Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-65371 Sun, 31 May 2020 04:14:25 GMT America Is a Tinderbox http://implode-explode.com/viewnews/2020-05-31_AmericaIsaTinderbox.html So many things make America combustible right now: mass unemployment, a pandemic that's laid bare murderous health and economic inequalities, teenagers with little to do, police violence, right-wingers itching for a second civil war and a president eager to pour gasoline on every fire. "I think we're indeed in a moment where things are going to get a lot more tense before they get more peaceful," said the University of Michigan historian Heather Ann Thompson, who won the Pulitzer Prize for her 2016 book "Blood in the Water: The Attica Prison Uprising of 1971 and Its Legacy."

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These demonstrations were sparked by specific instances of police violence, but they also take place in a context of widespread health and economic devastation that's been disproportionately borne by people of color, especially those who are poor. "Sociologists have studied collective behavior, urban unrest for decades, and I think it's safe to say that the consensus view is that it's never just about a precipitating incident that resulted in the unrest," Darnell Hunt, dean of social sciences at U.C.L.A., told me. "It's always a collection of factors that make the situation ripe for collective behavior, unrest and mobilization."

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iehi-feed-65369 Tue, 26 May 2020 16:43:03 GMT Florida Landlords Are Already Lining Up To Evict People http://implode-explode.com/viewnews/2020-05-26_FloridaLandlordsAreAlreadyLiningUpToEvictPeople.html iehi-feed-65362 Sun, 17 May 2020 17:51:51 GMT Rethinking Cities, Offices, WeWork, and More, After COVID-19 http://implode-explode.com/viewnews/2020-05-17_RethinkingCitiesOfficesWeWorkandMoreAfterCOVID19.html I don't think many smart and creative people will leave NYC becuase of Covid-19. I think Covid-19 made many smart and creative people realize that NYC is just not worth it.

Something in the cost-benefit analysis no longer makes sense. And not only because many people can work remotely. But also because the city itself no longer maintains its own side of the bargain.

Crime is going up. Public transport is deteriorating. Housing costs are skyrocketing due to lack of new supply, especially around existing public transport stations. The streets are less pleasant and less safe to walk in -- notwithstanding a few cool experiments that are pedestrian-friendly. And that's before Covid-19.

I am using NYC as an example but the same is true for many other cities in developed countries.

What I am trying ot say is: Cities can still be great and attractive, especially for smart and creative people who can live anywhere they like. But they have to step up their game. Saying that they're too old, or too big, or need more money is a poor excuse. If Tokyo can be clean, be safe, walkable, have reasonably-priced housing, and have incredible public transport -- so can New York. More on this, soon.

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iehi-feed-65355 Mon, 11 May 2020 22:19:01 GMT I've Seen Trump's Tax Returns and You Should, Too http://implode-explode.com/viewnews/2020-05-11_IveSeenTrumpsTaxReturnsandYouShouldToo.html Sometimes a tweet is just a tweet. And sometimes it's an advertisement for your business. And sometimes, when the president of the United States promotes his business on Twitter while overseeing the federal response to a pandemic gutting the economy, it's a financial conflict of interest.

Is Trump pushing businesses to reopen despite ongoing perils attached to the coronavirus because it's best for the country? Or is it because Covid-19 has battered his family's fortunes? Or is it simply because he has the upcoming presidential election in mind? Who knows. But we are more than three years into this presidency and the same questions that have hung over Trump from the moment he launched his bid for the White House still linger: What are the contours of his personal finances and how do they inform his actions and policies?

On Tuesday, the Supreme Court will help shape our understanding of some of this when it hears arguments involving efforts by Congress and a New York prosecutor to get access to Trump's tax returns, bank documents and bookkeeping records.

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Trump sued me for libel in 2006 for a biography I wrote, "TrumpNation," claiming the book unfairly and intentionally misrepresented his track record as a businessman and lowballed the size of his fortune. The suit was dismissed in 2011.

During the course of the litigation, Trump resisted releasing his tax returns and other financial records. My lawyers got the returns, and while I can't disclose specifics, I imagine that Trump is hesitant to release them now because they would reveal how robust his businesses actually are and shine a light on some of his foreign sources of income.

Deutsche Bank AG, one of the firms Trump's lawyers are trying to stifle in their arguments before the Supreme Court, also turned over documents in my case -- including its own assessment of Trump's wealth that pegged his fortune at $788 million in 2004, well below the $3 billion he told them he had at the time. Deutsche is the only major global bank to have continued doing business with Trump since the early 1990s and is conversant with his financial comings and goings since then.

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iehi-feed-65354 Mon, 11 May 2020 17:38:40 GMT Small Businesses Counting on Loan Forgiveness Could Be Stuck With Debt http://implode-explode.com/viewnews/2020-05-11_SmallBusinessesCountingonLoanForgivenessCouldBeStuckWithDebt.html With thousands of businesses preparing to ask for their eight-week loans to be forgiven, banks and borrowers are just now beginning to realize how complicated the program may turn out to be. Along with lawmakers, they are pushing the Treasury Department, which is overseeing the loan fund, to make forgiveness requirements easier to meet.

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"Virtually every small business borrower believes that this will be forgiven," said Paul Merski, a lobbyist for the Independent Community Bankers of America. "They took it out assuming that it would be a grant but it's not -- you have to abide by very complex rules and regulations on how this is spent."

One of the biggest stumbling blocks is a requirement that businesses allocate 75 percent of the loan money to cover payroll costs, with only 25 percent allowed for rent, utilities and other overhead. That has become more difficult as the economic crisis from the virus drags on and as some businesses face a prolonged period of depressed sales, even once they reopen.

Some businesses are facing smaller payroll expenses because workers have opted to accept more generous unemployment insurance benefits, while only a handful of states have so far allowed businesses to reopen.

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iehi-feed-65349 Fri, 08 May 2020 15:19:27 GMT The record number of people applying for jobless benefits doesn't count new PUA applicants http://implode-explode.com/viewnews/2020-05-08_TherecordnumberofpeopleapplyingforjoblessbenefitsdoesntcountnewP.html [The headline jobs lost number is] an under-count -- by at least 2.5 million and probably a lot more... States are just starting to report the number of new claims filed by people such as gig workers, freelance writers and independent contractors who previously were ineligible for benefits... Only 23 states reported the number of PUA claims last week and even fewer in the prior three weeks. They continue to lag behind in processing, reporting and paying out claims.

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What we know for sure is this: At least 30 million people have applied for benefits during the pandemic, but it's probably more like 35 million and still going up.

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iehi-feed-65348 Fri, 08 May 2020 15:12:18 GMT Coronavirus costs the U.S. 20.5 million jobs in April as unemployment soars to 14.7% http://implode-explode.com/viewnews/2020-05-08_CoronaviruscoststheUS205millionjobsinAprilasunemploymentsoarsto1.html If millions of Americans who have been furloughed and expect to return to their jobs are counted, the Bureau of Labor Statistics said the jobless rate would have almost 5 percentage points higher at nearly 20%.

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Although the April employment report paints an ugly portrait of the U.S. labor market, the devastation runs even deeper than the official statistics show.

For one thing, some of the people who are still getting paid by their companies but aren't working probably were not included in the jobless rate. Others have stopped looking for work and dropped out of the labor force because there are no jobs. They would not be counted in the official jobless rate, either. And with many companies closed or going out of business, the response rate to the government's survey was lower than usual.

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iehi-feed-65345 Tue, 05 May 2020 21:06:07 GMT Big Banks and Fossil Fuel Industry Poised to Get Bailed Out Under Fed's "Main Street" Lending Program http://implode-explode.com/viewnews/2020-05-05_BigBanksandFossilFuelIndustryPoisedtoGetBailedOutUnderFedsMainSt.html ``We've walked down plenty of Main Streets in America: in West Virginia, downstate and upstate New York, New Hampshire, Connecticut, Florida and in ski towns from coast to coast. We've seen plenty of boutique gift shops, family-owned restaurants and ice cream parlors, hair and nail salons, sole-proprietor bake shops, and locally-owned breweries. What we've never seen on any of these streets is a shop or restaurant with "15,000 employees or up to $5 billion in annual revenue" or one that needed to refinance $200 million in debt. And yet, that describes businesses that will be able to apply for loans under the Fed's "Main Street" Expanded Lending Program that has been approved by both Treasury Secretary Mnuchin and Fed Chair Powell.

You have to ask yourself this: if this was really about helping Main Street, why wouldn't that $750 billion have simply been added to the Paycheck Protection Program (PPP) which is restricted to businesses with 500 or fewer employees -- the Small Business Administration's definition of a small business? The second round of funding to that program by Congress is likely to run out sometime this week. Just under half of all American workers are employed by a small business that has less than 500 workers according to the most recent government data.

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"The Federal Reserve today unveiled an expanded ‘Main Street' business lending program that could allow failing, highly indebted oil and gas companies to borrow money at low rates. In doing so, the Fed heeded a call by U.S. Sen. Ted Cruz (R-Texas) as well as fracking companies to make it easier for oil and gas companies to refinance their debts. The Fed's new program rules drop an earlier restriction on refinances.

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iehi-feed-65344 Tue, 05 May 2020 20:58:42 GMT Billionaire Sam Zell Sees Economy Permanently Scarred by Pandemic http://implode-explode.com/viewnews/2020-05-05_BillionaireSamZellSeesEconomyPermanentlyScarredbyPandemic.html ``"How soon will anybody get on an airplane? How soon will anybody stay in a hotel? How soon will anybody go to a mall?" he asked. "The fact that these places may be open doesn't necessarily mean that they'll be doing business."

Nothing to Buy

Zell disagrees with the conventional wisdom that big cities like New York are doomed and warehouses are the smartest bet in commercial real estate.

For now, the raspy-voiced investor who earned his nickname, the Grave Dancer, buying distressed real estate in the 1970s, is watching from the sidelines. Like Warren Buffett, Zell hasn't found anything to buy since the onset of the pandemic. Part of the problem is a lack of deals.

"Those sellers that wanted to sell still remember the prices that were available seven or eight weeks ago. The buyers are looking at a very different world and expecting to see significant discounts," he said. "When you've got that big a spread, nothing happens."

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Shares of [his] real estate investment trust [Equity Residential], one of the biggest apartment owners in the U.S., are down almost 30% since late February. Rents, however, are holding up well enough that Zell said he doesn't expect any significant changes in monthly collections.

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For years, Zell has been warning that the U.S. construction boom would result in oversupply and lower prices, and the current shutdown "is going to dramatically make things much worse."

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iehi-feed-65336 Fri, 01 May 2020 22:56:45 GMT COVID-19's Income Truth: Real-time losses are worse than they appear from unemployment numbers http://implode-explode.com/viewnews/2020-05-01_COVID19sIncomeTruthRealtimelossesareworsethantheyappearfromunemp.html iehi-feed-65332 Thu, 30 Apr 2020 15:36:09 GMT Fed expanding the scope of Main Street lending program to include bigger businesses http://implode-explode.com/viewnews/2020-04-30_FedexpandingthescopeofMainStreetlendingprogramtoincludebiggerbus.html Touted as one of the cornerstone's the Fed's initiatives to get money to businesses and households in need, the Main Street program now will allow companies with up to 15,000 employees and $5 billion in revenue to apply for financing.

That's up from the previous limit of 10,000 workers and $2.5 billion in revenue for a program targeted at medium-sized firms whose operations have been hamstrung by the social distancing efforts put into place to limit the spread of the coronavirus.

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iehi-feed-65329 Tue, 28 Apr 2020 17:53:55 GMT The ‘Great Repression' is here and it will make past downturns look tame: Rosenberg http://implode-explode.com/viewnews/2020-04-28_TheGreatRepressionishereanditwillmakepastdownturnslooktameRosenb.html In the "base case" for the U.S. economy, published by his firm, Rosenberg Research, the economy "reopens" in May, in a staggered approach across industries and regions. There are "periodic setbacks in terms of COVID-19 case counts...sufficient to make people less comfortable and confident about spending then they did prior to the crisis. A vaccine is not developed in this forecast, but treatment that alleviates the worst respiratory symptoms" is developed within the next six months, he writes.

What does that mean for the economy and financial markets?

A 30% contraction in real gross domestic product in the second quarter, negative year-over-year consumer price growth for 5 quarters, and an unemployment rate of 14.2% by the end of 2020, averaging 13% throughout 2021.

The 10-year Treasury yield TMUBMUSD10Y, 0.653% sinks lower and lower each quarter, to 31 basis points by the fourth quarter, and averages 18 basis points throughout 2021. Yields fall as bond prices rise.

Investors in high-yield debt run for the doors, leaving those bonds more than 700 basis points more expensive than Treasurys at the end of this year.

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iehi-feed-65326 Sun, 26 Apr 2020 22:11:06 GMT Source: Trump chloroquine push came after talk with billionaire donor Larry Ellison (THE REAL-LIFE HANK SCORPIO) http://implode-explode.com/viewnews/2020-04-26_SourceTrumpchloroquinepushcameaftertalkwithbillionairedonorLarry.html A top Health and Human Services official who said he was transferred from his post for pushing back on "efforts to fund potentially dangerous drugs promoted by those with political connections" felt pressured to rush access to chloroquine treatments for the coronavirus after President Donald Trump had a conversation about it with a mega-rich donor, a source close to the doctor told NBC News.

Dr. Rick Bright said he was instructed to implement a national program aimed at expanding access to the drug without proper controls and despite the lack of peer-reviewed clinical data on the drug's effectiveness following a conversation Trump had with Oracle Chairman Larry Ellison, the source said.

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iehi-feed-65324 Sun, 26 Apr 2020 22:01:35 GMT Restaurants' bailout problem: Unemployment pays more http://implode-explode.com/viewnews/2020-04-26_RestaurantsbailoutproblemUnemploymentpaysmore.html The new Paycheck Protection Program waives repayment of small business loans if the borrower uses 75 percent of the money to maintain payroll, a measure intended to reduce layoffs. But with the expanded unemployment benefits included in the stimulus bill, some workers can as much as double their weekly checks if they stay unemployed.

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Restaurants represent less than 9 percent of Paycheck Protection loan recipients, but as of March accounted for the majority of layoffs nationwide as the contagion took hold.

"If the intention was to get people back to work, they're not doing it," said Tom Colicchio, the renowned restaurateur and "Top Chef" judge, who has been an advocate for small restaurants during the pandemic. "They're not going to come back to work because unemployment is too attractive.''

This was all fantastically bungled...

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iehi-feed-65323 Fri, 24 Apr 2020 18:12:56 GMT America's Small Businesses Need a Marshall Plan http://implode-explode.com/viewnews/2020-04-24_AmericasSmallBusinessesNeedaMarshallPlan.html America's 30 million small businesses are a powerful economic engine. Collectively, they employ 59 million people, create two-thirds of net new jobs, and account for 44 percent of U.S. economic activity, according to the Small Business Administration.

Quite simply, small businesses are too big to let fail.

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What plagues our economy won't heal by summer. The country will not magically re-open one day as if all companies have been on ice and can resume business as usual. Most won't have the resources to hire back 100 percent of their staff, restock shelves or pay their bills. Most also don't have the knowledge or the supplies to do so safely.

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To increase the chances that as many small businesses as possible survive beyond a few more months, this unprecedented pandemic requires unprecedented creativity and courage.

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Pouring an additional $310 billion into PPP alone, as Congress has agreed to do, is not sufficient. We need a Marshall Plan for small businesses that begins with providing federally backed loans that cover what it will cost businesses to reopen and reinvent themselves for the COVID economy. These expenses include things like buildouts in workplaces and retail spaces to accommodate social distancing; regular virus testing for customers and employees; hiring and training; reconnecting or redeveloping supply chains; and converting products and services to meet evolving customer demands.

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Staggeringly long lines at food banks from Iowa to California are just the beginning -- imagine if just 30 percent of all small businesses permanently shut down, taking more jobs with them. The cost of doing nothing will be far greater that the cost of bold decisions now. The economy and the social fabric of our country will be impacted in ways that no generation alive has ever known if we fail to act with the urgency small businesses deserve, and this moment demands.

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iehi-feed-65320 Thu, 23 Apr 2020 17:38:25 GMT JPMorgan, Bank of America, Wells Fargo Sued Over Trump's Paycheck Protection Program http://implode-explode.com/viewnews/2020-04-23_JPMorganBankofAmericaWellsFargoSuedOverTrumpsPaycheckProtectionP.html Citing data provided by the Small Business Administration (SBA), the lawsuits allege that JPMorgan Chase, Bank of America, Wells Fargo, and U.S. Bancorp failed to process the PPP applications on a first-come, first-serve basis as required by the program. Instead, they "prioritized loan applications seeking higher loan amounts because processing those applications first generated larger loan origination fees for the banks." The PPP loans are administered by the SBA and processed by banks.

The plaintiffs claim that the banks encouraged them to "act fast" and apply for the loans, concealing from the public that they were "reshuffling the PPP applications" they received "and prioritizing the applications that would make the bank the most money." As a result of their "dishonest and deplorable behavior," the suits describe, "thousands of small businesses that were entitled to loans under the PPP were left with nothing."

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iehi-feed-65318 Wed, 22 Apr 2020 02:22:17 GMT Trump's Entire Coronavirus Response Is Massive Political Corruption http://implode-explode.com/viewnews/2020-04-21_TrumpsEntireCoronavirusResponseIsMassivePoliticalCorruption.html Trump has treated the distribution of the federal government's supply of emergency medical equipment like he is walking around the neighborhood with a money clip, pulling out bills and patting grateful recipients on the cheek. When New York governor Andrew Cuomo noted that he retains power to reopen public spaces, Trump exploded, "I got it all done for him, and everyone else, and now he seems to want Independence! That won't happen!" Trump routinely threatens Democratic governors not to complain about his mismanagement if they want help from Washington, conflating the authority of the government with his own authority ("When they disrespect me, they are disrespecting our government"). He has used the precious supply of ventilators as in-kind contributions, allowing endangered Republican allies like Martha McSally and Cory Gardner to hold them up as proof of their clout.

When Congress handed Trump control of half a trillion dollars in spending authority, it insisted on establishing some loose oversight requirements. Trump has diligently trashed them. When he signed the economic rescue bill, he added a statement that he would refuse to follow its express requirement that the inspector general report if the administration is withholding information from Congress. He quickly fired the inspector general who was tasked with overseeing the bailout fund, and replaced him with a member of his impeachment defense team. There is little mystery about Trump's intention. He blurted it out: "I'll be the oversight."

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iehi-feed-65313 Sun, 19 Apr 2020 18:37:46 GMT A Barrage of New Lobbying Activity Funnels Coronavirus "Small Business Aid" To Surprisingly Big Companies http://implode-explode.com/viewnews/2020-04-19_ABarrageofNewLobbyingActivityFunnelsCoronavirusSmallBusinessAidT.html The program dispersed 1.66 million loans, according to the SBA's tally. There were 30.2 million small businesses in the US in 2019, so about 5.5% got loans. What's going to happen to the remaining 94.5% of the small businesses?

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4,412 loans were issued in amounts larger than $5 million each. And we already know which company with 5,700 employees got $20 million. Yup, a restaurant chain, because they and hotel chains were exempted from the employee limit. Restaurants and hotels got their own limit: 500 employees per location. They accomplished this through magnificent lobbying efforts...

And then there is the curious case of Longview Power LLC, in which KKR, one of the big private equity firms, has a 40% stake as a result of Longview's bankruptcy in 2015. Longview owns a 700-megawatt coal-fired power plant in West Virginia and has about 140 employees. It was approved for a PPP loan last Friday, and on Tuesday it announced that it filed for Chapter 11 bankruptcy... If the company follows the rules of the PPP loan, it will be forgiven and turn into pure profit for then new owners.

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iehi-feed-65312 Sun, 19 Apr 2020 14:42:26 GMT A New Statistic Reveals Why America's COVID-19 Numbers Are Flat http://implode-explode.com/viewnews/2020-04-19_ANewStatisticRevealsWhyAmericasCOVID19NumbersAreFlat.html The U.S. has now tested 3.2 million people, which is also about 1 percent of its population, but it has found more than 630,000 cases. So while the U.S. has a 20 percent positivity rate, South Korea's is only about 2 percent--a full order of magnitude smaller.

South Korea is not alone in bringing its positivity rate down: America's figure dwarfs that of almost every other developed country. Canada, Germany and Denmark have positivity rates from 6 to 8 percent. Australia and New Zealand have 2 percent positivity rates. Even Italy--which faced one of the world's most ravaging outbreaks--has a 15 percent rate. It has found nearly 160,000 cases and conducted more than a million tests. Virtually the only wealthy country with a larger positivity rate than the U.S. is the United Kingdom, where more than 30 percent of people tested for the virus have been positive.

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iehi-feed-65310 Fri, 17 Apr 2020 21:26:16 GMT What Trump's Plan to Reopen America Gets Right, and Wrong http://implode-explode.com/viewnews/2020-04-17_WhatTrumpsPlantoReopenAmericaGetsRightandWrong.html But there is no requirement that states first show that they have tested enough people to establish that the trajectories they are seeing are truly reflective of population-level trends. Overall, testing has been far too low for these trajectories to be relied on. Even after six weeks, barely 1 percent of the country's population has been tested for Covid-19 and new daily tests have plateaued around 150,000. This is also not enough testing for effective levels of contact tracing.

More important, the plan calls for measuring a relative decline, and not an absolute threshold for very limited spread. So there could be a 14-day decline and yet the number of new cases could still be too high. We need a firm threshold, such as 20 new cases per one million people, that ensures a low number of new coronavirus cases when we start to re-open.

Another big concern with the plan is that, like the current C.D.C. testing guidelines, it still focuses on testing symptomatic people. If we are to stop the spread, the focus has to broaden to asymptomatic coronavirus-infected people who can be unwitting super-spreaders and ignite a resurgence.

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Finally, nothing is mentioned in the "Opening Up America Again" plan about how states should handle a resurgence. There is no guidance on defining a significant uptick in cases or how to respond. As Dr. Anthony Fauci mentioned in the press briefing announcing the plan, there may be instances where states must "pull back." But what does pulling back entail? How will states know when to do this? There is no guidance.

The guidelines also task states with "independently" securing personal protective equipment and key equipment such as ventilators, despite the fact that the federal government has intervened calamitously in this supply chain.

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