royal Caribbean and Norwegian, whose ships make up 70 per cent of the industry’s ships, now face multiple court cases from passengers who lost relatives and crew who became ill.

Norwegian, which did not respond to a request for comment, is being sued separately by a group of investors who claim that the cruise company lied about the severity of the disease in order to shore up bookings.

Carnival is also facing investigations in the US and Australia for allowing infected passengers to disembark.

Carnival’s Grand Princess cruise ship was held off Oakland, California. Eventually 78 passengers tested positive for the virus
Carnival’s Grand Princess cruise ship was held off Oakland, California. Eventually 78 passengers tested positive for the virus © Josh Edelson/AFP

Yet, according to data from the Miami Herald newspaper, which has been tracking the industry, just 82 people are thought to have died from coronavirus caught on cruise ships. As the total worldwide deaths from coronavirus near 400,000, cruise executives say the industry has been unfairly tarnished.

“This caught everyone by surprise and there was limited scientific data and guidelines to work off but yet you are made to be the scapegoat,” says a senior executive at one of the biggest cruise companies. “It has been difficult to move away from situations that are very media sexy.”

Ben Cordwell, a travel and tourism analyst at GlobalData, says announcements by health authorities such as the CDC that blame the cruise industry for the virus’s spread have been “disastrous” for its future. “We will still see cruises, the whole industry is not going to disappear,” he says.

“[But] the amount of negative publicity it has received is going to be hard to shrug off.”

The 2020s were meant to be a boom decade for cruises. Nineteen new ships worth more than $9bn were due to launch this year alone.

One, the Scarlet Lady, which cost €600m to build, was the first of a new line run by Virgin — Richard Branson’s maiden foray into the cruise ship market.

Ships are also getting bigger — the largest in the world currently is Royal Caribbean’s 228,000-tonne Symphony of the Seas, five times the size of the Titanic — and more exciting, with a glow in the dark adventure park on board as well as a 10-storey water slide.

Carnival’s Mardi Gras, whose maiden voyage had been due in August, has six themed entertainment areas and the world’s first rollercoaster at sea.

Ports around the world are being developed to accommodate cruise ships and the passengers that flood off them. Global Port Holdings, reported a 15 per cent increase in cruise port revenues in 2019, and is investing in two new Caribbean ports.

In contrast Venice, which saw nearly 170,000 cruise passengers travel to the city last June, is looking to reduce visits from the biggest ships.

Carnival’s Ruby Princess ship docks in Wollongong, Australia. Carnival says it has 32,000 crew awaiting repatriation
Carnival’s Ruby Princess ship docks in Wollongong, Australia. Carnival says it has 32,000 crew awaiting repatriation © EPA-EFE

But despite adding an estimated $150bn to the global economy, according to the CLIA, only a relatively small number of travellers choose to cruise — under 3 per cent the world’s 1.1bn tourists last year.

Instead of raking in record profits — the three main operators made almost $6bn in profits off revenues of $38bn in 2019 — the industry is now scrabbling for cash.

In May, Norwegian used two of its cruise ships and two islands as collateral for part of a $2.4bn fundraising comprising equity, loans and private investments. It said that this could see it through 18 months without cruises.

Its much larger rival Carnival raised $6.4bn through equity and debt in April, including a $430m stake from Saudi Arabia’s Public Investment Fund, but still plans to lay off staff and cut pay.

Also in May, Royal Caribbean raised $3.3bn secured against 28 vessels and “material intellectual property”, shortly after S&P and Moody’s had both downgraded the company’s credit rating to junk.

Profits across the three largest cruise companies in 2019

The industry not only faces the maintenance costs of keeping ships in good shape for when holidays can restart but also significant cash outflows as customers claim refunds for cancelled trips.

Norwegian said that as of May 11 just over half of the customers with cancelled trips had requested cash refunds instead of vouchers offering 125 per cent of their original holiday value. At the end of March it had $1.8bn of customer deposits on its books.

And unlike peers in the hotel and restaurant sectors, cruise lines — which are mostly registered in tax havens such as Panama and the Bahamas — are ineligible for the US government’s $3tn aid programme.

The CLIA has also approached the EU for help but Mr Cordwell says that authorities are unlikely to be sympathetic: “[Their registration in tax havens] gives the governments an excuse not to include them in stimulus and avoid risk of a backlash from the public.”

The industry is no stranger to corporate controversy. Campaigners have long argued that cruise ships litter the environment with high levels of noxious discharge and damage habitats.

Others condemn their labour practices and their use of so-called “flags of convenience” to register in domains with more lenient legal restrictions.

“Covid has thrust the industry under the international spotlight and people are looking very hard at how this industry has been acting for decades,” says Kendra Ulrich, shipping campaigns director for the environmental group

“This is the latest example of a morally bankrupt business culture and one that they are going to have to make public and substantive changes to, to regain public trust.”

The US Centers for Disease Control and Prevention has ruled that it will only allow cruise liner employees to disembark if the companies guarantee to charter private flights to return them home
The US Centers for Disease Control and Prevention has ruled that it will only allow cruise liner employees to disembark if the companies guarantee to charter private flights to return them home © Tim Rue/Bloomberg

In 2016, Carnival was found guilty by a Miami court on seven counts of environmental negligence including dumping oil, sewage and dirty water at sea. It was its third conviction for the same offence since 1998. Both Royal Caribbean and Norwegian have also been fined for their environmental records.

 Ms Ulrich says that under the “flags of convenience” model, a term the industry views as pejorative, cruise companies can adopt less stringent labour standards as they do not come under US or European employment law.

An investigation by Columbia Journalism School in 2016 found that on some Carnival ships crew worked 70 hour weeks on nine-month contracts with no days off or paid leave.

The International Transport Workers' Federation said that in the first two weeks of May, four cruise ship crew members had committed suicide on board.

Carnival says its “top priorities are [health and safety] compliance, environmental protection and the health and safety of our guests and crew”.

Robert Kwortnik, associate professor at Cornell University’s School of Hotel Administration, says that registering in tax havens keeps costs down: “The operational model is more efficient because you can save costs in terms of labour.

Will we see a wholesale change in that model? I don’t know if it will happen immediately, but it could be better for the industry.”

To restore public trust, cruise lines have focused their attention on tighter health checks and increased sanitation.

“By February we had a completely enhanced medical protocol. Full medical screening, oxygen saturation checks, 28-day medical history [for passengers], and denied boarding to anyone with even mild flu symptoms,” says Euan Sutherland, chief executive of the insurance company Saga, which runs two cruise ships.

Other cruise companies have begun to announce similar measures.

The industry is regulated by numerous supranational bodies including the International Maritime Organization and the World Health Organisation but protocols and decisions over when to sail again are down to the companies themselves.

Genting, which operates three cruise lines out of Asia, was the first to officially announce new measures. It has promised that 100 per cent filtered air from outside the ship will be supplied to each cabin and that isolation wards will be added to on board medical centres.

But Annelies Wilder-Smith, professor of emerging infectious diseases at the London School of Hygiene and Tropical Medicine, says that in order to prevent future outbreaks of coronavirus cruise liners would have to operate at 50 per cent capacity at most.

She also suggests pre-departure health screenings, limiting onshore day trips and splitting the timetable for activities so that only half the number of passengers would take part at a time. “Logistically it is a nightmare but it can be done,” she says.

Cruise operators are quick to point out that the industry has one of the highest repurchase rates of any sector, with 85 per cent who take a cruise booking again.

A reader survey from Cruise Addict magazine found that 88 per cent would not be deterred from cruising because of coronavirus and more than half had already booked a new cruise since the pandemic began.

But newcomers will be harder to persuade. Stewart Chiron, an independent industry consultant, says cruise ships will have to start sailing again before potential customers believe that cruise holidays are safe.

“The industry needs to convince customers that they are safe, will not risk infection with Covid-19, or be quarantined on a ship,” says Jamie Rollo, an analyst at Morgan Stanley.

“When sailing does resume, it might take only a small outbreak on one ship to cause global operations to be suspended again, so the industry needs to get this right first time.”

Additional reporting by Lauren Fedor in Washington

A Crash in the Dollar Is Coming

The world is having serious doubts about the once widely accepted presumption of American exceptionalism.

By Stephen Roach  

The U.S. government needs to take better care of the dollar.  
The U.S. government needs to take better care of the dollar. / Photographer: Mark Wilson/Getty Images

The era of the U.S. dollar’s “exorbitant privilege” as the world’s primary reserve currency is coming to an end. Then French Finance Minister Valery Giscard d’Estaing coined that phrase in the 1960s largely out of frustration, bemoaning a U.S. that drew freely on the rest of the world to support its over-extended standard of living. For almost 60 years, the world complained but did nothing about it.

Those days are over.

Already stressed by the impact of the Covid-19 pandemic, U.S. living standards are about to be squeezed as never before. At the same time, the world is having serious doubts about the once widely accepted presumption of American exceptionalism. Currencies set the equilibrium between these two forces — domestic economic fundamentals and foreign perceptions of a nation’s strength or weakness. The balance is shifting, and a crash in the dollar could well be in the offing.

The seeds of this problem were sown by a profound shortfall in domestic U.S. savings that was glaringly apparent before the pandemic. In the first quarter of 2020, net national saving, which includes depreciation-adjusted saving of households, businesses and the government sector, fell to 1.4% of national income. This was the lowest reading since late 2011 and one-fifth the average of 7% from 1960 to 2005.

Lacking in domestic saving, and wanting to invest and grow, the U.S. has taken great advantage of the dollar’s role as the world’s primary reserve currency and drawn heavily on surplus savings from abroad to square the circle. But not without a price. In order to attract foreign capital, the U.S. has run a deficit in its current account — which is the broadest measure of trade because it includes investment — every year since 1982.

Covid-19, and the economic crisis it has triggered, is stretching this tension between saving and the current-account to the breaking point. The culprit: exploding government budget deficits. According to the bi-partisan Congressional Budget Office, the federal budget deficit is likely to soar to a peacetime record of 17.9% of gross domestic product in 2020 before hopefully receding to 9.8% in 2021.

A significant portion of the fiscal support has initially been saved by fear-driven, unemployed U.S. workers. That tends to ameliorate some of the immediate pressures on overall national saving. However, monthly Treasury Department data show that the crisis-related expansion of the federal deficit has far outstripped the fear-driven surge in personal saving, with the April deficit 5.7 times the shortfall in the first quarter, or fully 50% larger than the April increment of personal saving.

In other words, intense downward pressure is now building on already sharply depressed domestic saving. Compared with the situation during the global financial crisis, when domestic saving was a net negative for the first time on record, averaging -1.8% of national income from the third quarter of 2008 to the second quarter of 2010, a much sharper drop into negative territory is now likely, possibly plunging into the unheard of -5% to -10% zone.

And that is where the dollar will come into play. For the moment, the greenback is strong, benefiting from typical safe-haven demand long evident during periods of crisis. Against a broad cross-section of U.S. trading partners, the dollar was up almost 7% over the January to April period in inflation-adjusted, trade-weighted terms to a level that stands fully 33% above its July 2011 low, Bank for International Settlements data show. (Preliminary data hint at a fractional slippage in early June.)

But the coming collapse in saving points to a sharp widening of the current-account deficit, likely taking it well beyond the prior record of -6.3% of GDP that it reached in late 2005. Reserve currency or not, the dollar will not be spared under these circumstances. The key question is what will spark the decline?

Look no further than the Trump administration. Protectionist trade policies, withdrawal from the architectural pillars of globalization such as the Paris Agreement on Climate, Trans-Pacific Partnership, World Health Organization and traditional Atlantic alliances, gross mismanagement of Covid-19 response, together with wrenching social turmoil not seen since the late 1960s, are all painfully visible manifestations of America’s sharply diminished global leadership.

As the economic crisis starts to stabilize, hopefully later this year or in early 2021, that realization should hit home just as domestic saving plunges. The dollar could easily test its July 2011 lows, weakening by as much as 35% in broad trade-weighted, inflation-adjusted terms.

The coming collapse in the dollar will have three key implications: It will be inflationary — a welcome short-term buffer against deflation but, in conjunction with what is likely to be a weak post-Covid economic recovery, yet another reason to worry about an onset of stagflation — the tough combination of weak economic growth and rising inflation that wreaks havoc on financial markets.

Moreover, to the extent a weaker dollar is symptomatic of an exploding current-account deficit, look for a sharp widening of America’s trade deficit. Protectionist pressures on the largest piece of the country’s multilateral shortfall with 102 nations – namely the Chinese bilateral imbalance — will backfire and divert trade to other, higher-cost, producers, effectively taxing beleaguered U.S. consumers.

Finally, in the face of Washington’s poorly timed wish for financial decoupling from China, who will fund the saving deficit of a nation that has finally lost its exorbitant privilege? And what terms — namely interest rates — will that funding now require?

Like Covid-19 and racial turmoil, the fall of the almighty dollar will cast global economic leadership of a saving-short U.S. economy in a very harsh light. Exorbitant privilege needs to be earned, not taken for granted.

Stephen Roach, a faculty member at Yale University and former chairman of Morgan Stanley Asia, is the author of "Unbalanced: The Codependency of America and China."

America’s Calamity

Many now protesting against racism and police brutality in the US won’t be satisfied unless the result of this national spasm is improved schools, health care, and job opportunities for minorities – a fair shake for black people. What will happen when America once again falls short of honoring its professed values?

Elizabeth Drew

drew57_ERIC BARADATAFP via Getty Images_USprotestwhitehousegeorgefloyd

WASHINGTON, DC – It has been a calamity for the United States that, when two national tragedies – the COVID-19 crisis and the country’s legacy of racism – collided this spring, the occupant of the White House was an unstable person, totally unfit to govern.

President Donald Trump’s inability to cope with the pandemic has so far led to more than 112,000 deaths, one of the world’s highest per capita mortality rates for COVID-19, with the coronavirus still spreading to areas not previously hit. The public-health crisis has also triggered the worst economic downturn in the US since the Great Depression of the 1930s.

As subsequent events have unfolded, it is no exaggeration to say that the American experiment – 244 years old next month – is in serious danger, even more so than during the constitutional crisis caused by the Watergate scandal of the 1970s. The pandemic coincided with the latest in a long series of race-related outrages, and it has caused the country to explode.

Millions of cooped-up Americans watched, over and over, the cold-blooded killing of an unarmed, handcuffed black man, George Floyd, by four Minneapolis police officers. One, Derek Chauvin, casually kneeled on Floyd’s neck for nearly nine minutes until he lost consciousness; two others sat on Floyd’s back, further depriving him of oxygen; the fourth looked on, keeping appalled bystanders at bay as Floyd, struggling to live, cried out, “Please, I can’t breathe.”

Floyd’s killing shocked the country’s conscience. It provided Americans with an unambiguous picture of the true meaning of “police brutality.” After being shut in for weeks by lockdowns and social-distancing rules, people had considerable pent-up energy, which the recordings of Floyd’s death unleashed. Protests began in Minneapolis the next day and quickly spread across the country. Tens of thousands of people of all races and ages participated.

Demonstrators who engaged in violence, looting, and property destruction (including setting police cars on fire) were catnip for Trump, whose brand of politics depends on stoking his supporters’ outrage. His Nixon-like “law and order” rhetoric aimed to erase the distinction between the violent protesters and the far larger number of peaceful ones.

US Attorney General William Barr was, as always, ready to help Trump exploit the situation and accrue more power. Because Washington, DC, is not a state, Trump and Barr had leeway to impose their own solution. They used various state national guards, the military-like arms of federal agencies, and, unnervingly, some unidentifiable forces. Washington became an occupied city.

Trump pretends to be a tough guy and is authoritarian to the bone. Yet, as the protests swelled outside the White House, he decided, or so he claimed, that it was time to “inspect” the president’s mammoth underground bunker. The White House itself had already become a bunker: during the chaos after Floyd’s murder, the height of the fence surrounding its grounds was nearly doubled.

True to his inclination to stir things up, Trump tweeted that, had demonstrators breached that fence, “they would have been greeted with the most vicious dogs, and most ominous weapons, I have ever seen.”

The deeply disturbing use of force to clear peaceful demonstrators from Lafayette Square across from the White House – a violation of their rights for which Barr initially took credit – also shocked the national conscience. Trump’s less-than-brilliant advisers – most prominent, his daughter Ivanka and son-in-law Jared Kushner – had concocted a political stunt that involved Trump walking across the square to the boarded-up St John’s church, the basement of which had been set on fire.

But they failed to think through what he would do when he got there. Trump awkwardly waved a Bible, sometimes holding it upside down, for photos that only made him look foolish.

Moreover, Trump’s advocacy of flooding America’s cities with active-duty US troops was met with widespread antipathy and scorn. A cascade of former high-ranking military officials, including James Mattis, the retired Marine general who was Trump’s defense secretary until last year, openly denounced the president.

Mattis, who described himself as “angry and appalled” at the idea of using the troops to put down the demonstrations, said Americans were “witnessing the consequences of three years without mature leadership.”

But those who saw in such statements the unraveling of Trump’s presidency didn’t factor in Republicans’ continued fealty. Faced with the choice between Mattis and Trump, nearly all elected Republicans stuck with the president.

They had defended him for so long, shared so many of his views, and become so dependent on him and his donors that they weren’t ready to break with him, despite knowing that current polls suggest he might go down in November’s election – and take them down with him.

While the national uprising against racist policing will lead to some reforms, such as improved training and the prohibition of choke holds and neck restraints like the one that killed Floyd, rethinking the role of the police alone, no matter how radical the results are, cannot eliminate racism, the great stain left on America by the founders’ compromise with slavery.

Governments can do nothing about the quotidian offenses of living as a black person in America – the empty taxis that refuse to stop, being mistaken for employees in supermarkets, the myriad intentional and unintentional insults.

Many now in the streets won’t be satisfied unless the result of this national spasm is improved schools, health care, and job opportunities for minorities – a fair shake for black people. What will happen when America once again falls short of honoring its professed values?

Elizabeth Drew is a Washington-based journalist and the author, most recently, of Washington Journal: Reporting Watergate and Richard Nixon's Downfall.


Chris Vermeullen
We believe the upside price move in Gold, coinciding with a potential parabolic upside price move in the US stock market, could represent a very unique scenario where the US Federal Reserve and Global Central Banks have entered the ultimate battle to attempt to regain control of the global capital and credit markets after the 2008 credit crisis and the current COVID-19 economic crisis. 

The only reason Gold is climbing to near new all-time high levels is that global risk has become a major issue and the US Fed as well as central banks are doing everything possible to provide capital liquidity and support through what may become an extended global recession.

Right now, Gold is hedging global market risks and unknowns. 

Once Gold clears the $2000 price level, we believe Gold will enter a parabolic upside price trend that could accelerate well above $3250 very quickly – possibly before the end of 2020. 

This would indicate that global traders and investors have priced global market risk at likely 3x higher than most common risk-off market scenarios. 

The only other time when this extreme risk factoring took place in Gold was in early 1980 when interest rates were 15% or higher and the US economy had entered a period of stagflation (the late 1970s). 

At that time, the price of Gold reached nearly 7x the price of the SPX at that time before contracting after a peak in 1981.

If our research is correct, Gold has just begun an upside price rally that will attempt to hedge credit and global market risks resulting from the past 10+ years of US Federal Reserve and global central bank intervention. 

The attempts of the global central banks to support the credit and capital markets have created a massive credit/debt bubble that has pushed the US stock market into an incredible bubble rally. 

We’ve seen nothing like this in recent history.

Until fiscal responsibility returns to the global markets, expect Gold and Silver to continue to hedge global risks and while the world continues to expand debt and credit in an attempt to support weaker economic data/output – continue to expect hedging to continue. 

Until global investors perceive the debt/credit risks have abated – Gold and Silver will continue to rally in an attempt to hedge the massive risks to the global credit and banking sectors.

At this point – it is like a game of “chicken”.  Either the global central banks find some way to prompt organic economic growth or the precious metals markets will continue to illustrate the fear in the markets related to credit risks. 

Should the credit markets or banking sector collapse or experience any real extended risks, Gold could rally to unbelievable levels (like in 1979~80; where the price of Gold was over $650 per ounce and the price of the SPX was $110). 

If that were to happen at today’s levels, Gold would reach levels above $22,250 or higher.  Think about it.

We continue to urge our clients to stay very cautious of the current price rally in the US stock market as we continue to see risks shuffling just below the surface.  Watch Gold and Silver. 

Once these metals start to really breakout, you are going to see a big shift in how investors perceive risk in the global markets. 

Read our article about the US stock market going parabolic – it is important that you understand what is happening right now.


Silver is likely one of the most incredible opportunities for skilled technical traders ever.  This secondary precious metal is still trading below $19 per ounce – well below the $50 per ounce peak reached in 2011. 

If you understand our logic and can appreciate how Gold could rally to levels above $5000 or $10,000 because of extreme risk factoring, then consider that Silver could rally to levels above $250 per ounce given the same risk factors – that’s a 1300% price increase.

This is why we continue to urge our clients and followers to stay cautious – stay very cautious. 

We’ve been mostly in cash and have been executing very selective “low allocation” trades over the past 5+ months.  We called for a massive super-cycle event in August 2019 based on our 600+ year super-cycle modeling. 

When that longer-term super-cycle was delayed because of the US/China trade deal news near the end of 2019, we knew the super-cycle event would happen at some point in the near future. 

Along comes the COVID-19 event about 60 days later. 

It just took another 2 months for the world to understand how much risk was involved in a global pandemic event. 

The process of the world reacting to the COVID-19 risks set off a series of events that leads us to right now.

The Market’s Optimism Is Built on a Foolish Proposition

By Andy Krieger, Editor, Money Trends

The U.S. hasn’t seen unrest like this since the assassination of Dr. Martin Luther King Jr. in 1968.

We’ve had widespread violent protests, riots, and looting across dozens of major cities, with thousands of arrests.

Yet the impact on the markets has been negligible. Stocks continue to rally. They’ve surpassed the highs of the market when the first several Covid-19 deaths in the U.S. were announced.

However, I believe that won’t last. Let me explain…

A Foolish Proposition

The only thing that seems to be relevant to the markets is the de facto put option from the Fed.

The 40% economic collapse in the second quarter is irrelevant. So are the 110,000 U.S. deaths from the coronavirus.

In the minds of stock buyers, the Fed is going to continue providing support and economic stimulus.

In reality, the economy is a mess, and the civil unrest is only going to hinder the recovery. Damage to property and extensive curfews are not helpful to economic growth, to say the least.

Not to mention, the mass riots and protests provide a perfect breeding ground for the virus to spread, as tens of thousands of shouting people are bunched together for many hours.

The likelihood of a second wave of Covid-19 infections is growing stronger by the day. Yet none of these things seem to matter to the markets.

People are relying on the assurances of Jerome Powell, the Chairman of the Federal Reserve, that the Fed is not going to run out of ammunition… and that the Fed will provide essentially unlimited lending to support the economy.

But counting on the Fed to keep up the stimulus indefinitely is a very foolish proposition that is doomed to fail. Here’s why…

Even the Fed Has Limits

The system is not seizing up right now. The banks are working efficiently. No, they are not lending easily, but they always prefer to lend to companies and people who don’t need the money.

Companies that are weak can realistically be expected to go out of business, not get bailed out by taxpayers. That is not the function of government in a capitalistic, democratic society.

That is why stocks are theoretically considered “risky” assets. Companies can go out of business and fail. They aren’t supposed to get propped up and supported due to some sort of shady cronyism.

But today’s system has been distorted by funny money.

The Fed just keeps blowing out its balance sheet, pumping ever more money into a weak economy to trick people into thinking that things are alright.

In 2019, the Fed’s balance sheet stood at $3.76 trillion. Since the onset of the coronavirus, the Fed has grown the assets in its balance sheet to $7.1 trillion. Yes, $7.1 trillion!

That sounds a bit scary. If I just keep borrowing money so that my balance sheet is getting bigger and bigger, am I getting wealthier?

Of course not. That is not a creation of true wealth. It is a creation of true debt.

Bad Environment for Risky Assets

This is what I’m referring to when I talk about funny money.

The huge injections of borrowed funds simply pushed up the value of assets like stocks, without the underlying economic growth that should really be driving the stock market.

That’s why the market’s valuations today are truly extraordinary. The P/E ratios – which measure how much investors are paying for each dollar of a company’s earnings – point to fantastic growth rates and an economy that is humming on all cylinders.

They are not discounting an economy that just needed over $5 trillion of emergency bailout spending.

However, the Fed and the Treasury do have limits, as much as they may not want to admit it. At some point borrowers will resist any further debt issuance by the Treasury.

Federal borrowing will start to crowd out money that would otherwise go towards investment.

The Fed will finally have to restrain its balance sheet and start to reduce its size. And the trajectory of long-term economic growth will be more modest.

This is not a great environment for risky assets.

We don’t know which catalyst will propel the markets in a direction that matches the fundamentals.

But that time is coming.

At a minimum, we will see a correction of 10% from current levels in the S&P 500. Potentially, we will see a second wave of violent selling that will melt down to new lows.