by Raul Diego, MintPress News:

Money has been moving like lava through the economy for almost two months now amid the coronavirus shutdowns resulting in millions of layoffs, which some bank officials like J.P. Morgan’s Bob Michele, say will keep unemployment high for at least a decade. The bleak prediction comes as the April jobs report, published today, reported that 20.5 million people joined the ranks of the unemployed. If we consider a study done by the Economic Policy Institute, the real figure could be twice larger.

Meanwhile, mortgage lending has slowed to a standstill as credit availability tanked 26 percent since February and laid-off workers around the country are finding they make more money collecting unemployment than cashing their payroll check. Michele speculated about what might happen “when Paycheck Protection Program (PPP) runs out of money”, venturing that curbed consumer spending will cause even more layoffs in the near future.

But the dangers of an exceptionally slowed-down U.S. economy can and is already starting to have an acute effect on the rest of the world. Brazilian Economy Minister Paulo Guedes, warned yesterday of an “economic collapse” as a result of the measures put in place to stem the coronavirus outbreak. The sudden downturn has left Brazilian President Jair Bolsonaro’s plan to “re-start” Brazil’s economy in the dust, as the IMF predicts a 5.3 percent contraction to the Brazilian economy this year.

A brief emitted and updated on May 4 by the UN’s Industrial Development Organization (UNIDO), projects that developing countries, especially in Latin America and Eurasia, will be the “hardest hit” by the economic impact of the COVID-19 pandemic response. Tellingly, the brief includes a study showing “unprecedented outflows of capital from emerging economies” into the coffers of the first world.

As jobs disappear and our everyday lives are disrupted in the name of flattening the curve of the coronavirus WHO-declared pandemic, a picture of what tomorrow will look like is still too uncertain to make out, but all indications show that we are close to a breaking point.

No Jobs and no credit

In a “series of economic briefings” leading up to President Donald Trump’s decision to scrap the CDC’s reopening guidelines yesterday, the President was warned that up to “50 percent of the country’s small businesses” could disappear.

Mortgage lending has also come to a standstill, as banks get stricter on lending terms and reserve the toughest rules for Fannie & Freddie Mac loans. J.P. Morgan and Wells Fargo, two of the usual suspects in this century’s financial scandals, are requiring prime credit scores of 700 or above and, in the case of JPM, a 20 percent down payment on the home price. Indeed, our too-big-to-fail financial institutions who benefited so egregiously in the 2008 bailouts are once again mitigating their risk on our dime, but this time before the crash actually happens.

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