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How the COVID-19 Bailout Gave Wall Street a No-Lose Casino

ILLUSTRATION: Rolling Stone/Victor Juhasz

While ordinary Americans face record unemployment and loss, the COVID-19 bailout has saved the very rich

By Matt Taibbi | 13 May 2020

ROLLING STONE — In late April Marko Kolanovic, a financial analyst for JPMorgan Chase, wrote to clients with good news. Pandemic aside, investors should expect stock prices in S&P 500 companies to return to record numbers some time early next year!

“The S&P 500 should attain previous all-time highs,” Kolanovic wrote, “if the monetary measures are sustained.”

The key part of this phrase was the last bit, “if the monetary measures are sustained.” In countries that did not have a Federal Reserve Bank shooting a bazooka of cash daily at Wall Street, Kolanovic suggested the coronavirus would result in a 30 percent decline in the present value of earnings.

In other words, without intervention by the Federal Reserve, the United States in the coronavirus era would be looking at a Depression-level contraction.

Assuming the Fed bazooka keeps firing, however, a large portion of the investor class is already on a road leading back to champagne and confetti. And that, as Robert Frost would say, has made all the difference. […]

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