“The Man” Behind the Mask

  • Masks… torches and pitchforks?
  • A back-and-forth history of viral transmission
  • Breaking the collective trust
  • BLS vs. real-world unemployment stats
  • Fed’s off-the-charts balance sheet
  • Readers on a laundromat and lawn care… the GDP… India’s heavy-handed tactics… and more!

So now the people who presume to rule us want us to use masks? We’re all for that… but under the circumstances, we want torches and pitchforks too.

“The Trump administration is expected to recommend that Americans in parts of the U.S. where the novel coronavirus is rapidly spreading wear cloth face masks or face coverings when in public to reduce transmission,” says The Wall Street Journal.

“Vice President Mike Pence said guidance on the topic would be issued in the coming days,” per The Washington Post.

The mayors of New York and Los Angeles aren’t waiting on Washington; they’re already urging their citizens to mask up.

Before it all goes down Orwell’s memory hole, let’s revisit some very recent history.

We’ll start on Feb. 4. Here’s a representative news story of the time from a mainstream outlet, Business Insider — complete with snarky illustration.

Wuhan Headline

Fast-forward to the end of February and here’s what the U.S. surgeon general was telling us…


Exactly why the same masks that protect health care providers from infection are useless for the rest of us, he did not explain.

But that same day, Vice President Pence — the guy who now says mask “guidance” is forthcoming soon — was emphatic: “Let me be very clear… The average American does not need to go out and buy a mask.”

Two days later, here’s what Vox, the website that purports to “explain” the news, posted…

Vox graphic

Four days later on his personal Twitter account, the surgeon general doubled down — in a tweet that’s since been deleted.


Then on March 11, the mayor of New York — the one urging his citizens to wear masks now — said this. Note the first sentence in the tweet…


But that was then and this is now. Here’s the surgeon general two days ago…


CDC director Robert Redfield added, “Particularly with the new data… this is being critically re-reviewed to see if there’s potential additional value for individuals… that may be asymptomatically infected.”

New data?! What the actual hell.

Any nonscientist following corona news was aware by mid-March — at the latest — of “asymptomatic spread.” You can have zero symptoms for as long as two weeks and still scatter the virus like the nozzle of a garden hose set to “spray.” That’s why everyday folks on Twitter were aghast at the sight of young people packing Florida beaches for spring break.

Also in mid-March, the value of masks was apparent when the Financial Times published an article headlined, “Containing Coronavirus: Lessons From Asia.”

It included a chart showing the cumulative number of cases in a dozen or so countries; the starting point was the day when the 100th case turned up. The best results came from Hong Kong, Singapore, Japan and South Korea.

Several internet wags helpfully annotated the chart. “Flattening the curve,” indeed…

Masks vs No Masks

Ah, but wasn’t it all justified as a “noble lie”? After all, there was a shortage of masks for U.S. health care providers. Wasn’t it for the greater good?

Not so, says Zeynep Tufekci, an information-science researcher who’s studied and lectured about the science of pandemics — including SARS in 2003.

“The message became counterproductive,” she wrote in The New York Times, “and may have encouraged even more hoarding because it seemed as though authorities were shaping the message around managing the scarcity rather than confronting the reality of the situation.”

Oh, the Times published that column on March 17 — two weeks before the CDC and the surgeon general finally got around to their flip-flop.

In addition, the “noble lie” argument doesn’t fly given how a not-tiny amount of the mask shortage is the federal government’s own fault.

One example: Customs and Border Protection had a stockpile of 1.5 million N95 masks — the good medical-grade stuff. They were past their expiration date, but there are ways to use them safely regardless. Hospitals could surely use them now, right?

But no. According to The Washington Post, CBP’s parent agency — the Department of Homeland Security — decided to hand them over to the TSA, “whose workforce has been clamoring for protective equipment.” Never mind that hardly anyone’s passing through airport security these days.

Another example: The FDA barred the import of KN95 masks — not as good as N95, but good enough under the circumstances — because they’re made in overseas factories that haven’t been FDA-certified.

From Buzzfeed: “Without the FDA’s seal of approval, importers are hesitant to order KN95 masks because they worry they’ll get held up at customs. Many hospitals are refusing to accept them, even as free donations, because they fear legal liability should a health care worker get ill while using a nonpermitted device.”

And as noted here in The 5 already, it was only last week the FDA relaxed its byzantine “premarket notification rules” for clothing makers and other companies that wish to meet the need for garden-variety surgical masks.

And yet this constellation of cretins who have so badly botched something as simple as masks are the same people who insist we must shut down the U.S. economy because they know best.

Who knows, maybe it does require such an extreme slowdown of human activity; The 5 does not count itself among the crowd that believed, “It’s just the flu, bro.” We were anticipating “social distancing” weeks before it became a household word.

But we know this much: The so-called experts who demand we “shelter in place” have done nothing to earn our collective trust.

Which brings us to the March unemployment numbers.

They come with several caveats. Starting with the fact they don’t cover the entire month of March. Here’s what they do cover, according to the Bureau of Labor Statistics: “Employment data refer to persons on establishment payrolls who worked or received pay for any part of the pay period that includes the 12th day of the month.”

Heck, on March 12, the NCAA was still thinking it could still stage March Madness basketball games — albeit without any fans in the stands.

Anyway, the wonks at BLS calculate a loss of 701,000 jobs in March. That’s the first monthly loss since early 2010. It’s not the worst loss ever — there were several months in early 2009 that were worse. No, the “worst ever” will come next month.

With that, it’s time to bring back the chart tracking the job losses and recoveries from every recession since World War II. The little red line on the left is where we are now.

Here We Go Again

“What made the 2007 recession so scary was both the depth and duration of the job losses,” writes chartmeister Bill McBride — still at it after lo these many years at his Calculated Risk blog. It wasn’t until June 2014 he could put this chart into mothballs; it took an extraordinary 6½ years to get back to even.

“The 2020 recession will have the sharpest decline in jobs, but we don’t know about the duration of the losses. Duration will depend on the battle against the virus,” he says guardedly.

That said, “Next month will be stunning.”

The official unemployment rate jumped from a lowest-in-50-years 3.5% to 4.4% — the largest monthly increase since the mid-1970s.

The real-world unemployment rate from Shadow Government Statistics jumped from 21.1% in February to 22.9% in March — the highest level since August 2016.

To be clear, ShadowStats’ John Williams is working with the same numbers as the Bureau of Labor Statistics; it’s just that he runs the numbers the way the BLS did 40 years ago to get a more honest figure. His figure is so much higher — and has been for many years — because it accounts for legions of part-timers who want to work full time… and even more people who just plain gave up looking for work.

Speaking of “off the charts” numbers, there’s the Federal Reserve’s balance sheet.

The Fed updates the numbers once a week, late on Thursday.


That’s $5.8 trillion where it stands now. The Fed has conjured $1.5 trillion into existence in a mere three weeks to shore up the financial system and support the seven alphabet-soup programs it’s created in recent weeks.

Not even the response to the “Lehman moment” in 2008 comes close.

The bulk of those holdings are U.S. Treasuries. “The Fed increased its purchases of U.S. Treasuries that are flooding Wall Street by $362 billion in one week’s time, giving it a new total of $3.34 trillion of Treasury securities on its balance sheet,” write Pam Martens and Russ Martens at Wall Street on Parade.

“It calls this maneuver Quantitative Easing but it’s actually an unwanted debt mop-up operation.”

Word. Without the Fed’s purchases, how could a 10-year T-note yield a paltry 0.58% as we write today?

Stocks are losing ground again as the week stumbles to a close. All the major indexes are down about 2.5%, the Dow back below 21,000.

Gold’s paper price is up a skootch at $1,616.

Crude has been rising relentlessly the last two days amid rumors that Saudi Arabia and Russia will call off their price war. A barrel of West Texas Intermediate trades at $27.58 — still pitifully low by the standards of the last several years, but it was very near $20 a mere 48 hours ago.

“Help me understand — services are 70% of GDP?” a reader inquires.

“My friend owns a laundromat and I own a lawn care service. He charges me $20.00/week to wash my clothes and I charge him $20.00/week to mow his yard. How does that add $2,080.00 to the year’s GDP versus me wearing dirty clothes for the year and him letting his lawn go to seed?

“Since services are optional will we evidently see unemployment go to 70%?”

The 5: Think you’ve got a couple of things confused. It’s true that services are a way bigger portion of the economy than manufacturing these days, but that’s not where the 70% figure comes from.

It’s consumer spending that accounts for 70% of GDP — with the rest consisting of government spending, business investment and net exports.

But you’re still onto something, which is how GDP is largely nonsense. Years ago, Agora founder Bill Bonner pointed out if you mow your lawn and your neighbor mows his lawn, GDP remains static. But if you pay him to mow your lawn, and he pays you to mow his lawn, GDP rises!

“The fundamental problem with GDP is that it is an abstraction,” observed our old friend Chris Mayer. “It doesn’t mean anything. You can’t eat GDP. You can’t wear it. You can’t spend it. It doesn’t change your life or your job. A rising GDP doesn’t mean you get any wealthier. It’s just a number that economists can play with.”

”When I see the Indian police beating a helpless man,” a reader writes after we noted the rough enforcement of corona curfew in the world’s biggest democracy, “I think to myself about why the United States’ Founders like Washington and Jefferson supported the right to keep and bear arms so strongly and why today’s elitist politicians around the world are doing their best to restrict or totally eliminate that right.”

The 5: Hell, we don’t even have the right to peaceably assemble to ask the government for redress of any grievances we have about masks right now. Convenient, no?

Best regards,

David Gonigam

Dave Gonigam
The 5 Min. Forecast

P.S. We’ll try to end the week on a hopeful note, and still come back around to the subject of masks.

From a longtime reader in Chicago’s western suburbs: “This is a marriage made in heaven, with a group called Re:new, which employs women in Wheaton, Illinois, who are refugees or similar and are trying to make a life for themselves.

“FIVE measly bucks per mask, free shipping and follows CDC standards. You can protect yourself, help the medical community by not ordering ‘regular’ masks, help hurting women rebuild their lives, and more.”

Here’s the link to their website. “Another plus,” the reader reminds us, “is they are learning to use the private sector and not be dependent on the public purse!”

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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