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Dear John,
When middle-aged and older people feel unsafe, they run to the familiar and reliable, even if it’s deadly dull. Younger people who feel threatened are more likely to take risks in hopes of finding something better.
This generational difference explains a great deal about what’s happened during the most tumultuous two weeks in recent American economic and political history. ([link removed])
Since February 24th, with the lethal coronavirus spreading around the world, middle-aged and older Americans – not only most vulnerable to the disease but also accounting for most retirement savings – have been fleeing stocks for the relative safety of US government bonds.
The stampede has gutted the stock market while reducing bond yields, which move in the opposite direction of bond prices, to unprecedented lows. The interest rates on the 10-year Treasury note fell Friday to a record-breaking 0.71%.
Despite the Fed’s half-per cent cut in interest rates last Tuesday and the labor department’s upbeat jobs report on Friday, the flight to safety continues. Bonds are deadly dull, but when the economy is wracked by uncertainty they’re the safest havens available.
The rush to safety didn’t end there. In last week’s Super Tuesday primaries in the 2020 election, older Democratic voters stampeded toward Joe Biden.
As recently as February 22nd – the Friday before the giant selloff on Wall Street – only 17.2% of Democratic voters supported Biden, according to the RealClearPolitics aggregate polls. Less than two weeks later, Biden’s support had surged to 34.3%.
Biden was helped by his strong showing in the South Carolina primary and by the last-minute endorsements of the former South Bend, Indiana, mayor Pete Buttigieg and the Minnesota Senator Amy Klobuchar. And by fear-mongering over Bernie Sanders by Democratic insiders, big funders and pundits.
But the rapidity of Biden’s ascendance was fueled by a sudden flight to safety among older voters.
Biden is the political equivalent of US government bonds. He may be boring but at least he’s familiar and safe.
Younger voters are still counting on Bernie Sanders. They’re looking beyond the immediate coronavirus and financial crises to the larger existential crises of this century – climate change, health care, inequality and corruption. Their time horizons extend beyond those of their parents and grandparents because they’ll be here longer.
The generation gap revealed itself on Super Tuesday. Voters between 45 and 64 preferred Biden by 22 points over Sanders (42% to 20%).
But Sanders triumphed with younger voters. In Texas, Biden won the support of just 17% of voters under the age of 45, while Sanders won only 19% of voters over 45. In Colorado, Biden won a mere 8% of the under-45s, while Sanders pulled down just 20% support among their elders. In California, Biden’s support among sub-45 voters came to a bare 9%; Sanders won only 22% of those over 45.
Meanwhile, as the coronavirus and its financial fallout continue to spread, Donald Trump appears even more dangerous than he did just weeks ago. The deceptive, narcissistic, vindictive president is helping transform a public health problem and financial slide into a double-barreled national emergency.
On Friday, while wearing his own re-election campaign merchandise, Trump gave a disjointed news conference during which he called Jay Inslee, the Washington state governor who has criticized Trump’s leadership on the coronavirus, a “snake.”
He also claimed the coronavirus test was available to all who needed it, but anyone who has tried to be tested knows that’s untrue. As of now, no more than several thousand people can be tested per day.
Trump is facing crises that elude his capacities to con. He can’t bully the coronavirus. He can’t intimidate or threaten it into submission. He can’t convince it to go away or make a deal with it. Nor can he order the stock and bond markets to do better.
The coronavirus is in plain sight. Hospitals and clinics are overwhelmed. As of Saturday afternoon, authorities had reported 400 confirmed coronavirus cases in the United States, and 19 people have died.
Most of Trump’s supporters are middle-aged and older, with little or no savings to tide them over a recession. If the double-barreled crisis deepens, they too are likely to flee to safety next November.
Politics and economics are complex, but in times of crisis they follow simple rules. Older people want safety. Younger people want change. Everyone wants leaders they can trust.
Thanks for reading,
Robert Reich
Inequality Media
P.S. If you can, support our work to connect the dots between the coronavirus outbreak, the election, and the economy. ([link removed]) Kudos to our monthly donors for your continued support as we continue getting the truth out during these perilous times for America.
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