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Public Trust is a Collateral Casualty of Covid-19

“In God We Trust” is the motto of the United States of America. I never thought of it as a question rather than a statement. It is above the Capitol or the White House, depending on the banknote. It is the supreme reference of our country, but it is also our way to put our faith in our global currency the United States Dollar.

In many conversations recently, the question of trust came up. Almost unanimously, the mistrust in the country’s leadership emerged as a collateral casualty of Covid-19. Not that the virus provoked this mistrust, but the reactions that it triggered demonstrated an underlying lack of confidence in the pillars of our society.

As I was watching the streaming of “Hamilton”, available earlier than planned to boost our spirit, I realized how impeccably our forefathers had balanced the Republic and its democracy. The emergence of a sinisterly incompetent but bullying Presidency has made it obvious that the damage that the Executive Branch could cause was everywhere.

Congress's approval rate has consistently been below 50% in the past five years, but it now lies at a miserable 25%. The House of Representatives was able to regain some public esteem with Nancy Pelosi, the destruction of the Senate Majority under Mitch McConnell has shown the inexistence of the Republican Party, captured by the President.

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Source: Gallup

Even though the judicial branch managed to keep its standards and pushed back many of the outrageously divisive initiatives of the President, its reputation suffered from the appointment of Judge Kavanaugh suspect of rape, the appointment of incompetent judges, and — more recently — by unimaginable pardon. The presence of corruption and personal conflicts of interest when he fires the prosecutor of the anomalies of his family business and his legal advisor, the (in)famous Rudi Giuliani. The collusion between the White House and the Department of Justice is another blow to the judicial branch.

The legitimate commending of the front-line heroes, who took care of Covid-19 victims, could not hide the deplorable state of our health care system. The denial in front of warnings of prominent leaders like Bill Gates was absurd.

The handling of the crisis by the White House, the white militia threatening cautious governors, the Covid-19 demonstrators, and the campaigners against masks are nothing short of irresponsible. Its opposition to science was appalling and the refusal to take nationwide measures was a dereliction of duty.

For a country like the United States of America to have five times fewer beds than Japan is a shame. The whole industry is more wired for foreign visitors paying extraordinary fees than for the people.

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Source: Statista

But the scientific community is the one I worry about: unable to agree on anything, even the simple use of masks, the contradiction between “experts” and the bullying of Dr. Fauci by the White House shows how unscientifically we were prepared to handle such a threat. Is virology a science? Not to mention the politicians, journalists, or corporate leaders who found a new vocation in the media as medical experts.

“President Trump has made more than 20,000 false or misleading claims” according to the Washington Post fact-checker. It should therefore not merit public attention.

The print media continued to report as a leading page item every lie of the White House. Not happy with that, every single of them has used Facebook. LinkedIn and Twitter to reverberate those headlines including a photo of Donald Trump. By doing so, they played in the hand of Donald Trump. They did it during the 2016 campaign by almost ignoring Hillary Clinton. They continue to do it by overexposing Donald Trump and almost ignoring Joe Biden.

Yet, serious media pretend that we should subscribe to “serious journalism”. Don’t they know that bad publicity is good publicity for Donald Trump? Putting him on the fifth page would infuriate him more, as well as not linking social media to those articles. Is this complicity to the flamboyant leadership of a despicable President?

They are increasingly looking like social media who themselves turned into populist tabloids. They desperately try to become tabloids of one kind or another. The coverage of the coronavirus crisis by serious media such as the New York Times or the BBC of the coronavirus has overshadowed any form of news. The tone of competition between countries or states exacerbated. It obliterated serious problems such as the illegal takeover of Hong Kong by China who also attacked India, the grave consequences of the skyrocketing balance sheet of the Federal Reserve, the record budget deficit of June 2020 equivalent to the whole year 2019, the gravity of unemployment and recession and the echo to a prompt recovery that is close to utopia.

Behind this attitude, is the fight for publicity. Over 90% of Facebook’s revenues come from advertising. Regular media are starving for advertising revenues. One can understand the importance of their coverage in social media and through regular channels. But behind this is the conspiracy of corporate America, the public relations firms, and the advertising agencies who are massively channeling those costs by preference to social media. Is it because social media do not argue? Are corporate leaders so venal that they are happy to ignore serious media to the benefits of sensationalism? Can money buy the truth?

The 10 million unemployed is the most massive layoff, mostly by large companies.

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Yet, we do not know how many of them were genuine. Companies might have laid off or furloughed employees, while they continued to work. Many companies used Federal stimulus money to pay for those employees, especially during the period where additional unemployment benefits were paid.

The problem started much earlier: airline companies bought back their shares making them vulnerable to any downturn to boost their share prices. The practice amounted to $5 trillion for the entire corporate world over the past five years, forcing the Government to step in with taxpayers’ money.

The PPP program was aimed at keeping employment for small businesses through the Small Business Administration lending program. It was also the worst show of greed and selfishness by businesses who should not even have applied for decency reason. Vibra boasts annual revenues of $1 billion, but when the company got in line to receive what is essentially free government money (the loans are forgivable), it made itself seem small. From Vibra’s corporate address in Pennsylvania, 26 limited liability companies received PPP loans, 23 of them from the same bank, with almost all the loan approvals coming on the same day in April.

The delay for this urgent intervention was due to the greed of large banks who wanted to be paid for what was effectively a service to their existing clients: they obtained $24 billion in fees. JPMorgan Chase & Co. and Bank of America Corp. are in line to split between $1.5 billion and $2.6 billion in fees for being the conduits of the government’s aid program for small businesses stricken by the coronavirus shutdown. In front of the public outrage of the $ 24 billion of fees, they made on this program JP Morgan, Bank of America, and others have pledged to donate those fees to small-business lending needs, according to an analysis of newly released data.

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Source: CRFB

If at least the US public finance situation were solid.

Entering into the Covid-19 crisis, public finance was already in a difficult situation with $ 23 trillion of federal debt. It exceeds $27 trillion and will reach $30 trillion at the end of the year.

In June 2020 alone, the budget deficit reached $864 billion, compared to $ 989 billion for the whole fiscal year 2019. The whole budget deficit for 2020 will reach at least $3.8 trillion. That implies that we have reached an unbearable situation and that the United States of America is at the end of its fiscal policy.

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Source: CRFB

The Federal Reserve massively injected $3 trillion in one month, equivalent to its total intervention of the past ten years. Most of it is in mortgage loans and US Treasuries.

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Source: US Fed

If public trust can be placed in God, the crisis of confidence in public leadership is the biggest threat to the United States. It is certainly not the first time. On July 15, 1979, Jimmy Carter delivered a speech to the American people from the Oval Office.

I want to talk to you right now about a fundamental threat to American democracy. The threat is nearly invisible in ordinary ways. It is a crisis of confidence. I want to talk to you right now about a fundamental threat to American democracy. The threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation. The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America.

Regaining trust is extraordinarily difficult in normal times. This challenge needs to be recognized and confronted. Where are the leaders who are able to drive the country in this direction?

Written by

CEO at Galileo Global Advisors and Adjunct professor Columbia Law School.

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